BP implements hiring freeze, refocuses on oil and gas

27th Jun 2024 11:58

(Sharecast News) - BP has implemented a hiring freeze and halted new offshore wind projects, it was reported on Thursday, as part of a strategic shift under new chief executive officer Murray Auchincloss.

Auchincloss, who took over in January, was reportedly aiming to address investor concerns by emphasising oil and gas investments, particularly in the Gulf of Mexico and US shale basins.

The strategy, according to Reuters, was a response to rising profits from fossil fuels, driven by the Covid-19 pandemic and geopolitical tensions including Russia's invasion of Ukraine, which contrasted with lower returns from renewables.

Sources within BP told Reuters that dozens of employees previously focussed on new renewable projects had been reassigned to existing initiatives, such as offshore wind farms in the UK and Germany.

BP was also apparently planning to invest in biofuels and short-term low-carbon ventures, including a recent $1.4bn purchase of Bunge's 50% stake in the Brazilian sugar and ethanol joint venture BP Bunge Bioenergia.

The company was also expected to cut jobs in the renewables sector, though specific targets were not known.

Auchincloss, alongside chief financial officer Kate Thomson, was prioritising a pragmatic approach to growth, with Reuters reporting that he was targeting $2bn in cost savings by 2026 and reducing the executive leadership team from 11 to 10 members.

BP confirmed the strategic shifts to Reuters, emphasising six new priorities to streamline operations and enhance company value.

The company's most notable external hire under Looney, Anja-Isabel Dotzenrath, resigned in April for personal reasons, with her successor, William Lin, expected to focus more on gas operations.

BP's recent share price underperformance had fuelled speculation about a potential takeover, adding pressure on Auchincloss to balance decarbonisation with the immediate demand for fossil fuels.

Despite slowing its target to cut oil and gas output by 2030 from 40% to 25%, BP was maintaining its goal to develop 10 gigawatts of renewable capacity by the same year.

Reuters said the company was also bolstering its exploration team to replenish reserves and sustain output, reflecting a broader shift towards traditional energy sources.

Reporting by Josh White for Sharecast.com.