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BP is writing down the value of its green energy businesses by $4bn-$5bn after a series of setbacks and as new management tries to pivot back to oil and gas.
The FTSE 100 oil major did not specify which projects caused the impairments, but said the writedowns would “primarily” be in its gas and low-carbon energy unit, which includes hydrogen, carbon capture and Lightsource, its solar business. BP has already spun off its wind business into a separate joint venture.
BP has been attempting since last March to sell at least a 50 per cent stake in Lightsource to a new partner. The company also cancelled its H2Teesside hydrogen project in the UK in December.
The writedown will not affect BP’s underlying profits when it posts its results on February 10. BP did not comment on whether the move was the final writedown that investors could expect on its struggling green businesses. BP’s share price fell 0.8 per cent in early trading on Wednesday, compared with a 0.35 per cent fall for rival Shell.
The company has been radically scaling back clean energy after a “fundamental reset” of its strategy unveiled by Murray Auchincloss, its previous chief executive, last April.
The move saw BP’s shares outperform many of its peers last year, but Auchincloss himself abruptly departed just before Christmas.
Several people familiar with the situation suggested that BP’s chair, Albert Manifold, had grown impatient at the slow pace of decision-making at the company. BP has appointed Meg O’Neill, the former chief executive of Australian energy company Woodside, as its new chief executive from April.
In a largely downbeat trading statement, the company said its gas sales in the fourth quarter would be $100mn-$300mn lower than in the previous quarter, its crude sales would be $200mn-$400mn weaker, and that its oil and gas production was flat. It said its refining margins would be $100mn higher than in the previous quarter, but that oil trading “is expected to be weak”.
However, BP said its net debt, a persistent cause of concern for investors, would be $3bn-$4bn lower in the fourth quarter than in the previous quarter, and that its divestments would be about $5.3bn by the end of the year, compared with previous guidance of “above $4bn”. BP has also now sold a stake in Castrol, its lubricants business, and pledged to use the $6bn proceeds to reduce its debt further.