BP, a UK-based oil and gas giant, is intending to move its approach away from renewable energy ambitions and back toward fossil fuels.
According to sources, during the capital markets day on Wednesday, the company’s CEO, Murray Auchincloss, will warn investors that BP is abandoning its objective of increasing renewable power capacity 20-fold by 2030 in favour of 50GW.
Under Auchincloss’ predecessor, Bernard Looney, BP promised in 2020 to reduce oil and gas output by 40% while quickly increasing renewables by 2030.
However, the reduction target was lowered to 25% in 2023. BP’s current renewable generation capacity stands at 8.2GW.
Since taking over, Auchincloss has reduced investments in renewables, announced cost-cutting initiatives, and announced a 5% reduction in staff.
The corporation failed to meet its 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) objective of $40.9 billion (£32.3 billion), thus it will now establish an annual percentage growth target rather than a fixed dollar figure.
Capital spending in 2024 was estimated to reach $16.24 billion.
BP also intends to liquidate assets and eliminate other low-carbon initiatives in order to reduce debt and increase profits.
This decision aligns with a broader trend in the energy sector of companies refocusing on oil and gas due to improved returns amidst rising fossil fuel prices, the report said.
The strategy shift also comes amid pressure from Elliott Investment Management, which has built up a nearly 5% stake in bp and is calling for an overhaul, including tighter cost discipline.
Elliott has a history of advocating for reform at corporations like Honeywell and Southwest Airlines.
According to a source familiar with the subject, Elliott wants BP to reduce its green energy spending and consider selling assets such as wind and solar farms.
It also advised that BP could profit from selling its Castrol lubricants and service stations to unlock value and increase share buybacks.
