LONDON (AP) — British energy company BP confirmed Wednesday that it would slash spending on green ventures and increase its oil and gas production, a change in direction that it hopes will bolster its flagging share price but has been met with incredulity from climate action campaigners.
In a statement titled “Reset BP,” the company said it will reduce its spending on net zero transition businesses by $5 billion a year to up to 2 billion. By contrast, it said it would increase its investments in oil and gas production by about 20% to $10 billion.
CEO Murray Auchincloss said that the company is focusing its spending on BP’s “highest-returning businesses to drive growth” and that will be “very selective” in its investments in renewables.
“This is a reset BP, with an unwavering focus on growing long-term shareholder value,” he said.
The strategy represents a pullback from the company’s much-vaunted plan five years ago, under then CEO Bernard Looney, to shrink oil and gas production in favor of net zero businesses.
The update, which came before a major shareholder meeting in London later Wednesday, is clearly aimed at bolstering investor support in light of the company’s flagging share price.
So far, the heavily-trailed update doesn’t appear to have appealed to investors, and the company’s share price was down 0.8%. However, the stock has been rallying in recent weeks on speculation that the company was about to change tack.
The company’s stock underperformance against its peers such as Shell, ExxonMobil and Chevron, has stoked market speculation that it may move its share listing to New York from London, or even make it a takeover target.
The influential U.S. hedge fund Elliott Management recently took a nearly 5% stake in BP, and it is believed that it has sought to push BP back towards fossil fuels to boost profit.
Auchincloss has already spun off BP’s offshore wind business in a joint venture while he’s looking to offload its onshore wind arm. The group has also been slashing costs in the face of tougher trading. Recently, it announced it would cut more than 5% of its workforce.
BP’s change of strategy is facing sharp criticism from environmental campaigners, who had previously warmed to the company’s insistence that the future was green.
“This move by oil giant BP clearly demonstrates why super-rich corporations and individuals, chasing short-term profit for themselves and shareholders, cannot be trusted with fixing the climate crisis or leading the transition to renewable energy we so badly need,” said Matilda Borgström, U.K. campaigner at climate action group, 350.org.
“Pumping money into more oil and gas increases the risk of climate impacts for us all, flies in the face of legal climate targets, and with the renewables sector growing exponentially is a big risk to the shareholders that BP is so keen to please,” she added.