BP to cut fossil fuels output by 40 per cent by 2030

Following record losses in the second quarter of 2020 and the first dividend cut in a decade, BP revealed parts of its new strategy that would reshape the company from an international oil company to an integrated energy company.

BP said on Tuesday that it aims to increase its annual low carbon investment ten-fold to around $5 billion a year by 2030. It will be “building out an integrated portfolio of low carbon technologies, including renewables, bioenergy, and early positions in hydrogen and CCUS”.

According to the (still) oil major, BP aims to have developed around 50GW of net renewable generating capacity by the end of the decade – a 20-fold increase from 2019 – and double its consumer interactions to 20 million a day.

Over the same period, BP plans to reduce oil and gas production by at least one million barrels of oil equivalent a day, or 40 per cent from 2019 levels. The company expects its remaining hydrocarbon portfolio to be more cost and carbon resilient.

Upstream oil and gas production is expected to reduce from 2.6 mmboepd in 2019 to around 1.5 mmboepd while refining throughput is expected to fall from 1.7 mmbpd in 2019 to around 1.2 mmbpd.

The company also emphasised the completion of ongoing major projects and stopping exploration in countries where it does not already have upstream activities.

It did note that it considers its 19.75 per cent stake Rosneft as a fundamental part of its broader portfolio and that it provides BP with a strong position in Russia.

Also, BP aims for emissions from its operations and those associated with the carbon in its upstream oil and gas production to be lower by 30-35 per cent and 35-40 per cent respectively by 2030.

Helge Lund, chairman of BP, said: “Energy markets are fundamentally changing, shifting towards low carbon, driven by societal expectations, technology and changes in consumer preferences.

“And in these transforming markets, BP can compete and create value, based on our skills, experience, and relationships. We are confident that the decisions we have taken and the strategy we are setting out today are right for bp, for our shareholders, and for wider society.”

This new strategy comes on top of BP’s new net-zero ambitions announced earlier this year. This strategy, according to the company, sets out “how BP expects to deliver its ambition”.

Bernard Looney, BP CEO, said: “BP has been an international oil company for over a century – defined by two core commodities produced by two core businesses.

Now we are pivoting to become an integrated energy company – from IOC to IEC. From a company driven by the production of resources to one that that’s focused on delivering energy solutions for customers.

“We believe our new strategy provides a comprehensive and coherent approach to turn our net-zero ambition into action. This coming decade is critical for the world in the fight against climate change, and to drive the necessary change in global energy systems will require action from everyone.

“So, in the years ahead, BP is going to significantly scale-up our low-carbon energy business and transform our mobility and convenience offers. We will focus, and reduce our oil, gas, and refining portfolio. And, as we drive down emissions on our route to net-zero, we are committed to continuing to deliver long-term value for our stakeholders.

“We bring with us over 100 years of experience steeped in the world of energy. We understand energy markets deeply, and have developed unique capabilities in trading, marketing, technology, and innovation”.

Some other goals set in the strategy include bioenergy production to rise from 22,000 b/d to more than 100,000 b/d, its hydrogen business to have grown to have 10 per cent share of core markets, electric vehicle charging points to have increased from 7,500 to over 70,000, and energy partnerships with 10-15 major cities around the world and three core industries. All that by the end of the decade.

It is worth noting that BP did not release the entire strategy on Tuesday. The company said it would provide more details on its strategy, business plans and investor proposition in its capital markets day presentations on 14-16 September.