BP’s new chief executive, Murray Auchincloss, promised a flexible approach to divestment from fossil fuels as the oil giant reported a $3 billion profit in the latest quarter on Tuesday.
Mr Auchincloss said in an interview after BP reported earnings that the company was following what he called a “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’re seeing increasing demand for energy right now around the world,” he said. “It’s not slowing down.”
BP “will invest in today’s energy system to ensure that prices do not get out of control,” Mr Auchincloss said. “So that’s the investment in oil and gas,” he added, while also investing money in alternative energy sources such as biofuels and hydrogen.
Mr Auchincloss was confirmed as BP’s chief executive in January. The former CFO was serving in an interim capacity after his predecessor, Bernard Looney, left due to his inability to fully disclose his personal relationships at the company.
In a presentation to financial analysts on Tuesday, Mr Auchincloss appeared to suggest a more speculative approach than that taken by Mr Looney, who after becoming chief executive in 2020 has launched perhaps the most ambitious shift towards renewables among the majors petroleum products. companies.
But Mr. Looney shifted his focus back to oil and gas production early last year after Russia’s invasion of Ukraine helped boost oil and gas prices.
Oil company leaders, especially in Europe, face a difficult balancing act between proving to customers and governments that they are serious about reducing emissions and appealing to investors, who insist on profitability and returns above all else.
“The first thing investors want is to make sure they get a return,” said Giuseppe Bivona, the chief investment officer at Bluebell Capital Partners, a hedge fund that has criticized BP for plans to cut oil and gas operations while investing in areas such as offshore wind energy. Fund managers said BP lacks the expertise to succeed in the wind industry.
Indeed, BP said last year it wrote off $1.1 billion in investments in offshore wind projects along the east coast of the United States that involved a joint venture with Norway’s Equinor. Mr Auchincloss acknowledged that BP had paid a “premium” to enter a business that has proved difficult, with projects facing delays and higher costs.
Meanwhile, the company’s core oil and gas output rose 2.6 percent last year. Supplies of liquefied natural gas — a frozen, compressed fuel carried by ships — rose more than 20 percent.
Mr Auchincloss said oil production would continue to grow by 2% to 3% a year until 2027 due to increased production in Abu Dhabi, Angola, the United States and elsewhere. He said there were projects in the plan that could extend production growth into the next few years if needed. “We have some big decisions ahead of us,” he said.
BP said that, on average, the prices it received for oil and natural gas were about 20 percent lower in 2023 than in 2022, partly because of a decline in annual profit, from $27 billion in 2022 to $13.8 billion last year, which still ranks as one of the best years of the last decade.
In the area of cleaner actions, BP is now betting on businesses that are closer to the company’s existing strengths in fuel distribution and car servicing. For example, the company’s production of so-called biofuels made from plants and substances such as cooking oil increased by 18%. The company’s portfolio of electric vehicle charging points grew by 35%.