Bp returns to oil and gas, goodbye to green major aspirations
In the new strategic plan a drastic cut in clean energy investments and a commitment to relaunch - rather than reduce - hydrocarbon production, also to improve profitability. This is how the British company tries to regain market favour and respond to pressure from the Elliott fund
3' min read
3' min read
More oil and gas, less renewables. Bp presents its new strategic plan and in line with the anticipations makes a U-turn, which if it does not reduce the commitment to clean energy to zero, aims at drastically scaling it back: green investments will be reduced to $1.5-2 billion per year, a cut of around $5 billion from the previous target, while capex for hydrocarbons will remain at around $10 billion per year, with the stated goal of expanding production (or at least extraction capacity) at least until 2035.
Undoubtedly, this is a 'reset' of strategies, as promised by CEO Murray Auchincloss, who had already started to change course after the company's disappointing performance, but who now also has to respond to pressure from the activist fund Elliott, which has become Bp's third largest shareholder with a stake of around 5 per cent.
No comment has yet come from the fund. While the stock market reacted with a 1.5% drop in the share price, probably mainly related to the reduction in buybacks: Bp will buy back its own shares for USD 0.75-1 billion in the current quarter, instead of USD 1.75 billion as previously planned. On the other hand, it has pledged to raise its dividend by at least 4% a year in the future, thanks to the strengthening of its balance sheet that it aims to achieve with the new plan.
The novelties are many. Starting with the radical change in philosophy compared to the management of former CEO Bernard Looney, who in 2020 had attempted an unrealistic 'green' revolution, planning to multiply generation from renewables by twenty by 2030 and to reduce hydrocarbon production by 40 per cent in parallel.
The latter target had already been scaled back in 2023 (forecasting a 25 per cent cut) and then unofficially shelved. Auschinsloss - who had taken the helm of Bp 13 months ago assuring 'an unchanged direction of travel' - now completes the turnaround: 'We will increase investments in upstream and production, to enable us to produce energy with high profit margins in the coming years,' he summarised yesterday.
