Will bp's Poor 2024 Results Impact its Sustainability Spend?

British oil and gas giant bp has announced a strategic shift following a decline in its 2024 financial performance.

“In 2024 we laid the foundations for growth,” says Murray Auchincloss, CEO at bp.

“We have been reshaping our portfolio - sanctioning new major projects, and focusing our low-carbon investment - and we have made strong progress in reducing costs. 

“Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns. 

“It will be a new direction for bp and we look forward to sharing it at our Capital Markets Update on 26 February.”

bp’s financial results from 2024

The company reported a 35% fall in annual profits to US$8.9bn and a 61% drop in fourth quarter profits year-on-year.

Kate Thomson, Chief Financial Officer at bp, said: “In 2024, bp delivered operating cash flow of US$27.3bn. 

“During the year, we introduced our target to deliver at least US$2bn of savings by the end of 2026 relative to 2023 and are making strong progress, achieving US$0.8bn of structural cost reduction. 

“We raised the dividend per ordinary share by 10% and delivered US$7bn of share buybacks. Our focus on capital discipline and strengthening the balance sheet continues into 2025.”

bp attributes its quarterly drop in profit to “weaker realised refining margins, higher impact from turnaround activity, seasonally lower customer volumes and fuels margins and higher other businesses and corporate underlying charge”.

The potential impact of bp's strategic reset

The International Energy Agency’s (IEA) The Oil and Gas Industry in Net Zero Transitions World Energy Outlook Special Report predicts that demand for oil and gas will peak before 2030. 

However, it also says that oil and gas will remain necessary in 2050 — although on a reduced production scale.

As of 2022, oil, coal and natural gas were responsible for 80.9% of the world’s energy mix according to the IEA. 

Equinor has cut its renewable investments from US$10bn to US$5bn in hopes of finding growth through oil and gas. 

TotalEnergies also said it will reduce its low-carbon energy investments. 

If bp is to follow this trend, its “fundamental reset” could spell bad news for its low-carbon initiatives. 

bp's low-carbon projects

bp is involved in two major low-carbon projects in Teesside, UK – the Northern Endurance Partnership carbon capture and storage project and the Net Zero Teesside Power project.

Ben Houchen, Mayor of Tees Valley, says: “Net Zero Teesside Power and the Northern Endurance Partnership can help make us the UK’s first decarbonised industrial cluster, pioneering clean energy and creating the good quality jobs of the future.”  

These projects both reached financial close in December 2024. 

In October 2024, bp fortified its position in the renewable sector by acquiring Lightsource bp.

This deal significantly expands bp’s onshore renewable energy footprint across 19 global markets.

“This deal creates an engine for onshore renewable power development at bp – combining wind, solar and batteries to generate the energy flows our traders need to optimise value and the electrons our customers want,” said William Lin, bp’s Executive Vice President for Gas and Low Carbon Energy. 

In December 2024, bp and JERA Co. agreed to combine their offshore wind businesses to form an equally-owned joint venture called JERA Nex bp with completion expected by the end of Q3 2025.

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