BP to Increase Oil
Output, New Chief Says
signaled that he would take a more profit-oriented
approach than his predecessor, who started a big push into renewables.
new chief executive, Murray Auchincloss, promised a flexible
approach to the shift away from fossil fuels as the oil giant reported a $3 billion
profit in its latest quarter on Tuesday (06.02.2024).
Auchincloss said in an interview after BP reported earnings
that the company was pursuing what he called a “demand strategy.” BP’s shares rose
nearly 5 percent in trading in London, where the company is based.
has a plan to become what Mr. Auchincloss called an integrated
energy company. But in the meantime, “we see growing demand for energy right now
across the globe,” he said. “It is not slowing down.”
is “going to invest in today’s energy system, to help make sure that prices don’t
get out of control,” Mr. Auchincloss said. “So that’s
investing into oil and gas,” he added, while also putting money into alternative
energy sources like biofuels and hydrogen.
Auchincloss was confirmed as chief executive of BP in
January. The former chief financial officer had been serving in an interim capacity
after the departure of his predecessor, Bernard Looney, over his failure to
fully disclose personal relationships at the company.
a presentation to financial analysts on Tuesday, Mr. Auchincloss
seemed to suggest a more profit-oriented approach than the one pursued by Mr. Looney,
who after becoming chief executive in 2020 began perhaps the most ambitious
shift into renewable technologies among the major oil companies.
Mr. Looney shifted his focus back toward oil and natural gas production early last
year, after Russia’s invasion of Ukraine helped drive oil and gas prices higher.
leaders of oil companies, especially in Europe, face a difficult balancing act between
demonstrating to customers and governments that they are serious about lowering
emissions and appealing to investors, who insist on profitability and returns above
first thing investors want is to make sure they get performance,” said Giuseppe
Bivona, the chief investment officer of Bluebell Capital
Partners, a hedge fund that has criticized BP over plans to reduce its oil and gas
business while investing in areas like offshore wind power. The fund managers have
said that BP lacks the expertise to succeed in the wind industry.
BP said that last year it wrote off $1.1 billion in investments in offshore wind
projects along the East Coast of the United States, which involved a joint venture
with Norway’s Equinor. Mr. Auchincloss acknowledged that
BP had paid a “premium” to enter a business that has proved difficult, with projects
encountering delays and higher costs.
the meantime, the company’s mainstay oil and gas production rose 2.6 percent last
year. Supplies of liquefied natural gas — a chilled, compressed fuel transported
by ships — rose by more than 20 percent.
Auchincloss said that oil output would continue to rise
2 percent to 3 percent a year through 2027 because of production increases in Abu
Dhabi, Angola, the United States and elsewhere. He that there were projects on the
drawing board that could prolong the output growth in later years if necessary.
“We have some big decisions ahead of ourselves,” he said.
said that, on average, the prices it received for oil and gas were about 20 percent
lower in 2023 than in 2022, partly accounting for a drop in annual profit, from
$27 billion in 2022 to $13.8 billion last year, which still ranked as one of its
best years in a decade.
cleaner energies, BP is now betting on businesses that are closer to the company’s
existing strengths in distributing fuel and servicing automobiles. For instance,
the company’s production of so-called biofuels that are made from plants and substances
like cooking oil were up 18 percent. The company’s portfolio of electric vehicle
charging points rose by 35 percent.