BP’s (LON: BP.) CEO Bernard Looney and his restructuring plans

A wind of change has been blowing in BP PLC (LON: BP.) since the time CEO Bernard Looney took over in February 2020. Looney, who has been the head of the oil and gas exploration and production division in the past, has been making headlines in the recent times for taking drastic steps to bring about a change in the company.  

Earlier itself, the veteran oil engineer had made his intentions of lowering BP's production targets very clear, aiming to reduce the output by 1 million barrels per day (40 per cent) by 2030 and increase its renewable energy output by 20 times. He seeks to become the first CEO of an oil company to promote this decision as a positive impact on the investors looking for a long-term vision for a lower-carbon economy. 

Related Read: BP moving to hydrogen as renewables hit a record growth 

However, to achieve his objectives, he has been reducing the workforce dramatically, not even sparing the exploration team that has been generating profits by discovering oil. More than 600 engineers, geologists, and scientists have been removed, making their numbers to reach as low as 100. This has been a part of Looney’s intentions to revamp the company. 

In recent months, hundreds of employees working in the oil exploration team have either left, or been laid off, or transferred to contribute towards the development of new low-carbon activities, informed the current and former employees of BP. 

The restructuring plan of Looney has witnessed BP to announce roughly 15 per cent of the total 10,000 job being cut over the past few months. This move marks the beginning of the company’s rapid shift away from oil and gas. Nevertheless, oil and gas will remain the main source of revenue for BP over the next decade, which will be used in sourcing cash to finance the shift to renewable energy. 

Rystad Energy, an Oslo-based energy consultancy, indicated that major oil and gas companies have shown sharp decline in their search for new fossil fuel resources last year. A drop in the acquisitions of new onshore and offshore exploration licences were also witnessed, with BP seeing the largest fall in new acreage acquisitions last year.  

The data from Rystad’s research also indicated that BP acquired around merely 3,000 square kilometres of new exploration licences in 2020, recording its lowest since 2015. The study said that coronavirus crisis triggered spending cuts that slowed down exploration activity across the industry. 

Lately, BP’s shares have hit their lowest level in 25 years in 2020, observing a 44 per cent decline. The share price of the oil major quoted GBX 290.00 in its previous trading session (22 January).