New BP chief forecasts lower oil production

The recently appointed CEO of BP, Bernard Looney, is set to lay out his vision of the company’s future – one that will involve the oil major producing less oil.

BP, which owns the Castrol lubricant brand, has already pledged to achieve net-zero emissions by 2050 and has revised down the value of its hydrocarbon assets. It has also announced a tenfold increase in renewables investment, along with a 40% reduction in hydrocarbons production over the coming years.

Looney, who joined BP 29 years ago as a drilling engineer, now needs to convince investors that he can achieve all this while still delivering value for shareholders. In an interview with the Financial Times, he said:

“There has been a lot of excitement about what we have done in the last six to eight months. [But] there is a very simple message: we need to execute.”

Many people believed that the pandemic’s effects on the oil markets, which saw oil prices drop to below $20 per barrel from $70, before then recovering to about $40, would have hindered BP’s efforts to transition away from oil, but Looney insists that this simply
“reinforces the need for us to change”.

Recently, BP made a considerable start on its transition when it teamed up with Equinor in a $1.1 billion deal for a stake in US offshore wind farms. Despite the shift to renewables, Looney insists that BP will still be a leading hydrocarbons producer in 10 years, with a focus on retaining the most profitable assets.

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