BP U Turn: Shifts Strategy Slashing Green Investments to Prioritize Oil and Gas

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BP is set to announce a major shift in its strategy by significantly reducing investments in renewable energy and instead focusing on ramping up oil and gas production. The decision comes amid mounting pressure from investors who have been dissatisfied with BP’s lower profits and share prices compared to its competitors.  

 

The energy giant’s expected announcement follows similar moves by Shell and Norwegian firm Equinor, both of which have already scaled back their commitments to green energy. Meanwhile, in the United States, former President Donald Trump's "drill baby drill" rhetoric has spurred renewed enthusiasm for fossil fuel investments, steering the industry further away from low-carbon projects.  

 

BP had once positioned itself as a leader in transitioning towards cleaner energy. Five years ago, it set ambitious targets to cut oil and gas production by 40% by 2030 while ramping up renewable energy investments. However, in 2023, the company softened that commitment, reducing the target to a 25% cut. Now, BP is expected to abandon the target entirely and confirm it is slashing its investment in renewables by more than half. Chief Executive Murray Auchincloss has described the shift as a "fundamental reset."  

 

Auchincloss faces pressure from certain shareholders, including the influential activist group Elliott Management, which has taken a nearly £4bn stake in BP’s £70bn business. The firm has been advocating for increased investments in oil and gas to drive profitability. In 2024, BP’s net income fell to $8.9bn (£7.2bn), a steep decline from the $13.8bn reported the previous year. Since former CEO Bernard Looney unveiled BP’s original transition strategy in 2020, the company has delivered total shareholder returns—including dividends—of 36% over five years. However, this lags far behind its competitors, with Shell returning 82% and ExxonMobil an impressive 160% in the same period.  

 

BP’s underperformance has led to speculation that it could become a takeover target or even consider moving its primary stock market listing to the United States, where oil and gas companies often command higher valuations. Despite the growing momentum behind the shift, not all shareholders are in favor of abandoning BP’s previous green energy commitments.  

 

Last week, a coalition of 48 investors urged BP to allow them a vote on any plans to alter its renewable energy strategy. A spokesperson for Royal London Asset Management, one of the signatories, stated: "As long-term shareholders, we recognise BP's past efforts toward energy transition but remain concerned about the company's continued investment in fossil fuel expansion."  

 

Environmental groups have also expressed outrage, warning that BP will face significant resistance if it moves forward with prioritizing fossil fuels. Greenpeace UK has cautioned that the company should brace for "pushback and challenge at every turn if it doubles down on fossil fuels—not just from green campaigners but from its own shareholders."  

 

Senior climate adviser Charlie Kronick highlighted potential policy risks, stating: "Government policies will also need to prioritise renewable power, and as extreme weather puts pressure on insurance models—policymakers will be looking to fossil fuel profits as a way to fund extreme weather recovery. BP might want to seriously put the brakes on this U-turn."  

 

Business leader Sir Ian Cheshire, who has held executive positions at companies such as Kingfisher and Barclays, questioned whether BP’s strategy will stand the test of time. "I do wonder whether this sort of decision will look right in 10 years," he said, emphasizing that the transition to renewables is still inevitable.  

 

"The climate change issue has not gone away, the science hasn’t changed," Cheshire added, suggesting that BP’s pivot to fossil fuels could be short-sighted in the long run.  

 

As BP unveils its new strategy, the debate over its long-term direction is likely to intensify. While some investors welcome the move towards higher fossil fuel profits, others warn that abandoning renewable commitments could prove risky in an era of growing climate concerns and shifting regulatory landscapes.

 

Based on a report by BBC  2025-02-27

 

 

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BP U Turn: Shifts Strategy Slashing Green Investments to Prioritize Oil and Gas

 

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