BP announced on Wednesday that it will increase its annual investment in upstream oil and gas to $10 billion while significantly reducing its spending on clean energy by over $5 billion per year. This shift is part of a major strategy reset aimed at improving the company’s performance.
In recent years, BP’s stock has lagged behind its UK competitor, Shell, and other major international oil companies. The company’s board has faced mounting pressure to make substantial changes that will better reward shareholders.
Earlier this month, the pressure intensified when activist investor Elliott Management took a stake in BP and called for changes in strategy, including potential board reshuffles.
BP’s newly announced strategy focuses on increasing shareholder value. The company plans to shift its focus back to oil and gas, increasing investment in upstream projects, boosting oil and gas production, and cutting spending on low-carbon energy initiatives.
The strategy will involve reallocating capital to higher-growth areas, with oil and gas investments rising to about $10 billion annually. At the same time, BP will reduce its transition investments to around $1.5 billion to $2 billion per year, a sharp decline of more than $5 billion from previous plans.
In the upstream sector, BP targets launching 10 major projects by the end of 2027, with an additional 8 to 10 projects by 2030. The company also expects to increase its production to 2.3 to 2.5 million barrels of oil equivalent per day by 2030, with further growth potential through 2035. This represents a significant reversal from BP’s previous goal of cutting oil and gas production by 2030.
As part of its clean energy transition, BP will focus investments on specific areas such as biogas, biofuels, and electric vehicle (EV) charging. The company also plans to limit its involvement in hydrogen and carbon capture projects, adopting a “capital-light” approach to low-carbon energy.
BP is also aiming to reduce costs and net debt. The company plans to achieve $4 billion to $5 billion in structural cost reductions by the end of 2027 and to announce $20 billion in new divestments by the same year.
CEO Murray Auchincloss emphasized that BP’s strategy is designed to grow upstream investment and production, ensuring the company can provide high-margin energy for years to come. He added that BP will be highly selective in its transition investments, focusing on fewer key markets and utilizing innovative, cost-efficient platforms.
“This is a reset for BP, with an unwavering focus on growing long-term shareholder value,” Auchincloss said.
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