Saudi Press

Saudi Arabia and the world
Sunday, Jun 01, 2025

COP26: Away from summit, global demand for oil and gas means BP remains a 'cash machine'

COP26: Away from summit, global demand for oil and gas means BP remains a 'cash machine'

Britain's energy giants have set out ambitious targets to move towards renewables but they are not welcome at the Glasgow climate meeting - and are enjoying a sharp recovery in demand for their products.

It may strike some as deeply ironic that, while heads of state, scientists, charities and environmental activists rub shoulders at the COP26 summit, some of the biggest players involved in the transition to net zero are not in Glasgow.

While the likes of Turin Polytechnic, Bristol City Council, the Omega Institute for Holistic Studies and the US Presbyterian Church are all there, there is no room for some of the world's biggest oil and gas companies.

This is curious because, were the likes of Chevron and Exxon Mobil to set sufficiently bold targets for carbon reduction, it would have far more impact than the targets set out by many of the individual governments attending.

BP's chief executive Bernard Looney has set out ambitious net-zero plans


Most surprising of all is the omission of the UK's big two oil and gas producers, BP and Royal Dutch Shell, which have both set out ambitious plans to reduce their carbon footprint and transition away from oil and gas towards renewables.

Both have backed their promises with action.

Earlier this year, for example, Shell said it would dispose of its US shale assets, selling them in September to ConocoPhillips.

These moves have, it is fair to say, put both in hot water with elements of their shareholder base.

BP, for example, encountered much scepticism from investors when, just before the global pandemic, it announced plans to go net zero by 2050.

More recently, Shell has faced calls from an activist investor, the hedge fund Third Point, to break itself up, separating its cash-generative fossil fuel operations from its businesses investing in renewables and carbon reduction technologies.

Shell boss Ben van Beurden said the company was told it was not welcome at COP26


So it is odd indeed that the COP26 organisers found no room to include companies actually being criticised for having similar objectives to those of the summit itself.

The pair were apparently excluded because the Science Based Targets initiative, a third party supported by the UN and some non-profit organisations, judged that their emissions reduction targets were not credible.

Ben van Beurden, Shell's chief executive, explained last week: "We were told that we were not welcome, so we will not be there."

The organisers may also be judging that neither should be in Glasgow because they have made no secret of the fact that, while they are committed to reducing their carbon footprint, hydrocarbon production will remain a core part of their business for years to come.

That reflects that, in the absence of an enormous fall in the cost of transitioning away from them, the world will still be consuming oil and gas in significant quantities well into the middle of the century.

That demand for oil and gas continues to outweigh supply was borne out today by BP's latest financial results.

At a headline level, BP reported a loss of $2.5bn for the three months to the end of September, which was an accounting technicality reflecting the fact it must mark the price of contracts used to hedge the value of liquefied natural gas shipments to the price in the market while not actually doing the same for the value of its assets.

More importantly, on an underlying basis, replacement cost profit - the industry's preferred measurement - rose 18% to $3.32bn compared with the second quarter.

That was up from $86m in the same period last year and was significantly better than analysts had been expecting.

It is the third quarter in a row that BP's results have beaten expectations and mainly reflects stronger oil and gas prices.

Brent crude traded at an average of $73.51 per barrel during the three months, up from $68.97 from April to June and up from $42.94 in the three months to the end of September last year.

BP breaks even at a crude price of $40 a barrel.

No wonder, then, that Bernard Looney, the chief executive, described BP as resembling a "cash machine" when its core products are trading at these levels.

Operating cash flow during the quarter was just shy of $6bn.

And things on that front may yet get better.

Mr Looney said demand for oil was already back above the pre-pandemic level of 100 million barrels per day - and that is even before global aviation has recovered.

Analysts at the investment bank Bank of America today said they expect a price of $120 per barrel by June next year.

BP's cash is being deployed in a number of ways.

One is to reduce debt which, during the last 12 months, has fallen from $40.38bn to $31.97bn and which has now come down for six consecutive quarters.

Some will go on share buybacks: BP announced a further $1.25bn worth of these today although, with the dividend being held at the previous level, the shares, which are up by 39% since the start of the year, fell by more than 2%.

And, of course, it is going on investment.

BP's capital expenditure is expected to be between $14-$16bn next year.

Not all of that will be on renewables.

Mr Looney stressed today that investors should not assume that, just because BP is aiming to cut emissions, it would be making no new investments into hydrocarbon projects.

Oil demand is already back above 100 million barrels per day - even before global aviation recovers


Interestingly, Mr Looney - who said he was "not hearing" calls from investors to separate its hydrocarbons operations from its renewables operations - was at pains to scotch the suggestion that BP is only interested in building the latter.

He told analysts: "I see the characterisation in some media as BP moving from oil to renewables and that's not actually the case.

"Yes, we are building a renewables business.

"But we've always said, we're not building a renewables business just for renewables.

"We're building a renewables business to be part of an integrated energy value chain that goes all the way from the production of energy into, in some cases, people's cars in terms of electrons, or into hydrogen, or into whatever it is that you wish to do with it.

"It's a focusing of oil. It's a doubling of convenience, including EV [electric vehicle] charging, $5bn to $10bn. And it's an investment in renewables."

If that sounds complicated, that is because it is.

The transition away from fossil fuels is not as black and white as some perhaps think.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
The Daily Debate: The Fall of the Dollar — Strategic Reset or Economic Self-Destruction?
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
Saudi-Spanish Business Forum Commences in Riyadh
Saudi Arabia and Spain Sign MoU to Boost SME Sectors
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
A Chinese company made solar tiles that look way nicer than regular panels!
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
Saudi Arabia Emerges as Global Tech Magnet with U.S. Backing and Trump’s Visit
This was President's departure from Saudi Arabia. The Crown Prince personally escorted him back to the airport.
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
Trump takes a blow torch to the neocons and interventionists while speaking to the Saudis
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
×