BP ramps up oil and gas investment to $10bn a year in ‘fundamental reset’
BP is drastically scaling back its green ambitions, ditching plans to cut its oil and gas production by the end of the decade, as part of a “fundamental reset” of the troubled company’s strategy.
Instead, it is ramping up its oil and gas investment to $10bn a year.
The oil and gas giant has confirmed that it will scrap its plan to cut its oil and gas production by increasing it to 2.3–2.5m barrels of oil a day by 2030.
At an investor day in London, the chief executive, Murray Auchincloss, said BP will increase oil and gas investment to around $10bn a year. He added that the company will be “very selective” about investing in fossil fuel alternatives which help the energy transition.
Today we have fundamentally reset BP’s strategy. We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns.
The company said it now plans to invest $1.5bn to $2bn a year in energy transition businesses – more than $5bn lower than its previous expectation. This includes an average of less than $800,000 a year in low carbon energy.
The oil boss had promised to overhaul the company’s strategy, reversing a shift towards renewable energy generation begun under his predecessor Bernard Looney, after lacklustre results recently. Its shares have underperformed rivals in recent years.
This strategy will see BP grow its upstream oil and gas business, focus its downstream business, and invest with increasing discipline into the transition.
Key events
Back to BP, our main story, which is ditching its green ambitions by increasing its oil and gas investment to $10bn a year, as part of a fundamental reset of the troubled company’s strategy.
The company has confirmed that it will scrap its plan to cut its fossil fuel production and will instead grow production to 2.3m–2.5m barrels of oil a day by the end of the decade.
The oil supermajor’s chief executive, Murray Auchincloss, added that it would be “very selective” about investing in fossil fuel alternatives that help the energy transition.
“Today we have fundamentally reset BP’s strategy,” he said. “This is a reset BP, with an unwavering focus on growing long-term shareholder value.”
Derren Nathan, head of equity research at Hargreaves Lansdown, said:
Murray Auchincloss’s experience as chief financial officer prior to taking up the CEO job has shone through in BP’s strategic reset. Cost savings ($4-$5bn) by end 2027, debt reduction and cash flows are all in focus as BP looks to put the worst results since the pandemic behind it. There are some lofty financial goals here and the market reaction suggests investors are going to need quite some convincing they can be achieved. For now, the suggestion of a lower-than-expected buyback in the short term doesn’t seem to have impressed.
BP’s targeting average free cash flow growth of 20% over the next three years with the investment focus firmly on hydrocarbon extraction. Refocusing downstream operations, selling off the Gelsenkirchen refinery and potentially Castrol as well are other actions being taken to make the company a leaner machine. This should go at least some way to satisfy 5% shareholder Elliott Management’s reported calls for wide ranging divestments.
BP’s not taken its eye off the transition completely, but spending is reducing, and projects are likely to be far more selective. If the plan can be executed BP will be heading towards a much firmer financial footing. Whether this is enough to win the backing of investors with varying agendas remains to be seen.
US economy ‘less safe’, experts say, as Trump hobbles consumer watchdog
Millions of Americans are more likely to be ripped off by scammers and thieves as a result of a bid by the Trump administration to defang the top US consumer watchdog, former officials have warned.
Donald Trump has indicated he wants to eliminate the Consumer Financial Protection Bureau (CFPB), which was set up after the financial crisis to shore up oversight of consumer financial firms, prompting critics to accuse him of setting the stage for “one of the biggest cons” in modern memory.
The billionaire tycoon Elon Musk, engaged in a government-wide “efficiency” blitz with the president’s blessing, has suggested the agency is already dead. Only in a court filing late on Monday did Russell Vought, the CFPB’s acting director, clarify it would continue to exist – albeit in a “more streamlined and efficient” form – under the new administration.
With the CFPB incapacitated by layoffs, work stoppages and widespread confusion over its future, the Massachusetts senator Elizabeth Warren, who played a key role in setting up the agency, held a forum on its future on Capitol Hill on Tuesday alongside other Senate Democrats.
Apple shareholders vote against ending DEI program amid Trump crackdown
And another Apple story.
Apple shareholders voted down an attempt to pressure the technology company into yielding to Donald Trump’s push to scrub corporate programs designed to diversify its workforce.
A proposal drafted by the National Center for Public Policy Research – a self-described conservative thinktank – urged Apple to follow a litany of high-profile companies that have retreated from diversity, equity and inclusion (DEI) initiatives currently in the Trump administration’s crosshairs.
After a brief presentation about the anti-DEI proposal, Apple announced shareholders had rejected it without disclosing the vote tally. The preliminary results will be outlined in a regulatory filing later on Tuesday.
The outcome vindicated Apple management’s decision to stand behind its diversity commitment even though Trump asked the US Department of Justice to look into whether these types of programs have discriminated against employees whose race or gender are not aligned with the initiatives’ goals.
