BP, in a Reversal, Says It Will Produce More Oil and Gas

BP’s profits, and its assumptions that oil prices will be around $70 a barrel for the decade, are allowing Mr. Looney to promise a combination of increased investment and shareholder benefits, at least for now. Dividends will go up by 10 percent for the quarter, and BP announced $2.75 billion in stock buybacks, following $11.25 billion last year.

Despite those generous payouts, the valuation of companies like BP and Shell, which have embraced climate friendly investments in renewable energy, have substantially lagged behind those of their American rivals, Exxon Mobil and Chevron, which have largely stuck to producing oil and gas.

On Tuesday, investors seemed to welcome the announcement. BP’s share price rose about 8 percent.

The oil and gas business today looks very different from 2020, when Mr. Looney, newly named as chief executive, announced he would pump up investments in clean energy like solar and wind and cut oil and gas production by 40 percent by the end of the decade.

Back then, oil and gas was a troubled business, with some analysts predicting it was in terminal decline as oil giants looked to other investments. BP took $17 billion in write-downs on the value of its oil and gas fields, figuring they were no longer worth the sums on the company’s books. Other companies took similar steps.

Three years later, the landscape has changed. Brent crude, the international oil benchmark, averaged $101 a barrel last year, more than double its price in 2020, and natural gas prices soared, largely because Russia cut off supplies to Europe, pushing oil producers to record profits.

Under BP’s new plans, oil output will decline 25 percent by the end of the decade from 2019 levels, to two million barrels a day, rather than 40 percent as previously announced. Carbon dioxide emissions from the oil and natural gas that BP produces will also be reduced 20 to 30 percent, instead of up to 40 percent.

The company says these investments will be in “shorter-term, fast-payback projects” and still be appropriate for a world that is cutting fossil fuel use to meet climate targets.