London (AFP) – British energy giant BP is set Wednesday to announce a shakeup to its strategy after a difficult trading year and as countries transition to cleaner energy. A much-anticipated presentation to investors gathered in London comes after BP earlier this month pledged to “fundamentally reset” following a 97-percent slump to its net profit in 2024. BP’s profit after tax tumbled to $381 million last year from $15.2 billion in 2023 in the face of higher costs and weaker oil and gas prices. Total revenue dropped nine percent to $195 billion.
“We now plan to fundamentally reset our strategy and drive further improvements in performance,” chief executive Murray Auchincloss said following the earnings update, adding details would be revealed at the investor day. He said it would be a “new direction for BP,” a company born in 1908 and with a current worldwide workforce of nearly 88,000. Auchincloss has put the emphasis on oil and gas to boost profits, scaling back on the group’s key climate targets since taking the helm at the start of 2024. Last year, BP announced it would “significantly reduce” investment in renewable energy through the end of the decade.
Ahead of the investor day, it has widely been reported that US activist investor Elliott Investment Management has built a significant stake in BP. The fund is known for forcing through corporate changes within groups it invests in, signaling further upheaval ahead for BP, analysts said. The energy group has already embarked on a plan to find $2 billion in cost savings and recently axed 4,700 staff jobs, or around five percent of its workforce.
Investors have speculated that BP could this week abandon its pledge to reduce oil production by 25 percent by 2030 compared to its 2019 levels. It already scaled back its climate plans with a target of reducing carbon emissions by 20-30 percent by the end of this decade compared to 2019 levels. This is down from a previous target of 35-40 percent. British rival Shell and other oil majors have also cut back on clean energy objectives.
On the eve of BP’s update, TotalEnergies chief executive Patrick Pouyanne said that while oil and gas would continue to be produced, “you need to produce it differently with much lower emissions.” The head of the French giant spoke Tuesday at International Energy Week, an annual gathering in London of major players from across the sector. Shell the same day forecast global demand for liquefied natural gas to rise by about 60 percent by 2040. It forecast that this would be “largely driven by economic growth in Asia, emissions reductions in heavy industry and transport as well as the impact of artificial intelligence.”
© 2024 AFP