But Apple’s CEO, Tim Cook, has maintained a cordial relationship with Trump since his first term in office, an alliance that so far has helped the company skirt tariffs on its iPhones made in China. After Cook and Trump met last week, Apple on Monday announced it would invest $500bn in the US and create 20,000 more jobs during the next five years – a commitment applauded by the president.
Here’s our full story on the carmakers Aston Martin and Stellantis:
All Elizabeth line strikes called off as Aslef train driver dispute is resolved
A pay dispute involving train drivers on London’s Elizabeth line has been resolved, which means all strikes have now been called off – good news for passengers.
Members of Aslef were due to stage a series of strikes from Thursday which would have caused travel chaos in the capital.
The union said its executive committee has accepted a new offer from the line’s operator, MTR.
Strikes planned for Thursday and Saturday had already been called off, but Aslef said all industrial action has now been cancelled, including threatened walkouts on 8 and 10 March.
The Elizabeth line is the cross-London mass transit line, which opened in May 2022, and carries about 800,000 passengers a day.
Industrial unrest has persisted in some places on the rail network despite the resolution last summer of the major nationwide disputes that had brought two years of disruption.
BP is under pressure from shareholders, notably Elliott Management, the New York hedge fund. The world’s most prominent activist investor took a near-£4bn stake in the company recently, just under 5% of its shares.
Elliott is expected to be pushing for major changes behind the scenes, including a shift back towards fossil fuels to boost profit, a boardroom cull with the chairman, Helge Lund, seen as most vulnerable, and a potential break-up of the company.
BP made about £7.2bn last year, down a third from the year before, after oil and gas prices fell from the highs seen in the wake of Russia’s invasion of Ukraine.
The company is laying off 4,700 staff globally and axing 3,000 contractors to save money.
BP’s decision to reduce spending on renewables and double down on its fossil fuel assets will be “shocking but not surprising to investors focused on sustainability”, said Lindsey Stewart, director of stewardship research and policy at Morningstar.
He explained:
Having already cut back its energy transition targets in 2023, BP’s subsequent underperformance compared with peers has created pressure for BP management to focus on sustainability of a financial rather than ecological nature. For sustainable investors, this will hardly be the end of the argument.
Several of BP’s shareholders decided to vote against the company’s chair the last time BP reduced its commitment to energy transition, after not being offered the opportunity to vote on the company’s adjusted strategy. That’s a possibility again this year, unless the BP decides to table a “say-on-climate” vote at its upcoming AGM as 48 investors have already requested.
Allen Good, director of equity research at Morningstar:
The refocus on hydrocarbons is positive for BP as is the overall lower spending, which is driven by lower renewable spending. Along with the asset divestitures it should improve the balance sheet and returns. However, there still is little, if any, production growth, and BP’s repurchase rate has been reduced materially.
Here’s our full story:
BP also announced a strategic review of its lubricants business, Castrol, effectively putting it up for sale. It is targeting $20bn in divestments by 2027, including potential proceeds from Castrol and the solar business Lightsource.
What is described as “disciplined investment in the transition” means that the company will be “focused on returns, fewer higher-returning opportunities, accessing growth more efficiently”.
It flagged focused investment in biogas, biofuels and electric vehicle charging “driven by returns – high grading projects, leveraging existing infrastructure, focusing on fewer key markets”.
It will invest in offshore wind and solar platforms in a “capital light way for BP” and limit further projects in hydrogen and carbon capture.
At the same time, the company is seeking to cut more than £500,000 of costs from its low carbon energy businesses by 2027.
BP ramps up oil and gas investment to $10bn a year in ‘fundamental reset’
BP is drastically scaling back its green ambitions, ditching plans to cut its oil and gas production by the end of the decade, as part of a “fundamental reset” of the troubled company’s strategy.
Instead, it is ramping up its oil and gas investment to $10bn a year.
The oil and gas giant has confirmed that it will scrap its plan to cut its oil and gas production by increasing it to 2.3–2.5m barrels of oil a day by 2030.
At an investor day in London, the chief executive, Murray Auchincloss, said BP will increase oil and gas investment to around $10bn a year. He added that the company will be “very selective” about investing in fossil fuel alternatives which help the energy transition.
Today we have fundamentally reset BP’s strategy. We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns.
The company said it now plans to invest $1.5bn to $2bn a year in energy transition businesses – more than $5bn lower than its previous expectation. This includes an average of less than $800,000 a year in low carbon energy.
The oil boss had promised to overhaul the company’s strategy, reversing a shift towards renewable energy generation begun under his predecessor Bernard Looney, after lacklustre results recently. Its shares have underperformed rivals in recent years.
This strategy will see BP grow its upstream oil and gas business, focus its downstream business, and invest with increasing discipline into the transition.
