BP Plc will write down up to $17.5 billion from the value of its assets as the world’s six-largest oil and gas company revises longer-term energy price assumptions with the expectation of quick transition away from fossil fuels.
In a statement, BP said the aftermath of the new coronavirus pandemic will accelerate the pace of transition to a low-carbon economy.
The London-headquartered firm said it has revised its expectations of Brent crude prices over the next 30 years to an average of $55 a barrel to take into account falling demand for oil during the transition to net-zero by countries worldwide.
BP has also reassessed the price of Henry Hub gas to $2. 90 per million British Thermal Units (mmBTU).
These new assumptions will prompt BP to review some of its exploration plans, the company said.
“These lower long-term price assumptions are considered by BP to be broadly in line with a range of transition paths consistent with the Paris climate goals,” it said. “However, they do not correspond to any specific Paris-consistent scenario.”
It’s the latest in the series of a major overhaul as it becomes a leader organization that is fit for a global shift towards cleaner forms of energy.
Plans for a greener BP
In February, BP outlined its ambition to be a “net-zero” company by 2050. The shakeup will require the company to remove more than 400 million metric ton of carbon emissions a year from its oil and gas business.
BP’s new chief Bernard Looney, who replaced Bob Dudley, expects BP will “invest more in low-carbon businesses – and less in oil and gas – over time.” The oil and gas company hasn’t set out the detail of how it plans to meet the goals until an investor meeting in September.
BP is following in the footsteps of other large oil and gas companies by setting a target to reduce its greenhouse gas emissions. Oil bigwigs including Royal Dutch Shell Plc, Equinor ASA and Total SA have set out agendas to decarbonize the oil and gas industry.
In an email to workers last week, CEO Bernard Looney said around 15% of the global workforce of more than 70,000 will be affected by job cuts.
A majority of these job cuts will be “office-based” with most of the cuts to be carried out by the end of this year.
It is speculated that 2,000 of the redundancies will be in the UK, where the firm has 15,000 employees.
The unusual circumstances of negative oil prices brought on by the coronavirus outbreak was to blame, according to Looney. The oil downturn saw BP fall to pre-tax losses of $3.9 billion for the first quarter of the year in April.
BP is scheduled to publish its second-quarter financial results on August 4, 2020.