RIGHT WING TELEGRAPH VIEW
We won’t invest in green energy for the sake of it, says BP boss
Matt Oliver
Matt Oliver
TELEGRAPH
Tue, August 1, 2023
BP boss Bernard Looney's comments come after BP scaled back some of its green targets earlier this year - Hollie Adams/Bloomberg
The boss of BP has warned that the oil giant will not invest in green energy schemes unless they are profitable enough, as rising costs make a string of offshore wind farms unviable.
On Tuesday the blue chip company became the latest producer to reveal a drop in profits, with oil and gas prices down from the highs they reached following the outbreak of the Ukraine war.
In the wake of the crisis, Bernard Looney, BP’s chief executive, said investment was needed in both fossil fuels and renewable power to boost global energy security.
But he also warned that green energy schemes had to pay their own way, as oil companies face pressure from investors to focus on fossil fuel production rather than less profitable wind and solar farms.
It comes as a string of offshore wind farms face being delayed or shelved, as rising costs wreck the business cases for investing in them.
BP already scaled back its green targets earlier this year after making record profits of $27.7bn (£21.7bn) in 2022 off the back of soaring oil and gas prices.
Mr Looney’s comments on Tuesday came as the company said second quarter profits had sunk to $2.6bn (£2bn), down from $8.5bn a year earlier.
The company insists it is not scaling back its green ambitions, having pledged to invest an extra $8bn in its “transition” businesses and another $8bn in its oil and gas divisions by the end of the decade.
Speaking on Tuesday, Mr Looney said: “We are investing in today’s energy system, and – not or – we are investing in accelerating the energy transition.
“We’re not making a choice between one or the other, we believe the world needs both.”
In February, the company slowed its retreat from oil and gas production, relaxing its targets for cutting carbon emissions up to 2030.
Asked whether BP should further reduce its green commitments, Mr Looney said: “We grew oil and gas production in the first half of this year.
“We’ll actually grow production through the middle of the decade and it will be relatively flat through the end of the decade… That’s where we provide the security that the world needs, at the same time providing the cash flows that we need for our business.”
At the same time, Mr Looney warned inflation had “clearly impacted offshore wind projects”.
But he said: “What I can tell you categorically is that our returns threshold is sacrosanct – we will not develop projects that don’t meet our returns threshold.”
He said the company would only invest in offshore wind where it could directly benefit from the power generated, adding: “We don’t want to generate electrons just for electrons’ sake.”
Mr Looney’s remarks come as a string of wind farm projects around the world, including some in Britain, are facing serious financial difficulties.
Swedish energy giant Vattenfall last month confirmed it had halted development of the 1.4 gigawatt Boreas project, off the coast of Norfolk, after a 40 per cent increase in costs made it unviable.
Developers behind other projects have also indicated their schemes could be at risk as well, with final investment decisions still to be taken.
Tue, August 1, 2023
BP boss Bernard Looney's comments come after BP scaled back some of its green targets earlier this year - Hollie Adams/Bloomberg
The boss of BP has warned that the oil giant will not invest in green energy schemes unless they are profitable enough, as rising costs make a string of offshore wind farms unviable.
On Tuesday the blue chip company became the latest producer to reveal a drop in profits, with oil and gas prices down from the highs they reached following the outbreak of the Ukraine war.
In the wake of the crisis, Bernard Looney, BP’s chief executive, said investment was needed in both fossil fuels and renewable power to boost global energy security.
But he also warned that green energy schemes had to pay their own way, as oil companies face pressure from investors to focus on fossil fuel production rather than less profitable wind and solar farms.
It comes as a string of offshore wind farms face being delayed or shelved, as rising costs wreck the business cases for investing in them.
BP already scaled back its green targets earlier this year after making record profits of $27.7bn (£21.7bn) in 2022 off the back of soaring oil and gas prices.
Mr Looney’s comments on Tuesday came as the company said second quarter profits had sunk to $2.6bn (£2bn), down from $8.5bn a year earlier.
