In 2020, BP set out its vision of transforming from an International Oil Company to an Integrated Energy Company by setting long-term targets that showcase an increasing shift towards lower-carbon energy to align with its ambition to become a net-zero company by 2050. But lower prices and weaker oil product demand in 2020 led to an overall poor financial performance. The first quarter of 2021 however, showed signs of recovery with an improved price environment, but certain segments still continue to show weakness.

In 2020, BP saw its first annual loss since 2010, the year of its Gulf of Mexico oil spill disaster. Major asset impairments and oil price weakness resulted in an underlying replacement cost loss before interest and tax*.  In Q2 2020, BP amassed a major loss in relation to $9bn in non-cash impairments arising from revisions to long-term price assumptions. The final quarters of 2020 were also negatively impacted by weakened prices but were not subject to such large impairment charges.

In Q1 2021, BP returned to pre-pandemic profitability levels* despite continued revenue weakness. BP’s gas and low carbon division benefitted largely in Q1 2021 from strong gas marketing and trading results, likely also profiting from the LNG price volatility in the early part of 2021. The results also included an approximately $1bn gain on disposal of a 20% interest in Block 61 Oman, but excluding this adjustment, the division was still up over 150% from Q1 2020. BP brought online its Raven field, Egypt and Satellites Cluster, offshore India, in the quarter which added to the gas output. BP’s oil production and operations division showed improved results year on year (YOY) as the company realised higher prices despite a production reduction of 22% resulting mainly from divestments. However, its refining sector continues to underperform reflecting continued weak refining throughput, weaker diesel prices and margins. The company’s customers and product results improved year on year and are expected to form a greater proportion of the company’s margins as part of the new strategic direction.

Going forward, BP is targeting a reduction in both its oil and gas production from 2.4 million barrels of oil equivalent per day (MMboed) in 2020 to 2MMboed by 2025, excluding Rosneft production, and a reduction of its refining throughput from 1.6MMbd in 2020 to 1.5MMbd by 2025. BP’s existing producing and planned developments production is expected to remain relatively flat out to 2025 and further divestments within its upstream sector can be expected over the coming years to meet its targeted reduction. In terms of LNG, the company increased its LNG portfolio volume from 15Mtpa in 2019 to 20Mtpa in 2020. As no additional equity LNG capacity came online in 2020, BP would have boosted its merchant LNG volumes significantly for the year. The lack of major capacity additions to its existing LNG portfolio suggests that merchant LNG volumes will contribute to the bulk of the company’s LNG growth ambitions going forward and is targeting growth to 25Mtpa by 2025.

As part of the company’s target of 50GW renewable capacity by 2050, BP is driving forward with aggressive growth in its solar and offshore wind portfolios. Over the last year, the company has successfully bid in its first UK offshore wind licensing round plus announced a $1bn deal with Equinor to develop offshore wind projects in the offshore US. The company has a growing solar business and is expecting to capture significant growth through its project pipeline in the US and Australia. In 2020, BP’s renewable power capacity jumped from 2.6GW in 2019 to 3.3GW.