The second supermajor to report full-year results, BP, said today it had lost $5.7 billion last year because of the oil price slump and demand destruction caused by the coronavirus pandemic.
Weaknesses in the gas market also contributed to the negative net result, BP noted in its filing, which compared with a profit of $10 billion for the previous year.
During the last quarter of 2020, the company eked out a profit, but it was below estimates due mostly to weaker downstream demand.
The UK-based supermajor is among the most ambitious in the sector when it comes to a renewable shift and the pandemic probably added motivation for its efforts as the industry watched oil prices sink, rendering billions of barrels of oil unprofitable.
As part of its transition efforts, BP said it will reduce its oil and gas production by 40 percent by 2030 while boosting investments in renewable energy by $5 billion a year in the same period-ten times its current level of investment in low-carbon energy.
The company also said it will divest assets worth $25 billion over the next five years, which should help it weather the adverse effects of its core business plans, notably lower oil and gas revenues.
Most recently, the company sold a third of its 60-percent stake in an Omani gas block to the national oil company of Thailand. The price tag of the deal was $2.6 billion. Last year, BP also sold its petrochemical business for $3.5 billion. So far, more than half of the $25-billion divestment target has been reached, BP said in its 2020 financial report.
BP also reported net debt of $39 billion at the end of 2020, down by $6.5 billion from 2019. Operating cash flow stood at $13.8 billion for the year, excluding payments made as compensation for the Deepwater Horizon disaster.
This year, BP expects the oil market to rebalance thanks to OPEC+'s efforts and prices to recover. Gas prices should also recover as tighter supply drives them up internationally, the supermajor said.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
However, BP isn’t kidding anybody by its greenwashing drive. This is part of burnishing its environmental credentials and justifying the huge losses it suffered as a result of the COVID-19 pandemic, cutting dividends drastically and making thousands of its employees redundant.
The whole world knows that the minute oil and gas prices start to surge, BP and other supermajors will forget about greenwashing themselves and go back to the core business that has sustained them for ages, namely oil and gas.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London