LONDON (AP) — British energy giant BP has revealed its decision to significantly alter its strategic direction by cutting back on investments in green initiatives while ramping up its focus on oil and gas production. This shift, outlined in a statement titled “Reset BP,” aims to boost the company’s struggling share price, although it has stirred disbelief among climate activists.
Under the new strategy, BP plans to slash spending on businesses related to achieving net zero emissions by up to $5 billion annually, reallocating funds to the tune of $2 billion. In contrast, the company intends to increase investments in oil and gas production by approximately 20%, totaling $10 billion. CEO Murray Auchincloss emphasized the importance of prioritizing BP’s most profitable ventures to drive growth and highlighted a discerning approach to renewable energy investments.
The strategic pivot marks a departure from the company’s previous commitment, articulated five years ago by then CEO Bernard Looney, to reduce oil and gas production in favor of sustainable endeavors. The announcement, made ahead of a crucial shareholder meeting in London, seems designed to shore up investor confidence amid BP’s waning share value.
Despite the anticipation surrounding the strategic update, investors have not responded positively so far, evidenced by a 0.8% drop in BP’s share price. Nonetheless, recent market speculation, hinting at an imminent change in direction, has fueled a resurgence in the company’s stock valuation. BP’s underperformance in comparison to industry peers like Shell, ExxonMobil, and Chevron has sparked conjecture about a potential relocation of its share listing to New York or even the likelihood of a takeover bid.
The entry of the influential U.S. hedge fund Elliott Management as a significant BP shareholder, with a nearly 5% stake, has raised speculation about its impact on the company’s strategic trajectory. Auchincloss has already overseen the separation of BP’s offshore wind operations into a joint venture, with plans to divest its onshore wind division. Concurrently, the company has initiated cost-cutting measures in response to challenging market conditions, including the announcement of a workforce reduction exceeding 5%.
Critics, including environmental activists, have voiced strong objections to BP’s revised strategy, pointing out the potential climate risks associated with bolstering oil and gas investments. Matilda Borgström, a U.K. campaigner at climate action group 350.org, condemned the shift as a stark illustration of the perils of prioritizing short-term profits over sustainable solutions. She warned that the increased allocation of funds to fossil fuel activities contradicts legal climate objectives, poses environmental hazards, and disregards the expanding renewable energy sector, thereby jeopardizing both the planet and shareholder interests.
