BP resets commercial strategy to focus on oil and gas

26 February 2025

BP announced a “fundamentally reset strategy”, with significant capital reallocation to grow its upstream oil and gas business and “invest with increasing discipline into the transition.” The new strategy is aimed at reducing costs, improving performance, and growing free cash flow, returns and long-term shareholder value.

The key components on the new strategy are:

• Reducing capital expenditure and costs: Targeting total capex of $13–15 billion p.a. to 2027, some $1–3 billion lower than in 2024; targeting significantly higher structural cost reductions of $4–5 billion by the end of 2027.
• Reallocating capital expenditure to higher growth: Increasing oil & gas investment to ~$10 billion p.a.; growing production to 2.3–2.5 million barrels of oil equivalent in 2030.
• Disciplined investment in the transition: Reducing transition business investment to $1.5–2 billion p.a., over $5 billion p.a. lower than previous guidance; selective investment in biogas, biofuels and EV charging; capital-light partnerships in renewables; focused investment in hydrogen and CCS.
• New divestments: Targeting $20 billion in divestments by the end of 2027; carry out a strategic review of Castrol.
• Reducing net debt: Targeting a range of $14–18 billion by the end of 2027.

Two decades ago, BP repositioned itself as “Beyond Petroleum” to embrace low-carbon energy technologies—solar and wind power, biofuels, and hydrogen energy development. In 2020, the former CEO Bernard Looney pledged to cut BP’s oil and gas output by 40% by 2030 compared to 2019. But the bid on renewables has not produced the expected returns and the company found itself in an increasingly dire financial situation.

Since the current CEO Murray Auchincloss took over in January 2024, BP shares have fallen 11%, while competitors including ExxonMobil and Shell grew. Last year, Auchincloss said he would cut the company’s costs by at least $2 billion by the end of 2026 to boost returns and address investor concerns over its energy transition strategy.

Earlier this month, BP announced plans to sell the BP Gelsenkirchen refining site in Germany, along with related assets.

Source: BP