Equinor’s Johan Sverdrup oil field, west of Stavanger, Norway
Equinor’s Johan Sverdrup oilfield, west of Stavanger, Norway © NTB Scanpix/AFP via Getty Images

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Norway’s Equinor has become the first major oil company to cut its dividend, as the coronavirus crisis devastates demand for crude and forces producers to shore up their finances. 

Shareholders will receive a first-quarter payout of $0.09 per share, a 67 per cent fall from the fourth quarter of 2019, the company said in a statement on Thursday. 

Equinor has already taken forceful actions to strengthen our liquidity and financial resilience under the current circumstances. In this extraordinary market situation, we have now also decided to reduce the cash dividend,” said chief executive Eldar Sætre. 

The group, formerly known as Statoil, has already laid out plans to curb capital spending, exploration activities and axe costs by $3bn to preserve cash. Last month it suspended a $5bn share buyback plan.

The company has also raised $5bn from the bond market in an effort to “secure balance sheet capacity, strengthen liquidity and support continued investments in a high-quality project portfolio”. 

Global oil demand has collapsed amid widespread lockdowns and travel bans, with the drop in consumption coinciding with still robust production that is overwhelming the industry’s ability to store the crude.

Brent crude, the international oil benchmark, this week fell to 21-year lows below $16 a barrel, before recovering to $23. 

Equinor’s decision to cut the dividend comes earlier than analysts had anticipated. Big oil companies have sought to preserve their payouts for as long as possible.

Some smaller and independent companies have cut their dividends as they come under intense financial pressure.

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