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From International Oil Company to Integrated Energy Company

04th August 2020

bp sets out strategy for decade of delivery towards net zero ambition

New strategy sees bp:

Pivoting to low carbon energy and customer focus

  • 10-fold increase in low carbon investment by 2030, with up to 8-fold increase by 2025
  • partnering with 10-15 cities and 3 core industries in decarbonization efforts and doubling customer interactions to 20 million per day, all by 2030

Focusing resilient hydrocarbon business on value:

  • capital intensity decreasing as major project wave completes, combined with continued efficiency focus, to drive earnings and ROACE growth
  • production declines by 40% by 2030 through active portfolio management 
  • no exploration in new countries Delivering on net zero ambition • emissions from bp’s operations 30-35% lower by 2030
  • emissions associated with carbon in upstream oil and gas production 35-40% lower by 2030 
  • carbon intensity of products bp sells lower by more than 15% by 2030

Delivering long term value for shareholders 

  • reset resilient dividend of 5.25c/share per quarter, with commitment to return at least 60% of surplus cash as share buybacks
  • profitable growth with 7-9% annual growth in EBIDA per share to 2025
  • sustainable value with increasing investment in low carbon and non-oil and gas

bp today introduces a new strategy that will reshape its business as it pivots from being an international oil company focused on producing resources to an integrated energy company focused on delivering solutions for customers.

Within 10 years, bp aims to have increased its annual low carbon investment 10-fold to around $5 billion a year, building out an integrated portfolio of low carbon technologies, including renewables, bioenergy and early positions in hydrogen and CCUS. By 2030, bp aims to have developed around 50GW of net renewable generating capacity – a 20-fold increase from 2019 – and to have doubled its consumer interactions to 20 million a day. 

Over the same period, bp’s oil and gas production is expected to reduce by at least one million barrels of oil equivalent a day, or 40%, from 2019 levels. Its remaining hydrocarbon portfolio is expected to be more cost and carbon resilient.

By 2030, bp aims for emissions from its operations and those associated with the carbon in its upstream oil and gas production (addressed by Aim 1 and Aim 2 of bp’s net zero ambition) to be lower by 30-35% and 35-40% respectively.

bp also today sets out a new financial frame to support a fundamental shift in how it allocates capital, towards low carbon and other energy transition activities. The combination of strategy and financial frame is designed to provide a coherent and compelling investor proposition – introducing a balance between committed distributions, profitable growth and sustainable value – and create long-term value for bp’s stakeholders. As part of the investor proposition, bp’s board has introduced a new distribution policy, with two elements:

  • the dividend reset to a resilient level of 5.25 cents per share per quarter, and intended to remain fixed at this level, subject to the board’s decision each quarter, supplemented by
  • a commitment to return at least 60% of surplus cash to shareholders through share buybacks, once bp’s balance sheet has been deleveraged and subject to maintaining a strong investment grade credit rating.

“Energy markets are fundamentally changing, shifting towards low carbon, driven by societal expectations, technology and changes in consumer preferences. And in these transforming markets, bp can compete and create value, based on our skills, experience and relationships. We are confident that the decisions we have taken and the strategy we are setting out today are right for bp, for our shareholders, and for wider society,” said Helge Lund, chairman.

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