(Oil Price) – BP is expected to announce this week that it is shifting its focus back to oil and gas, ditching a target to boost renewable energy capacity generation 20-fold by 2030, sources familiar with the new strategy told Reuters on Monday.
BP earlier this month pledged to fundamentally reset its strategy as it booked its lowest annual and quarterly profits in years and seeks to push up its stock performance and regain investor trust.
“Building on the actions taken in the past 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns,” BP’s chief executive Murray Auchincloss said in a statement two weeks ago.
BP’s leadership will communicate its new strategy, which “will be a new direction for bp”, at a Capital Markets Update on February 26, Auchincloss added.
At the event this Wednesday, BP’s chief executive is expected to announce that the UK-based supermajor would ditch its previous goal – set under former CEO Bernard Looney – to grow renewable capacity 20-fold to 50 gigawatts (GW) between 2019 and 2030.
Auchincloss is also expected to announce a pivot back to oil and gas – as other European majors such as Shell and Equinor have already done.
BP is set to cut investments in other low-carbon energy solutions as it looks to raise returns for shareholders and cut debt, which has been recently increasing, according to Reuter’s sources.
The pressure on BP to improve its stock performance and returns became more intense earlier this month after reports emerged that activist investor Elliott Management had bought a stake in the supermajor and would be pushing for changes in strategy, or even for board reshuffles.
Elliott’s stake in BP is estimated at nearly 5% as the activist investor is reportedly pushing for major asset sales to address the undervalued shares of the UK-based supermajor.
By Charles Kennedy for Oilprice.com
