BP taking up to $17.5B hit as pandemic accelerates emissions cuts
LONDON — The coronavirus pandemic is reducing demand for oil and gas and forcing major energy companies to accelerate the shift from fossil fuels. The latest sign: BP says it will cut the value of its oil and gas assets by as much as $17.5 billion and review plans for some oil wells.
The London-based company said Monday that it was taking the steps because demand for energy is likely to remain weaker for “a sustained period” as countries respond to the pandemic by boosting efforts to reduce carbon emissions.
BP in February pledged to become a “net-zero company by 2050, meaning it will eliminate or offset all carbon emissions from its operations and products by that date. But oil companies are being forced to move faster than planned because the pandemic is already squeezing the profits they are counting on to finance the transition.
BP said the actions announced Monday would result in after-tax impairment charges and write-offs of between $13 billion and $17.5 billion when the company reports secondquarter earnings.
The structural shift in the energy industry has combined with unusually high oil and gas supplies to create a perfect storm on global energy markets at the start of the coronavirus outbreak.
With storage facilities filling up and demand plunging as economies were locked down, the U.S. price of oil went below zero in April for the first time ever.
Only a week ago, BP announced it would cut 10,000 jobs to reduce costs and adapt to lower prices and plummeting global demand.
Monday’s announcement makes clear that the pandemic has hastened the move away from fossil fuels.
“This is the energy transition happening, said David Elmes, an energy expert at Warwick Business School in northern England. ”The question is who can do it and how fast they can do it.