BP has revised its 2020 outlook, in a context of enduring impact of the COVID-19 pandemic on the global economy and energy demand and of likely transition to a lower carbon energy system. The group has lowered its long-term (2021-2050) price assumptions to an average of around US$55/bbl for Brent and US$2.90/MBtu for Henry Hub gas (US$2020 real) and revised its carbon price forecast for the period to 2050 (average of US$100/tCO2eq in 2030). The group has thus decided to focus on its February 2020 strategy to become a net-zero company by 2050, by diversifying into low-carbon activities, by becoming a leaner and lower cost organisation and by strengthening its finances. Consequently, BP has reviewed its intent to develop some of its exploration intangible assets, which will lead to non-cash impairment charges and write-offs estimated at US$13-17.5bn post-tax in the second quarter of 2020.
In April 2020, BP had already cut its 2020 spending plan by a quarter, from US$15bn to US$12bn, including a US$1bn reduction investment in short-cycle onshore activity; this will include its US shale business BPX Energy, which will slash its output by 70 kboe/d. In addition, BP will reduce its spending in downstream (fuels marketing, refining and petrochemicals) by around US$1bn.