BP turns back to fossils, to increase annual oil, gas investment to $10 bn

BP said on Wednesday it would increase annual oil and gas investment to $10 billion, returning the focus to fossil fuels, as part of CEO Murray Auchincloss' efforts to boost returns and improve financial performance. 

The oil major slashed planned annual investment in transition businesses by more than $5 billion than its previous forecast, to between $1.5 billion and $2 billion per year.   

"We will grow upstream investment and production to allow us to produce high margin energy for years to come. We will focus our downstream on markets where we have leading integrated positions," Auchincloss said in a statement. 

Under Auchincloss' predecessor, Bernard Looney, BP pledged in 2020 to cut oil and gas output by 40 per cent while rapidly growing renewables by 2030. BP lowered the reduction target to 25 per cent in 2023. 

BP now aims to grow production to 2.3 million to 2.5 million barrels of oil equivalent per day in 2030. 

Across the energy sector, major companies that shifted their position in response to the need to lower carbon emissions and curb climate change have returned the focus to oil and gas, where returns have become easier as fossil fuel prices have rebounded from COVID-19 pandemic lows. 

"We will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset BP, with an unwavering focus on growing long-term shareholder value," Auchincloss added. 

The strategic adjustments come as BP seeks to regain investor confidence after underperforming its peers, while activist investor Elliott Investment Management's building a stake added pressure for transformative changes. 

The company was reviewing its lubricants business, Castrol, and targeting $20 billion in divestments by 2027.     

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