BP takes $4bn-$5bn hit on green energy business

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

BP has acknowledged for the first time that its struggling green energy businesses are worth far less than previously thought, and will wipe $4-$5 billion (€4.3 billion) off their value, taking its cumulative writedowns in the past two years to about $20 billion.

The FTSE 100 energy major said last April that its belief in a fast transition to clean energy had been “misplaced” and that it would now refocus on oil and gas.

On Wednesday, it said it would write down primarily its “transition businesses” by $4-$5 billion. While BP has spun off its wind energy business into a stand-alone joint venture with Japan’s Jera, it has so far failed to attract a new partner for Lightsource, its solar arm. It has been trying to sell at least 50 per cent of Lightsource since last March.

BP has also cancelled several hydrogen projects, including a hydrogen and carbon capture project in Teesside in northeast England, the Duqm Green Hydrogen project in Oman and a huge hydrogen hub in Pilbara, Australia.

Analysts at RBC Capital Markets said BP’s total writedowns since the start of 2023 would stand at about $20bn, assuming a $4.5 billion impairment for its green businesses.

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 1.6 per cent, taking its market value to £67 billion (€77 billion).

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The company has been radically scaling back clean energy after a “fundamental reset” unveiled by Murray Auchincloss, its previous chief executive, last April.

The move saw BP’s shares outperform many of its peers last year, but Mr 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 $100-$300 million lower than in the previous quarter, its crude sales would be $200-$400 million weaker, and that its oil and gas production was flat. It said its refining margins would be $100 million 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 $4 billion”. BP has also now sold a stake in Castrol, its lubricants business, and pledged to use the $6bn proceeds to reduce its debt further. – Copyright The Financial Times Limited 2026