Canadian Natural

Inter Pipeline is expected to have 100 per cent ownership of the Cold Lake pipeline system before the end of the year. (Dan Riedlhuber/Reuters)

Deteriorating oil prices are causing Canadian Natural Resources Ltd. to slash its 2015 spending by about 28 per cent, with its Kirby oilsands project and conventional oil and gas operations in Canada and overseas bearing the brunt of the cut.

The Calgary-based oil and gas giant built flexibility into the $8.6-billion budget it announced in November. But oil prices have fallen dramatically since then, so this year's spending is expected to now come in at $6.2 billion.

The company said Monday it will defer about $470 million of spending for the first phase of its Kirby North steam-driven oilsands project and reduce drilling at its North American and international conventional oil and gas operations.

But CNRL said the budget for its Horizon oilsands project has been left intact and the company expects the reduced capital spending will allow it to continue its dividend without changes.

The company also expects to continue to grow output compared with 2014 but at a slower pace — seven per cent, rather than the original target of 11 per cent.

Canadian Natural is the latest major Canadian energy producer to scale back its spending plans as a result of free-falling crude prices. U.S. benchmark crude was trading at around US$46 a barrel on Monday, less than half of where it was just six months ago.

A major reason for the collapse in global oil prices is an oversupply of crude, as demand growth in China and other Asian countries slows and production from the United States, Canada and other countries increases.

The OPEC cartel of petroleum producing countries has also said it won't reduce output — a move that's seen as a way to pressure other countries to reduce their higher-cost output.

Canadian Natural shares were down more than four per cent at C$31.71, about the same as the energy sector overall on the Toronto Stock Exchange Monday.