![]() However, BP still has US$14 billion of annual capital expenditure on the oil and gas businesses, and pays a dividend of US$8.5 billion. ![]() In 2019 BP spent only US$500 million to US$750 million on its renewables businesses, which, predictably, once again, now include wind farms, solar power, biofuels and what the company describes as “low-carbon start-ups”. ![]() “Where is the cash going to come from?”Īt the moment, BP’s investment in renewables is frankly pathetic, falling far behind its rival Shell. Repsol published a loss of €5.28 billion (US$5.69 billion) for the period including a nearly €4.85 billion impairment on production assets, mainly onshore in North America, after Repsol’s management assumed a lower oil and gas price scenario, which the company declared was, “consistent with the foresight to the energy transition and with the Paris Agreement’s climate goals.” You can read the full announcement here.īP has not yet announced how it will hit its net zero target in any detail, and it is important to note that BP is six times larger than Repsol in market capitalisation, so the potential impairments it faces from stranded assets is likely to be much greater than the mere five billion euros reported by Repsol this month.Īnalysis in The Financial Times in the UK determined that if global temperature rises are restricted to two degrees Celsius above pre-industrial levels, in line with the Paris agreement, oil majors will have to write off half their assets, whilst if the temperature cap is set lower at only 1.5 degrees from the pre-industrial baseline, then four-fifths of hydrocarbon assets could be worthless. On February 20 Repsol posted a huge loss for the fourth quarter of 2019, due almost entirely to the one-off costs related to its net zero goal. Spanish oil company Repsol had previously announced a similar initiative to become net zero by 2050, and has shown how this commitment came with a heavy financial hit to the balance sheet. Such a transition will come at a massive cost to the company and its shareholders. “The world’s carbon budget is finite and running out fast,” he said, “We need a rapid transition to net zero.” Mr Looney declared that BP had to reinvent itself as the global climate crisis intensified. ![]() Which is good news for contractors working on its massive offshore Senegalese gas project, and less good news for those in Alaska on its large onshore oil projects there. Given that BP produces over three million barrels of oil equivalent a day, this is quite a goal, and will inevitably involve an increased focus on gas in the company’s production mix. By BP’s definition of net zero, the company’s own operations will produce no net carbon dioxide emissions in 2050, and BP has also stated that it will also cut by half the amount of carbon in the products it sells by 2050. “Net zero” means that any emissions produced by the company would be offset by taking an equivalent amount out of the atmosphere through technologies such as carbon capture, or through reforestation projects. Earlier this month, BP’s new chief executive Bernard Looney, who boasts that he owns no car and uses Instagram ( here), announced a decision to cut its greenhouse gas emissions to so-called “net zero” by 2050. Now, it is a case of New Leader, Old Strategy. In 2013, BP sold off its wind power assets, as part of what the company described at the time as its, “continuing effort to become a more focused oil and gas company and re-position the company for sustainable growth into the future.” The decision to exit wind in 2013 followed BP’s exit from the solar power business in 2011, after forty years of trying to grow a viable business there. Unfortunately, Baron Browne resigned as CEO in 2007 after lying about his personal life in court, and the company’s drive to invest in renewables quickly petered out, as it faced tens of billions of dollars of fines and claims following the Deepwater Horizon disaster in the Gulf of Mexico, and poor returns from its alternative energy investments. Having acquired Amoco, Arco and Burmah Castrol in the preceding five years to create one of the largest oil and gas companies in the world, the good baron unveiled a new sunflower logo for BP, and announced an array of investments in solar and wind power, declaring that the planet needed energy companies to becomes cleaner and greener. ![]() old ones) will recall that in 2000, the CEO of BP, John Browne, now Baron Browne of Madingley, vowed that the company’s initials would henceforth stand for “Beyond Petroleum”, as he launched a $200 million advertising and publicity campaign to highlight its diversification away from hydrocarbons. ![]()
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