London (Business Emerge) October 7: BP has restructured its energy transition plan, abandoning its previous goal to reduce oil and gas output by 2030, according to insiders. The move by CEO Murray Auchincloss is aimed at restoring investor trust and reflects a shift in strategy from BP’s earlier aggressive energy transition ambitions.
Back in 2020, BP announced one of the industry’s boldest commitments—to reduce its oil and gas output by 40% while significantly expanding renewable energy investments by 2030. However, in February of last year, the company revised this target to a 25% reduction, which would see production level off at around 2 million barrels per day by the end of the decade. This adjustment came as shareholders prioritized short-term gains over BP’s broader energy transition plans.
BP, listed in London, is now setting its sights on several new projects in regions like the Middle East and the Gulf of Mexico to bolster its oil and gas production. Since taking over as CEO in January, Auchincloss has struggled to address the decline in BP’s share price, which has lagged behind competitors. Investors have been skeptical of the company’s profitability potential under its current strategy.
Previously serving as BP’s finance head, Auchincloss, a 54-year-old Canadian, has sought to distance himself from his predecessor Bernard Looney. Looney was dismissed after lying about relationships with colleagues, and Auchincloss has emphasized profitability and high-return ventures, focusing primarily on oil and gas.
Despite these shifts, BP remains committed to achieving net zero emissions by 2050. “As Murray said at the start of the year… the direction is the same – but we are going to deliver as a simpler, more focused, and higher value company,” a BP spokesperson stated. Auchincloss is set to unveil his revised strategy at an investor day in February, including the scrapping of the 2030 production target, though sources suggest the company has already informally moved away from it. Whether BP will announce a new production target remains uncertain.
Similar changes are occurring at BP’s rival, Shell, which has also scaled back its energy transition efforts since Wael Sawan became CEO in January. Shell has been divesting from renewable energy and power businesses, discontinuing projects in areas such as offshore wind, biofuels, and hydrogen.
The shift in focus for both companies coincides with a renewed emphasis on European energy security following the market disruptions caused by Russia’s invasion of Ukraine in early 2022. Despite having invested billions in low-carbon initiatives and significantly downsizing its oil and gas exploration team since 2020, BP appears to be rebalancing its priorities.