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BP slashes net-zero spending by nearly £4bn in renewed oil and gas focus

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BP has confirmed it will slash spending on net-zero transition businesses by more than five billion US dollars (£3.95 billion) a year, and significantly ramp up its oil and gas operations.

The fossil fuels giant said it still hopes to become a net-zero company but will only spend up to two billion dollars (£1.6 billion) a year on projects aimed at the energy transition, a significant cut.

It said it will increase oil and gas investment by about 20% to 10 billion US dollars (£7.9 billion) a year as part of a major strategy update.

Chief executive Murray Auchincloss said the company is focusing its spending on BP’s “highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency”.

He added that as well as the increase in oil and gas spending, BP will be “very selective in our investment in the (energy) transition, including through innovative capital-light platforms”.

Mr Auchincloss said: “This is a reset BP, with an unwavering focus on growing long-term shareholder value.”

The update to the oil and gas giant’s plans come ahead of a major shareholder meeting in London on Wednesday afternoon.

BP has come under increasing pressure from some shareholders over falling profits and a share price that has lagged behind rival Shell.

The influential US hedge fund Elliott Management took a nearly £4 billion stake in the company recently, just under 5% of its shares.

The move is understood to have been aimed at pushing BP back towards fossil fuels to boost profit.

BP made about £7.2 billion last year, down a third on the year before, after oil and gas prices fell from the highs seen in the wake of Russia’s invasion of Ukraine.

According to the International Energy Agency, no new fossil fuel projects are compatible with limiting global warming to 1.5C compared to pre-industrial levels, a goal adopted by most of the international community.

A ship passing an offshore wind farm
BP has already spun off its offshore wind business in a joint venture (Ben Birchall/PA)

However, BP has said it wants to increase its production to between 2.3 million and 2.5 million barrels of oil per day by 2030.

And it said it hopes “major” oil and gas projects will start by the end of 2027, with a target of eight to 10 kicking off by the end of the decade.

The decrease in renewables will cover biogas, biofuels and electric vehicle charging projects, while BP will go after “capital-light partnerships” in other green energy such as wind and solar.