bp plc is ready to pump in billions in its core oil and gas business with an eye on healthy margins for shareholders
It will cut down spending on its low-carbon business, as part of which it is reviewing its stake in Lightsource bp
The group is seeking $20 billion in stake sale in Lightsource bp and a strategic review of Castrol, its lubricant business
UK-headquartered global fossil-fuel giant bp plc has unveiled its ‘reset’ strategy. This strategy will see it sticking to its upstream business of oil and gas to produce ‘high margin energy’ for years to come, while announcing plans to divest stake in its solar PV development arm Lightsource bp.
It became the sole stakeholder of Britain’s Lightsource bp in October 2024, the company that back then had 62 GW of solar PV capacity in its development pipeline across 19 global markets. It was to help the company meet its own demand for cost-competitive low-carbon power (see Leadership Change At Lightsource BP Post BP Acquisition).
Within 5 months of completing Lightsource bp’s acquisition, bp said it targets to earn $20 billion by bringing in a partner for the solar power developer and from the strategic review of its longstanding lubricant business Castrol.
Instead, it has committed to investing $10 billion/year through 2027 in the oil and gas business, while being ‘disciplined’ in its investment in renewables and lowering its transition investment to $1.5 billion to $2.0 billion, down from the previously announced target of $5 billion.
Murray Auchincloss, the CEP of bp, said the company will have an ‘unwavering’ focus on growing long-term shareholder value. “We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns,” he added.
Going forward, it will make ‘disciplined’ investments in the transition. It will grow top-tier offshore wind and solar platforms in a ‘capital light way’ and limit further projects in hydrogen and carbon capture.
According to a Reuters report, bp’s reset strategy comes as a result of its underperformance compared to its peers Shell and Exxon, and the acquisition of a 5% stake in bp by US activist investor Elliott Investment Management. The new investor is reportedly pushing the group towards divestment mainly in the low-carbon sector, cost cuts and transforming its performance.