Oil and gas giant BP has reportedly dropped its goals for cutting oil and gas output by 2040 as it shifts away from an ambitious clean energy strategy in light of sustained global demand for fossil fuels.
The company is expected to abandon its targets during an investor day in February, sources told Reuters.
In 2020, BP announced it would seek to shrink its oil and gas output by 40% by 2030. At the time, the company also pledged to raise its renewable energy capacity to 50 gigawatts.
Those targets were scaled back in February 2023, and a goal was set to cut oil and gas output by 25%. This would leave BP producing around 2 million barrels a day by 2030, according to Reuters.
However, just months after CEO Murray Auchincloss was appointed to the position, BP is now looking to change course.
Sources told Reuters that BP is considering investments in the Middle East as well as the Gulf of Mexico to increase oil and gas production.
Specifically, the company is looking into three projects in Iraq, including one in the Majnoon field and other fields in Kuwait. BP also entered an agreement in August with the Iraqi government for developing the Kirkuk oilfield.
On the other side of the globe, BP has plans to develop the Kaskida reservoir in the Gulf of Mexico. It is also looking to invest in developing the Tiber field and Permian shale basin.
At the same time, the company has pulled back on investments in renewables, including offshore wind, hydrogen, and biofuel projects.
The strategy switch-up comes after former executive Bernard Looney (who first introduced the ambitious climate goals) was forced to resign last year after lying about relationships with some of his colleagues.
At the same time, BP has seen its share prices drop and underperform compared to competitors like Shell. By abandoning Looney’s goals and focusing on profits, Auchincloss appears to be attempting to rebuild confidence among BP investors.
The new CEO indicated he was heading in this direction in July, saying, “I’m not really focused on production volumes; I’m focused on cash and earning as I continue to tell the market that’s what counts,” according to the Times.
News of the strategy reset appeared to bode well with some on Monday as BP’s share prices were up 1.70% just before 10 a.m. Eastern time.
Auchincloss will present a new energy transition strategy in February. However, it remains unclear if the company will include guidance on production output, per Reuters.
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While BP will be walking back on its previous goals, the company has reportedly said it plans to hit net zero emissions by 2050.
“As Murray said at the start of year … the direction is the same — but we are going to deliver as a simpler, more focused, and higher value company,” a spokesperson told Reuters.