Nothing can escape the wind of change sweeping BP right now, not even the exploration team that has fueled its profits by discovering billions of barrels of oil for more than a century.
The source said that the company’s geologists, engineers and scientists have been reduced from a peak of 700 a few years ago to less than 100. This is the initiative of CEO Bernard Looney in 2020 to rely on climate change. Part of promoting reform.
One is the reduction in the production capacity of traditional energy projects.
Hundreds of people have left the oil exploration team in recent months, and they have either been transferred to help develop new low-carbon projects or they have been laid off. The era of the exploration team from Moscow and Houston to BP’s Sunbury research headquarters near London is over. The BP exploration team led by former North Sea president Ariel Flores has been reduced and its work focus It has been reduced to finding new resources near existing oil and gas fields to offset the impact of the decline in production and minimize expenditures. This shows that the company is rapidly switching from oil and gas to renewable energy. However, for at least the next 10 years, oil and natural gas will remain the company’s main source of funding for its transition to renewable energy.
BP employees highlighted the huge challenges the company faces in its transition from fossil fuels to carbon neutrality. By lowering BP’s production target, he expressed his intentions to investors seeking a long-term vision of a low-carbon economy. Rooney clearly expressed his intentions internally and externally, and became the first oil to promote this goal. Giant CEO.
The second is the reduction of oil and gas exploration activities.
Under Rooney’s restructuring and reforms, BP will cut about 10,000 jobs, accounting for about 15% of the total number of employees, which is the most radical among European oil giants including Royal Dutch Shell and Total.
Rooney, 50, is an experienced petroleum engineer who was responsible for the oil and gas exploration and production department. He plans to cut daily production by 1 million barrels, or 40%, in the next 10 years, while increasing renewable energy production by 20 times.
But it is undeniable that although the current energy is constantly transitioning to renewable energy, but at least until 2030, oil and natural gas will still be BP’s main source of income.
It is worth mentioning that Rooney’s efforts to revive BP did not boost its stock price. The company’s stock price fell to its lowest level in 25 years at the end of 2020, down 44% during the year, mainly because people doubted the company’s ability to complete Transform and achieve its target profit. Some sources pointed out that BP, which significantly reduces exploration, will result in a smaller company.
According to data from the Norwegian consulting company Rystad Energy, BP has obtained a new exploration permit of approximately 3,000 square kilometers in 2020, which is the lowest level since at least 2015 and far below the exploration permit obtained by Shell of approximately 11,000 square kilometers. , Or the exploration permit for approximately 17,000 square kilometers obtained by Total.
The source said that although global exploration activities will slow down in 2020 due to the new crown pneumonia epidemic, the decline in BP’s exploration activities is mainly the result of its strategic changes.
You must know that for decades, oil and gas exploration has been a pioneering force in the transformation of enterprises to large multinational companies, bringing huge profits to shareholders. Under the leadership of former CEO Bob Dudley (Bob Dudley), in response to the 2014 oil price plummet, BP began to cut exploration expenditures in order to use technology to release more oil and gas reserves.
Rooney pushed the exploration budget even lower, about 350 million to 400 million US dollars per year. This is about half of BP’s exploration expenditures in 2019 and only a small part of the US$4.6 billion exploration expenditures in 2010.
In 2020, BP also erased $20 billion from the value of its oil and gas assets after lowering its energy price expectations. Under these lower price assumptions, BP believes that many of its oil and gas reserves are not worth developing.
The third is to accelerate the construction of the renewable energy project team.
Here is a little bit of knowledge for you. BP was founded in 1908, formerly the Anglo-Persian Oil Company (Anglo-Persian Oil Company). Since then, a large number of fossil fuel resources have been discovered in Iraq, Azerbaijan, the North Sea and the Gulf of Mexico .
Previously, the company tried to achieve energy diversification and increase its pace in the field of renewable energy. It invested billions of dollars in wind farms and solar energy technology, but most of the investments ended in failure.
However, Rooney believes that with the government’s unprecedented support for the energy transition and the continuous advancement of technology, his plan will be successful and renewable energy will become easily available. He has hired Giulia Chierchia, a former McKinsey executive, to oversee the development of BP’s strategy.
According to sources, a geologist and data processing team led by Kirsty McCormack of Houston, who previously worked in the exploration department, will now focus on researching and drawing analysis methods for rock structure maps, looking for Fossil fuels, development of low-carbon technologies such as carbon capture, utilization and storage (CCUS) and geothermal energy. Absorbing carbon dioxide emitted by heavily polluting industries and injecting it into depleted oil fields is seen as the key to the energy transition because it helps offset emissions.
Many BP executives have been transferred. Felipe Arbelaez was previously responsible for BP’s oil and gas business in Latin America, and now leads its renewable energy business. Louise Jacobson Pratt (Louise Jacobsen Plutt) is an experienced petroleum engineer and is now the senior vice president of CCUS.
BP also recruited employees from Uber, Toyota and Silicon Valley to improve its understanding of electric vehicles, the electricity market, and renewable energy, and expand its capabilities in big data.
Franziska Bell, a former Toyota employee, is currently the vice president of data and analysis at BP, and Justin Lewis joined in July this year after working as a software engineer at Tesla (Tesla) The company is responsible for BP’s high-tech start-up department.
This change has made employees full of respect and worry, and they doubt whether this transition is sustainable and whether it is sufficient for BP to compete in the rapidly changing energy world.
Some BP executives warned that BP may rush to invest in new projects before it fully understands new areas, while giving up long-term sources of profit. An executive in the exploration department said: “With so many changes within the company, it will also be a huge challenge.”