BP Promises Strategy Reset as Oil Giant's Profits Slump

BP, one of the world's largest oil and gas companies, has announced a strategic reset as it grapples with declining profits and a shifting energy landscape. The company, led by CEO Murray Auchincloss, is set to unveil its updated strategy at an investor day in February, which is expected to include the removal of its 2030 production target and a renewed focus on short-term returns.

BP's revised strategy comes amid a renewed focus on European energy security following Russia's invasion of Ukraine in early 2022. The company has invested billions in new low-carbon businesses and sharply reduced its oil and gas exploration team since 2020. However, supply chain issues, increasing costs, and rising interest rates have put further pressure on the profitability of many renewables businesses.

BP has abandoned its target to cut oil and gas output by 2030, focusing instead on near-term returns and investing in profitable businesses, primarily oil and gas. The company is now targeting several new investments in the Middle East and the Gulf of Mexico to boost its oil and gas output, including projects in Iraq, Kuwait, and the Gulf of Mexico.

BP's shares have underperformed its rivals so far this year, as investors question the company's ability to generate profits under its current strategy. Auchincloss, who took the helm in January, has struggled to stem the drop in BP's share price. The 54-year-old Canadian, previously BP's finance head, has sought to distance himself from the approach of his predecessor Bernard Looney, vowing instead to focus on returns and investing in the most profitable businesses, first and foremost in oil and gas.

BP continues to target net zero emissions by 2050, but its revised strategy is expected to prioritize short-term profitability over long-term sustainability goals. The company has reduced emissions from its operations by 41% (compared to 2019) and aims for a 25% reduction in bp production by 2030. However, its commitment to reducing emissions and transitioning to renewable energy sources may be called into question as it focuses on boosting oil and gas output.



BP's revised strategy is a response to investor pressure and a shifting energy landscape, but it may also signal a retreat from the company's ambitious energy transition goals. As BP focuses on short-term profitability, it risks falling behind in the race to a low-carbon future. The company's ability to balance the need for short-term profitability with long-term sustainability goals will be a critical factor in determining its success in the coming years.



BP's revised strategy is a significant shift for the oil and gas giant, which has long been a leader in the energy transition. As the company focuses on boosting oil and gas output, it risks losing ground in the race to a low-carbon future. Investors will be watching closely to see how BP's revised strategy pans out and whether the company can successfully balance the need for short-term profitability with long-term sustainability goals.