BP will increase oil production, says new chief

BP's new CEO, Murray Auchincloss, promised a flexible approach to the shift away from fossil fuels as the oil giant reported $3 billion in profits on Tuesday in its latest quarter.

Mr. Auchincloss said in an interview after BP reported earnings that the company was pursuing a so-called “demand strategy.” BP shares rose more than 5 percent in trading in London, where the company is based.

BP has a plan to become what Mr Auchincloss called an integrated energy company. But in the meantime, “we are currently seeing growing demand for energy around the world,” he said. “It's not slowing down.”

BP “will invest in the current energy system to ensure prices do not spiral out of control,” Mr Auchincloss said. “So that's investing in oil and gas,” he added, while also putting money into alternative energy sources such as biofuels and hydrogen.

Mr Auchincloss was confirmed as CEO of BP in January. The former chief financial officer had served in an interim role following the departure of his predecessor, Bernard Looney, due to his failure to fully disclose personal relationships at the company.

In a presentation to financial analysts on Tuesday, Mr. Auchincloss seemed to suggest a more profit-oriented approach than that of Mr. Looney, who after becoming CEO in 2020 embarked on perhaps the most ambitious shift to renewable technologies among major oil companies. businesses.

But early last year, Looney shifted his focus back to oil and natural gas production after Russia's invasion of Ukraine helped drive up oil and gas prices.

Oil company leaders, especially in Europe, face a difficult balancing act between showing customers and governments that they are serious about cutting emissions and appealing to investors, who insist primarily on profitability and returns.

“The first thing investors want is to make sure they get returns,” said Giuseppe Bivona, the chief investment officer of Bluebell Capital Partners, a hedge fund that has criticized BP for plans to cut its oil and gas business while investing in areas such as offshore. wind force. The fund managers have said BP lacks the expertise to succeed in the wind industry.

BP said it had written off $1.1 billion last year on investments in offshore wind projects along the east coast of the United States, which involved a joint venture with Norway's Equinor. Mr Auchincloss acknowledged that BP had paid a “premium” to enter a business that was proving difficult, with projects experiencing delays and higher costs.

Meanwhile, the company's main oil and gas production rose 2.6 percent last year. Supplies of liquefied natural gas – a cooled, compressed fuel transported by ships – increased by more than 20 percent.

Mr Auchincloss said oil production would continue to rise 2 to 3 percent a year until 2027 due to production increases in Abu Dhabi, Angola, the United States and elsewhere. He said there were projects on the drawing board that could extend production growth in later years if necessary. “We have some big decisions ahead of us,” he said.

BP said prices the country received for oil and gas in 2023 were on average about 20 percent lower than in 2022, partly responsible for a decline in annual profits, from $27 billion in 2022 to $13.8 billion last year, which still ranks as one of the best years in ten years.

In the cleaner energy space, BP is now betting on companies that are closer to the company's existing strengths in fuel distribution and automotive maintenance. For example, the production of so-called biofuels, made from plants and substances such as cooking oil, increased by 18 percent. The company's portfolio of electric vehicle charging stations increased by 35 percent.