BP has abandoned its green ambitions in favour of ramping up fossil fuel production as its boss claimed that optimism over the pace of the green transition had been “misplaced”.
In a major strategy shift, the energy company will increase its investment in oil and gas to $10bn (£7.9bn) a year while slashing more than $5bn from its previous green investment plan.
The radical overhaul means BP will be “very selective” about investing in low-carbon options while producing 2.4m barrels of oil and gas a day by 2030 – about 60% higher than the figure in its net zero plan set out five years ago.
“Today we have fundamentally reset BP’s strategy,” said BP’s CEO, Murray Auchincloss. “This is a reset BP, with an unwavering focus on growing long-term shareholder value.”
The move back towards fossil fuels represents a stark shift from the investment plan put forward five years ago by the former chief executive, Bernard Looney. He had promised to shrink the company’s fossil fuel production to about 1.5m barrels a day and make BP a net zero energy company by 2050.
Auchincloss said BP would instead focus on strengthening its production portfolio by starting up 10 large-scale oil and gas projects by 2027 and a further eight to 10 projects by the end of the decade.
He said: “Our optimism for a fast [energy] transition was misplaced, and we went too far, too fast.”
There has been growing pressure from investors for BP to shrug off its green pledges, which initially won praise from green groups but have since been diluted as BP’s share price fell.
BP has lost almost a quarter of its market value in the past two years while the market value of its rivals Shell and ExxonMobil has increased as they pursued greater oil and gas production.
The company also faces an existential threat from the activist hedge fund Elliott Management, which in recent months has amassed a stake in the oil company worth almost £3.8bn, or 5% of its shares.
The New York hedge fund is widely expected to use its grip on the 120-year-old company to demand sweeping changes, including a potential breakup, to rescue its flagging market value.
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The dismantling of Looney’s green agenda will come alongside a plan to cut BP’s growing debt pile from almost $23bn at the end of last year to between $14bn and $18bn by the end of 2027.
The company plans to sell $20bn of assets, possibly including its Castrol lubricants business, its network of service stations and the solar power developer Lightsource BP, while trimming up to $3bn from its overall investments and cutting up to $5bn in costs from across the company by the end of 2027.
Matilda Borgström, a campaigner at the climate action group 350.org, said: “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.
“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.”
Source: www.theguardian.com