The company insists it is not scaling back its green ambitions, having pledged to invest an extra $8bn in its “transition” businesses and another $8bn in its oil and gas divisions by the end of the decade.
Speaking on Tuesday, Mr Looney said: “We are investing in today’s energy system, and – not or – we are investing in accelerating the energy transition.
“We’re not making a choice between one or the other, we believe the world needs both.”
In February, the company slowed its retreat from oil and gas production, relaxing its targets for cutting carbon emissions up to 2030.
Asked whether BP should further reduce its green commitments, Mr Looney said: “We grew oil and gas production in the first half of this year.
“We’ll actually grow production through the middle of the decade and it will be relatively flat through the end of the decade… That’s where we provide the security that the world needs, at the same time providing the cash flows that we need for our business.”
At the same time, Mr Looney warned inflation had “clearly impacted offshore wind projects”.
But he said: “What I can tell you categorically is that our returns threshold is sacrosanct – we will not develop projects that don’t meet our returns threshold.”
He said the company would only invest in offshore wind where it could directly benefit from the power generated, adding: “We don’t want to generate electrons just for electrons’ sake.”
Mr Looney’s remarks come as a string of wind farm projects around the world, including some in Britain, are facing serious financial difficulties.
Swedish energy giant Vattenfall last month confirmed it had halted development of the 1.4 gigawatt Boreas project, off the coast of Norfolk, after a 40 per cent increase in costs made it unviable.
Developers behind other projects have also indicated their schemes could be at risk as well, with final investment decisions still to be taken.
Prime Minister Rishi Sunak announced new oil and gas projects in the North Sea on Monday - Simon Walker/No 10 Downing Street
Meanwhile, Mr Looney said BP was holding crunch talks about a proposed wind farm it is seeking to build off the east coast of the US, where it is seeking to renegotiate a power-selling agreement due to rising costs.
He told the Telegraph: “The challenge has arisen in the United States and in the UK, where there are projects that have experienced cost rises where there have been pre existing contracts signed on the revenue side, and then there’s a mismatch between the cost assumptions and the revenue assumptions.
“And that’s where the real crunch is coming in.... That’s what the industry is trying to resolve. Clearly, the world needs offshore wind to be successful.”
It comes as Rishi Sunak on Monday announced new oil and gas projects in the North Sea, in a bid to boost Britain’s energy security.
His push angered climate activists, who are campaigning for an end to all new licensing in the UK.
But the Prime Minister, who has suggested some of Britain’s net zero pledges could be watered down if they threaten consumers with huge costs, said the move would “increase domestic gas production and reduce our reliance on hostile foreign states”.
BP reveals underwhelming £2bn profit – but still sparks climate activists' anger
BP’s results come a day after Rishi Sunak announced new oil and gas projects in the North Sea - ANDY BUCHANAN/AFP
Oil giant BP has reported a 70pc drop in profits on the back of lower oil and gas prices.
The FTSE 100 company on Tuesday posted second-quarter profits of $2.6bn (£2bn), down from $8.5bn a year earlier.
That was lower than the $3.5bn analysts had been expecting, echoing similarly disappointing numbers at rival Shell last week.
On Tuesday, BP announced a 10pc increase in its dividend and pledged $1.5bn more in share buybacks, following $3.9bn worth in the first and second quarters.
Bernard Looney, BP’s chief executive, said the numbers reflected lower profit margins at the company’s refining operations, due to work being carried out.
He added: “We’re delivering our strategy at pace – we’ve started up two major oil and gas projects to help keep energy flowing today and we’re accelerating our transformation through our five transition growth engines.
“And we’re delivering for shareholders, growing our dividend and announcing a further share buyback.
“This reflects confidence in our performance and the outlook for cash flow, as well as continued progress reducing our share count.”
It means BP’s first-half profits came in at $7.6bn, down from $14.7bn during the same period last year – when oil and gas prices rocketed after the outbreak of the Ukraine war.
The results come a day after Rishi Sunak announced new oil and gas projects in the North Sea, in a bid to boost Britain’s energy security.
His push has angered climate activists, who are campaigning for an end to all new licensing in the UK.
