BP PLC plans to continue investing in lower-return renewable fuels and technologies while also using its oil businesses to maintain solid cash flow and a healthy dividend to shareholders, CEO Bob Dudley said Sept. 18.
The London-based oil major will continue to lead the sector in the energy transition toward a lower-carbon world; however, the company will also remain competitive on returns as it looks to lower the cash breakeven below $50 per barrel of oil, Dudley said during a discussion hosted by the Center for Strategic and International Studies in Washington, D.C.
In a Sept. 12 conference call with JPMorgan, Dudley said BP could divest some of its more carbon-intensive assets and scale back the development of other traditional projects as it works to cut emissions and reduce debt.
However, the CEO cautioned Sept. 18 that while BP and many of its competitors have been making progress toward aligning with the goals of the Paris Agreement on climate change, there is not a direct road to get there, and the use of traditional fuels such as oil and natural gas will remain.
"The world is going to need all fuels; it is going to need oil," Dudley said Sept. 18, pointing to expectations for rising global energy demand through 2040. "Our role [at BP] is to create a return on investment or we go away, we don't exist."
In the last few years, many of the oil majors, including Royal Dutch Shell PLC and BP, have been increasing equity investments in non-oil businesses, including wind and solar. But like many of its peers, BP has been under heavy pressure from investor activist groups to reduce the carbon intensity of its operations.
At BP's annual general meeting in May, shareholders approved an investor-backed resolution to broaden the way the company reports its greenhouse gas emissions and climate goals. However, Dudley said it is difficult to project precise climate and carbon-reduction scenarios looking 30 years into the future.
"Are we on track [to meet the Paris agreement goals]? I think we are doing all the right things," Dudley said.
