BP on Tuesday said it was boosting spending on oil and gas as much as it will on what it calls “transition growth engines,” a sign of both the pushback energy giants have received for their moves into the renewable energy space as well as the need for energy security and affordability.
BP BP, -0.88% BP, +3.68% said it will spend up to $8 billion more on oil and gas by 2030, and an equal $8 billion more on areas including bioenergy, electric vehicle charging and hydrogen.
“It’s clearer than ever after the past three years that the world wants and needs energy that is secure and affordable as well as lower carbon – all three together, what’s known as the energy trilemma,” said CEO Bernard Looney in a statement.
BP said it’s targeting “shorter-term, fast-payback” projects in oil and gas, that won’t need much new infrastructure. BP still expects oil and gas production to decline, but not by as much — excluding production from Russia’s Rosneft, which it walked away from, BP expects 2030 production to be 25% lower than it was in 2019, compared to a previous estimate of 40% lower.
Oil and gas production is expected to rise to 2.3 million of oil equivalent barrels by 2025 but fall to around 2 million in 2030.
The spending change was announced alongside fourth-quarter results, as BP profits swelled to $10.8 billion from $2.3 billion in the year-ago quarter. What it calls its underlying replacement profit rose to $4.81 billion from $4.07 billion, coming up shy of analyst estimates of $5 billion.
That profit increase was driven by higher prices. BP received $82.23 per barrel equivalent for the oil and gas it produced in 2022, up from $55.65 in 2021. BP said it was increasing its dividend by 10% and boosting its share buyback authority by $2.75 billion.
BP says it expects oil CL.1, +1.97% BRN00, +1.75% prices to be supported by recovering Chinese demand, as well as uncertainty over the level of Russian exports and low inventory levels. BP says global gas prices NG00, -0.20% will remain dependent on the weather in the northern hemisphere and the pace of Chinese demand recovery.
BP says its own production will be broadly flat in both the first quarter and for the year.
BP’s profit for the year was $27.7 billion on an adjusted basis. According to the Wall Street Journal, BP along with Exxon Mobil XOM, -0.17%, Chevron CVX, +0.11% and Shell SHEL, -0.77% earned more than $159 billion in 2022.