UK regulator invites bids for £4bn electricity links
Ofgem is inviting bids from investors to own and operate £4bn worth of electricity links plugging Britain into homegrown North Sea power.
Ofgem has opened the OFTO (Offshore Transmission Owner) regime tender round 12 where investors can bid for infrastructure connecting RWE’s Sofia wind farm to the onshore electricity grid in North Yorkshire.
Located 195km off Britain’s northeast coastline in the North Sea, the 1.4 GW wind farm can power almost 1.2m homes. It connects to the Yorkshire electricity transmission network via cables and offshore and onshore converter stations and substations, which transport the energy to millions of British homes.
Since its launch in 2009, OFTO has seen winning bidders invest more than £11bn in links connecting 27 offshore wind farms. As the race to achieve clean power intensifies, Ofgem anticipates bringing on average £6bn of OFTO assets to market each year in the run up to 2030.
Beatrice Filkin, Ofgem director of major projects, said:
Connecting offshore wind farms such as Sofia helps harness the power of the North Sea to keep the lights on and deliver homegrown energy to British consumers.
OFTO is part of Ofgem’s work to attract investors into the UK to boost growth and build a stable and secure energy system to deliver clean power to people’s homes.
As well as successfully attracting the investment needed to upgrade our energy system, OFTO also ensures that we as regulator deliver a good deal for consumers and keep bills as low as possible.
Later this year Ofgem plans to launch tender round 13, anticipated to be its biggest tender round so far comprising transmission assets for these three windfarms:
Located 196km offshore, Dogger Bank C, has a generation capacity of 1.2GW. It forms part of the world’s largest windfarm which will have an installed capacity of 3.6GW capable of powering up to 6 m homes a year.
One of Scotland’s largest offshore wind farms, it has 72 turbines located 15km off the Angus Coast in the North Sea and has a generation capacity of almost 1.1GW.
Located 69km from the East Anglian coast in the southern North Sea, the wind farm could generate up to 1.4GW with the potential to power over 1.3m homes. The array forms part of the East Anglia Hub windfarms.
Aston Martin delays electric car; Stellantis swings to loss
Jasper Jolly
The British sportscar maker Aston Martin has delayed its first battery electric vehicle further, as it announced plans to cut 170 jobs in the latest step in its quest for profits.
The FTSE 250 manufacturer on Wednesday said its priority was plug-in hybrid cars, which combine a small battery with a petrol engine. The first electric model will only come in “the latter part of this decade”.
It is the latest delay in the electric plans for Aston Martin, famed as the car driven by James Bond in the British spy films. Aston Martin had planned to showcase an electric car in the last James Bond film, but it cancelled that model. It last year postponed its first electric car to 2026, before the latest delay.
Carmakers around the world have slowed down efforts to switch to electric cars. While sales of electric cars have increased strongly in most large markets, manufacturers had expected faster growth.
Stellantis, the world’s fifth-largest carmaker by sales, on Wednesday said that it would give customers “freedom to choose” between internal combustion engine, electric, and hybrid technologies.
However, it is not just demand for electric models that has hit carmakers. Sales have slowed around the world, and across different technologies.
Stellantis, which owns brands including Fiat, Chrysler, Peugeot and Vauxhall, reported a swing to a loss of €127m in the second half of 2024, compared with a profit of €7.7bn a year earlier. It had shocked investors in the autumn with a profit warning.
The financial turmoil particularly in North America – and a falling out over strategy – led to the resignation of Stellantis chief executive Carlos Tavares in December. Stellantis said it will try to find a new chief executive in the first half of 2025.
Aston Martin appointed Adrian Hallmark as its chief executive last year, making him the fifth boss in five years. The former boss of British luxury car brand Bentley is the latest person appointed to try to make Aston Martin financially sustainable, five years after it was taken over in 2020 by the Yew Tree consortium, led by the US billionaire Lawrence Stroll.
German consumer confidence worsens; French morale improves
Consumer confidence has unexpectedly worsened in Germany amid a weak labour market.
The consumer confidence index from the research company GfK dropped to -24.7 in February from -22.6 in January, the lowest level since April.
This is putting pressure on Friedrich Merz, whose conservative CDU party came out top in the national election on Sunday, to quickly put together a coalition government with the Social Democrats and tackle Germany’s pressing problems.
Good Morning from Germany, where consumer sentiment has unexpectedly worsened again due to the weak labor market figures. The GfK Consumer Confidence Index dropped from -22.6 to -24.7, its lowest level since Apr 2024. Economists polled by Bloomberg had predicted an improvement to… pic.twitter.com/wp5NxuE7x6
— Holger Zschaepitz (@Schuldensuehner) February 26, 2025
Meanwhile in France, consumer confidence improved this month, with people becoming more optimistic about the job situation.
