BP to guard capability, maintain green spending in strategy revamp: executive

BP will guard its technical capability and remains committed to cash-generative parts of the renewables sector, executive vice president Gordon Birrell said Feb. 25 ahead of a strategy revamp widely expected to refocus the company on oil and gas investment.

Speaking the day before BP's capital markets update, Birrell outlined a string of recent final investment decisions, spanning two carbon capture and storage projects -- in the UK and Indonesia -- two hydrogen projects in Europe, and the Kaskida oil project -- the latter creating a new production hub for the company in the US Gulf of Mexico.

BP is under intense pressure from core investors to scrap previous guidance on reducing oil and gas production in favor of renewables, but has also encountered pushback from investors such as insurance companies that see continued value in renewables. CEO Murray Auchincloss will outline his plans Feb. 26 in London.

BP would not be involved in renewables generation for the sake of generation, but in more lucrative parts of the value chain, including hydrogen and potentially ammonia, Birrell told the IE Week Conference.

Despite large-scale job cuts and the curtailment of 24 early-stage projects at BP, "we're going to hold onto that technical capability that we need to continue to sustain our delivery of oil, gas, refining, plus the low-carbon projects that we've invested in, so we're protecting that technical capability that's so important to us," he said.

In renewables, "we're investing in the wind business and the solar business, and the [carbon capture and storage] business to have green electrons available, not necessarily just to sell green electrons but to have a value chain... with perhaps green hydrogen... maybe moving onto 'green ammonia' eventually and other products," Birrell said. "The electrification part of our company is in service of that -- in service of other products, rather than the green electron on its own, then we can choose how and where to take the rent from that system."

US commitment

Birrell stressed the centrality of US oil and gas to BP, as well as recent efforts to secure new resources in India and the Middle East -- likely alluding to negotiations BP has been undertaking in Iraq on redeveloping oil fields in Kirkuk.

The US remains "one of the most attractive places to invest in oil and gas and indeed previously in renewables, but for the moment in oil and gas," Birrell said, alluding to BP's 2024 decision to exit US onshore wind investments.

"We continue to put a huge amount of our investment capital every year into the US," he said, adding that the BPX shale business encompassed the "best geology" in the Permian basin, the Eagle Ford basin and the gas-focused Haynseville basin. "I'm very optimistic about" the US, he said.

In exploration around the world and the US in particular, BP is benefiting from new ocean-bottom seismic survey technology, coupled with expertise and computing facilities in Houston, he said. This technology had yielded an additional 20 billion barrels of oil equivalent in resources for BP in the Gulf of Mexico, Birrell said.

The message of BP's capital markets update would be about delivering "safe, reliable, low-cost energy to the world," Birrell said.