BP shifts focus from renewables to oil and gas, prioritizes investments in traditional energy sources

From Investing.com: 2024-06-27 01:05:55

BP’s new CEO, Murray Auchincloss, has implemented a hiring freeze and paused offshore wind projects to shift focus back to oil and gas, causing investor concerns over the company’s energy transition strategy. Auchincloss aims to slow investments in low-carbon projects that won’t generate cash soon, marking a reversal from his predecessor’s direction.

Auchincloss and CFO Kate Thomson are prioritizing investments in oil and gas assets, particularly in the Gulf of Mexico and U.S. onshore shale basins. BP is considering acquisitions in these areas and other low-carbon businesses. Earlier this week, BP agreed to buy Bunge’s 50% stake in a Brazilian venture for $1.4 billion.

BP has imposed a company-wide hiring freeze and may make job cuts in renewables, though no specific targets were given. Auchincloss, who took over in January, promised a pragmatic approach and announced a $2 billion cost-saving drive by the end of 2026. The company is focusing on growth projects and efficiency.

BP’s shares have underperformed rivals, leading to speculation of a potential takeover. The company aims to balance decarbonization efforts with near-term fossil fuel demand. In 2023, BP spent $2.5 billion on renewables, hydrogen, EV charging, and biofuels out of a total capex of $16 billion.

BP is the only major oil company with oil and gas output reduction targets. Shell shifted its focus to high-return businesses, reducing investments in renewables. In February 2023, BP revised its pledge to cut oil and gas output by 25% by 2030 and kept its renewables targets. Auchincloss softened language on the 2030 target last month.

BP has strengthened its exploration team and is allocating more capital to new field developments. The company overhauled its mergers and acquisitions division and business development division. Last October, BP had 18 billion barrels of oil and gas equivalent in resources to sustain its 2022 production level within its returns target.



Read more at Investing.com: BP halts hiring, slows renewables roll-out to win over investors By Reuters