BP boss says 'time to plot a new beginning' as renewables 'completely decapitalised'
Analysts guessing what 'fundamental reset' in strategy to mean but few would bet against further retreat on green power
The “fundamental reset” that BP plans to unveil later this month will reflect a portfolio shift that has already been "decapitalising renewables", the company’s CEO told investors today.
The reported move raised expectations that company will be steered toward a more aggressively value-driven strategy, which is likely to mean further retreat on renewables investments.
In a call with analysts, BP's CEO Murray Auchincloss described the reported move by Elliot Management as “market speculation right now” and declined to comment further.
However, his own published statement on the quarterly earnings report included a pledge to "fundamentally reset" company strategy, promising to focus on cash flow and returns.
A “new direction” for the company is to be unveiled at an investors event scheduled for 26 February.
BP executives offered few clues of what the new strategy will look like, but Auchincloss argued that the resetting reflects a path that the company has already been taking under his stewardship.
The company has also scaled back its plans for green hydrogen and biofuels.
“We've completely decapitalised renewables," the BP boss said. "We've made significant strategic progress, taking decisive action and reshaping our portfolio and laying the foundations for growth.
"Given the degree of that change, it's now time to to reset the strategy and plot a new beginning for us," he added.
Reimagining energy
Launching his own 'Reimagining Energy' vision for the company in 2020, Looney said oil production would be allowed to decline 40% by 2030, with investment pivoting to renewables for an alternative source of revenue.
This projected decline in oil production has since been dropped, and analysts expect more changes on 26 February.
“The results were missing the usual commentary on its Transition Growth Engines (TGE) business, which we believe indicates a wholesale rethink of its low-carbon strategy,” commented Rohan Bowater, an analyst with Accela Research.
Bowater also suggested that capex under the company's TGE category is unlikely to hit its targeted 50% of group capex in the 2025 calendar year.
With a wholesale capital allocation review underway, Bowater suggested that BP’s targeted 10GW of operational renewables and 50GW of sanctioned projects for 2030 are both now “highly uncertain”.
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