BP slashes net-zero spending by nearly £4bn in renewed oil and gas focus

BP has confirmed it will slash spending on net-zero transition businesses by more than five billion US dollars (£3.95 billion) a year, and significantly ramp up its oil and gas operations.

The fossil fuels giant said it still hopes to become a net-zero company but will only spend up to two billion dollars (£1.6 billion) a year on projects aimed at the energy transition, a significant cut.

It said it will increase oil and gas investment by about 20% to 10 billion US dollars (£7.9 billion) a year as part of a major strategy update.

Chief executive Murray Auchincloss said the company is focusing its spending on BP’s “highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency”.

He added that as well as the increase in oil and gas spending, BP will be “very selective in our investment in the (energy) transition, including through innovative capital-light platforms”.

‘Unwavering’

Mr Auchincloss said: “This is a reset BP, with an unwavering focus on growing long-term shareholder value.”

The update to the oil and gas giant’s plans come ahead of a major shareholder meeting in London on Wednesday afternoon.

BP has come under increasing pressure from some shareholders over falling profits and a share price that has lagged behind rival Shell.

The influential US hedge fund Elliott Management took a nearly £4 billion stake in the company recently, just under 5% of its shares.

The move is understood to have been aimed at pushing BP back towards fossil fuels to boost profit.

Invasion

BP made about £7.2 billion last year, down a third on the year before, after oil and gas prices fell from the highs seen in the wake of Russia’s invasion of Ukraine.

Mr Auchincloss has already spun off BP’s offshore wind business in a joint venture while he is looking to offload its onshore wind arm.

The group has already been slashing costs in the face of tougher trading.

It recently announced it would cut more than 5% of its workforce, with moves to axe 4,700 jobs across its global workforce and 3,000 contractor roles.