British oil company BP is shifting its focus back to fossil fuels following a significant profit decline in 2024. Plans include investing about ten billion dollars annually in oil and gas while reducing green energy investments to 1.5 to 2 billion dollars. This change, driven by CEO Murray Auchincloss and influenced by Elliott Management, marks a departure from previous leadership’s renewable energy ambitions. Critics, including environmental groups, oppose this strategy amid ongoing challenges in the energy market and fluctuating oil prices.
BP Shifts Focus Back to Fossil Fuels Amid Profit Decline
Following a significant profit decline in 2024, British oil giant BP is pivoting its strategy to prioritize fossil fuels once more. The company has announced plans to bolster its investments in oil and gas, aiming to allocate approximately ten billion US dollars annually to these sectors.
In light of last year’s downturn, BP is re-evaluating its approach and scaling back its commitments to renewable energy. During its recent capital markets day, BP confirmed that while it will ramp up spending on fossil fuels, investments in green energy will be curtailed significantly, dropping to about 1.5 to 2 billion dollars each year. This selective investment strategy means that the energy transition will not be a primary focus for the foreseeable future.
Strategic Shift in Leadership
BP’s CEO, Murray Auchincloss, is making a drastic change from the previous leadership’s vision. His predecessor, Bernard Looney, had ambitious plans to expand BP’s renewable energy portfolio. Initially, BP set an aggressive goal to cut oil and gas production by 40 percent in favor of renewables by 2030, which was later revised to a 25 percent reduction. However, last year’s profit slump prompted a reevaluation of these targets.
This strategic shift may also be influenced by the involvement of US hedge fund Elliott Management, which recently increased its stake in BP to nearly five billion dollars. Reports suggest that Elliott is advocating for renewed investments in oil and gas, aligning with Auchincloss’s new direction.
Critics, including environmental groups like Greenpeace, have voiced strong opposition to BP’s renewed focus on fossil fuels. They argue that such moves demonstrate a lack of commitment to addressing the climate crisis. The conversation surrounding the climate should not be driven solely by investor interests, they assert. Interestingly, BP’s rival Shell has also recently made headlines for scaling back its investments in offshore wind projects.
In response to the disappointing profits, Auchincloss has reduced BP’s planned stock buybacks from 1.75 billion dollars to a maximum of one billion dollars per quarter. Stock buybacks are typically seen as an attractive incentive for investors, and other oil companies have continued their buyback initiatives despite BP’s struggles.
Weak refining margins and volatile oil prices contributed to BP’s 35 percent profit drop, resulting in a total of 8.9 billion dollars in 2024, which was below its competitors’ performance and heightened investor scrutiny on Auchincloss’s leadership.
US President Donald Trump has also played a role in shaping the energy landscape, calling for increased production of fossil fuels since taking office. His administration’s policies, including withdrawing from the Paris Climate Agreement, allow for a more aggressive approach to fossil fuel production, further complicating the energy market dynamics.