BP has announced a strategic shift away from renewable energy investments to focus on expanding oil and gas production.
The energy giant revealed its new direction Wednesday following pressure from investors disappointed by its underperforming profits and share price compared to competitors.
BP plans to increase oil and gas investments by approximately 20% to $10bn yearly, while cutting previously planned renewables funding by over $5bn. This shift mirrors similar moves by Shell and Equinor, who have also scaled back green energy plans, coinciding with President Trump’s pro-drilling stance.
CEO Murray Auchincloss stated BP had “fundamentally reset” its strategy to prioritize shareholder returns. The company will be “very selective” about future investments in energy transition businesses, reducing funding to between $1.5bn and $2bn annually.
Despite climbing earlier, BP’s share price fell 2% following the announcement.
Five years ago, BP established ambitious targets to reduce oil and gas production by 40% by 2030 while increasing renewable investments. In 2023, this reduction target was lowered to 25%.
Auchincloss faces pressure from shareholders including activist group Elliot Management, which acquired a near £4bn stake to advocate for increased oil and gas investment. BP’s net income dropped to $8.9bn in 2024 from $13.8bn the previous year.
Since 2020, BP shareholders have received total returns of 36% over five years, significantly lower than Shell’s 82% and Exxon’s 160%. This underperformance has fueled speculation about potential takeovers or relocating its stock market listing to the US.
However, not all shareholders support this direction. Recently, 48 investors requested a vote on any plans abandoning previous renewable commitments. Royal London Asset Management expressed concern about “continued investment in fossil fuel expansion.”
Greenpeace UK warned BP would face “pushback and challenge” if it prioritizes fossil fuels, while Sir Ian Cheshire questioned whether this decision would “look right in 10 years,” noting the climate change issue “has not gone away, the science hasn’t changed.”
BP has already moved its offshore wind business into a joint venture with Japanese company Jera and seeks a similar arrangement for its solar operations. The company may also sell other “non-core” businesses.
This strategic pivot contrasts sharply with former CEO Lord John Browne’s “Beyond Petroleum” vision launched over 20 years ago.
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