BP’s offshore wind farms on hold as oil giant’s new boss doubles fossil fuel use

BP’s new boss has weakened the oil giant’s plans for green energy after pressure from investors.

In a major shift in strategy, Murray Auchincloss has put new offshore wind projects on hold as it focuses on oil and gas.

It’s a marked change from the policies of disgraced former CEO Bernard Looney, who pushed for a rapid divestment from fossil fuels.

That weighed on BP’s share price and widened the gap with rival Shell – prompting speculation it could become a takeover target.

While BP shares have fallen more than 10 percent over the past five years, Shell has risen 10 percent, while Chevron, Exxon Mobil and Total Energies have posted even bigger gains.

Auchincloss is stamping his authority on BP, replacing Looney last year.

Last month he unveiled a £1.6bn cost-cutting plan after profits beat expectations in the first quarter of this year.

It will now slow investment in big-budget, low-carbon projects that are not expected to generate cash for years.

Some workers on new renewable projects have been moved to programs already underway, such as offshore wind in Britain and Germany.

And the FTSE 100 firm will prioritize investing in and acquiring new oil and gas assets, focusing on projects in the Gulf of Mexico and US offshore shale basins where BP already has major operations.

BP will also consider investments in biofuels and some low-carbon businesses that can generate returns in the short term.

It plans to cut renewables jobs, although no specific targets have been set.

BP has imposed a company-wide hiring freeze, with only a few exceptions, including front-line and safety staff.

Auchincloss, 53, took the top job after Looney was forced to resign amid a scandal surrounding undisclosed relationships with colleagues.

BP said: “We will deliver as a simpler, more focused and more valuable company.

“We have set out six priorities that support this; including: greater business focus on the activities that create the most value, as well as delivering the next wave of BP’s efficiency and growth projects.

“The activities we undertake are part of this fulfillment, serving our goal of increasing the value of BP.”

Russ Mould, chief investment officer at AJ Bell, said Auchincloss had come under pressure to “take radical action with reduced blood pressure and risk falling prey to a larger predator”.

“The motivation for a slower energy transition path may be to secure a better valuation from the market, more in line with US counterparts that have not made the same kind of environmental commitments,” he said.

“In doing so, Auchincloss follows the path forged by his Shell counterpart, Wael Sawan. These decisions might suit investors in the short term, but could pose long-term problems.”