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BP Stops Recruiting And Slows The Roll-Out Of Renewable Energy To Woo Investors

BP Stops Recruiting And Slows The Roll-Out Of Renewable Energy To Woo Investors
Amidst investor dissatisfaction with BP's energy transition plan, Murray Auchincloss, the firm's new CEO, has put a stop to recruiting and stopped new offshore wind projects. According to sources within the business, Auchincloss is placing a fresh emphasis on oil and gas.
The actions, which were not previously publicised, are a part of Auchincloss's desire to reduce spending on large-scale, low-carbon projects, especially offshore wind, that are not anticipated to produce revenue for years. This information was provided by many anonymous BP sources.
They represent a sharp departure from the fast transition away from fossil fuels that the CEO's predecessor, Bernard Looney, undertook.
This has hurt BP's stock since revenues from oil and gas have surged following the COVID-19 epidemic and Russia's invasion of Ukraine, while returns from renewable energy have decreased.
According to three sources, BP has reallocated scores of individuals entrusted with seeking out new renewable energy prospects to ongoing projects like offshore wind in Germany and Britain.
According to business insiders briefed on the topic, Auchincloss and Chief Financial Officer Kate Thomson have emphasised investing in and even purchasing new oil and gas assets, notably in the U.S. onshore shale basins and the Gulf of Mexico, where BP already has significant operations.
BP intends to explore investing in biofuels and some low-carbon ventures that have the potential to yield short-term profits.
BP agreed earlier this week to pay $1.4 billion to acquire grain trader Bunge's 50% share in the Brazilian joint venture BP Bunge Bioenergia, which produces sugar and ethanol.
The people stated that BP has implemented a hiring freeze for the whole organisation, with the exception of frontline and safety staff, and that it is also anticipated to make some layoffs in the renewables sector, but no precise goals have been stated.
Since taking office in January, four months after Looney quit for concealing connections with coworkers, Auchincloss has pledged a practical strategy.
Auchincloss declared in May that it will cut costs by $2 billion by the end of 2026 compared to 2023. The 53-year-old reduced the number of people on his senior leadership team from 11 to 10.
Auchincloss established six targets "to deliver as a simpler, more focused, and higher value company," according to a statement from BP to Reuters.
Among the top goals are "the next wave of efficiencies and BP's growth projects" and business focus.
"The actions we are taking are part of delivering this - and of course are all in service of our aim of growing the value of BP," stated the statement.
Anja-Isabel Dotzenrath, a former head of RWE Renewables who joined in 2022 to oversee its renewables and gas division but resigned down for personal reasons in April, was BP's most well-known external recruit under Looney.
When he takes over in the next months, her replacement, seasoned BP executive William Lin, is anticipated to prioritise gas operations more, according to two sources.
In recent months, BP's stock has lagged its competitors, sparking rumours that it may be a candidate for acquisition.
This has increased pressure on Auchincloss as he tries to reassure investors who are balancing the growing short-term demand for fossil fuels with the imperative to decarbonise the global economy.
Out of its $16 billion in capital expenditures, BP invested $2.5 billion on biofuels, hydrogen, EV charging, and renewable energy sources in 2023.
The only significant oil corporation with objectives for reducing its output of petrol and oil is BP.
Shell reduced its investments in several low-carbon and renewable energy companies last year in favour of a high-return business strategy.
BP backed off from its major promise to reduce oil and gas output from 40% to 25% between 2019 and 2030 in February 2023. It maintained its plans for renewable energy by 2030, which included installing 10 gigawatts of capacity.
Auchincloss altered the wording on the 2030 aim last month.
As it attempts to refill its reserves in order to sustain and even increase output, BP has made a number of new hires to its exploration team, which has been led by Bryan Ritchie since May. This is another indication of change.
Additionally, BP is investing more money and manpower into exploring new areas, including the Gulf of Mexico's Kaskida, Tiber, and Gila finds.
According to three insiders, it also reorganised its mergers and acquisitions branch in recent weeks by merging it with Sam Skerry's business development division.
In October of last year, BP announced that it possessed resources worth 18 billion barrels of oil and gas, or 20 years' worth of its current output, that could be produced to maintain its production level until 2022 while still meeting its returns objective.

Christopher J. Mitchell

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