BP has confirmed details of a new strategy that will reshape its business as it pivots from being an international oil company focused on producing resources to an integrated energy company focused on delivering solutions for customers
In 10 years, BP aims to have increased its annual low carbon investment 10-fold to around US$5Bn a year, building out an integrated portfolio of low carbon technologies, including renewables, bioenergy and early positions in hydrogen and carbon capture, utilisation and storage. The company did not specify what kind of renewables it plans to invest in, but its track record in offshore oil and gas suggests that offshore wind will form at least a part of this transition.
By 2030, BP aims to have developed around 50 GW of net renewable generating capacity – a 20-fold increase from 2019 – and to have doubled its consumer interactions to 20M a day.
Over the same period, its oil and gas production is expected to reduce by at least 1M barrels of oil equivalent a day, or 40%, from 2019 levels. Its remaining hydrocarbon portfolio is expected to be more cost and carbon resilient.
By 2030, BP aims for emissions from its operations and those associated with the carbon in its upstream oil and gas production to be lower by 30-35% and 35-40%, respectively.
Making the announcement, the company also confirmed it had halved its shareholder dividend and was posting a US$6.7Bn quarterly loss.
BP chairman Helge Lund said, “Energy markets are fundamentally changing, shifting towards low carbon, driven by societal expectations, technology and changes in consumer preferences.
“In these transforming markets, BP can compete and create value, based on our skills, experience and relationships. We are confident that the decisions we have taken and the strategy we are setting out today are right for BP, for our shareholders, and for wider society.”
Company chief executive Bernard Looney said, “All of this means we aim to be a very different company by 2030. That is what the world needs. The next decade is critical in the fight against climate change.
“We believe this new strategy provides a comprehensive and coherent approach to turn our net zero ambition into action. Of course, to drive the necessary change in global energy systems will take action from everyone.
“We bring with us over 100 years of experience steeped in the world of energy. We understand energy markets deeply, and we have developed unique capabilities in trading, marketing, technology and innovation.
“We want to move fast but will do so with real discipline and care – keeping our focus on safety and performance while we transform, delivering long-term value for our stakeholders. And while we do not have all the answers, collaboration and challenge have shaped our new strategy and it is better for it. Continued dialogue will be vital to its delivery.”
Speaking after BP’s announcement, Wood Mackenzie vice president corporate analysis Luke Parker said, “This strategy update marked a big step forward, filling in many of the blanks, including detailed guidance to 2030. It leaves stakeholders with a much clearer of idea of where BP is headed over the next decade, how it will get there and what that means for the value proposition.
“We said back in February that no company of BP’s stature had gone as far, or committed so unequivocally, to transforming itself in the face of the energy transition. The guidance that BP laid out today brings that transformation to life – makes it real. It constitutes the clearest and most detailed roadmap to Big Energy that any of the majors have provided to this point. BP’s oil and gas business will shrink dramatically, while the low carbon business will grow strongly.
“BP is guiding for a 10-fold increase in investment in low carbon energy and technology. Within that, the company will deliver a 20-fold increase in developed renewables capacity.
“If ever there was a moment to reset, this was it. Several factors have converged to make it possible, including coronavirus and everything that comes with it; a strategic pivot to net zero on the horizon; Shell’s dividend reset; and a new leadership with credit in the bank. Our view is that BP has taken the prudent course of action.”
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