BP, ExxonMobil Provide A Contrast In Energy Transition Strategies

Reuters reports that new BP CEO Murray Auchincloss announced this week that his company will impose a hiring freeze and pause investments in new wind energy projects in an effort to make the UK-based major more competitive and attractive to investors. The moves come amid rising dissatisfaction from top BP shareholders over the company’s strategies related to renewables and other investments aimed at improving its ESG ratings.

The new internal strategy shift is a reversal from the aggressive investments in both onshore and offshore wind projects invoked by previous CEO Bernard Looney throughout his tenure, which began in February, 2020 and ended last December. BP’s ambitious plans for wind developments offshore the US Atlantic coast ran into severe profitability issues thanks to rapid inflation and supply chain issues.

While BP appears to be enjoying better success with major wind projects offshore Germany, the moves this week bring it more in line with the general trend among corporate majors to focus larger portions of their capital budgets to their core oil and gas business units. I noted this trend building in early 2023, and it became bluntly evident at last year’s CERAWeek conference as a parade of CEOs announced commitments to focus more on matters of energy security, and less on less profitable “green” ventures that provide opportunities for virtue signaling related to the energy transition.