BP, the British oil group, will unveil a strategic revision on Wednesday, signalling a turning point in its energy transition commitments. After a 97% drop in net profit in 2024, the oil giant, led by Murray Auchincloss, announced its intention to focus more on its core hydrocarbon activities, particularly oil and gas, which remain its primary profit drivers. This revision comes amid mounting pressure from investors, including activist fund Bluebell, which has called for a drastic reassessment of BP’s climate targets, deeming them unrealistic.
Speculation surrounding this strategic shift has fuelled market expectations of a further retreat from BP’s climate ambitions, particularly after the company had already scaled back its hydrocarbon production reduction targets in 2023. BP now aims for a 25% decrease in oil and gas production by 2030, compared to an initial goal of 40%. The group has also indicated that it will significantly cut back its investments in renewable energy.
Rumours of a stake acquisition by activist fund Elliott Management, known for advocating corporate restructuring, have further intensified pressure on BP. There is growing speculation over potential scenarios, including a company split, a leadership reshuffle, or even a move to list the company in the United States. This climate of uncertainty has already impacted BP’s stock performance, which continues to lag behind its main competitors.
Pressure from activist investors
Investment fund Bluebell, which has been pushing for BP to scale down its environmental ambitions, has stepped up calls for the company to realign its priorities. Analysts suggest that this investor pressure could drive BP to redirect its resources towards fossil fuels to ensure higher short-term financial returns. This strategic pivot is widely viewed as a direct response to concerns about the profitability of its renewable energy investments.
Elliott Management, another key player in this development, has acquired a significant stake in BP, reinforcing expectations of a major strategic overhaul. The activist fund is often associated with interventions aimed at boosting financial performance, which could lead to a complete restructuring of BP’s leadership or strategic priorities.
Workforce reductions and new oil projects
Alongside this strategic revision, BP has announced an internal workforce reduction, cutting 4,700 jobs, representing over 5% of its employees. The group has also finalised an agreement with the Iraqi government to develop several oil and gas fields in the Kirkuk province. These projects highlight BP’s commitment to strengthening its hydrocarbon activities, both in terms of exploration and production, while limiting investments in low-carbon energy initiatives.
While this renewed focus on fossil fuels has drawn criticism from NGOs such as Greenpeace, some industry observers believe BP is following a broader trend in the oil sector. Other major players, including Shell and TotalEnergies, have also adjusted their renewable energy investments while continuing to prioritise oil and gas.
