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Oil Companies Spending Cuts Unlikely to Be Enough

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Screen Shot 2015-08-04 at 23.11.09LONDON–The world’s biggest oil company’s have vowed to bring down the costs of big projects in the face of slumping oil prices, but the unrelenting price weakness–with crude below $50 a barrel–suggests they could have to dig deeper still.

In the past year, as oil prices plunged 60% from highs of $114 in 2014, U.K. energy giant BP PLC began testing new projects for profitability around $60 a barrel, down from $80 a barrel last year. Its Anglo-Dutch rival Royal Dutch Shell is testing projects at prices as low as $50 a barrel, though its overall price outlook is between $70 and $110 a barrel.

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