BP Shifts Focus Back to Oil and Gas, Scaling Back Renewable Energy Initiatives

British oil major BP has made a significant strategic shift, moving away from its ambitious renewable energy plans to refocus on its traditional strengths in oil and gas. This decision comes as part of a broader trend among oil companies to prioritize returns for shareholders over green investments.

In 2020, under former CEO Bernard Looney, BP unveiled a bold plan to increase low-carbon energy investments tenfold by 2030 while reducing emissions and oil and gas production. This move was seen as a pioneering step in the industry towards decarbonization.

However, faced with pressure from investors to deliver stronger financial performance, BP’s current CEO Murray Auchincloss announced a “reset” of the company’s strategy. This reset involves scaling back renewable energy investments to $1-2 billion per year, a significant decrease from previous plans.

The company will now focus on increasing investments in oil and gas to $10 billion annually, with a goal of boosting production to 2.5 million barrels per day by 2030. The renewables business will shift its focus to biogas, biofuels, and EV charging, moving away from costly offshore wind projects.

Additionally, BP has initiated a strategic review of its Castrol lubricants business as part of its broader realignment towards maximizing cash flow and returns. Auchincloss emphasized the importance of capital efficiency and performance improvements in driving sustainable growth for the company.

“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,” said Auchincloss. “We will be very selective in our investment in the transition, including through innovative capital-light platforms.”