BP Walks Back Green Targets Amid Market Realities, by Irina Slav

An oil and gas company saying it will cut oil and gas production by 40 percent by 2030 doesn’t sound like a winning business plan. Turns out, it wasn’t. From Irina Slav at oilprice.com:

• BP has reversed its commitment to cut oil and gas production by 40% by 2030.
• The energy transition remains challenged by economic realities, prompting BP and other major oil companies to scale down transition plans.
• BP’s pivot, along with similar moves from other oil majors, highlights the industry’s continued reliance on hydrocarbon.

In February 2020, then-brand-new chief executive Bernard Looney told the world that one of the oldest and biggest oil companies in the world was going to become a net-zero company by 2050. To achieve this, it would slash its oil and gas production by 40% by 2030.

Four years and one major crisis later, BP is abandoning not only the original production cut target of 40%, but also a revised, lower target of 25%. BP, in other words, is returning to its roots. And commodity investors who are not paying attention should be—and so are transition investors.

“This will certainly be a challenge, but also a tremendous opportunity. It is clear to me, and to our stakeholders, that for BP to play our part and serve our purpose, we have to change. And we want to change – this is the right thing for the world and for BP,” Bernard Looney said back in 2020 when he announced the company’s new course.

There was much enthusiasm in the climate activist world when that statement was made. Activists were not satisfied but did concede that it was a step in the right direction. Investors took the news differently—BP’s shares dropped precipitously immediately following the announcement of the newly charted course before rebounding later in the year.

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