Written by Ron Busso
LONDON (Reuters) – About five years ago, BP embarked on an ambitious quest to transform itself from an oil company to a business focused on low-carbon electricity.
The British company is now trying to return to its roots as an oil and gas giant with a growth story that rivals its rivals, restoring its share price and allaying investor concerns about future profits.
Rivals Shell and Norwegian state-owned Equinor are also scaling back energy transition plans they set out earlier this year.
Their reorientation is due to two major developments: the energy shock caused by Russia’s invasion of Ukraine, and the declining profitability of many renewable energy projects, especially offshore wind, due to rising costs, supply chain issues, and technical problems. It reflects.
BP CEO Murray Auchincloss plans to spend billions of dollars on new oil and gas development, including in the U.S. Gulf Coast and the Middle East, as part of a bid to improve performance and boost profits.
BP also announced plans to slow down its low-carbon operations, halt 18 early-stage potential hydrogen projects and sell its wind and solar businesses. The company recently cut its hydrogen team in London by more than half to 40 people, a company official told Reuters.
A BP spokeswoman declined to comment on the job cuts.
Shell Chief Executive Officer Wael Sawan has vowed to take a ruthless approach to improving performance and profits and closing a wide valuation gap with major U.S. rivals Exxon Mobil and Chevron.
The company has scaled back low-carbon projects such as floating offshore wind and hydrogen projects, exited electricity markets in Europe and China, sold refineries and weakened its 2030 carbon reduction targets.
Shell is looking for a buyer for Australian company Select Carbon, which it acquired in 2020, a person close to the company told Reuters. The company specializes in developing agricultural projects to offset carbon emissions.
A Shell spokeswoman declined to comment.
Lack of skills?
Some BP employees wonder whether the company has enough people left with the experience and skills needed to re-establish itself as an oil and gas major.
Four employees who responded to the call said employees bombarded them with questions as CEO Auchincloss detailed some of the company’s plans to turn the ship around during an online town hall meeting in early October.
He reversed his predecessor Bernard Looney’s strategy of building renewable generation assets, reducing emissions and gradually lowering oil and gas production targets, with BP looking to increase new oil and gas production. He said that he intends to develop it, and that it is possible.
In conversations with Reuters, some employees said BP does not have enough reservoir engineers to accelerate oil and gas production growth after laying off hundreds of upstream employees starting in 2020. He said he suspected that there were.
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