BP () is eliminating 4,700 positions internally, about 5% of its workforce, and more than 3,000 contractor jobs, CEO Murray Auchincloss told employees on Thursday, as the energy giant based in London seeks to reduce costs.
More cost-cutting efforts are planned for this year and beyond, Auchincloss said. The company has halted or paused 30 projects since June to focus on those that generate the most profit. A digitalization initiative, including the implementation of artificial intelligence across various departments, is central to these plans, he added.
During Auchincloss’s tenure as CEO, BP has fallen further behind its competitors in the oil sector and is now worth less than half of . The company is even being overtaken by companies that were once just a fraction of its value.
Given this performance, investors want to see changes. Auchincloss is expected to announce a further shift in focus to oil and gas in February, but there are many questions about whether this can be accomplished quickly enough.
The job cuts come days after BP announced it was postponing next month’s strategy update and relocating it from New York to London, to give Auchincloss more time to recover from a medical procedure.
“I understand and acknowledge the uncertainty this brings to all those whose jobs may be at risk, and also the effect it may have on colleagues and teams,” Auchincloss wrote in an email to BP employees, which was also provided to Bloomberg. “We have more to do over this year, next and beyond, but we are making solid progress as we position BP to grow as a simpler, more focused and higher value company.”
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BP shares rose 1.4% to 428.8 pence in London trading on Thursday.
BP’s decline in recent years reflects strategic mistakes that extend far beyond Auchincloss’s single year as permanent CEO. His predecessor, Bernard Looney, embraced low-carbon energy, made a mistaken prediction that global oil consumption had already peaked, and pushed expensive forays into offshore wind—only to be fired for his personal conduct before the strategy could be carried out.
Since then, BP has gradually watered down Looney’s strategy. The company slowed a planned reduction in its oil and gas production in February 2023, halted or paused a number of clean hydrogen projects, and in December announced the separation of its entire offshore wind business.
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However, the company has resisted making the more forceful shift back to fossil fuels that some investors have demanded. It has repeatedly reassured shareholders that it has enough untapped resources to meet its production plans, but since 2020 it has given the green light to only one major oil project, the Kaskida field in the Gulf of Mexico. This long period of exploration neglect will make it difficult to achieve a quick recovery, analysts say.
The company aims to cut costs by $2 billion by the end of 2026. Its net debt was about $24 billion at the end of the third quarter.
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