BP warns of net-zero price risks

CUTTING fossil fuel supplies too quickly risks a fresh surge in energy prices, the boss of BP has warned.

Bernard Looney, chief executive, said supply and demand needed to fall at the same pace to lessen the risk of “economic volatility”.

He called for a “cautious” approach to avoid a repeat of the surge in oil and gas prices over the past year following Russia’s invasion of Ukraine.

BP is investing heavily in renewable energy as it starts to diversify from oil and gas. However, this month it dialled back on targets to cut oil and gas production by 40pc by 2030, saying it will now only cut by 25pc.

Speaking at the International Energy Week conference in London yesterday, Mr Looney said the shift to net-zero emissions was a “massive opportunity”.

He added: “I’m an optimist. That does not, however, mean that we don’t need to be cautious. As the events of last year demonstrated, the sudden loss of even a small part of the world’s oil and gas can have severe economic and social costs.

“Reducing supply without also reducing demand inevitably leads to price spikes, leading to economic volatility. And there’s a risk that volatility will undermine popular support for the transition, an outcome that nobody wants.

We avoid that outcome by investing in today’s energy system, as well as investing in the transition.”

Surging oil and gas prices helped BP hit record profits of $27.6bn (£22.8bn) in 2022. The company plans to invest up to $8bn per year in oil and gas and $8bn per year in cleaner energy, up to 2030.

Separately, the International Energy Agency (IEA) warned that China’s reopening could prompt a fresh surge in gas prices. Gas prices have fallen back to prewar levels in recent weeks thanks to milder weather, helping to ease the cost of living crisis. The IEA said China’s demand for liquefied natural gas could grow by as much as 35pc this year as it emerges from its strict zero-covid policy.