BP has announced a pause on all new offshore wind projects as the company’s newly appointed CEO, Murray Auchincloss, focuses on fossil fuels. This strategic shift, first reported by Reuters, also includes a hiring freeze within the offshore wind division.
Auchincloss, who took office at the beginning of the year, aims to slow investments in large-scale, low-carbon projects such as offshore wind that do not promise immediate returns. The move contrasts with the policies of his predecessor, Bernard Looney, who had begun transitioning the company away from fossil fuels before resigning last fall due to personal scandals.
This shift back to fossil fuels has been influenced by investor concerns about the profitability of BP’s renewable energy projects, especially as oil and gas profits rise with the global economic recovery after the pandemic and geopolitical instability after the Russian invasion of Ukraine.
Sources within BP have indicated that Auchincloss and CFO Kate Thompson are prioritizing investments in existing oil and gas operations, particularly in the Gulf of Mexico and onshore U.S. shale basins. These areas are expected to achieve greater immediate returns compared to the long-term investments required for offshore wind projects.
BP remains open to investing in biofuels and other low-carbon projects that could provide faster returns. Recently, BP agreed to buy a 50% stake in a Brazilian sugar and ethanol joint venture from grain trader Bong for $1.4bn (£1.1bn).
Despite these changes, BP is expected to implement some job cuts in its renewable energy sector, although no specific targets have been disclosed. A company-wide hiring freeze is also in effect, with exceptions for front-line and safety essential workers.
Since taking office, Auchincloss has emphasized a pragmatic approach, including a $2 billion cost-savings drive by the end of 2026 and a streamlined executive leadership team. BP’s statement to Reuters outlined six priorities presented by Auchincloss aimed at making BP “a simpler, more focused and more valuable company.” These priorities include enhancing efficiencies and developing BP’s growth projects.
The company’s shares have underperformed in recent months, leading to speculation about potential takeover bids and increasing pressure on Auchincloss to balance the need to decarbonize with immediate demand for fossil fuels.
In 2023, BP has allocated $2.5 billion to renewables, hydrogen, electric vehicle charging and biofuels out of a total investment budget of $16 billion. Despite these investments, BP remains the only major oil company with clear targets for reducing its oil and gas production. In contrast, Shell has recently adjusted its strategy to focus on high-return companies and reduce investments in many renewable and low-carbon energy sectors.
The decision to halt offshore wind projects is likely to spark a backlash from climate activists who have long campaigned for BP’s transition to clean energy. As the company navigates these complex dynamics, Auchincloss’s actions will be closely watched by both investors and environmental advocates.