LONDON, Jan 25 (Reuters) - French oil group Total has to make the steepest cuts to investments and shareholderreturns among Europe's oil majors if oil prices remain weak, inorder to maintain its current credit rating, Fitch said onMonday.
Total's spending has to fall by around a third this yearcompared with 2015 to bring net leverage, a measure of acompany's ability to meet financial obligations, to a levelneeded to keep its 'AA-' rating with Fitch, the ratings agencysaid in a report.
Total has previously said it expects to have beaten its 2015cost-cutting target of $1.2 billion and plans to raise $10billion from asset disposals by 2017. It has also forecastcapital spending in 2016 would be $20-21 billion, down from$23-24 billion in 2015.
"If Total is not successful in its disposal plans, the cutsto discretionary expenditure would have to go up to 44 percentcompared with 2015," Fitch said. The agency assumes oil pricesto average $45 a barrel this year, $50 in 2017 and $55 in 2018.
Major oil companies have announced plans to sell billionsworth of assets in a bid to ride out weak oil prices but fewlarge sales have so far been agreed as volatile oil prices makeit difficult for buyers and sellers to agree on a price.
Royal Dutch Shell has announced a $30 billiondivestment programme following its expected takeover of BG Group.
Fitch said if Shell makes no disposals, it would have to cutdiscretionary spending by 49 percent to maintain its currentrating by 2018.
"Companies can do more than just cut capex and shareholderreturns," Fitch said. So far, only Italy's ENI hasreduced shareholder returns to rein in spending.
"As with capex, (operating expenditure) cuts should beeasier over time as contracts can be renewed at lower marketprices." (Reporting by Karolin Schaps; Editing by Greg Mahlich)
