Oil major BP intends to “fundamentally reset” its green energy strategy after reporting a sharp decline in profits.
The FTSE 100 group posted a net income of £7.2 billion ($8.9 billion) for 2024, down from £11.1 billion the previous year, as oil and gas prices and weaker refining margins strained performance.
BP is expected to announce on 26 February that it will scale back its renewable energy commitments and increase fossil fuel production, following similar moves by rivals Shell and Equinor. The company is likely to abandon its target of 50GW of renewables generation capacity by 2030 and could halve its planned £8.1 billion investment in renewables by the end of the decade.
Murray Auchincloss, who became chief executive after Bernard Looney’s departure in late 2023, said the company would focus on “growing cash flow and returns.” This shift is likely a response to investor impatience with BP’s lagging share price performance compared with US rivals, who maintained their focus on traditional oil and gas operations: a trend likely to accelerate with President Donald Trump’s pro-fossil fuel agenda.
Additionally, activist investor Elliott Management has taken a stake in the company, intensifying pressure for change.
The company has already begun retreating from its renewable ambitions. In December, it transferred the majority of its offshore wind assets to a joint venture with Japanese firm Jera, effectively separating them from its core fossil fuel business. BP also suspended new wind projects in June 2023.
Nick Butler, BP’s former head of strategy, said major oil companies would invest in renewables “when they can see a clear profit”. Last week, Equinor’s chief executive Anders Opedal cited slower-than-expected energy transition and customer reluctance to commit to long-term contracts as reasons for halving renewable investments.
Environmental groups have criticised the strategic shift. Global Witness revealed BP invested nearly £9 billion in oil and gas last year, compared with £1.3 billion in renewables and low-carbon energy. Greenpeace has called for increased pressure on fossil fuel companies to contribute to climate disaster recovery funds.
The company’s share price remained flat in early trading, following an 8% jump on Monday after news of Elliott’s stake emerged. Without a convincing new strategy, BP could become vulnerable to takeover attempts.