BP 'leaning in' on energy transition, but world needs reliable, affordable supply: CEO Looney

Maintaining economic stability and security of energy supply requires investing in "today's energy system" as well as new transition technologies, with the UK set to play a leading role, BP CEO Bernard Looney said Feb. 28, defending the company's revamped strategy.

Speaking at the International Energy Week conference, Looney defended a strategy shift by BP earlier in February, entailing greater spending on both oil and gas, and low-carbon areas, as well as a shallower-than-planned reduction in oil and gas output. He said BP was "leaning in" on the original energy transition strategy he announced when taking up his role in 2020.

Stressing the importance of an "orderly," but not slow energy transition, Looney said volatility in the energy system could undermine public confidence in the energy transition project as people wanted affordable, reliable supply.

"Ask people today what they want from energy and the answer is more likely to be an energy system that works. An energy system that works is one that provides energy that is secure and affordable as well as lower carbon," Looney said. "Action is clearly needed to accelerate the energy transition and at the same time that transition has got to be orderly. We need to invest in the energy transition and we need to invest in today's energy system, which is predominantly an oil and gas system."

Looney also stressed BP's UK role, which he described as a "microcosm of the BP strategy," saying the company plans new wells in the West of Shetland Schiehallion oil field, along with the largest ever seabed survey to facilitate positioning of new wind farms.

He also highlighted BP's investment in new hydrogen plants in northeast England and a new power plant with carbon capture technology.

"Governments all around the world are looking to countries like ours to do this, to do both" investment in oil and gas, and low-carbon energy technologies, Looney said.

"Orderly is not another word for slow. What it does mean is keeping affordable energy flowing when and where it's needed."

"On the transition we're focused on quick, near-term solutions that can help people and businesses decarbonize sooner, like EV charging and sustainable aviation fuel. On oil and gas, we're focused on high-quality options where we can deliver quickly," he said.

BP on Feb. 7 announced an expected investment increase of $16 billion over the coming decade split equally between oil and gas on the one hand and on the other, "transition growth engines" including hydrogen, bioenergy, renewables, electric vehicle charging and its convenience retail business.

At the same time, it retired an earlier forecast that it would reduce its oil and gas output by 40% by the end of the decade compared with 2019 levels, giving new guidance of a 25% reduction.

In the face of claims the company is watering down its commitments, Looney reiterated a forecast that BP would be devoting 40% of its capex to "transition growth engines" by 2025 and 50% by 2030.

Energy transition criticisms

However, Russia's invasion of Ukraine and subsequent sanctions show that "sudden loss of even a small part of the world's oil and gas can have severe economic and social costs," Looney said. "Reducing supply without also reducing demand inevitably leads to price spikes, price spikes lead to economic volatility. There's a risk that volatility will undermine popular support for the transition."

Speaking at the same event, BP was criticized for a lack of ambition by Simon Morrish, CEO of XLinks, a company planning a new 3.6 GW subsea renewable power cable to the UK from Morocco.

"It was a real shame that Bernard Looney was up on the stage earlier today saying that by 2030 he was still going to be investing 50% of BP's capital in climate-destroying hydrocarbons," Morrish said. "That lacks a massive amount of ambition when effectively you can have systems through green energy and nuclear" to meet energy security needs, he said.