BP Ready to Sell "Ineffective Assets" Even if Oil Prices Rise - Reuters

Baku / 07.08.20 / Turan: BP is preparing to sell a significant part of its oil and gas assets, even if crude oil prices recover, because it wants to invest in renewable energy sources. Three sources in BP told Reuters about this.

The strategy was discussed at a BP management meeting in July, sources said, shortly after the oil company cut its long-term forecast for oil prices to $ 55 a barrel. This means that its $ 17.5 billion worth of assets is no longer economically viable.

But even if oil prices return to $ 65-70, BP is unlikely to keep these assets and try to sell them, three sources said. BP's new strategy, however, means that the company will have no turning back once it divested of its poor oil and gas assets.

According to the new strategy of BP CEO Bernard Looney, by 2030 the company will reduce oil and gas production by 40%, or 1 million barrels per day. At the same time, activities in the field of renewable energy sources will be expanded. This is because climate activists, investors, banks and some governments are constantly increasing pressure on the oil and gas industry to reduce carbon dioxide emissions. Therefore, European oil companies are changing course.

Looney said BP will only continue to explore for oil near the existing production infrastructure, as this oil will be cheap. However, the company will refuse to develop deposits in remote regions.

BP also set a goal this week to sell its $ 25 billion in assets by 2025. According to Reuters, this is a sale by BP of Canadian assets and oil sands off the coast of Angola.

Parul Chopra, an analyst at Rystad Energy, believes that in addition to Angola, BP will withdraw from Azerbaijan, Oman, the United Arab Emirates and Iraq. “In Iraq, profitability is quite low and the company would like to get out of there,” he said.

BP plans a 10-fold increase in investment in low-carbon energy sources to $ 5 billion by 2030, and wants to ensure a 20-fold increase in renewables to generate 50 gigawatts of energy in new projects.

However, the company has debts of nearly $ 50 billion. Therefore, the transition to renewable energy sources is unlikely to be cost-effective. Large oil companies typically aim for a 12% to 15% return on their oil investments. BP said it is aiming for yields of 8% to 12% for renewables.   -02D-