Ben Mar­low:

Spend­ing $5bn a year on green projects is some jump for the oil ma­jor, but only one third of what it will spend on fos­sil fuel drilling

The Daily Telegraph - Business - - Front Page - Ben Mar­low

So that’s what boss Bernard Looney meant by “reimag­in­ing en­ergy and rein­vent­ing BP”: an oil ex­plorer that no longer ex­plores for oil. Or at least not with the same fe­roc­ity that it has done in the past. Don’t ex­pect it to drop the “Pe­tro­leum” in “Bri­tish Pe­tro­leum” just yet. But less crude means less gen­er­ous re­wards for share­hold­ers. Pay­outs, and pro­gres­sive ones at that, have al­ways been sacro­sanct among the oil gi­ants. In­deed, it was only back in Fe­bru­ary that Looney’s pre­de­ces­sor Bob Dudley boasted in his farewell speech of “a pow­er­ful in­vestor propo­si­tion of grow­ing dis­tri­bu­tions over the long term.”

Well, farewell to that too, or half of it at least, though one won­ders why Looney didn’t just cut it when he took over, in­stead of act­ing like BP had dis­cov­ered a mirac­u­lous for­mula that en­abled it to meet cli­mate tar­gets while con­tin­u­ing to chuck bil­lions of pounds at share­hold­ers every year, at the same time as oil prices lan­guish on the floor.

If Looney was dread­ing this mo­ment, he needn’t have. BP’s shares bounced more than 7pc on the news, pro­pel­ling it to the top of the FTSE leader­board for part of the day de­spite unveiling a jaw-drop­ping $17.7bn (£13.5bn) quar­terly loss, as well as for­go­ing its short-lived sta­tus as the big­gest sin­gle-payer in the FTSE 100 af­ter Shell sur­ren­dered that crown in April.

Even in­vestors it seems have ac­cepted two very im­por­tant facts: first BP needs to ramp up in­vest­ment in green en­ergy; sec­ond, its debt moun­tain must be re­duced. Halv­ing a div­i­dend that was set to cost £6.7bn this year will help on both counts.

As Looney now con­cedes, he needs to “re­set” BP if it is to stand any chance of meet­ing his bold “net zero” emis­sions pledge and the Paris cli­mate change goals. The pan­demic may have sav­aged de­mand for oil but it has pro­vided the in­dus­try’s big beasts with the best op­por­tu­nity they will get to ac­cel­er­ate the sweep­ing changes re­quired to pre­pare for a fu­ture with­out fos­sil fu­els.

An­nual low car­bon in­vest­ment will be fired up to around $5bn a year, a 10-fold jump on cur­rent lev­els. That means BP’s global re­new­able power gen­er­a­tion will have gone from 2.5GW in 2019 to 50GW by the end of the decade, more than the whole of the UK cur­rently has at its dis­posal. At the same time, its oil and gas pro­duc­tion will shrink 40pc.

Even the com­pany’s big­gest crit­ics had to ac­knowl­edge it is a bold step. Green­peace UK’s chief sci­en­tist Doug Parr de­scribed it as “a pretty big change from BP”, while the green share­holder ac­tivist group Fol­low This said BP was “the first to walk the walk”.

And yet, it is still too soon for cham­pagne corks. Five bil­lion dol­lars is un­doubt­edly a big jump from the pal­try $500m BP cur­rently spends a year on green projects, but it is only one third of the $14bn to $16bn it will still be fork­ing out on oil and gas drilling in 10 years’ time. And for that rea­son, there’s more reimag­in­ing needed.

‘Green­peace UK’s chief sci­en­tist de­scribed it as a pretty big change from BP’

Di­a­geo’s lock­down hang­over

Like all com­pa­nies, this year has been one of “two halves” for drinks gi­ant Di­a­geo but its prob­lem is that peo­ple haven’t been drink­ing enough halves, or shots, or cans, or any other mea­sures.

There’s an as­sump­tion that while the hu­man race has been holed up at home dur­ing lock­down, ev­ery­one has been get­ting soz­zled in their py­ja­mas while watch­ing Homes Un­der the

Ham­mer or what­ever the over­seas equiv­a­lent is. That may ac­tu­ally be true but the Guin­ness and John­nie Walker whisky maker re­lies on pubs, clubs and restau­rants for a big chunk of its trade, and with drink­ing venues closed from the end of March un­til July, prof­its have halved and the com­pany has taken a £1.3bn hit on the value of var­i­ous units.

Di­a­geo’s great strength over the years has been its ge­o­graphic reach. It is one of the FTSE’s few truly global con­stituents with size­able op­er­a­tions on six of the world’s seven con­ti­nents. Its reach is meant to be a nifty hedge so that if one cor­ner of the sprawl­ing booze em­pire is a lit­tle lack­lus­tre, other parts pick up the slack.

In­stead, with the pan­demic rag­ing, Di­a­geo is strug­gling in every mar­ket. It has writ­ten down busi­nesses in In­dia, Nige­ria, Ethiopia and South Korea; sales fell in Europe, Latin Amer­ica, Africa, and Asia; and cus­tomers drank less scotch, vodka, rum, gin and beer.

A rare bright spot was North Amer­ica, where te­quila sales tre­bled. Boss Ivan Menezes could prob­a­bly do with a shot or two to calm his nerves.

Wing and a prayer for Boe­ing

The Fed­eral Avi­a­tion Ad­min­is­tra­tion has laid out four re­quire­ments that the Boe­ing 737 Max pas­sen­ger jet must meet be­fore it can re­turn to ser­vice, in­clud­ing al­ter­ations to the plane’s wiring and flight con­trol soft­ware. A more ob­vi­ous one might be that it stops fall­ing out of the sky.

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