BP expects impairments of up to $2 billion in 2Q 2024

BP announces "unfavorable adjustments" of $1-2 billion in the second quarter of 2024, mainly due to the transformation of its Gelsenkirchen refinery in Germany.
Dépréciations BP deuxième trimestre 2024

Partagez:

BP, the British oil giant, has announced that it anticipates “unfavorable adjustments” after tax of between $1 billion and $2 billion for its second-quarter 2024 results. These adjustments include significant charges relating to the conversion of the Gelsenkirchen refinery in Germany.

Strategic transformation of Gelsenkirchen

The transformation of the Gelsenkirchen refinery, announced last March, aims to reduce the site’s total production capacity from 2025. BP plans to increase production of low-emission fuels in response to growing pressure for a more sustainable energy transition. This initiative is part of a broader strategy to shift towards less polluting energies.

At the same time, BP has warned that its refining margins for the second quarter will be “significantly lower” than in the previous quarter, as will those of Shell. This fall in margins is attributed to fluctuations in hydrocarbon prices and the impact of ongoing strategic adjustments.

Stability and production outlook

Despite these adjustments, BP indicated that its overall production should remain stable compared with the previous quarter. However, the company expects a slight drop in production in the gas and low-carbon energy segments. This relative stability in oil production contrasts with initial expectations of a slight decrease.

The Group also emphasized that its oil sales would be down, reflecting a trend observed since the beginning of the year. BP had posted a sharp fall in first-quarter earnings, mainly due to lower hydrocarbon prices, which affected revenues and margins.

Comparison with Shell

Shell, BP’s main competitor, recently announced write-downs of up to $2 billion in the second quarter of 2024. These write-downs mainly relate to the suspension of a major biofuels project in Rotterdam, the Netherlands, and its facilities in Singapore.

Shell’s Dutch project to produce sustainable aviation fuel (SAF) and renewable diesel was put on hold for an unspecified period of time, resulting in after-tax write-downs of between $0.6 and $1 billion. In addition, Shell’s Singapore facilities could generate write-downs of between $0.6 and $0.8 billion. These adjustments reflect the current challenges facing the Group in the context of fluctuating hydrocarbon prices and ongoing strategic adjustments.

Shell also warned that its gas sector’s performance for the second quarter would be in line with the previous year, but below that of the first quarter 2024 due to seasonality.

Future strategies and implications

Both BP and Shell have slowed down some of their original climate targets, preferring to focus on oil and gas activities to maximize short-term profits. This strategic reorientation drew criticism from environmental activists, who saw it as a step back from previous climate commitments.

BP and Shell’s forthcoming earnings releases and strategic decisions will give crucial indications of their ability to navigate between the pressure for climate action and the need to maintain robust financial returns. The evolution of these projects and the strategies adopted by the two oil giants will be closely followed by analysts and investors.

Orlen announces the definitive halt of its Russian oil purchases for the Czech Republic, marking the end of deliveries by Rosneft following the contract expiry, amid evolving logistics and diversification of regional supply sources.
Equinor and Shell launch Adura, a new joint venture consolidating their main offshore assets in the United Kingdom, aiming to secure energy supply with an expected production of over 140,000 barrels of oil equivalent per day.
Equinor announces a new oil discovery estimated at between 9 and 15 mn barrels at the Johan Castberg field in the Barents Sea, strengthening the reserve potential in Norway's northern region.
Sierra Leone relaunches an ambitious offshore exploration campaign, using a 3D seismic survey to evaluate up to 60 potential oil blocks before opening a new licensing round as early as next October.
Faced with recurrent shortages, Zambia is reorganising its fuel supply chain, notably issuing licences for operating new tanker trucks and service stations to enhance national energy security and reduce external dependence.
The closure of the Grangemouth refinery has triggered a record increase in UK oil inventories, highlighting growing dependence on imports and an expanding deficit in domestic refining capacity.
Mexco Energy Corporation reports an annual net profit of $1.71mn, up 27%, driven by increased hydrocarbon production despite persistently weak natural gas prices in the Permian Basin.
S&P Global Ratings lowers Ecopetrol's global rating to BB following Colombia's sovereign downgrade, while Moody’s Investors Service confirms the group's Ba1 rating with a stable outlook.
Shell group publicly clarifies it is neither considering discussions nor approaches for a potential takeover of its British rival BP, putting an end to recent media speculation about a possible merger between the two oil giants.
Petro-Victory Energy Corp. starts drilling of the AND-5 well in the Potiguar Basin, Brazil, as the first phase of an operation financed through its strategic partnership with Azevedo & Travassos Energia.
The Texan Port of Corpus Christi has completed major widening and deepening work designed to accommodate more supertankers, thus strengthening its strategic position in the US market for crude oil and liquefied natural gas exports.
BP Prudhoe Bay Royalty Trust is offering its interest in Prudhoe Bay, North America’s largest oil field, as part of its planned dissolution, assisted by RedOaks Energy Advisors for this strategic asset transaction.
CNOOC Limited’s Hong Kong subsidiary and KazMunayGas have concluded a nine-year exploration and production contract covering nine hundred and fifty-eight square kilometres in Kazakhstan, sharing investment and operations equally.
Donald Trump announced that the United States will no longer oppose Chinese purchases of Iranian oil, immediately triggering a drop in global crude oil prices and profoundly reshaping international energy trade partnerships.
Research firm S&P Global Commodity Insights lifts its outlook for the fourth straight year, betting on three point five mn barrels per day from 2025 despite lower prices.
Enbridge plans to expand its infrastructure to increase oil transportation from the American Midwest to the Gulf Coast, anticipating rising exports and addressing current market logistical constraints.
US commercial crude inventories significantly decline by 3.1 million barrels, widely surpassing initial forecasts and immediately pushing international oil prices higher.
The UK could have hydrocarbon reserves twice as large as current official estimates, according to Offshore Energies UK, highlighting the impact of fiscal policies on forecasts and the economic future of the North Sea.
Following US strikes in Iran, international energy companies partially evacuate their teams from Iraq as a precaution, while Lukoil maintains its entire personnel on southern oilfields.
Chinese independent refineries remain cautious amid rising Iranian crude prices driven by escalating Iran-Israel tensions, potentially threatening access to the strategic Strait of Hormuz.