by Jonathan Leake
February 11, 2025
from TheTelegraph Website





BP chief Murray Auchincloss

 says the restructuring will

'be a new direction for BP'.

Credit: Amr Alfiky/Reuters



BP vows 'fundamental reset'

as it retreats from 'net zero.'

 
Oil giant's change in strategy

comes after it was targeted

by US activist investor...

BP has halted all investments in renewable energy as part of a "fundamental reset" of its strategy.

As part of a bid to refocus on fossil fuels, the UK oil giant has said it will sell off 10 of its US onshore wind farms and hive off its offshore wind assets into a separate venture with Japan's Jera Co.

The shift in strategy comes after profits at the company fell from $13.4bn (£10.9bn) in 2023 to $8.2bn last year, which has led to BP cutting its performance-related bonuses for its senior leaders to 45%.

"We have completely decapitalized renewables," said chief executive Murray Auchincloss, who added that BP increased oil and gas production by 2% last year.

It comes after the company was recently targeted by Elliott Management, a US hedge fund with a reputation for taking stakes in companies and demanding they break themselves up or sell assets.

Mr. Auchincloss has said he will provide further details of BP's reset at a capital markets day later this month.

He said:

"We have been reshaping our portfolio - sanctioning new major projects and focusing our low-carbon investment - and have made strong progress in reducing costs.

"Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns."

This means the company has halted investment in around 30 projects that were set to generate uncertain profits, instead targeting 10 of its most lucrative.

That includes Kaskida in the Gulf of Mexico where BP is drilling more than 35,000ft into the seabed to access one of the region's largest new oil fields.

Another is the $7bn Tangguh project in Papua Barat, Indonesia.

 

Major investments are also planned in Iraq with the redevelopment of oil fields around Kirkuk, and in India where BP will help develop the country's largest offshore oil field.

The shake-up has also led to BP scaling back its investment in low-carbon energy and biofuel projects.

It marks an end to the legacy left by Bernard Looney, the former BP boss who was forced out in 2023 after failing to disclose relationships with his colleagues.

Mr. Looney admitted that following his exit, he had not been "fully transparent" about his past relationships.

Under Mr. Looney, BP shifted aggressively toward green energy by ramping up investment in solar and wind, while also pledging to reduce oil and gas production significantly.

This has led to BP falling out of favor with investors in recent years, with its share price falling by more than 9% over the past year.

 

That is compared to a 6.5% rise for rival Shell.

Mr. Auchincloss said the restructuring would "be a new direction for BP", although analysts are already predicting how Elliott could seek to influence strategy.

Neil Shah at Edison Group said:

"The looming shadow of activist hedge fund Elliott Management now raises the stakes further.

"Speculation is already rife that BP could face demands for a sharper focus on its core hydrocarbons business, asset spin-offs, or even a listing relocation to the US to tap deeper capital markets.

"If BP fails to deliver a clear and credible strategy at its capital markets day on Feb 26, these pressures may become unavoidable.

"The next phase of BP's evolution will hinge on whether it can convince markets that it can generate meaningful returns on both sides of the energy spectrum."

Environmental group Global Witness said BP had invested nearly £9bn in fossil fuels last year - seven times more than the £1.3bn invested in renewables and low carbon energy.

It said:

"The figures suggest abandonment of the net zero targets the company pledged five years ago."