BP Divesting from "Assets That Won’t Compete for Capital" Including Some of Its Green Fantasies

BP is dropping some of its politically correct green projects to make more money with oil and gas. Who would have thought it? We were told things like bio-fuels, hydrogen, and off-shore wind were the future. But, not so fast, as it turns out. Here is a slide from a recent BP presentation that summarizes:

Yes, BP is dropping 18 hydrogen projects, two bio-refinery investments, the Empire Wind project off the coast of New York, and its US on-shore wind portfolio. Yes, it’s still doing EV charging but focusing on fewer markets. It is also still doing solar. I have, in fact, consulted with a subsidiary as to zoning issues with one those projects. But, the big picture is explained in remarks made during the presentation (emphasis added):

We have worked across all our businesses to review the projects in our hopper, including those from early concept selection through to pre-FID [Final Investment Decision]. The result – we have stopped or paused 24 potential projects, allowing our teams to now focus on delivering the highest value projects. This work to prioritise our next wave of growth will continue through 2025, setting us up well for the high quality growth through the rest of the decade.

Furthermore, we continue to divest assets that won’t compete for capital – for example, we recently announced our plan to divest our US onshore wind business as well as the sale of four mature fields in Trinidad. These actions generate value today, reduce operating costs and enable future capital to be allocated to projects with higher returns…

Over the past ten years, we have made significant investment in our oil and gas business to create a highly advantaged global analytics platform. The advent of the next generation of AI is allowing us to once again team up with our partner Palantir to take this to the next level. AI bootcamps have been held with our engineers and use cases are being progressed. Already we can see ways to drive a meaningful improvement in efficiency across many of our core engineering processes.

Additionally, we are working with Palantir and teaming up with Infosys to accelerate the digitisation of our refining operations.

Note BP is dropping 24 projects and the vast bulk of them are renewables investments. Meanwhile, the company is putting money into oil and gas and combining it AI to magnify returns. There are also these nuggets:

Last quarter we announced FID at Kaskida [the Kaskida oil field in U.S. waters of the Gulf of Mexico], the first step of unlocking around 10 billion barrels of discovered resources in the Paleogene…

Across renewables and hydrogen, we expect to benefit from around $200 million reduction in annual cash costs, as a result of focusing our portfolio…

We continue to see energy demand growing as we look through the next few decades, with hydrocarbons remaining central to the energy system as the world decarbonises.

With the significant optionality in our oil and gas resource base, the new access we are progressing, and the new FIDs taken, we see the potential to grow through the decade. We will be value and returns-focused as we make decisions, or value over volume, to borrow a term from our past.

There is in the remarks, of course, a bit of the usual pandering to those enthralled with energy transition but if one watches what BP is doing as opposed to what BP says in that regard, there is but one conclusion to make, and it is that oil and gas are the future. BP will take government money for solar and EV charging where it’s offered but it's putting its shareholders’ money in petroleum.

#BP #Oil #Gas #NaturalGas #Renewables #Investments #Hydrogen