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SAN ANTONIO -- Due to depressed margins going forward, Tesoro Corp. slashed its capital spending plans for 2009 and expects to hold off on large projects, Dow Jones Newswires reported.
The oil refiner told analysts earlier this week it cut its 2009 capital spending from $1.1 billion to $600 million to $700 million, according to the report. It expects the margin environment for 2009 to be as challenging or more difficult than 2008, according to the report.
"We're not just going to push projects off to 2010," Chief Executive Bruce Smith told the news service after the meeting concluded, adding the company doesn't plan to simply defer projects because it doesn't expect refiners' returns to improve quickly.
"I just think that the margin environment could be that difficult for a couple of years," Smith said. As a result, Tesoro will scale back capital spending for several years, he told Dow Jones. The margin decline will likely be due to continued weak demand, he added.
However, the company said its own profit margins will likely improve thanks to strategic improvements that allow Tesoro to buy cheaper crude and produce more valuable products, the report stated.
Meanwhile, BP America Chairman and President Robert Malone praised President-elect Barack Obama for his choice for energy secretary, Nobel physics laureate Steven Chu, but emphasized the new administration must clarify its policies on renewable energy and open new areas for oil and gas exploration, Reuters reported.
Malone said Chu could put an emphasis on technology in energy policy.
"I thought it was an interesting pick and a good pick," Malone told reporters at a BP press conference. "He's signaling the importance of science to what we do, and I view that as a positive."
Malone also approved of U.S. Senator Ken Salazar of Colorado, who is Obama's nominee for secretary of the interior, the department responsible for leasing public lands for oil and gas production, according to the report.
In addition, Malone told reporters it is imperative the Obama administration provides clarity on renewable energy and biofuel issues through consistent multiple-year extensions of alternative energy tax credits, the report stated.
"We can't have wind farm operators waiting until the eleventh hour to find out if they're going to have subsidy," Malone said.