The consumer sentiment index edged up to 93 points in February from 92 points in January, according to France’s statistical office INSEE.
Justin Low, currency analyst at Forex live, said:
That’s the highest reading since October as consumer morale continues to pick up since the turn of the year. That said, it’s still on the weaker side and holding below the long-term average of 100. Of note, there was an uptick in unemployment prospects with the index rising to 55 – its highest since April 2021.
Over in the US, consumer confidence plummeted in February, the biggest monthly decline in nearly four years, a business research group said yesterday, with inflation seemingly stuck and a trade war under Donald Trump seen by a growing number of Americans as inevitable.
The Conference Board reported that its consumer confidence index sank this month to 98.3 from 105.3 in January. That’s far below the expectations of economists, who projected a reading of 103, according to a survey by FactSet.
Apple promises to fix bug in iPhone automatic dictation tool
Joanna Partridge
Apple has promised to fix a bug in its iPhone automatic dictation tool, after some users reported it suggested them “Trump” when they said the word “racist”, before quickly correcting itself.
The glitch was first highlighted in a viral post on Tiktok, when the speech-to-text tool sometimes briefly flashed up the word “Trump” when they said “racist”, and was later repeated by several users on social media.
“We are aware of an issue with the speech recognition model that powers dictation and we are rolling out a fix,” an Apple spokesperson said.
The company blamed the bug on its tool displaying words which have “phonetic overlap” , according to reports, which in this case included words with the ‘r’ consonant.
However, the glitch caused outrage among some conservative commentators in the US, who have long accused big tech firms of political bias against those on the right.
The bug also called into question Apple’s artificial intelligence capabilities, just a day after the company announced a $500bn investment in the US, widely interpreted as a move designed to appeal to Donald Trump’s government.
The tech giant said on Monday the investment, running over the next four years, will include a giant factory in Texas for artificial intelligence servers, and would would create about 20,000 research and development jobs across the country.
The AI announcement came just days after Apple’s chief executive Tim Cook reportedly met Trump. The company could face 10% tariffs on its devices, many of which are assembled in China before being imported into the US.
Introduction: Transport secretary backs expansion of airports ahead of Gatwick decision; Heathrow posts record passenger numbers
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK’s transport secretary Heidi Alexander said the government “believes in increasing airport capacity”, as a decision looms on the expansion of Gatwick airport.
Speaking at the annual dinner of trade body Airlines UK in London last night, Alexander said the government would do “all we can to support the sector and take the brakes off growth”.
She has to announce by Thursday whether she has approved Gatwick’s application to bring its emergency northern runway into regular use, which would enable 100,000 more flights every year at the West Sussex airport.
Gatwick said it could relocate the runway, which is currently only used for taxiing and in emergencies, and make it operational by the end of the year. This would cost an estimated £2.2bn – in comparison to Heathrow’s third runway, which is likely to cost far more than the last estimate of £14bn.
The climate change committee dropped its opposition to airport expansion from its carbon budget this morning. In contrast to previous advice that no airport expansion could take place without big cuts to carbon elsewhere, it was not prescriptive about where or how the expansion could occur.
However, like the Heathrow runway, the Gatwick expansion is controversial, with some MPs, local authorities and residents strongly opposed, who point to increased air and noise pollution, climate concerns and the impact on the local community.
The Civil Aviation Authority announced its support for the Gatwick expansion yesterday, saying it would bring “benefits to consumers” citing more choice of destinations for passengers.
Heathrow reported a jump in annual profits this morning after passenger numbers rose to record levels in 2024, just weeks after the chancellor, Rachel Reeves, backed the proposed third runway and said it could be built within 10 years.
Last year 84 million people travelled through Europe’s busiest airport, beating the pre-pandemic record set in 2019 by 3 million.
The airport’s underlying profits rose by 31% to £917m last year while revenues dipped by 3.5% to £3.6bn after the regulator limited charges. However, adjusted pre-tax profits fell by 9%.
Thomas Woldbye, the chief executive, said:
2024 underscores why Heathrow is the UK’s gateway to growth.
Heathrow, which is 15 miles west of London, confirmed it would submit its proposals for a third runway to the government this summer, but said “policy changes are needed to deliver the project successfully” and it would work with ministers, around air modernisation, planning reform and adjustments to the regulatory model for a third runway.
Meanwhile, the British luxury carmaker Aston Martin said it plans to cut about 5% of its global workforce – 170 jobs – as losses widened.
This is intended to save £25m. It said:
We are commencing a process to make organisational adjustments, to ensure the business is appropriately resourced for its future plans.
The Agenda
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3pm GMT: US New home sales for January
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3.30pm GMT: US EIA Crude oil stocks
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4.30pm GMT: Bank of England policymaker Swati Dhingra speaks
