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BP looks to double LNG portfolio by 2030 to 30 million mt/year: CFO


Part of switch to integrated energy company

BP looking at share of merchant, equity LNG

Sees future role for both blue, green hydrogen

  • Author
  • Stuart Elliott
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  • Jonathan Dart
  • Commodity
  • Coal Electric Power LNG Natural Gas

London — BP plans to double the size of its global LNG portfolio to 30 million mt/year by 2030, CFO Murray Auchincloss said August 4, as part of the company's new low-carbon strategy.

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Downstream gas supply remains a key pillar of BP's new strategy despite a pledge to cut upstream production sharply in the coming years to focus on low-carbon energy supply including renewables, bioenergy and hydrogen.

Speaking to analysts, Auchincloss said BP's current LNG portfolio was around 15 million mt/year, made up of equity and merchant volumes in a roughly 50-50 share.

"So we're going from about 15 million mt/year now to 25 [million mt/year] by 2025 and 30 [million mt/year] by 2030," he said.

The key to expanding the portfolio would be decisions around the mix of equity LNG versus merchant LNG, he said. "That is really the big thing that we'll have to work our way through," he said.

BP has built up more merchant LNG in its portfolio in recent years by agreeing offtake from projects where it does not hold equity, such as an agreement to buy LNG from the Eni-operated Coral LNG facility in Mozambique.

"We've got a great merchant portfolio now where you can take advantage of arbitrage and move things across locations," Auchincloss said.

He said the big decision for the coming decade is around how to build out its equity LNG position and making projects competitive, citing projects such as Browse LNG in Australia, the Tortue LNG project offshore Mauritania and Senegal, and the Tangguh LNG project in Indonesia.

"Can we get Browse off the ground with a low enough carbon content that the government and partners are happy? Can we do the next wave of LNG in Mauritania/Senegal, can we make it competitive enough?" he said.

"The challenge for our teams is how do we make sure that our own equity [LNG projects] -- the Browses of the world, the Mauritania/Senegals of the world, the Indonesias of world -- are low-cost and competitive against Henry Hub exported [LNG], with the right carbon footprint," he said.

"Or should we instead move to merchant [LNG] where you don't have to deploy that capital? That's a choice ahead of us."

Auchincloss -- who described the global gas market as likely to remain "materially oversupplied" in 2020 -- also said BP expected its Ghazeer gas project in Oman to start up this year, ahead of schedule.

Ghazeer -- the second phase of the giant Khazzan gas field in Oman -- had been expected to start up in 2021 and is expected to deliver an additional 0.5 Bcf/d of gas and over 15,000 b/d of condensate production.

Hydrogen development

As part of its new low-carbon strategy, BP also said it plans to accelerate work in hydrogen developments -- both blue hydrogen (fuel produced from natural gas in combination with carbon capture and storage) and green hydrogen (from renewable energy using electrolysis).

"We will seek early positions in hydrogen and CCUS," CEO Bernard Looney said.

BP's executive vice president for strategy and sustainability, Giulia Chierchia, said the company saw hydrogen and CCUS as "critical" to the world delivering net zero carbon emissions.

"Under our Paris-consistent scenarios, hydrogen grows to meet between 7% and 17% of final energy consumption, and even at the lower end of this range, hydrogen is a significant source of low carbon energy," Chierchia said.

"We believe in the role for both blue and green hydrogen, and we'll focus on both in North America and Europe, targeting industrial and heavy-duty transport as well as the Australian export market for green hydrogen," she said.

Chierchia said hydrogen would play a key role in its energy portfolio, with BP aiming for a 10% share in core markets.

"We're looking into evolutions in terms of hydrogen, both in terms of technology, but cash cost curves to actually make those technologies available," she added.