BP has announced it would raise spending on oil and gas to $10 billion (€9.53 billion) a year – and drop its interests in “green” energy.
On February 26, the UK-based multinational announced a fundamental reset strategy, opting for fossil fuels to generate profits.
In sharp contrast to its initial target of reducing production to 1.5 million barrels of oil per day, BP said it now anticipated producing between 2.3 and 2.5 million barrels per day by the end of the decade.
“Today we have fundamentally reset BP’s strategy. We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency,” said CEO Murray Auchincloss.
“This is all in service of sustainably growing cash flow and returns.
“We will grow upstream investment and production to allow us to produce high-margin energy for years to come. We will focus our downstream on markets where we have leading integrated positions.
“And we will be very selective in our investment in the transition, including through innovative capital-light platforms.”
Auchincloss concluded: “This is a reset BP, with an unwavering focus on growing long-term shareholder value.”
Following the announcement, Auchincloss told investors the company’s belief in the green energy transition had been “misplaced” and that it had moved “too far, too fast” in recent years.
He also stated that there would be a “need for decades to come” for oil and gas.
Auchincloss did add that renewables were a “significant opportunity” and confirmed that the company intended to meet net zero carbon emissions by 2050.
In 2020, BP promised to reduce oil and gas production by 40 per cent while rapidly expanding renewables by 2030 under Auchincloss’ predecessor, Bernard Looney. In 2023, BP dropped the reduction aim to 25 per cent.
BP’s shift occured at a time of increasing pressure from investors.
In the past two years, the company’s market value has dropped by more than 25 per cent, while competitors Shell and Exxon have seen theirs surge by increasing their oil and gas production.
Elliott Management, a US hedge fund, has discreetly amassed a £3.8 billion position in BP. The activist investor was anticipated to demand “transformational changes”, potentially even the company’s break up, US newspaper Wall Street Journal reported on February 9.
Environmentalists reacted with outrage to the news from BP.
“This move by oil giant BP clearly demonstrates why super-rich corporations and individuals, chasing short-term profit for themselves and shareholders, cannot be trusted with fixing the climate crisis or leading the transition to renewable energy we so badly need,” Matilda Borgström, UK campaigner with climate action group 350.org, said in a press release.
“Pumping money into more oil and gas increases the risk of climate impacts for us all, flies in the face of legal climate targets, and with the renewables sector growing exponentially is a big risk to the shareholders that BP is so keen to please,” she added.
