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BP halts hiring new staff and puts break on renewable energy plans

A logo of BP is seen at a gas station in London, on Nov. 1, 2022.
A logo of BP is seen at a gas station in London, on Nov. 1, 2022. Copyright Kin Cheung/Copyright 2022 The AP. All rights reserved
Copyright Kin Cheung/Copyright 2022 The AP. All rights reserved
By Indrabati Lahiri
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BP has revealed that this move was mainly due to increasing discontent amongst investors about the company’s green transition strategy.


BP, which had been making considerable strides in renewable energy, has recently announced that it would be scaling back on its sustainable energy plans, while refocusing on oil and gas for the foreseeable future. 

It also announced that it would be implementing a halt on new hiring across the company, as well as temporarily stopping new offshore wind projects. 

This is mainly due to growing investor anxiety and discontent about the oil giant’s big plans to invest in renewable energy projects, which are considerably capital-heavy. These are viewed as unlikely to generate much returns in the next few years because of the time needed for these projects to become operational. 

The current plans supported by BP’s current CEO Murray Auchincloss, are in sharp contrast to the agenda pursued by the company’s previous CEO, Bernard Looney who's plans for a faster energy transition were welcomed by environmentally-conscious consumers and investors at the time. 

However, the majority of investors were still dismayed at the thought of bidding goodbye to oil and gas profits, which soared after the Russia-Ukraine war, contributing heavily to BP’s bumper profits during that time. 

Now, in an attempt to further pacify these disgruntled investors, BP has announced that it will be investing more in oil and gas projects, especially in the US and in the Gulf of Mexico. Simultaneously, in order to not completely alienate the smaller portion of environmentally-focused investors, it will also keep investing in other low-carbon projects, which can start being profitable relatively soon. 

Russ Mould, investment director at AJ Bell said in an email note, “The motivation for taking the route of a slower energy transition might be to secure a better valuation from the market, more in line with US peers which have not made the same kind of environmental commitments. In doing so, Auchincloss is following the path forged by his counterpart at Shell, Wael Sawan. 

“These decisions could go down well with investors in the short term but they could store up longer-term problems for the business. By walking back its environmental pledges, BP risks the ire of campaigners, the wider public and, more seriously, politicians and regulators.

“The energy industry has been plagued in the past by problems relating to its cyclical nature, with professionals in this space facing waves of redundancies during fallow periods. This has resulted in an aged workforce and has seen expertise leave the sector. 

“A hiring freeze could now make it more difficult to fill jobs when BP needs to, in the future and, having muddled any green credentials, BP may struggle to attract new, younger talent given this demographic tends to be more concerned about the impact of climate change.” 

Renewable energy producers slow down investments

BP is not the only major oil and gas company to announce that it will be moving back towards its core fossil fuel business, in light of the current economic and investor situation. Shell also pulled back from low-carbon and renewable energy projects last year, revealing that it would be working more towards higher-profit ventures from now on. 

However, this phenomena is not limited solely to oil and gas companies trying to make a green transition. Even renewable energy companies such as Stratkraft have revealed that increased costs and falling electricity prices have given it pause, forcing it to pull back from some solar and wind energy projects. 

This is mainly in order to be able to survive in an increasingly turbulent and competitive business environment. Soaring interest rates for several months have also made it much harder for projects to be financially sustainable, especially since returns from renewable energy projects can often take years to arrive. 

Stratkraft president and chief executive officer (CEO) Birgitte Ringstad Vartdal said in a press release, “Stratkraft has in recent years built a strong position and an attractive portfolio of profitable renewable projects. The transition from fossil to renewable energy is happening at an increasing pace in Europe and the rest of the world. 

“We have strong competitive advantages and have delivered great value creation over time. However, the market conditions for the entire renewable energy industry have become more challenging. We are therefore sharpening our strategy to allocate the capital to the most value-creating opportunities with the best strategic fit.” 

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