Chevron has announced that the company is set to take a $10bn to $11bn hit during this quarter from cheap oil and gas prices.

The company is also considering plans to sell some natural gas projects in the US and Canada as part of its preparation for long term low prices. Chevron dimmed its outlook for oil and gas prices due to the glut of fossil fuels and therefore intends to take up to $11bn charge to reflect this outlook.

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As part of its 2020 organic capital and exploratory spending programme valued at $20bn, the company will reduce funding for various gas-related opportunities including Appalachia shale, Kitimat LNG project in British Columbia, and some of the other international projects.

Chevron plans to start soliciting expressions of interest for its interests in the Kitimat LNG, which is equally owned by Chevron Canada and Woodside Energy International (Canada). This decision only impacts the company’s interests in this project.

The company noted that it expected writedowns this quarter with respect to a deepwater Gulf of Mexico project that needs higher oil prices so as to hit a profit. It also expects writedowns related to shale gas in Appalachia which has suffered from low gas prices.

Chevron chairman and CEO Michael Wirth said: “We are positioning Chevron to win in any environment by ratably investing in the highest return, lowest risk projects in our portfolio. This will be the third consecutive year with organic capital spending held flat at $20bn, continuing our capital discipline through the cycle.

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“With capital discipline and a conservative outlook comes the responsibility to make the tough choices necessary to deliver higher cash returns to our shareholders over the long term.”

More than $2.8bn of planned capital spending represents the company’s downstream businesses that include refining, marketing and manufacturing of lubricants, additives and petrochemicals. Chevron’s latest move reflects the consequences of America’s shale oil and gas boom which reshaped the global energy landscape, reported CNN.