New investments on the horizon as BP, others  return to oil, gas production

After it got its fingers burnt, UK based BP has concluded plans to dump its pursuit of boosting renewable energy capacity and return to increasing oil and gas production.

The Company is expected to announce a fresh initiative in that space, thus ditching a target to boost renewable energy capacity generation 20-fold by 2030.

BP’s chief executive Murray Auchincloss is also expected to announce a pivot back to oil and gas – as other European majors such as Shell and Equinor have already done.

But beaten by poor cash flow and returns, they are now forced to beat a retreat.

BP earlier this month pledged to fundamentally reset its strategy as it booked its lowest annual and quarterly profits in years and seeks to push up its stock performance and regain investor trust.

“Building on the actions taken in the past 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns,” Auchincloss said in a statement two weeks ago, Reuters reported.

BP’s leadership will communicate its new strategy, which “will be a new direction for bp”, at a Capital Markets Update on February 26, Auchincloss added.

BP’s chief executive is expected to announce that the Company would ditch its previous goal set under former CEO Bernard Looney – to grow renewable capacity 20-fold to 50 gigawatts (GW) between 2019 and 2030.

BP is set to cut investments in other low-carbon energy solutions as it looks to raise returns for shareholders and cut debt, which has been recently increasing, according to Reuter’s sources.

The pressure on BP to improve its stock performance and returns became more intense earlier this month after reports emerged that activist investor Elliott Management had bought a stake in the supermajor and would be pushing for changes in strategy or, even for board reshuffles.

Elliott’s stake in BP is estimated at nearly five per cent as the activist investor is reportedly pushing for major asset sales to address the undervalued shares of the UK-based supermajor.