BP has been accused of pausing its renewable projects to reduce costs and maintain share buybacks to boost returns after the oil and gas company recorded better-than-expected profits of almost $2.8bn for the first quarter of 2024.
The company also promised to give shareholders higher dividends, lifting the payments whilst buying stock worth $1.75bn over the next three months.
Market analysts had predicted that the oil giant’s profits would reach $2.55bn for the April–June period, but BP reported that its profits reached $2.76bn.
But with these results, the company is facing criticism for prioritising profits and investor confidence over efforts to contribute to the energy transition.
In June, CEO Murray Auchincloss reportedly initiated a hiring freeze and suspended offshore wind projects, according to sources at the company, as it focuses on oil and gas to boost revenues.
One campaign group, Global Witness, an international NGO, argued: “While millions of us struggle with high temperatures and high bills, BP is raking in billions of profits, paying out massive dividends, and doubling down on dirty new oil and gas projects.”
BP has subsequently warned its investors of lower profit margins surrounding its refining business after a $2bn write-down resulted in refining operations in Germany being scaled back due to low demand.
A spokesperson from Edison Group, a leading investment consultancy, explained: “BP’s second-quarter results come as the company seeks to rebuild investor confidence in its strategy and facing headwinds as it pauses renewable projects to cut costs and maintain share buybacks in an effort to and boost returns.”
Growth in oil and gas production and operations for BP has led the company to offset lower outputs from gas and other low-carbon energy.
Auchincloss, speaking in a press release on Tuesday, said BP was now “driving focus across the business and reducing costs, all while building momentum in our drive to 2025 [and] while scaling back plans for new biofuels projects, we are demonstrating our commitment to delivering as a simpler, more focused and higher-value company.”
He added: “This all supports growing returns for shareholders, as we have announced today.”
It seems the company’s main aim is to focus increasingly on its oil and gas investments and put renewable energy, at least temporarily, to one side.
There could be bigger issues coming for the oil company. Following the Deepwater Horizon oil rig explosion in 2011, it is now being investigated over whether it lied to the US Congress about how much oil was spilled into the Gulf of Mexico.
