Big oil calls on contractors to cut costs now

(Repeats story from May 12, no changes to text)

* Energy service companies must cut charges

* Future projects could be threatened

* Expected oil price rebound no reason to wait

By Daniel Fineren

MILFORD HAVEN, Wales, May 12 (Reuters) - Energy service contractors must cut their charges to oil and gas companies to ensure both parts of the industry thrive after the current crisis, the chief executives of two of the world's largest oil companies said on Tuesday.

Energy service companies must drop their charges to reflect tighter margins since oil and gas prices slumped in late 2008, ExxonMobil (XOM.N) Chief Executive Rex Tillerson and the CEO of France's Total (TOTF.PA) told a press conference in Britain.

The French oil major might even have to put off projects if contractors do not cooperate.

"We don't want to squeeze them but they have to understand that they have to reduce their prices," Total's Christophe de Margerie said at the inauguration of the South Hook liquefied natural gas terminal in South Wales.

"If they don't understand without stopping our programmes, we might be forced to delay until they understand that this is the way it has to be, i.e., we all have to share the cost of this crisis," the head of the world's fourth largest nongovernmental oil group said.

Raw material, construction and service costs rose over the last few years as oil prices climbed towards record highs of over $147 a barrel last July, making for fat profits for oil companies.

But oil prices have tumbled since last summer to around $60 CLc1 on expectations of a slump in demand for energy across the world, squeezing oil majors' margins.

Now, they say, it is time for the contractors to pass on more of the lower costs.

"We would anticipate and expect that we will begin to capture some cost savings," Tillerson said, adding that the world's largest publicly traded company was in discussions with its service contractors about cutting costs and had already started to see costs ease slightly.

"We want to ensure that, if they work through this adjustment in prices and the adjustment in how they price their services to us, we maintain their viability over the long run," he said.

"Sometimes that may mean restructuring our contracts with them, it might mean extending some contracts to give them a little more security. Around another year or two in an uncertain environment has value for them and they can give value to us," Tillerson added.

Total's CEO agreed with his U.S.-based bigger partner in the South Hook project -- a joint venture with state-owned gas exporter Qatargas -- that big oil and gas producers had to cooperate with contractors to reduce costs.

De Margerie said he did not expect contractors to go back to the kind of prices they charged in 2002-2004 but that they should fall to at least 2006 levels to reflect the steep decline in oil prices.

"While it is true that we can see a brighter future in terms of oil prices, we cannot accept, and I insist on this, that the contractors think they can keep their prices the way they were when the price of oil was (nearly) $150 and just say 'Guys, we can wait because in the next two or three years time it will be better for all of us,'" he said.

EXXON INVESTMENT

Tillerson said Exxon would continue to invest heavily in future growth despite the global economic crisis cutting demand and energy prices in the short term.

"Our investment programmes two years ago were not predicated on high prices. They weren't predicated on high prices last year and they are not predicated on high prices today," he said. "So we have made little if any change to our investment outlook, our investment programmes." (Editing by Christian Wiessner)