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BP plc BP, the UK-based energy major, has decided to pause its plan to produce sustainable aviation fuel (SAF) at its Castellon refinery in eastern Spain, citing slower-than-expected growth in the market. The project was part of a broader €2 billion decarbonization push at the site, announced in 2023.
The decision reflects broader uncertainty in the emerging clean jet fuel industry, where demand and policy support have not kept pace with initial expectations. SAF has been championed as a key pathway to decarbonizing the aviation sector, but its commercial rollout has proven to be more complex and slower than anticipated.
BP Recalibrates Its Biofuels Strategy
While the Castellon expansion is on hold, BP still has an eye on future biofuels growth. According to a Bloomberg report, the company continues to consider an expansion at its Rotterdam facility, with a final investment decision expected by 2027 if the economics support it.
BP has signaled a broader shift in its low-carbon strategy, trimming spending in some areas as part of a strategic reset under CEO Murray Auchincloss. The company has now paused or shelved several SAF projects globally, including earlier plans for new sites in Germany, the United States and Australia.
Although BP declined to comment specifically on the Castellon project, it reiterated its prior guidance that it may still approve one new biofuels plant before 2027. That approval, however, remains dependent on economic viability and market conditions.
The latest move highlights the growing tension energy companies face as they try to balance decarbonization goals with financial discipline. For BP, that now means taking a more cautious and selective approach to its low-carbon investments.
BP’s Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like Archrock Inc. AROC, Kinder Morgan, Inc. KMI and Enterprise Products Partners L.P. EPD. While Archrock presently sports a Zacks Rank #1 (Strong Buy), Kinder Morgan and Enterprise Products carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. AROC provides natural gas contract compression services and generates stable fee-based revenues.
Archrock’s earnings beat estimates in three of the trailing four quarters and met once, delivering an average surprise of 8.81%.