BP tak­ing up to $17.5B hit as pan­demic ac­cel­er­ates emis­sions cuts

Richmond Times-Dispatch - - BUSINESS - BY DANICA KIRKA

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.

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