March 24, 2020 / 4:18 PM / 2 months ago

Oilfield firm Baker Hughes' Italian output may be halted due to virus

(Reuters) - Oilfield service firm Baker Hughes Co could cut capital spending this year up to 30% and may shut some manufacturing facilities in Italy due to the coronavirus, an executive said on Tuesday.

A screen displays the logo for Baker Hughes on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 24, 2019. REUTERS/Brendan McDermid

The firm supplies turbines for oilfield and liquefied natural gas production, and companies working in both markets have been slashing spending as oil prices tumbled this year.

Baker Hughes could reduce capital spending this year by 20% to 30% as activity declines, Vice President Jud Bailey said in a webcast at the Scotia Howard Weil energy conference.

In January, the company forecast this year’s spending would be flat with 2019, when expenditures totaled $1.24 billion.

Baker Hughes has spoken to the Italian government about keeping its facilities open, but so far it has received no answer to its request, Bailey said.

Italy has been hard-hit by the spread of coronavirus with over 6,000 deaths reported - more than any other country - which has prompted its government to put the country on lockdown.

The products made at the Italian facilities are “long-cycle,” Bailey said, which allows Baker Hughes potentially to make up for time lost during the shutdown.

Bailey said North American oilfield markets were most at risk from the recent collapse in oil prices, as demand falters amid the spread of coronavirus and a price war between top producers Russia and Saudi Arabia.

Rival Schlumberger NV said on Tuesday it would cut its 2020 capital spending by 30% this year, and Halliburton Co said it expects a significant reduction in its spending this year, from its previously announced budget of $1.2 billion.

Baker Hughes shares were up 15.8% at $10.80 on Tuesday afternoon.

Reporting by Liz Hampton in Houston; Editing by Franklin Paul and Matthew Lewis

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