Bp Plans To Scrap Some Renewable Energy Businesses
03
/ 2023.Feb
According to informed sources, British Petroleum (BP) plans to adjust its renewable energy strategy, or will cancel part of its renewable energy business.
The news came as a surprise, as the firm cut its outlook for global oil and gas demand in its 2023 edition of BP World Energy Outlook just two days after it said the turmoil sparked by the Russia-Ukraine conflict would prompt countries to invest in renewable energy. energy to seek greater energy security.
People familiar with the matter told the media that BP CEO Bernard Rooney has said that the company’s investment returns in the renewable energy sector have been disappointing and that it plans to cancel some renewable energy businesses; Shareholders believe it can maximize profits in areas where it has a competitive advantage, such as the traditional oil and gas business.
According to Rooney, ESG (environmental, social and governance) goals increase operating costs and limit companies' ability to grow profits. He also noted, however, that the moves were modest short-term course adjustments rather than a major strategic shift for the energy company.
Analysts and some investors say BP's commitment to switch from fossil fuels to renewable energy could hamper the company's earnings growth. Many companies are struggling to transition to new green technologies while still relying heavily on traditional energy sources.
A spokesman for BP said the company will update investors on the progress of its energy strategy when it reports full-year 2023 earnings on Feb. 7.
When Rooney took office about three years ago, he promised to reshape BP to reduce carbon emissions by reducing oil and gas production and developing renewable energy.
Looney has said in some recent discussions that the company will continue to push forward with renewable energy, but with a more fine-tuned approach to avoid spreading resources too widely or relying too heavily on renewables in its overall strategy. He and other BP executives have hinted that the company may reduce investments in areas such as solar and offshore wind, according to some people familiar with the matter.
In the latest energy outlook, BP has set three scenarios for energy transition, including "net zero", "rapid transition" and "new power". Taken together, the scenarios cover a range of possible outcomes for the global energy system over the next 30 years, BP said. All scenarios assume that oil and gas demand will decline over the next few decades as renewable energy grows and transport electrifies. But this expectation runs counter to the possible decision of BP.
BP's shares, which have lagged rivals over the past few years, are up about 7% since the end of January 2020, while Exxon's shares have nearly doubled over the same period.
The day before, Exxon Mobil released its financial report showing that the company's net profit in 2022 will be US$56 billion, which is a record high in the history of the Western oil industry.
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