BP ($BP) cuts in oil exploration could hurt struggling offshore exploration companies like Transocean ($RIG).
UK oil major BP has drastically scaled back the team that looks for more oil as part of its plan to transition to renewable energy sources, according to company insiders. Julian Satterthwaite reports.
It was always the engine of profits at BP.
But now the UK oil major has drastically scaled back the team that looks for new reserves of crude.
Company sources have told Reuters that the unit has been cut to fewer than 100 people.
That’s down from a peak of more than 700 a few years ago.
The firm wouldn’t comment on the report.
But it’s all part of a big upheaval triggered by chief executive Bernard Looney.
“The world does have a carbon budget. It is finite and it is running out fast and we need a rapid transition to net zero. Society has got to deliver on the Paris goals.”
Over the next decade, he wants to cut BP’s oil output by a million barrels per day – or about 40%.
At the same time, its output of renewable energy is supposed to rise twenty-fold.
Looney is driving the exploration budget down to around $400 million per year.
That’s less than a tenth of what it was in 2010.
Investment is flowing into new sources of revenue instead.
Last year BP said it had bought a majority stake in Finite Carbon.
The U.S. firm pays landowners to manage forests, generating so-called carbon offset credits that can be sold to polluters.
For all that, oil and gas will remain BP’s main source of income until at least 2030.
Beyond that date though, it could start to look like a very different company.
Sign up for our newsletter