NOTHING Beyond Profit

BP Slashes Jobs, Bolsters Oil & Gas Operations

By Andrew Topf - Jan 17, 2025

British oil major BP is cutting 5 percent of its workforce.

The job reductions are part of a cost-cutting plan that began in October 2024.

The job cuts align with a renewed emphasis on bolstering BP’s oil and gas operations and steering away from renewables.



The backlash against renewable energies continued this week as oil major BP (NASDAQ;BP) announced it is cutting 5 percent of its workforce or 4,700 jobs and 3,000 contractors.

The UK-based oil company said the reductions are part of a cost-cutting plan that began last October, when it identified $500 million of cost savings to be delivered in 2025 — 25 percent of the $2 billion target set for the end of 2026.

New CEO Murray Auchincloss was quoted by The Associated Press as saying that the company is “focusing resources on our highest-value opportunities” and that it has stopped or paused 30 projects since June.

In a statement, BP said “Last year (2024) we began a multi-year programme to simplify and focus bp. We are strengthening our competitiveness and building in resilience as we lower our costs, drive performance improvement and play to our distinctive capabilities.”

Despite efforts to sugar coat the bad news, BP’s share price has lost about 20 percent since last spring. The company has pulled back from several renewable energy projects and abandoned a previous plan to cut oil and gas output by 40 percent by 2030, states AP.

For example in October, BP created a joint venture with JERA, Japan’s largest power firm, to bring about “one of the largest global offshore wind developers.” According to Euro News, BP and JERA agreed to invest up to $5.8 billion by 2030, with BP committing to spend up to $3.25B. That’s a far cry from the $10 billion it pledged to spend between 2023 and 2030 on renewable energy capacity.

Oil and gas giants have come under increasing pressure to invest in renewables like wind and solar as net zero goals loom. BP, though, has said it will return to its core competencies, oil and gas, and is matching words with deeds.

On Jan. 16, Offshore Technology reported that BP will sign a deal with Iraq to develop four oil and gas fields in the Kirkuk region.

The Deep Dive notes that the job cuts align with Auchincloss’s emphasis on bolstering BP’s oil and gas operations and steering away from renewables.

The pivot mirrors similar strategies by BP’s industry rivals like Shell, which recently said it would stop developing new offshore wind projects. But it hasn’t yet helped the bottom line. In a trading update published earlier this week, BP reported that weaker refinery margins and reduced turnaround activities are expected to reduce Q4 profits by an estimated $100 million to $300 million. Further declines in oil production are expected.

Net Zero Investor observes that BP’s scaled-back renewable ambitions leaves its capital expenditures misaligned with net zero goals. The site quotes a review of BP’s Financial Investment Decisions by the Australasian Centre for Corporate Responsibility (ACCR). The report shows none of BP’s decisions in 2023 aligned with the International Energy Agency’s net zero emissions pathways for oil and gas.

The report also warns that if BP cuts less than its production targets, it is forecast to produce 84 percent more oil and gas in 2030 than it aimed to produce in 2020.

“BP claims its CAPEX is aligned with the goals of the Paris Agreement. However, if all oil and gas companies applied the same price-based framework as BP, they would sanction enough projects to exhaust the remaining carbon budget for a Paris-aligned world five times over,” according to Nick Mazan, UK company strategy lead at ACCR.

Net Zero Investor has an interesting explanation for why BP is cutting jobs now. BP, states the site, finds itself caught in the “valley of death” between the short-term demands of shareholders focused on profit margins, and the long-term expectations of investors prioritizing net zero targets.

With renewables currently accounting for under 10 percent of BP’s earnings, and with profits from oil and gas declining, BP like many of its peers is facing a vacuum.

“In a bid to keep investors at bay, the oil giant announced major job cuts, with some 4700 workers facing redundancies,” states Net Zero Investor.

By Andrew Topf for Oilprice.com