“[CEO Bernard Looney] and other BP executives have suggested that the company could play down future investment in areas including solar energy and offshore wind, according to some of the people. Discussions about the company’s direction have caused rifts inside BP over the past year, people close to the company say.”
The Wall Street Journal published a very revealing piece yesterday. “Bernard Looney seeks to sharpen strategic focus, with less emphasis on environmental goals,” reported Jenny Stasburg (February 1, 2023).
She begins:
Chief Executive Bernard Looney plans to dial back elements of the oil giant’s high-profile push into renewable energy, according to people familiar with recent discussions.
Mr. Looney has said he is disappointed in the returns from some of the oil giant’s renewable investments and plans to pursue a narrower green-energy strategy, the people said. He has told some people close to the company that BP needs to do more to convince shareholders of its strategy to maximize profits in areas where it has a competitive advantage, including its legacy oil-and-gas operations.
In some of the conversations, Mr. Looney has said he plans to place less emphasis on so-called ESG goals—a catchall term for environmental, social and governance—to help clarify that those aren’t distracting the company from its ability to deliver profits, the people said.
So trying to appease the enemy is getting unaffordable even with government subsidies? Politically correct, economically incorrect investments are asking for trouble, after all. And when BP’s oil-and-gas foes scream “greenwashing” and demand more bad investments–and threaten to sue for not doing enough (greenhushing)–then BP is wise to wise up.
Of course, BP wants to have it both ways. The article continues:
Mr. Looney, the people said, is casting the moves as a modest short-term course correction rather than a major strategic pivot for the 114-year-old company.
Investors, the owners of the company, matter:
Analysts and some investors say pledges by BP to shift away from fossil fuels and into renewable energy risk handicapping the company’s performance. Many companies are struggling to transition to new green technologies while still relying heavily on traditional energy sources.
A BP spokesman referred to previous public statements Mr. Looney and BP have made about the company’s strategy, including its commitment to reducing carbon emissions and shifting investments to green energy. Mr. Looney declined to comment through the spokesman.
BP is scheduled to report full-year earnings Feb. 7 after consecutive bumper quarters boosted by massive profit in its natural-gas trading arm. The company will update investors on its strategic progress at that time, the spokesman said.
BP, amid the UK/EU green extremism, has long tried to ‘outgreen’ its Big Oil and Big Gas competitors. It started with John Browne in 1997 and went downhill from there, with imaging about climate change alarm taking priority from real environmental and safety protocols, culminating in the Deepwater Horizon disaster. (Shell went second and has paid a price too.)
Back to the article:
Mr. Looney, a 32-year BP veteran, took over as CEO in early 2020 and soon announced commitments to shrink greenhouse-gas emissions, including from oil and gas the company sells. Analysts said at the time that the new targets went further than rivals’ plans. Investors questioned how renewables could make up for fossil-fuel businesses that typically produced higher—if volatile—returns.
Shares of BP and London-based rival Shell PLC over the past several years have lagged behind those of U.S. competitors, especially the biggest, Exxon Mobil Corp. BP shares are up about 7% from the end of January 2020, having recovered from pandemic lows, while Exxon shares have nearly doubled over the same period.
As European oil companies, BP and Shell face greater investor and government scrutiny over their carbon-reduction plans than do U.S. rivals, which have stuck more to their core oil-and-gas businesses. Still, overall, the sector globally has been caught between some large investors and governments calling for these companies to move away from fossil fuels, while others demand the profits those assets can generate.
Yes, ExxonMobil has dismissed Net Zero as impractical and bad public policy.
Looney knows he cannot be too bold in a transition away from wind and solar, etc. to the real energies that consumers demand.
Mr. Looney has said in some of the recent discussions that the company will continue its push into renewable energy, but with a finer-tuned focus to avoid spreading resources too thinly or relying too heavily on renewables in its broader strategy. He has suggested that areas of continued emphasis will include developing climate-friendly hydrogen, biogas and electric-vehicle partnerships and charging networks, the people said.
He and other BP executives have suggested that the company could play down future investment in areas including solar energy and offshore wind, according to some of the people.
Discussions about the company’s direction have caused rifts inside BP over the past year, people close to the company say.
Final Comment
Like Enron, BP has become a contra-capitalist company, jumping at government subsidies, supporting public policies hurting average consumers, and employing deceit about energy/climate reality. More than “modest short-term course correction” is needed. Looney and BP need to formally renounce what was announced three years ago:
“… we have set ourselves the ambition to become a net zero company by 2050 or sooner and to help the world get to net zero…. We will need support from partners, investors, policy makers, customers – and trade associations…. (Bernard Looney, CEO, BP, 2020)
That support is gone. The opportunity for the company is now to educate the people on the advantages of oil and gas (and coal) and employ climate data to question scientific exaggeration. (Remaining not-so-green, government-subsidized investments in hydrogen, biogas, and EV ventures need some rethinking as well.) Expect some fireworks, and lots of CO2 emissions, from a reborn BP.
BP CEO Bernard Looney and I had this exchange:
Bernard Looney (He/Him) • Author Chief executive officer, bp
“Appreciate the question, Rob – but I disagree. I think it’s hard to argue against capturing methane from landfill sites – which would otherwise go into the atmosphere – and then processing and using it to replace diesel in transport – reducing lifecycle emissions. Seems very sensible to the vast majority I speak with.”
I responded:
“Is it economic on a stand alone basis without taxpayer subsidies? If so, you are correct. If not, an economist might protest that more resources are expended than created by biogas recovery.
But this begs the question of whether natural gas prices and diesel prices are artificially inflated because of government policies.”
https://www.linkedin.com/posts/bernardlooneybp_energy-biogas-activity-7026166205736484864-MQ9o?utm_source=share&utm_medium=member_desktop
Long-suffering BP shareholders have been victims of craven, spineless managers and directors who have made the colossal error of attempting to appease the very people whose goal is destruction of the company as the result of a mistaken belief in climate pseudoscience.
https://www.drroyspencer.com/wp-content/uploads/UAH_LT_1979_thru_January_2023_v6.jpg
Another reality check from the WSJ:
“Some of that difference reflects the widening valuation gap between European and U.S. oil-and-gas stocks. Shell changes hands for under seven times forward earnings, compared with roughly 11 for
Exxon and Chevron. Investors are dubious that a push into renewables at Shell and BP can deliver
the same returns as fossil fuels.”
– Carol Ryan, “Shell Is Very Generous With Buybacks” (02-03-2023), B12.