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Disappointing Returns May Force BP To Rein In Its Renewable Energy Push

Bernard Looney, the chief executive of BP, has recently discussed plans with people close to the supermajor to potentially scale back the company’s push into greener operations with less emphasis on ESG targets, The Wall Street Journal reported on Wednesday, quoting sources with knowledge of the discussions.

Looney took over as chief executive at BP in early 2020. Just days later, he pledged to make the company a net-zero emissions energy firm by 2050 or sooner.

BP, like most European majors, is now pitching itself as an integrated energy company looking to transform itself from an international oil major into a broader energy firm.

BP said in 2020 that it would cut its oil and gas production by 40 percent by 2030 through active portfolio management and no exploration in new countries. Back then, BP also said it would aim for a tenfold increase in low-carbon investment by 2030, with up to an eightfold increase by 2025.

After the price and demand crash in 2020, the rebound in oil and gas demand as major economies reopened in 2021, and the energy crisis that worsened in 2022 following the Russian invasion of Ukraine, BP has changed the rhetoric to target solving the world’s energy trilemma— secure, affordable, and lower carbon energy.

In August 2022, BP’s Looney said, commenting on solid Q2 earnings, “Our people have continued to work hard throughout the quarter, helping to solve the energy trilemma – secure, affordable, and lower carbon energy. We do this by providing the oil and gas the world needs today – while, at the same time, investing to accelerate the energy transition.”

Also last year, Looney said that “As an integrated energy company, or IEC, bp’s role is to help solve this trilemma. That means developing much-needed hydrocarbons – with lower emissions from those operations AND – at the same time – investing to help accelerate the energy transition. It doesn’t have to be a choice – or a trade-off. We need to do both.”

A sharper focus on clean energy investments – expected to be just a short-term correction in the strategy – for BP could be the result of Looney’s disappointment with the returns of some of the investments in renewables, according to the Journal’s sources.    

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By Michael Kern for Oilprice.com

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