BP has announced plans to “fundamentally reset” its strategy following a significant drop in profits and mounting pressure from activist investors. The company reported a net income of $8.9 billion (£7.2 billion) in 2024, a sharp decrease from $13.8 billion the previous year. This decline is attributed to lower oil and gas prices and reduced profits from refining operations.
In response, BP is expected to scale back its investments in renewable energy projects and increase its focus on oil and gas production. This shift aligns with similar moves by industry peers such as Shell and Equinor. Notably, BP had previously set an ambitious target of achieving 50GW of renewable generation capacity by 2030, a goal that is now anticipated to be abandoned in the forthcoming strategy update scheduled for 26 February.
The strategic pivot comes amid reports that activist hedge fund Elliott Management has acquired a near-5% stake in BP, making it the company’s third-largest shareholder. Elliott is reportedly advocating for BP to reduce its spending on renewable energy and consider significant asset divestments. The hedge fund’s involvement has intensified discussions about BP’s future direction and the balance between traditional fossil fuel operations and renewable investments.
BP’s Chief Executive, Murray Auchincloss, has acknowledged the need for a strategic overhaul to enhance performance and profitability. He is expected to present detailed plans to investors later this month. This development marks a departure from BP’s earlier commitments under former CEO Bernard Looney, who had aimed for a 40% reduction in oil and gas output by 2030 and substantial investments in renewable energy sources.
The company’s decision to recalibrate its strategy has drawn criticism from environmental groups, especially in light of recent extreme weather events linked to climate change. Lela Stanley, head of fossil fuels investigations at Global Witness, stated, “As the world battles extreme weather disasters supercharged by fossil fuels, it is wrong that polluters such as BP can double down on the oil and gas that is driving climate breakdown.”
As BP prepares to unveil its revised strategy, stakeholders will be closely monitoring how the company balances investor demands for profitability with global calls for sustainable and environmentally responsible practices.
