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Donald Trump’s inauguration speech as US president this week praised fossil fuels and “liquid gold beneath our feet”. Despite BP’s large oil and gas operations and reserves in Texas and the Gulf of Mexico (or America), you have to drill deep to find the gold in its financing.
Now a UK company the way The other big investor-owned energy multinational by market value is not a sixth of ExxonMobil’s value but less than half that of its older Anglo-Dutch rival Shell. it is announcement Last week it cut 4,700 jobs in a renewed effort to become “a simpler, more focused, higher value company”.
But BP has made many announcements about its future over the years and has a disappointing record. It has also been run through a number of chief executives, the latest being Murray Auchincloss, who just postpone A long-awaited strategy update for investors next month to recover from medical procedures.
Auchinclos succeeded Bernard Looney, who had fired in 2023 amid allegations of misconduct for his past relationships with colleagues. “It’s almost Shakespearean. This company is star-crossed,” reflected one BP veteran. It must have suffered a number of unfortunate incidents while trying to please investors and respond to climate change.
The worst was the 2010 Deepwater Horizon oil spill, which killed 11 workers, polluted the Gulf of Mexico and forced asset sales to cover a $65 billion bill. The company took a long time to recover and arguably never did: it still has $24 billion in net debt and only allowed A sixth platform in the Gulf last year, in a case it was first discovered in 2006.
Then came Looney’s pledge five years ago that BP would cut oil and gas production by 40 percent by 2030 and “rethink energy for people and our planet”. It was bolder in rhetoric than substance, and BP has been moving away from it ever since, as high interest rates offered the prospect of being able to build wind farms cheaply.
The kicker was Vladimir Putin’s full-scale invasion of Ukraine in 2022, forcing BP to divest its minority stake in Russian oil company Rosneft at a cost of $25 billion. Having made a lot of money in the mid-2000s from TNK-BP, its original joint venture with a group of oligarchs, it was eventually expelled. Like others, Russia took it by surprise.
But companies make their own luck, and BP can’t just claim bad luck. The thread that runs through its recent history is its great sense of ambition and purpose, which has outstripped its ability to put plans into practice. While ExxonMobil tends to treat the world as it is, BP is prone to wishful thinking.
It goes back to Lord John Brown, who transformed the company as CEO by acquiring Amoco and Arco in the US and striking the TNK-BP deal. He also brought an intellectual brilliance to the strategy, including the thinly veiled idea that BP would go “out of petroleum”. The slogan didn’t last but its legacy is a dream every BP leader aspires to.
BP is not a cowboy outfit. Despite the Deepwater Horizon lapses, its operations are generally well managed and it takes compliance seriously. But it’s more intelligence than instinct (“There’s a lot of clever people out there,” says one observer, not exactly meant as a compliment). Another called it “more like a state than a business”, lacking the huge profit margins of rivals.
The commitment to decarbonise was prompted in part by social and government pressure following the 2016 Paris Agreement to limit global warming. It hoped to attract investment from ESG funds and benefit from a financial transition. But it failed and it didn’t respond as fast as Shell In Change course. It has been bogged down by poor financial results, executive ups and downs and strategic indecision.
BP now faces a world where Trump tells oil companies to “drill, baby, drill” and withdraws the US from the Paris accord. Meanwhile it has been accused of greenwashing by Greenpeace for not decarbonising fast enough. If the past few years have proven anything, it’s that it’s impossible to please both parties, especially as an energy company headquartered outside the United States.
Market value of Deepwater Horizon, BP three months ago crossed briefly Which is Shell but now far behind. Many bankers wonder if they can handle a merger or takeover. If BP is to remain independent, it must show investors that it can make things happen rather than looking to the future. There is such a thing as being too smart.
