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Highlights:
- BP has dropped its 2030 target to cut oil and gas production by 40%, refocusing on hydrocarbon projects.
- New investments are planned in the Gulf of Mexico, Permian Basin, and Middle East to boost production.
- Despite the shift in strategy, BP maintains its commitment to net zero emissions by 2050.
BP (LSE:BP) has quietly dropped its ambitious goal of cutting oil and gas production by 40% by 2030, according to sources cited by Reuters. This move is part of a broader strategy shift under new chief executive Murray Auchincloss, who has been steering the company toward prioritizing profitable investments in oil and gas to regain investor confidence. Auchincloss, who took the helm earlier this year, has scaled back BP’s energy transition plans, signaling a return to traditional hydrocarbon-focused projects while still committing to a long-term net-zero emissions target by 2050.
Scaling Back Ambitions
When BP's original strategy was unveiled in 2020, it was hailed as one of the most progressive in the sector. The company pledged to slash its oil and gas output by 40% by the end of the decade while significantly ramping up its investments in renewable energy. However, in February 2023, this target was reduced to a 25% production cut, setting BP's projected output at 2 million barrels per day by 2030.
According to sources familiar with the matter, BP has now effectively abandoned this target altogether. The company is reportedly focusing on several large-scale oil and gas projects in regions such as the Middle East, Gulf of Mexico, and the US Permian Basin. These developments aim to boost BP’s production capacity, ensuring continued profitability.
New Investments in Hydrocarbons
Auchincloss, previously BP’s head of finance, has distanced himself from the approach of his predecessor, Bernard Looney, who championed BP’s ambitious energy transition strategy. In an effort to turn around BP’s underperforming share price, Auchincloss is emphasizing returns on investment and focusing on the most profitable parts of BP’s portfolio, including oil and gas.
BP is reportedly eyeing new investments in the Gulf of Mexico, where it plans to develop the complex Kaskida reservoir and proceed with the Tiber field. The company is also considering acquiring more assets in the US Permian shale basin to strengthen its onshore oil operations, following its 2019 acquisition that boosted its reserves by 2 billion barrels.
In the Middle East, BP may invest in the redevelopment of oil fields in Kuwait, further diversifying its hydrocarbon projects.
A Shift in Strategy, But a Long-Term Focus on Net Zero
While BP is scaling back its near-term production cuts, the company insists it remains committed to achieving net zero emissions by 2050. Auchincloss has emphasized that BP will become a “simpler, more focused, and higher value company,” though it will be prioritizing oil and gas production in the near term. The updated strategy, including the removal of the 2030 production target, is expected to be formally presented at BP’s investor day in February 2024.
