BP has warned it expects to write down up to $5bn on its underperforming green energy operations as it refocuses on oil and gas under new chair Albert Manifold. The writedowns relate mainly to BP’s gas and low-carbon “transition” businesses and include setbacks in solar and hydrogen projects, though the company said they would not affect underlying profits. BP has been trying to sell a stake in its Lightsource solar arm and has cancelled hydrogen developments in the UK, Oman and Australia.
The announcement comes amid weaker oil trading and falling crude prices, with Brent averaging $63.73 a barrel in the final quarter of last year. BP’s shares dipped after the update, which follows similar trading warnings from rival Shell. The company said it has continued to cut debt and will enter the year with net debt of about $22bn to $23bn.
The write-down also comes shortly after BP appointed Meg O’Neill as chief executive, replacing Murray Auchincloss after less than two years. O’Neill, who joins from Woodside in April, will take charge as BP moves further away from the green strategy pursued under former chief executive Bernard Looney. Analysts said the downbeat update highlights the scale of the challenge facing BP as it pivots back towards fossil fuel production in a volatile energy market.
