BP share price: Energy giant to increase oil and gas production - here's what it could mean for the North Sea

The fossil fuels giant has unveiled its new strategy, which will involve BP refocusing its efforts on increasing oil and gas production. This comes after investors were unhappy with BP’s profits and the fact its share price is much lower than its rivals.

BP said it still hopes to become a net-zero company, but will only spend up to $2 billion [£1.6bn] a year on projects aimed at the energy transition, in a significant cut.

The company said it would increase oil and gas investment by about 20 per cent to $10bn [£7.9bn] a year. Chief executive Murray Auchincloss said the company is focusing its spending on BP’s “highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency”.

Scottish Green co-leader Lorna Slater said: “After years of greenwashing and spin, it seems that BP has stopped pretending to care about our climate. This is a conscious act of climate vandalism and environmental negligence that can only have a devastating impact on people and planet.

“Companies like BP have spent years raking in obscene profits at the expense of the world around us while making false promises that they would use it to diversify away from fossil fuels.

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“Some of us will remember their cynical Beyond Petroleum campaign. The reality is that the climate emergency is only getting worse and some of the worst polluters are doing even less to stop it.”

Ms Slater said the oil and gas industry “cannot be trusted” to make the transition to green energy. She said the UK government must now enforce “robust” regulations to force them to do so.

Ms Slater said Labour must “finally close the loopholes in the windfall tax” to make sure energy giants like BP are paying their fair share, adding: “Our best defence against global oil and gas prices is to make the investment that is needed in clean, green renewable energy, so that we can have proper energy security while lowering bills.”

BP now plans to grow production to 2.3 million to 2.5m barrels of oil a day by the end of the decade. It will also scrap its plans to cut fossil fuel production completely, cut its renewable spending by $5bn a year to between $1.5bn and $2bn, and sell $20bn of its businesses in the next two years.

BP also plans to cut its net debt from $23bn to between $14bn-$18bn by the end of 2027.

A bellwether of UK North Sea oil and gas production, BP first located natural gas in the southern North Sea working with the rig Sea Gem in 1965, and has been one of the biggest stakeholders in the industry over the past six decades.

Five years ago BP set some of the most ambitious targets to cut oil and gas production by 40 per cent by 2030. In 2023, the company lowered this target to 25 per cent.

It is now expected to abandon this target altogether and cut its investments in renewable energy by more than half.

Last year BP’s net income fell to $8.9bn (£7.2bn), which is down $13.8bn on the previous year.

Since 2020 when its renewable strategy was first introduced, shareholders have received returns of 36 per cent. In contrast, shareholders at rivals Shell and Exxon have seen returns of 82 per cent and 160 per cent respectively.

Shares in BP rose more than 1 per cent ahead of the announcement, but were trading 1.8 lower after the official announcement.

Charlie Kronick, senior climate advisor at Greenpeace UK, said: “Government policies will also need to prioritise renewable power, and as extreme weather puts pressure on insurance models, policymakers will be looking to fossil fuel profits as a way to fund extreme weather recovery.

“BP might want to seriously put the brakes on this U-turn.”

Mr Auchincloss added: “Today we have fundamentally reset BP’s strategy. We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency.”

Chiara Liguori, senior climate justice policy advisor at Oxfam GB, said: “It is gravely wrong that big polluters like BP can just abandon their climate targets in pursuit of higher profits.

“These profits come with a huge climate cost that impacts us all, but it is people living in poverty who are left paying the highest price for a climate crisis they did little to cause.

“Instead of being allowed to increase their polluting activities, fossil fuel companies like BP must be held to account by taxing them more, both to incentivise a fair switch to a low-carbon economy that benefits everyone and to ensure the costs of addressing climate change fall on those most responsible.

“People and planet must be put before profit and greed, for the sake of us all.”