Issue of the week: BP’s energy crisis
The oil and gas major says it wants to become “a tech company”. What are the chances of that?
The new boss of BP, Bernard Looney, was described last year as “the man to win over the millennials”. He missed a chance to do that last week, said Emily Gosden in The Times. As Greenpeace protesters blockaded the oil major’s London HQ, Looney was posting Instagram updates from Germany, “where he was meeting a rather more sympathetic crowd of BP employees”. There followed a weekend of protest at the British Museum (where BP is a sponsor), which, according to The Guardian, was backed by museum staff. Even the Church of England is in on the action, leading calls for the oil major to cut its carbon emissions to “net zero”. There’s a long way to go. BP’s current “carbon footprint, including customers using its products, is larger than that of the entire UK”.
Looney has said that he wants BP to be seen as much as “a tech company” as anything else. But as the oil major grapples with the global shift to green energy, he faces the difficult task of trying to juggle pressure from campaigners and ethical investors, while also soothing other shareholders more concerned about protecting their dividends. The long tilt “away from high-carbon stocks and towards disruptive greener alternatives is already under way”, said Michael Mackenzie in the FT. But few investors could have imagined it would be quite so “abrupt and startling”. The energy sector’s weighting in the S&P 500 has shrunk from 11.4% in 2010 to less than 4% today. Meanwhile, Exxon-Mobil – the planet’s most valuable company in 2012 – has dropped off the list of the world’s top ten biggest companies altogether. The push towards meeting tougher climate standards is weighing heavily on the sector, “with some warning of a future where oil majors may never extract their vast reserves”.
Oil majors are facing “a particularly tough” year, with a slump in Chinese demand thanks to the coronavirus – and a corresponding fall in the oil price – weighing heavily on their figures, said Michelle McGagh on Citywire. BP’s profits plunged 26% last quarter, though the company pleased investors by announcing a 2.4% rise in the dividend. But Looney has balanced that by setting a more ambitious carbon reduction target than European rivals such as Shell and Total, said Anjli Raval in the FT. It is pledging net-zero emissions by 2050 or sooner, and “a 50% cut in the carbon intensity of the products BP sells”. That wasn’t enough, though, to pacify Greenpeace, which noted the billions BP will continue to invest in new oil and gas production. Looney’s contract reveals that he’s “entitled to a car appropriate to his status” while performing his duties, observed Prufrock in The Sunday Times. “Let’s hope it’s an electric one.”