What Burnham could learn from BP’s pragmatism
In 2020, BP unveiled a “major, necessary step in support of our purpose to reimagine energy for people and our planet.” The new strategy – “performing while transforming” – would see the firm “significantly scale-up our low carbon energy business” as part of a commitment “to become a net zero company by 2050 or sooner and help the world get to net zero.” Even the design of the annual report aimed to reflect this, oozing cuddly vibes with doodles of wind farms and a scribbled “#bpnetzero” on page one. But times change.
Six years and two chief executives later, the company is more frank: corporate communications simply state that BP “is a global integrated oil and gas company.” Adding, for the avoidance of doubt: “We produce oil and gas, trade energy, and make, ship and sell energy products.” The company’s stated purpose is also now clear: “to deliver energy to the world, today and tomorrow.”
In pursuit of that, CEO Meg O’Neill is overhauling the company, conceding that “our performance over the past few years has not met our own expectations, let alone those of our shareholders.” Questionable governance arrangements aside, she’s on a roll. Last week the energy giant announced it was pulling out of the North Sea, citing unpredictable “fiscal regime changes” that undermine confidence and stability. Thanks to high taxes and regulation, the North Sea simply isn’t competitive.
BP CEO’s message to the PM
It’s also ditching Archaea, four years after buying the US biogas business for $4bn. That investment came under former CEO Bernard Looney, mastermind of the pivot to clean energy from which O’Neill is now moving away. She told the media yesterday that certain investments in green energy simply hadn’t “delivered the returns that we expect”. There’s no sentimentality here: “Some assets may have been important to BP in the past…that does not necessarily mean they are the right assets for BP’s future,” she said.
As O’Neill works to transform BP, she also had a clear message for the Prime Minister, revealing that she told him his country currently gets 75 per cent of its energy from fossil fuels and that, therefore, “the first barrel of oil we consume and molecule of natural gas we need should be coming from the UK North Sea, where we generate jobs, we generate tax revenue, we generate all those additional positive impacts.” Let’s just hope that Andy Burnham proves to be as pragmatic as Meg O’Neill.