BP has taken an enormous risk by betting the farm on booming global demand for oil and gas as far out as the late 2030s, and retreating drastically from renewables and clean-tech investment.

The International Energy Agency warns that the world is heading for the largest glut of excess oil supply ever seen, with a fall in the structural price of crude to match. If the IEA is right, BP is condemning itself to a death spiral in a Faustian pursuit of quick profit.

The company has switched almost overnight from the green darling of the European “majors” to arch-villain under the back-to-basics strategy of Murray Auchincloss. It is slashing its plan for renewable projects by 72 petajoules of energy by 2030.

Not as green as its logo: BP has wound back its commitment to scale back its oil and gas business.Credit: Jason Alden

None of the others are acting in this fashion. TotalEnergies is adding a further 46 petajoules. “The story that jumps out is BP’s pivot back to oil and gas at full steam,” says Martijn Rats from Morgan Stanley.

The IEA said in its mid-term outlook that global oil demand would peak in 2029 at under 106 million barrels a day (b/d) and then go into decline. Yet projects already planned or in the works will push supply capacity to almost 114 million b/d.

“Barring the pandemic, this spare capacity is unprecedented. Oil companies may want to make sure their business strategies and plans are prepared,” said Fatih Birol, the IEA’s director. Marginal fields in the North Sea have little future in this scenario, with or without new licences.

BP is hurling itself against these powerful headwinds. It is not a short-term strategy intended to “max out” what remains of the post-COVID boomlet, or to fill the hole in world gas supply left by the loss of Russian pipeline exports to Europe. The investment will........

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