bp cuts green investments and pivots back to oil and gas

Energy company bp has released a statement introducing what it refers to as a "fundamentally reset strategy," which will see increased investment in oil and gas initiatives and more conservative investment in the energy transition.

According to Murray Auchincloss, chief executive officer of bp, the strategic shift aims to improve returns and grow long-term shareholder value. According to Auchincloss, this will be achieved by "upstream investment and production to allow us to produce high margin energy for years to come."

The company is looking to leverage it's traditional strengths in oil and gas to grow its upstream business. To this end, bp will increase investment in upstream oil and gas to $10 billion per annum and plans to grow production to 2.3–2.5mmboed in 2030.

The company is also looking to reshape its downstream portfolio too to drive growth and increase operating cash flow.

One of the most eye catching portions of the statement is the plan for a more "disciplined" investment in energy transition. bp is planning to be more selective with its investment into biofuels and EV charging and is looking for "capital-light" renewable energy partnerships. Overall, the company is significantly reducing its green investments by over $5 billion per annum.

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The reason for the pivot, stated Auchincloss, is that the transition to cleaner fuels moved more slowly than anticitapated. He was quoted as saying: “Our optimism for a fast [energy] transition was misplaced, and we went too far, too fast.”

Ultimately, the focus of bp's new strategy is to ensure a healthier balance sheet by reducing and reallocating capital expenditure, as well as reducing costs and debt.

Helge Lund, bp’s chair, commented on the reset: “The board believes that this is an important strategic reset for bp and is confident that it, together with rigorous performance management, will deliver improved performance and sustainable value for bp’s shareholders. Over the past 12 months, we have worked closely with Murray and his team as they have developed the new direction, ensuring it reflects the significant changes we have seen in energy markets and our purpose of delivering energy to the world today and tomorrow. This new direction places free cash flow growth, returns and value at its heart."