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Back in black: BP shifts strategy, halts hiring and puts a pause on offshore wind to reassure investors

By: Chloe Emanuel 28/06/2024 Reuters

General Windfarms

BP (BP.L) has announced a company-wide hiring freeze and a pause on new offshore wind projects, as new CEO Murray Auchincloss shifts the company’s focus back to oil and gas. The strategic shift aims to address investor concerns over BP's energy transition strategy, according to sources within the company.

Auchincloss, who took over as CEO in January, is slowing investments in large, low-carbon projects, particularly in offshore wind, which are not expected to generate cash flow for several years. This represents a significant departure from the direction taken by his predecessor, Bernard Looney, who emphasized rapid movement away from fossil fuels.

Sources indicate that BP has reassigned many employees from new renewables projects to existing ones, such as offshore wind developments in Britain and Germany. The company is also prioritizing investments in new oil and gas assets, particularly in the Gulf of Mexico and U.S. shale basins.

In addition to the hiring freeze, Auchincloss has hinted at potential job cuts in the renewables sector, though specifics have not been disclosed. He has also initiated a $2 billion cost-saving drive and reduced the executive leadership team from 11 to 10 members.

BP confirmed these strategic changes, stating that Auchincloss introduced six priorities to transform BP into a "simpler, more focused and higher value company." These include concentrating on the business's core areas and enhancing efficiencies.

Earlier this week, BP agreed to acquire Bunge's (BG.N) 50% stake in their Brazilian sugar and ethanol joint venture for $1.4 billion. This move signals BP’s continued interest in biofuels and other low-carbon businesses that offer short-term returns.

Shares in BP have lagged behind rivals, increasing speculation of a potential takeover. The company's renewed emphasis on oil and gas aims to balance the need to decarbonize with rising demand for fossil fuels.

In a bid to sustain and grow output, BP has hired new staff for its exploration team and allocated more resources to developing fields in the Gulf of Mexico. BP's exploration and business development divisions have also been combined to streamline operations.

This strategic pivot reflects a broader industry trend, with BP being the only major oil company maintaining oil and gas output reduction targets while scaling back on renewable investments.

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Back in black: BP shifts strategy, halts hiring and puts a pause on offshore wind to reassure investors

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