BP Expected to Reverse Its Pledge to Cut Oil and Gas Production

BP is expected to reverse a previous commitment to reduce oil and gas production by the end of the decade amid a broader pivot in the industry to continue providing the hydrocarbons the world needs, some of the biggest shareholders in the UK-based supermajor told the Financial Times.

BP’s peer Shell has already eased its carbon intensity target for 2030 as it has shifted away from clean power sales to retail customers. 

While keeping their 2050 net-zero targets intact, Europe’s major oil companies have started to scale back interim emission reduction targets, acknowledging that their priorities now lie with returning more cash to shareholders. And these returns come from the fossil fuel business, not from renewables.    

Following the Russian invasion of Ukraine and the energy crisis, the oil and gas industry has stressed that affordability and energy security are at least as equally important as helping the world reduce carbon emissions.

Emissions could be reduced faster with more renewables, carbon capture, or hydrogen, but none of these clean energy alternatives have proved ready to replace oil and gas. And most importantly—none of these are as profitable as oil and gas. 

As BP prepares to announce first-quarter results on Tuesday, shareholders expect the supermajor to announce – not necessarily this week – new oil and gas production targets that would further scale back a 2020 pledge to cut hydrocarbon production by 40% by 2030.

“Do we think BP is going to change their guidance on oil production? Yes, we do,” a representative of one of BP’s top ten shareholders told FT.

Another investor told the financial publication that they would “love them to build more in renewables” but that returns for shareholders in clean energy are not just there, yet.

BP’s new CEO Murray Auchincloss, who succeeded Bernard Looney, has expressed in the past views that the supermajor would “pragmatically adapt” to energy demand trends.  

By Tsvetana Paraskova for Oilprice.com

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