bp has introduced a fundamentally reset strategy that begins with a significant reduction in its energy transition investment. The company will now invest selectively in biogas, biofuels and EV charging, pursue capital-light partnerships in renewables, and focus on hydrogen and carbon capture and storage.
The company is now committing between $1.5bn and $2bn per annum – over $5bn less than previously guided. In tandem, bp is reducing and reallocating capital expenditure, cutting costs and driving improved performance to grow cash flow, returns and long-term shareholder value. Upstream, bp plans to increase oil and gas investment to approximately $10bn per annum, strengthen its portfolio and raise production to between 2.3 and 2.5 million barrels of oil equivalent per day by 2030, generating an additional $2bn in operating cash flow by 2027. In its downstream operations, the company is reshaping its portfolio by focusing on more integrated and advantageous positions, including a strategic review of Castrol, to deliver an extra $3.5–$4bn in operating cash flow by 2027. bp’s updated financial framework aims to reduce annual capital expenditure to between $13bn and $15bn until 2027, achieve structural cost reductions of $4–$5bn by the end of 2027 and complete divestments totalling $20bn – potentially including proceeds from Lightsource bp and the Castrol review – while lowering net debt to between $14bn and $18bn by 2027 and maintaining resilient shareholder distributions at 30–40% of operating cash flow. Overall, bp is targeting a compound annual growth rate in adjusted free cash flow of over 20% until 2027, with returns on average capital employed exceeding 16% by the same year.
