Why BP CEO Bernard Looney is gambling the oil major’s future on renewable energy – and selling off core fossil-fuel assets ronbousso1
more than $650 million in profits in 2019, according to financial filings reviewed by Reuters. Yet the oil major agreed to sell a third of its majority stake in the project earlier this year. The deal exemplifies a larger strategy to liquidate fossil-fuel assets to raise cash for investments in renewable-energy projects that BP concedes won't make money for years.
Performance figures for other assets recently bought or sold by BP are not available because, like other oil majors, it does not usually disclose financials of individual projects. The performance numbers for the two renewable projects and the Oman unit have not been previously reported. BP did not give Reuters updated financials for those projects or others beyond 2019.
In an interview with Reuters, BP Chief Financial Officer Murray Auchincloss dismissed the importance of the company's recent share performance and said BP and its investors can weather the rapid transformation. The declining oil-and-gas revenue this decade will be offset, in part, by higher expected revenues from gasoline stations and their attached convenience stores, he said.
A recent attempted sale illustrates the increasing challenge of selling oil assets. When BP tried to sell two stakes in North Sea fields to Premier Oil, it slashed its price by two-thirds in negotiations, to $205 million, only to see the deal collapse entirely late last year when Premier hit financial difficulties.
Looney faces a steep challenge in convincing shareholders to come along on what promises to be a wild ride for BP, said Russ Mould, the investment director for AJ Bell, one of UK's largest consumer-investing platforms, serving 368,000 people. When BP expanded the Oman project in October 2020 to boost its gas output, Looney called it central to BP's strategy. He has said he envisions natural gas, which has lower emissions of atmosphere-warming carbon than crude oil or coal, as a long-term revenue source to finance the company's metamorphosis.
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