On Tuesday morning, Charlie Kronick, senior climate adviser at Greenpeace UK, said: “BP posting billions in profits while wildfires and floods continue to wreak havoc around the world shows us who really benefits from Rishi Sunak’s climate policy U-turns.
“Handing out new oil and gas licences will do nothing to improve our energy security, or address either the climate crisis or the cost of living facing people across the UK, instead allowing companies like BP and Shell to rake in even more money for their shareholders.”
Matt Oliver
TELEGRAPH
Tue, August 1, 2023
Tue, August 1, 2023
BP’s results come a day after Rishi Sunak announced new oil and gas projects in the North Sea - ANDY BUCHANAN/AFP
Oil giant BP has reported a 70pc drop in profits on the back of lower oil and gas prices.
The FTSE 100 company on Tuesday posted second-quarter profits of $2.6bn (£2bn), down from $8.5bn a year earlier.
That was lower than the $3.5bn analysts had been expecting, echoing similarly disappointing numbers at rival Shell last week.
On Tuesday, BP announced a 10pc increase in its dividend and pledged $1.5bn more in share buybacks, following $3.9bn worth in the first and second quarters.
Bernard Looney, BP’s chief executive, said the numbers reflected lower profit margins at the company’s refining operations, due to work being carried out.
He added: “We’re delivering our strategy at pace – we’ve started up two major oil and gas projects to help keep energy flowing today and we’re accelerating our transformation through our five transition growth engines.
“And we’re delivering for shareholders, growing our dividend and announcing a further share buyback.
“This reflects confidence in our performance and the outlook for cash flow, as well as continued progress reducing our share count.”
It means BP’s first-half profits came in at $7.6bn, down from $14.7bn during the same period last year – when oil and gas prices rocketed after the outbreak of the Ukraine war.
The results come a day after Rishi Sunak announced new oil and gas projects in the North Sea, in a bid to boost Britain’s energy security.
His push has angered climate activists, who are campaigning for an end to all new licensing in the UK.
On Tuesday morning, Charlie Kronick, senior climate adviser at Greenpeace UK, said: “BP posting billions in profits while wildfires and floods continue to wreak havoc around the world shows us who really benefits from Rishi Sunak’s climate policy U-turns.
“Handing out new oil and gas licences will do nothing to improve our energy security, or address either the climate crisis or the cost of living facing people across the UK, instead allowing companies like BP and Shell to rake in even more money for their shareholders.”
BP Is Latest Energy Firm to Report Profit Drop on Lower Oil and Gas Prices
Even with the drop in profit, BP raised its dividend and announced a new stock buyback.
By BILL MCCOLL
By BILL MCCOLL
INVESTOPEDIA
Published August 01, 2023
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Peter Dazeley / Contributor / Getty Images
KEY TAKEAWAYS
Published August 01, 2023
Peter Dazeley / Contributor / Getty Images
KEY TAKEAWAYS
BP's profit slumped in the second quarter, joining rivals in feeling the impact of lower oil and gas prices.
Second quarter profits were down by more than half from 2022.
Even with the drop in profit, BP raised its dividend and announced a new stock buyback.
BP (BP) is the latest to join the list of major energy companies that posted big profit declines because of falling oil and gas prices.
The British petroleum giant reported fiscal 2023 second quarter profit of $2.6 billion, a more than 69% drop from $8.5 billion a year ago.1
CEO Bernard Looney said it was “another quarter of performing while transforming,” adding the company’s underlying performance was resilient with good cash delivery during “a period of significant turnaround activity and weaker margins in our refining business.”
Rivals Chevron (CVX), Exxon Mobil (XOM), and Shell (SHEL) also saw earnings shrink because of the decline in energy prices.
Despite the slide in profits, BP announced it was raising its dividend by 10% to $0.0727 per share, and would make another $1.5 billion in stock buybacks prior to the release of its third quarter financial results.
American Depositary Receipts (ADRs) of BP were down 1.5% in early trading on Tuesday but remained in positive territory for the year.
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