Energy giant BP is to increase investments into oil and gas to $10bn a year as part of what it has called a ‘reset’ that will shift focus back on driving shareholder returns while abandoning plans to cut fossil fuel production.

In an announcement delivered this week, the company has confirmed it will scrap its current green ambitions and instead grow fossil fuel production to between 2.3 million and 2.5 million barrels of oil a day by the end of the decade.

BP’s chief executive officer, Murray Auchincloss has said the plan now will be to “grow upstream investment and production” to produce “high margin energy for years to come” while being “very selective in our investment in the transition” to green, renewable energy.

Under its new guidance, BP’s ‘disciplined investment in the transition’ will come to the tune of around $1.5bn a year, more than $5bn lower than previous stated targets.

“Today we have fundamentally reset BP’s strategy,” said Auchincloss. “We are reducing and reallocating capital expenditure to our highest-returning business to drive growth. This is all in service of sustainably growing cash flow and returns.

“We will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a rest BP, with an unwavering focus on growing long-term shareholder value.”

In growing its upstream, BP is setting out to get ten new major gas and oil projects started by the end of 2027 and a further eight to ten by the end of 2030. It also expects to grow production to some 2.5 million barrels of oil a day in 2030 with the capacity to increase to 2035.

It all represents a stark shift in tone for BP which put forward an investment plan five years with the promise to shrink its oil and gas production to around 1.5 million barrels a day and make BP a net zero energy company by 2050.

The Guardian reports, however, that the firm has faced growing pressure from shareholders to retreat from its green pledges. BP has lost almost a quarter of its market value in the past two years while the market value of rivals like Shell and Exxon has increased while they pursue greater oil and gas production. 

Earlier this month, the notorious activist investor, Elliott Management took up a £3.8bn stake in BP, becoming its third largest shareholder at 5%. The fund has earned a reputation as one of the world’s most notorious activist investment shops, taking up large holdings in companies before forcing through strategic and personnel changes.

The US fund’s investment in the London-listed petrochemical giant emerged only days before BP reported an ‘anaemic set of full-year results’ in which its profit ‘slumped’ to $8.9bn. Bosses at Elliott Management view BP’s renewable-focused capital expenditure to have been misguided and – in the weeks leading up to its announcement – voiced its hope that the board would ‘energetically support the “fundamental reset” promised by Auchincloss.’

Matilda Borgström, a campaigner at the climate action group 350.org, said: “This move by oil giant BP clearly demonstrates why super-rich corporations and individuals, chasing short term profit for themselves and shareholders, cannot be trusted with fixing the climate crisis or leading the transition to renewable energy we so badly need.

“The climate crisis isn’t going away and neither is public demand for urgent action to fund the switch to safe, affordable renewable energy. Pumping money into more oil and gas increases the risk of climate impacts for us all, flies in the face of legal climate targets, and with the renewable sector growing exponentially is a big risk to the shareholders BP is so keen to please.”

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