BP will continue producing hydrocarbons for decades to come and will benefit from rising oil prices even as it reduces output as part of its shift to low-carbon energy, Chief Executive Bernard Looney told Reuters on Tuesday.
The recent rally in crude prices, which climbed on Tuesday to a more than two-year high above $75 a barrel, is likely to continue, Looney said in an interview at the Reuters Events: Global Energy Transition conference.
“There’s a very strong possibility that these prices will sustain over the coming years, and if they do, that’s very good for our strategy.”
Higher oil prices mean BP will be able to raise more cash from selling assets that will go towards building its renewables and low-carbon business, as well as returning money to shareholders via share buybacks, he said.
The 50-year old Irishman brushed aside investor concerns that BP might miss out on the rally because of its plan to slash oil output by 40 per cent and grow its renewables output 20 fold by 2030 as part of its energy transition.
“As people understand we’re going to be in the hydrocarbons business for decades to come, that concern has gone away a little bit,” Looney said.
“We want to run the best hydrocarbons business possible. We don’t want to run the biggest hydrocarbons business possible.”
BP’s shares hit their lowest since the mid-1990s late last year, a bigger drop than any of its rivals, amid falling oil prices and investor concerns over its strategy.
They have recovered strongly so far this year but are still around 30 per cent below their pre-COVID-19 crisis levels.
“What we offer investors is a stable, resilient dividend,” Looney said. “We’re going to grow value from this company over the next five years.”
“We’re going to offer you a sustainable investment proposition that I believe will grow value,” he added.
Looney said BP’s energy transition will continue to evolve over time but added that he feels “at a good place” at the moment, even as investor pressure mounts on oil companies to tackle greenhouse gas emissions.
“We have leaned into this as hard as we can,” Looney said. “We will continue to evolve the strategy, we will continue to evolve our targets. They will undoubtedly get bolder over time.”
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