The UK oil and gas company BP has announced a major strategic turn, seeking growing free cash flow, returns and long-term shareholder value. The group aims at reducing capital expenditure to US$13-15bn/year through 2027, i.e., US$1-3bn lower than in 2024, and at reallocating capital expenditure to higher-growth activities, i.e., oil and gas upstream activities, to the detriment of transition investments that will be cut by US$5bn/year compared to previous guidance.
Under the company’s new strategic plan, BP plans to increase upstream oil and gas investments to US$10bn/year to strengthen its upstream portfolio and to grow its production to 2.3-2.5 Mboe/d by 2030. The group expects to start up 10 large-scale oil and gas projects by 2027 and a further 8 to 10 projects by 2030. BP will also focus its downstream portfolio on markets where it has leading integrated positions (high-grading mobility network, marketing Gelsenkirchen refinery, selective investment in EV charging and biofuels growth markets), investing US$3bn by 2027 and seeking US$2bn of structural cost reductions across its downstream portfolio.
The move back towards fossil fuels represents a massive cut for transition and renewable energy investment, to US$1.5-2bn/year, i.e., over US$5bn/year less than previous guidance. As a result, investments directed towards transition should become more selective, focusing on biogas, biofuels, EV charging, hydrogen/CCS and on capital-light partnerships in renewables. BP also plans to sell about US$20bn of assets, possibly including its solar power developer Lightsource BP.
The new investment plan represents a major shift from its previous aim to acquire 50 GW of renewable generating capacity by 2030 and owning a diversified portfolio.