BP vows to be tight-fisted despite oil price rally

FLORENCE, ITALY: BP will not change its spending plans because of rising global oil prices and is preparing to approve projects this year that can make money with prices below US$ 40 a barrel, the head of its oil and gas division Bernard Looney told Reuters.

Irishman Looney, 46, is seen across the industry as one of the strongest candidates inside BP to succeed Chief Executive Bob Dudley, 62, who is expected to serve at least a few more years in the job.

Like its rivals, BP is set to enjoy a strong increase in revenue from the 50 percent rise in oil prices since the middle of last year to around US$ 70 a barrel.

But Looney, in a rare interview, said the British company would retain the spending discipline it achieved through deep cost cuts and more efficient work patterns during the three-year downturn from 2014.

BP said last year it would have annual capital expenditure of US$ 15-17 billion until 2021.

“Discipline has to remain the word and we shouldn’t be seduced by the oil price,” Looney told Reuters on the sidelines of the Baker Hughes conference in Florence.

“We’re not going to say that now that the oil prices are back up, let’s do more, let’s spend more,” Looney said.

The company, which still faces billions in penalties over the deadly 2010 Deepwater Horizon spill, is now able to generate profit with oil prices in the US$ 50s per barrel, halving the break- even from earlier in the decade. — Reuters