BP WILL cut back its investment in renewables and will focus on oil and gas in a bid to reduce costs and grow cash flow.
The move is a significant one for oil and gas exploration and production in Western Australia with BP, a foundation investor in the North West Shelf Project, and with a 44.33% interest in the Browse Basin. It also has a 20% interest in the Angel Carbon Capture and Storage project near Karratha.
BP CEO Murray Auchincloss announced what he described as a reset in a media release on 26 February that outlined a significant capital reallocation and plans to drive improved performance.
The reset follows a drop in income to US$8.9 billion in 2024, down from US$13.8 billion in 2023.
It will invest US$10 billion per annum in oil and gas and grow production by an additional US$2 billion operating cash flow in 2027.
At the same time it would reduce its investment in renewables by US$5 billion per annum lower than previous guidance to an annual spend of US$1.5 to 2 billion.
The media release said the strategy will see BP grow its upstream oil and gas business, focus its downstream business, and invest with increasing discipline into the transition.
“It builds on BP’s distinct strengths and competitive advantages as an integrated energy company – with a world-class portfolio with top tier oil and gas businesses in attractive basins and leading integrated positions and brands across value chains, all underpinned by trading, technology, and partnerships.”
Mr Auchincloss described it as a fundamental reset of BP’s strategy.
“We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns,” he said.
“We will grow upstream investment and production to allow us to produce high margin energy for years to come. We will focus our downstream on markets where we have leading integrated positions. And we will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset BP, with an unwavering focus on growing long-term shareholder value.”
