BP held its Investor Day on February 26, 2025, in London, where CEO Murray Auchincloss unveiled a “fundamental reset” of the company’s strategy, pivoting away from its previous aggressive energy transition focus toward a stronger emphasis on oil and gas. This shift scraps earlier ambitions, like the 2020 pledge to cut oil and gas output by 40% by 2030 and the 2023 revision to a 25% cut, as well as the goal to grow renewable generation capacity 20-fold to 50 gigawatts by 2030. Instead, BP is doubling down on fossil fuels to boost earnings and regain investor confidence after years of underperforming rivals like Shell and Exxon.
BP plans to increase annual investment in oil and gas to $10 billion through 2027, up from previous levels, aiming to grow production to 2.3-2.5 million barrels of oil equivalent per day (boepd) by 2030, compared to 2.36 million boepd in 2024. New projects include the Kaskida and Tiber fields in the Gulf of America and investments in Iraq and Kuwait.
Investment in transition businesses (renewables, hydrogen, EV charging) is slashed by over $5 billion annually, now set at $1.5-2 billion per year, down from a prior $5-6 billion target by 2030. BP is also reviewing its Castrol lubricants business and seeking a 50% partner for its Lightsource BP solar unit.
Total capital expenditure is cut to $13-15 billion annually through 2027 (from $16.24 billion in 2024), with $20 billion in divestments targeted by 2027 to reduce net debt to $14-18 billion. Shareholder returns include a 4% annual dividend increase and $750 million to $1 billion in Q1 2025 share buybacks, lower than the prior $1.75 billion forecast.
BP retains its net-zero-by-2050 ambition but refocuses sustainability on operational emissions (now targeting a 45-50% cut by 2030 from 2019 levels) and key business-relevant areas, dropping broader decarbonization goals.
Where are we now?
First of all, energy is a growth market, BP told. The world is in an “energy addition” phase – consuming increasing amounts of both fossil fuels and low carbon energy. Second, oil and gas will be needed for decades to come. Global demand for oil and gas to 2035 continues to be robust, including strong growth in natural gas demand from emerging Asian economies. Demand for North American natural gas is set to expand by around 15% in the same period; and LNG demand grows by around 50% to 2035. Third, while the pace and shape of the energy transition is uncertain, BP continue to view it as a significant opportunity to grow value. Global carbon emissions need to be reduced and, as well as looking for more energy, countries, companies and customers are looking for lower carbon products and services to support their own decarbonisation objectives, the company said.
It’s clear that BP operates in a growing and dynamic industry. And BP is well positioned to compete, the company reported. Electricity demand increases by around one third to 2035. Wind and solar both continue to grow quickly, and markets for carbon capture and low carbon hydrogen are beginning to develop. Demand for bioenergy grows around 35% to 2035.
In upstream: BP established new partnerships, like their gas JV in Egypt with ADNOC, reached final agreement for new resource access in Iraq, expanded in India, and divested mature gas fields in Trinidad. In downstream: the company announced exits from the Netherlands and Türkiye retail markets, acquired full ownership of BP bioenergy, and sold the SAPREF refinery. The company is planning to further simplify and focus the portfolio, with the announcement of a $20 billion divestment programme, which BP expect to deliver through 2027.
The upstream is, and will continue to be, BP’s primary cash generating business. To grow the upstream BP is focused on: – maintaining safe and efficient operations – this underpins everything BP do; – increasing oil and gas investment to $10 billion per year for 2025 to 2027, with expected returns of greater than 15%; and – strengthening the portfolio through discovered resource access in the company’ core regions including the Middle East, Azerbaijan and Trinidad; while BP reload the exploration hopper. The outcome is an upstream that is growing to 2.3 to 2.5 million barrels a day in 2030, with around 1 million barrels of oil equivalent per day expected to be delivered from the US, and with the capacity to increase production out to 2035.
BP expect to increase operating cash flow by around $2 billion in 2027 compared to 2024. And going forward, their Archaea business will now be reported within gas and low carbon energy. BP will continue the disciplined build out of Archaea, a business with competitive returns, where we hold a market leading position and expect to be cash flow positive from 2026. BP test project economics at $60/bbl Brent.
“Our strategy is being fundamentally reset. We are reallocating capital to drive growth from our highest returning businesses. We acknowledge performance has not been where we want it to be. And we are focused on relentlessly driving improvement. This is all in service of growing long-term shareholder value for you our investors, which is at the core of the strategy we are presenting today. It’s underpinned by a plan that delivers compelling free cash flow and strong returns growth, supporting resilient distributions and a stronger balance sheet,” BP said.
BP’s move reflects pressure from investors— notably activist Elliott Investment Management’s 5% stake—and a market favoring near-term returns over long-term green bets, especially post-Ukraine energy security concerns and higher fossil fuel prices. Analysts see this as a pragmatic retreat from the “Beyond Petroleum” idealism that tanked its stock (down 16% in 2024 vs. rivals), though some, like RBC’s Biraj Borkhataria, note the capex cuts and returns might not fully satisfy investors expecting a bigger payout.
UK oil major BP pledged to increase annual oil and gas spending to 10 billion, cut investment into renewables from $5 billion to $1.5-2 billion per year and carry out divestments worth $20 billion by 2027. BP cuts renewable investment and boosts oil and gas in strategy shift. The company boosts oil and gas investment to $10 bln annually. Cuts annual transition spending by over $5 billion.
Energy transition is slower than BP expected. The oil major said investment in transition businesses would be “significantly lower” over the coming years. The firm said spending is now likely to come in at $1.5 billion to $2 billion per year — more than $5 billion per year below the previous guidance. “Today we have fundamentally reset BP’s strategy,” BP CEO Murray Auchincloss said in a statement.
“We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns,” he added.
Reuters reported that BP is poised to abandon its target to increase renewable generation 20-fold by 2030. Lindsey Stewart, director of investment stewardship and policy at Morningstar Sustainalytics, said that BP’s decision to reduce capital expenditure on renewables and double down on its fossil fuel assets “will be shocking but not surprising to investors focused on sustainability.”
He added that “having already cut back its energy transition targets in 2023, BP’s subsequent underperformance compared with peers has created pressure for BP management to focus on sustainability of a financial rather than ecological nature.”
BP cut planned annual investment in renewable energy businesses by more than $5 billion, from its previous forecast, to between $1.5 billion and $2 billion per year. It now aims to grow oil and gas production to between 2.3 million and 2.5 million barrels of oil equivalent per day in 2030. It pumped 2.36 million boepd in 2024.
“It’s a radical shift,” CEO Murray Auchincloss told. “Pressure on budgets meant that lower cost energy won out in most nations, and the pace of transition and decarbonisation, while important, was not as fast as envisioned. And energy demand continues to rise. Our optimism for a fast transition was misplaced and we went too far too fast.”
It is the latest big energy company to change its position in response to the need to lower carbon emissions and curb climate change, returning the focus to oil and gas.
Under Auchincloss’ predecessor, Bernard Looney, BP pledged in 2020 to cut oil and gas output by 40% while rapidly growing renewables by 2030. It lowered that target to 25% in 2023.
BP also revised its approach to so-called Scope 3 emissions by removing its previous target of a 20% to 30% absolute reduction between 2019 and 2030. The emissions account for greenhouse gases, such as carbon dioxide, released in the atmosphere from a company’s supply chain and the consumption of its products by customers.
/BP, X, Reuters, CNBC/