BP abandons oil output target - report

7th Oct 2024 08:00

(Sharecast News) - BP has abandoned a target to cut oil and gas output by 2030 as chief executive Murray Auchincloss scales back the firm's energy transition strategy to regain investor confidence, according to three sources cited by Reuters.

When unveiled in 2020, BP's strategy was the sector's most ambitious with a pledge to cut output by 40% while rapidly growing renewables by 2030.

The oil giant scaled back the target last February to a 25% reduction, which would leave it producing 2 million barrels per day at the end of the decade.

On Monday, Reuters cited sources with knowledge of the matter as saying that BP is now targeting several new investments in the Middle East and the Gulf of Mexico to boost its oil and gas output.

Auchincloss took the helm in January but has struggled to stem the drop in BP's share price, which has underperformed rivals so far this year as investors question the company's ability to generate profits under its current strategy.

The Canadian, previously BP's head of finance, has sought to distance himself from the approach of his predecessor Bernard Looney, who was sacked for lying about relationships with colleagues, vowing instead to focus on returns and investing in the most profitable businesses, first and foremost in oil and gas.

The company continues to target net zero emissions by 2050.

"As Murray said at the start of year... the direction is the same - but we are going to deliver as a simpler, more focused, and higher value company," a BP spokesperson told Reuters.

Auchincloss will present his updated strategy, including the removal of the 2030 production target, at an investor day in February, though in practice BP has already abandoned it, sources told Reuters. It was unclear whether BP would provide new production guidance.

It was also understood that BP is considering investing in the re-development of fields in Kuwait.

In the Gulf of Mexico, BP has announced it will go ahead with the development of Kaskida, a large and complex reservoir, and the company also plans to green light the development of the Tiber field.

Sources told Reuters that BP will also weigh acquiring assets in the Permian shale basin to expand its existing US onshore business, which has expanded its reserves by over 2 billion barrels since acquiring the business in 2019.