BP is under mounting pressure from both a pro-oil hedge fund and British MPs, as the company grapples with conflicting demands over its cost-saving measures and commitment to green energy goals.
Elliott Management, a major BP shareholder, is pushing the oil giant to intensify its cost-cutting strategy to free up billions of additional cash for shareholders. This follows BP’s earlier decision to scale back its renewable energy investments in favor of more profitable oil and gas projects, a shift spurred by Elliott’s earlier demands.
Simultaneously, members of the UK Parliament’s Business and Trade Select Committee are criticizing BP for its perceived lack of commitment to the country’s net-zero targets. At a hearing on Tuesday, Liam Byrne, the committee’s chairman, accused BP of reversing its green efforts, stating, “Once upon a time, BP seemed to be leading green Britain, and now it’s lagging green Britain.” He further emphasized that the government’s efforts to reduce emissions appear to be at odds with BP’s actions.
In response, Louise Kingham, BP’s head of UK operations, defended the company’s strategy, insisting that BP had not abandoned its green pledges. She explained that BP was working to balance its oil and gas production with investments in the low-carbon transition and continued to make strides in cutting emissions.
The scrutiny follows BP’s February announcement of a major strategic reset under CEO Murray Auchincloss. The new plan involved halting all investments in renewable energy and selling off many green assets—an abrupt departure from its 2020 strategy, which had focused on expanding solar and wind investments while pledging significant reductions in oil and gas output. The shift came after Elliott exerted pressure on BP, and now the hedge fund is demanding further changes.
Elliott is seeking an additional $5 billion in cost savings beyond BP’s existing plans, which already aim to save $4 billion to $5 billion by 2027. The hedge fund’s proposal would increase BP’s annual free cash flow to $20 billion by 2027, 40% higher than the company’s current projections. This would allow for significantly higher shareholder returns through dividends and buybacks.
Elliott has also suggested broader changes to BP’s management, beyond the planned departure of Chairman Helge Lund. The hedge fund owns more than 5% of BP, making it one of the company’s largest stakeholders.
In response to the growing demands, a BP spokesperson told Bloomberg, “Eight weeks ago, we announced a fundamentally reset strategy, and our focus now is on delivering that at pace. We welcome constructive feedback from all shareholders as we focus on delivering.”
BP’s struggle to navigate these competing pressures highlights the challenges the oil giant faces in balancing shareholder interests with its green energy commitments amidst a global push toward net-zero emissions.
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