Oil giant BP returns to its traditional energy sources
In 2023, BP, the British oil and gas stalwart, has drastically revised its energy strategy. The company is now investing an additional 20% in oil and gas, totaling £7.9 billion annually, while slashing its renewable energy expenditure. Spending on green energy will drop drastically, potentially dropping as low as £1.6 billion per year.
BP CEO Murray Auchincloss explained to the Press Association that the company is focusing on its most profitable ventures and making strategic investments in the energy transition.
This shift in focus has been met with criticism from environmental groups and some shareholders. Greenpeace argued, "This is clear evidence that fossil fuel companies cannot and will not be part of the solution to the climate crisis; the debate is over." They contend that the response to the climate crisis should not be dictated by investor preferences or market conditions.
In 2020, BP, under its previous leadership, set a goal to reduce oil and gas production by 40% by 2030. This target was later revised down to 25% in early 2023. In 2022, BP's profits plummeted to £7.2 billion, marking a drop from £10.9 billion in 2021. Pressure from US hedge fund Elliott Management, with nearly a 5% stake in BP, and the policies of former US President Donald Trump led to calls for increased investment in oil and gas. BP's competitor, Shell, has similarly shifted strategy, reducing its investments in offshore wind projects.
BP's latest investment plan entails:
- Oil and Gas Production:* - The company aims to invest around £10 billion annually in oil and gas, with an objective of growing upstream production to 2.3–2.5 million barrels of oil equivalent per day (mmboed) by 2030. - BP plans to launch 10 new major projects by the end of 2027 and an additional 8 to 10 by 2030.
- Renewable Energy:* - BP is reducing its renewable energy spending, now allocating only £1.5 billion to £2 billion annually for transition investments, significantly lower than its initial guidance of more than £5 billion. - The company is abandoning its ambitious target of growing renewable generation capacity 20-fold by 2030, opting instead for a more modest 50GW goal.
- Despite the criticism from environmental groups, BP CEO Murray Auchincloss announced a renewed focus on oil and gas, with a target to invest an additional 20% in these sectors by 2023, amounting to £7.9 billion annually.
- Contrary to its 2020 commitment to reduce oil and gas production by 40% by 2030, BP revised its target down to 25% in 2023, citing market conditions and investor preferences as factors.
- In light of the company's shift in strategy, the other fact to consider is that BP's CEO has set a new fact for 2023, aiming to grow upstream oil and gas production to 2.3–2.5 million barrels of oil equivalent per day (mmboed) by 2030, requiring a substantial investment in these sectors.
