By Ron Bousso
LONDON (Reuters) – Nearly five years ago, BP embarked on an ambitious effort to transform itself from an oil company into a low-carbon energy company.
The British company is now seeking to return to its roots as a major oil and gas player with a growth story to match rivals, revive its share price and allay investor concerns about future profits.
Rivals Shell and Norway’s state-controlled Equinor are also scaling back energy transition plans drawn up earlier this decade.
Their change in direction reflects two major developments: the energy shock caused by Russia’s invasion of Ukraine and a decline in the profitability of many renewable energy projects, especially offshore wind, due to rising costs, supply chain issues and technical issues.
BP CEO Murray Auchincloss plans to pour billions into new oil and gas developments, including in the US Gulf Coast and the Middle East, as part of his drive to improve performance and boost returns.
BP has also slowed its low-carbon activities, halted 18 potential hydrogen projects early and announced plans to sell wind and solar businesses. It recently cut its hydrogen team in London by more than half to 40 employees, company sources told Reuters.
A BP spokesperson declined to comment on the layoffs.
Shell CEO Wael Sawan has vowed to take a ruthless approach to improving performance and returns and closing a yawning valuation gap with bigger US rivals Exxon Mobil and Chevron.
The company has scaled back its low-carbon activities, including floating offshore wind and hydrogen projects, withdrawn from European and Chinese energy markets, sold refineries and watered down its 2030 carbon reduction target.
Shell is looking for buyers for Select Carbon, an Australian company it acquired in 2020 that specializes in developing agricultural projects used to offset carbon emissions, sources close to the company told Reuters.
A Shell spokesperson declined to comment.
SKILLS SHORTAGE?
Some BP employees are questioning whether the company will retain enough staff with the experience and skills needed to re-establish itself as an oil and gas giant.
Employees bombarded CEO Auchincloss with questions during an online town hall meeting in early October as he laid out some of his plans for turning the ship around, according to four employees on the phone.
He told them that BP could and would develop new oil and gas production in a reversal of predecessor Bernard Looney’s strategy of building renewable energy sources, cutting emissions and slowly lowering oil and gas production targets.
Speaking to Reuters, some employees said they doubted BP has enough reservoir engineers to boost oil and gas production growth after letting go of hundreds of employees from its upstream division since 2020.
