BP Slashes Renewables Investments to Refocus on Oil and Gas

 

British oil major BP has joined its peers in scaling back renewable-energy initiatives in favor of a return to its historical focus on oil and gas. On Wednesday, BP Chief Executive Officer Murray Auchincloss told investors that the company's controversial  plan to pivot fast and early towards green energy is now over. "This is a reset bp, with an unwavering focus on growing long-term shareholder value," Auchincloss said in a statement.

In 2020, under then-CEO Bernard Looney, BP announced a 10-fold increase in low-carbon energy investment by 2030, combined with emissions reductions of 35 percent and a managed 40 percent decline in oil and gas production over the same period. At the time, it was perhaps the most ambitious decarbonization proposal that any oil major had announced. 

However, BP and its peers have been gradually walking back their green investment plans. Under pressure from investors to show better free cash flow and stronger quarterly returns, BP now plans to "fundamentally reset strategy." It will now increase investments in oil and gas to $10 billion a year and cut planned investments in renewables down to $1-2 billion a year, $5 billion less than previously planned. The new approach will increase O&G production to 2.5 million barrels a day by 2030.

Its renewables business will be "disciplined" going forward, with a focus on biogas, biofuels and EV charging - not on costly offshore wind. BP has also announced a strategic review of its Castrol lubricants business. 

"We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns," said Auchinloss. "We will be very selective in our investment in the transition, including through innovative capital-light platforms."