BP has adjusted its language regarding its commitment to reducing oil and gas output by 2030, aiming to reassure investors about its energy transition strategy and close a significant value gap with competitors. CEO Murray Auchincloss has shifted the company’s strategy to focus more on returns, moving away from his predecessor Bernard Looney’s strong emphasis on renewables and low-carbon energy.
Despite this shift, BP’s shares continue to lag behind rivals such as Shell, TotalEnergies, Exxon Mobil, and Chevron, reflecting concerns that BP is not prioritizing investments in the most profitable segments of its business, notably oil and gas. Auchincloss has maintained BP’s target, set by Looney in 2020 and slightly revised in 2023, to reduce oil and gas output by around 25% from 2019 levels to 2 million barrels of oil equivalent per day (boed) by 2030. This target, unique among major oil companies, has raised concerns among some investors.
Auchincloss, who assumed his role in January after Looney’s unexpected resignation last September, has taken a pragmatic approach, suggesting that BP may exceed or fall short of the 2030 target. He emphasized a focus on returns and cash flow over volume, indicating that decisions on over 30 projects across BP’s businesses would be made based on their returns.
Analysts, such as Biraj Borkhataria from RBC Capital Markets, anticipate that BP may increase its spending on oil and gas production, known as upstream, as it focuses on returns. This could lead to higher upstream volumes than the 2 million boed target in 2030, in line with Auchincloss’s emphasis on a returns-based approach to decision-making.
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