Procurement Forms Part of bp Oil and Gas Strategy Review
Murray Auchincloss, CEO of bp, has announced a comprehensive review of the company's oil and gas portfolio.
The initiative is aligned with cost reduction strategies aimed at boosting shareholder value, a pivotal move amid the industry's evolving landscape.
"So far this year, we’ve brought five new oil and gas major projects onstream, sanctioned four more and made ten exploration discoveries, including the significant discovery in Bumerangue block in Brazil," states Murray in bp’s second quarter and first half 2025 results.
Oil and gas on the comeback trail?
Following a major deepwater find off the coast of Brazil in the Bumerangue block of the Santos Basin, bp is solidifying its stance in oil and gas investment.
The field, sprawling over an area of more than 300 km², augments bp’s upstream exploration ambitions and could become a new production hub, highlighting its commitment to traditional energy sources.
The discovery adds to other significant finds in the Gulf of Mexico and Egypt. Despite an initial push towards an energy transition, bp now finds itself recalibrating its strategy, reducing planned investments in renewables while shifting focus back towards traditional oil and gas exploration.
It's a pivot occurring amid scrutiny from the International Energy Agency (IEA), which reports that global renewable capacity must significantly expand to meet 2030 net-zero targets.
The IEA forecasts that renewable energy capacity worldwide is expected to grow by 2.7 times by 2030, although this growth still falls short of expectations.
Profitability under pressure
In 2025’s Q2 results, bp recorded an underlying replacement cost profit of US$2.4bn, marking a 15% year-on-year decrease, yet surpassing analyst projections.
Despite the decline, bp's operational performance showed robust metrics with upstream plant reliability and refining availability exceeding 96%.
Operations generated cash flow amounting to US$6.3bn, which helped reduce net debt to US$26bn. This financial health was buoyed further by divestments, including exits from onshore wind in the US and mobility assets in the Netherlands.
bp has enacted cost reductions of US$1.7bn since 2023 and initiated a US$750m share buyback for Q2. Notably, capital expenditure in oil and gas for H1 2025 reached US$3.4bn, greatly surpassing spending on gas and low-carbon energy combined.
Complexities in energy supply chains
The intricacies of renewable energy supply chains, as observed by Maersk, arise from the complex infrastructural, regulatory and geographical requirements for setting up and maintaining clean energy solutions like wind, solar, hydro and geothermal resources. Although solar power stands as the most mature and scalable, primarily dominated by China, its logistics involving special cargo pose significant challenges.
Wind energy logistics present greater challenges, relying on extensive large-scale operations that, if mishandled, could incur substantial costs. Still, a well-coordinated renewable supply chain could usher in a resilient decentralised energy grid.
McKinsey & Company accentuates the critical role of renewables for achieving net-zero targets, estimating that excluding China, solar and wind capacities will triple by 2030. However, this growth hinges on overcoming vulnerabilities such as raw material price volatility and policy fluctuations.
For procurement leaders, integrating renewables into their strategic planning will require investing in early partnerships with logistics providers and innovative sourcing solutions to navigate the supply chain challenges.
Investor priorities vs climate commitments
Once hailed as a frontrunner in decarbonisation efforts among oil majors, bp’s path suggests a divergence in focus towards investor returns over climate commitments. The alignment of long-term shareholder value with its 2050 net-zero pledge remains uncertain.
Murray's commitment to ongoing business improvement and cost discipline suggests a refined strategic direction, balanced between lucrative shareholder investments and environmental responsibilities.
