BP slashes green spend, ups fossil fuel investments in major strategy 'reset'

(Sharecast News) - BP is to slash its investments into low-carbon and alternative fuels and raise its spending in oil and gas as part of fundamental "reset" to its strategy, the energy giant revealed on Wednesday, causing shares to drop into the red. The moves are part of a plan to significantly reallocate capital to grow free cash flow, returns and long-term shareholder value, BP said, with structural cost reductions of $4-5bn expected to be made by the end of 2027.

Capital expenditure is expected to total $13-15bn each year until 2027, some $1-3bn lower than the amount spent in 2024.

To achieve this, the company said it is only making "disciplined" and "selective" investments into its so-called transition businesses, which comprise biogas, biofuels, EV charging, hydrogen, carbon capture and storage (CCS) and other renewables. As such, investment in these areas would be just $1.5-2bn per annum, over $5bn a year lower than previous guidance.

Meanwhile, annual capex into oil and gas would be increased to $10bn as it ramps up production capacity to 2.3-2.5mmboed by 2030.

BP is also targeting $20bn of divestments by 2027, including potential proceeds from solar developer Lightsource bp, and said it would conduct a strategic review of the Castrol lubricants division.

Net debt is expected to reduce to $14-18bn by the end of 2027, down from the $23bn position registered at the end of 2024.

"Today we have fundamentally reset bp's strategy," said chief executive Murray Auchincloss.

"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."

The stock was down 1.5% at 430.20p by 1030 GMT.