BP generates profit once more in the second quarter, marking a return to financial success.
BP Announces Strategic Shift Towards Balanced Energy Portfolio
BP, one of the world's leading energy companies, has unveiled a new strategy that represents a significant shift in its approach to carbon emissions reduction and clean energy investment. The strategy, outlined in BP's 2025 plan, aims to strike a balance between maintaining fossil fuel production and selective low-carbon investments.
The updated plan reveals ambitious targets for carbon emissions reduction. BP aims to reduce operational (Scope 1 and 2) emissions by 40-50% by 2030, compared to 2019 levels. The company also aims for a near-zero methane intensity target by 2025. Moreover, BP has set a goal to reduce oil and gas production by 25% by 2030 to support decarbonization efforts.
In terms of clean energy investment, BP is allocating 40% of its 2025 capital expenditure to transition growth businesses such as hydrogen and biofuels. The company aims to raise this allocation to 50% by 2030. Key low-carbon projects include hydrogen plants in Germany and Spain, and partnerships in sustainable aviation fuels (SAF) and biogas.
Despite scaling back renewable energy investments by over $5 billion annually compared to earlier plans, BP's strategy still prioritizes the development of low-carbon technologies. This "hybrid" approach reflects a pragmatic balance between near-term profitability and long-term energy transition risks.
BP's strategic shift has been met with mixed reactions. While the company's focus on decarbonization via niche low-carbon projects has been welcomed, its increased allocation to oil and gas projects has drawn criticism from ESG investors.
In other news, BP recently agreed to sell its onshore wind energy business in the United States. The company's net loss in the second quarter of 2024 was $129 million. However, shares in BP gained 1.7 percent in early London deals following its update.
Energy prices have come under pressure due to concerns about US President Donald Trump's tariffs affecting economic growth and OPEC+ nations producing more oil. BP managed to post a profit for the second quarter due to lower impairments compared to the previous year, a revaluation of assets, particularly in liquefied natural gas (LNG), and divestments.
BP's chief executive Murray Auchincloss stated that the quarter was strong operationally and strategically for BP. The group also announced plans to cut cleaner energy investment by more than $5 billion annually and offload assets worth a total of $20 billion by 2027.
BP's rival, Shell, has also scaled back its climate objectives. British rival Shell posted a slight increase to its profit after tax for the latest reporting period. Meanwhile, French rival TotalEnergies and US groups ExxonMobil and Chevron posted heavy falls to their net profit in the second quarter.
BP reported a profit after tax of $1.63 billion in the April-June period of 2025. The group's net profit plunged 70 percent in its first quarter, hit by weaker oil prices. BP last month named Albert Manifold as its new chairman, with Helge Lund, the previous chairman, announcing his departure amid the strategy reset.
In February 2025, BP launched a major pivot back to its more profitable oil and gas business. The company is also launching "a further cost review" and aims to be "best in class in [its] industry" without compromising on safety.
BP's new strategy, as outlined in the 2025 plan, involves allocating a significant portion of its capital expenditure towards low-carbon businesses like hydrogen and biofuels in the oil-and-gas industry, with the aim of increasing this allocation to 50% by 2030. The company's ambitious targets include reducing operational emissions by 40-50% by 2030 and a near-zero methane intensity target by 2025, while also aiming to reduce oil and gas production by 25% by 2030 to support decarbonization efforts.
