BP, one of the major oil companies, has adjusted its language regarding its pledge to reduce oil and gas output by 2030. The move comes as CEO Murray Auchincloss aims to reassure investors and close the value gap with competitors.
Auchincloss has shifted BP’s strategy towards focusing on returns, moving away from the strong emphasis on renewables and low-carbon energy set by his predecessor, Bernard Looney. This shift has raised concerns among investors, as BP’s shares lag behind rivals like Shell, TotalEnergies, Exxon Mobil, and Chevron.
Despite the adjustment in language, Auchincloss has not completely abandoned the target set by Looney in 2020 to reduce oil and gas output by 25% by 2030. He mentioned that BP may overshoot or undershoot this target, indicating a flexible approach to the transition.
The CEO highlighted that BP has over 30 projects across its businesses that will influence its production decisions in the coming years. Auchincloss emphasized a returns-based approach rather than focusing solely on volume, signaling a shift in the company’s priorities.
Analysts, such as Biraj Borkhataria from RBC Capital Markets, anticipate an increase in BP’s spending on oil and gas production, known as upstream. This could result in higher upstream volumes than the 2 million barrels of oil equivalent per day target set for 2030.
The adjustment in BP’s language and strategy reflects the challenges and uncertainties in the energy transition landscape. As Auchincloss navigates the company towards a more returns-focused approach, the industry will be watching closely to see how BP’s production and investment decisions evolve in the coming years.