BP scraps renewables target, returns to oil and gas in strategy reset

BP will boost investment in oil and gas while walking back a push for more renewable output, the British oil and gas multinational announced on Wednesday.

The firm said it would increase oil and gas spending by about 20% to $10bn a year (€9.5bn), while cutting renewable investment by around 70%.

CEO Murray Auchincloss confirmed that 10 major oil and gas projects would be created by 2027, followed by a further eight to 10 projects by the end of the decade.

Wednesday’s announcement comes after BP had pledged in 2020 to reduce oil and gas output by 40% by 2030.

In 2023, BP swapped this target for a 25% reduction, following Russia’s invasion of Ukraine and Europe’s energy crisis. 

The firm had also pledged to boost renewable output 20-fold between 2019 and 2030 to 50 gigawatts.

BP is now abandoning this aim as part of what Auchincloss called a “fundamental strategy reset”, designed to regain investor confidence.

Over the past two years, BP’s valuation has underperformed against competitors Shell and ExxonMobil, firms that are prioritising more oil and gas output.

BP profits fell to $8.9bn (€8.5bn) in 2024, from $14bn (€13.3bn) in 2023.

Driving growth

BP added on Wednesday that its investment in businesses working on the energy transition to renewables would be “significantly lower” over the coming years.

This funding will total between $1.5bn and $2bn annually (€1.4bn and €1.9bn), more than $5bn (€4.8bn) per year below the previous estimate.

“We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency,”  Auchincloss said in a statement.

“This is all in service of sustainably growing cash flow and returns,” he added.

BP is also hoping to raise at least $20bn (€19bn) by selling assets before the end of 2027.

Businesses that may be sold off include Castrol lubricants, as well as the solar power developer Lightsource BP.

Appeasing investors

The rescinded commitments from the oil and gas giant come as the political climate is changing around sustainability pledges.

US President Donald Trump, a climate sceptic, has notably promised to ramp up fossil fuel production - and many companies feel less pressure to keep up with green targets.

The announcement also comes in response to pressure from activist investor Elliot management, which has built up an almost 5% stake in BP.

It’s not exactly clear what Elliot would like BP to do but some analysts expect major demands.

These could include a potential breakup of the company and tighter cost discipline.