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BP’s (NYSE:BP) surprise announcement that it has scaled back climate targets and now plans to produce more oil and gas for longer has angered climate-focused investors, but the company’s stock price has gained 19% in the four days since the news, reaching its best levels in nearly four years.
“The decision that BP has made is regrettable, [taking] into account that the targets were approved by investors at the last annual meeting,” said Angela Quiroga, environmental and ESG analyst at BP shareholder Union Investment.
Last May, BP (BP) won shareholder support for its strategy of cutting hydrocarbon output 40% by 2030 from 2019 levels; this past Tuesday, BP said it now plans a 25% cut, although it did not change its long-term ambition to reduce emissions to net zero by 2050, and remains committed to using 50% of its spending budget on low-carbon businesses by 2030.
Changes in the world from the voracious consumption of fossil fuels coming out of the pandemic to the disruptions caused by the Ukraine war prove the highly touted energy transition is more complicated than first envisioned, BP (BP) CEO Bernard Looney told The Wall Street Journal in an interview.
“If you sat in any meeting in Europe in the 2019 period and talked about energy, there was one conversation: It was about energy emissions,” Looney told WSJ. “Today, on the back of a pandemic, on the back of a war, on the back of a cost-of-living crisis, on the back of an energy crisis, [it] has shifted to a much more balanced conversation.”
BP’s (BP) pivot also is the simple result of forecast oil prices being unexpectedly higher for longer; as RBC Capital’s Biraj Borkhataria said, “It’s better to talk up oil when it’s at $80 a barrel, than $40.”
BP isn’t alone: Earlier this month, Shell (SHEL) CEO Wael Sawan said his company will increase its cash-cow natural gas business and be cautious about ramping up spending on renewables.
“We cannot justify going for a low return,” Sawan said on Shell’s post-earnings conference call after reporting record profit for 2022.
Image and article originally from seekingalpha.com. Read the original article here.