BP defends Russia, Middle East oil presence

BP's oil and gas investments in Russia and the Middle East fit into the company's view on "resilient hydrocarbons" as part of its transition plans.

"People can run through our portfolio and make their own judgments on where it is that we might exit. And that is not something that I am going to get into today. But we talk a lot about resilient hydrocarbons," chief executive Bernard Looney told the Argus Crude Live virtual conference on 26 January.

BP aims to cut its own oil and gas output by 40pc and emissions by up to 40pc by 2030, but this target excludes its 20pc stake in Russian state-controlled Rosneft, which plans to prioritise investments in its Arctic Vostok Oil project over the next two years. In the Middle East, BP operates the Rumaila oil field in Iraq, has oil assets in the UAE and gas assets in Oman.

"Lifting costs in Russia are less than $3/bl. Greenhouse gas intensity of Russian production is actually less than most of the majors, including BP. They have just launched [their] 2035 ambitions, which are very ambitious around methane intensity of 0.25pc, a 30pc reduction in upstream environmental efficiency or intensity," he said. "The Middle East — long life, low cost, environmentally-efficient barrels."

Looney said at the event that the world's energy transition to a lower-carbon future is moving fast, but reiterated the majors' view that hydrocarbons are going to be around for many decades, and that it will be their job to make sure that the hydrocarbons are produced "in the best possible way".

"There is not a switch here. People I think would like us to be able to switch off the hydrocarbons tonight and switch on our new business tomorrow. This is a transition," he said. "The hydrocarbons fuel to transition. Without them, we cannot transition."

Looney also talked about the importance of what he called "greening companies" versus "green firms".

"I think a lot of people look at the green company — the solar company, the wind company — they say 'We want to back that, we want to invest in that'. But it is actually as important, and I would argue even more important that companies who are greening, companies who are transitioning from being carbon intensive to something else, it is so important that those companies are successful," he said.

"How do we set the financial system and the financial incentives and the regulatory environments so that those companies are encouraged every bit, as much as that new solar company? And this is something that we are going to be talking more about in the months and years ahead," Looney said.

Almost a year ago, BP revealed its headline-grabbing longer-term ambitions, and has since added more goals, including a tenfold increase in low-carbon investment by 2030.

Looney said today that "in broad terms the response has been very encouraging". He highlighted "the pace of change in the world, that what looked incredibly ambitious just 12 months ago, people are continuing to push for more and people are continuing to move". "This is a fast moving and evolving world," Looney said.