BP Oil: On February 26, Wednesday, British energy giant BP announced that it would decrease its expenditures on “net zero” and green projects while increasing its production of gas and oil. The goal of BP’s strategic shift is to boost its faltering share price, earnings, and shareholder returns. But the action has drawn harsh criticism from climate activists. Let’s analyze the BP oil strategy in brief for investors.
Overview of BP Oil
In 1998, the British petrochemical company BP PLC merged with the American Amoco Corporation to become one of the biggest oil firms in the world. Later the company changed its name, and then in 2000 it adopted the moniker BP PLC. London is home to the company’s headquarters. This vertically integrated business engages in exploration and extraction, refinement, marketing and distribution, power generation, and trading, among other aspects of the oil and gas sector.
BP Oil Strategy
BP oil reduces its yearly transition expenditures by more than $5 billion and increases its yearly investment in oil and gas to $10 billion. Additionally, the Investors are not surprised by BP’s decision because they had heard at the end of the previous year that the company intended to scrap its 2030 goal of lowering oil and gas production.
Moreover, according to a statement, British energy behemoth BP Plc may also sell its worldwide lubricant division as part of its “global strategic review.” As of right now, BP, Castrol India’s ultimate holding company, owns 51% of the Indian business, which is valued at $1.26 billion (Approximately Rs. 11,000 crore). According to bankers, BP’s worldwide lubricant sales division, including those in India, may bring in up to $10 billion.
Aftermaths of the Announcement
The BSE saw Castrol India’s shares close flat at ₹218 after the worldwide announcement. According to bankers, the sale is anticipated to draw bidders from Indian competitors looking to expand their market share as well as private equity firms.
BP’s move adds to the rising number of international corporations preparing to divest their operations in India. The paint company AkzoNobel India has been placed up for sale by the Netherlands-based AkzoNobel NV, which is also in negotiations with Pidilite Industries, JSW Paints, and Blackstone, a major private equity firm.
Conclusion
Although the BP oil strategy has been a strategic move from company’s end but the investors are not very happy with this step. Some investors have weighed up escalations at BP’s AGM in response to the company’s decision to cut back on renewables and increase fossil fuel spending.
However, in a statement, the CEO of BP said that the company would be selective in its investment, and it would focus more on the capital-light platforms as well as sustainability. So, the investors need not worry anymore affirms the company’s officials.
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