LONDON (Reuters) – Nothing escapes the winds of change now sweeping through BP, not even the exploration team that has driven its profits for more than a century by discovering billions of barrels of oil.
The geologists, engineers and scientists have been reduced to less than 100 from a peak of more than 700 a few years ago, company sources told Reuters.
‘The wind has been very cold in the investigation team since Looney’s arrival. It happens incredibly fast, “a senior member of the team told Reuters.
Hundreds have left the oil investigation team in the past few months, either transferred to help develop or dismantle low-carbon activities, current and former employees said.
The exodus is the strongest sign so far from within the company of its rapid shift of oil and gas, which will nonetheless be the main source of cash to finance a switch to renewable energy for at least the next decade.
BP declined to comment on the staff changes that were not made public.
Reuters spoke to a dozen former and current employees of BP who highlighted the major challenges facing the company in the transition from fossil fuels to carbon neutrality.
Looney made his intentions clear internally and externally by lowering BP’s production targets and becoming the first CEO for oil to promote it positively for investors who want a long-term vision for a lower carbon economy.
BP cuts about 10,000 jobs, about 15% of its staff, under the restructuring of Looney, the most aggressive among European oil giants, including Royal Dutch Shell and Total.
The 50-year-old, a veteran oil engineer who previously headed the oil and gas exploration and production division, aims to increase production by 1 million barrels a day or 40 over the next decade. % while increasing the production of renewable energy 20 times.
Despite the changes, oil and gas will remain BP’s main source of income until at least 2030.
And Looney’s quest to rediscover BP has done nothing to push up its shares, which reached their lowest level in 25 years in late 2020 and fell 44% during the year, mostly due to doubts about whether will be able to make the profit he is striving for.
The change marks the end of an era for reconnaissance teams from Moscow and Houston to BP’s research headquarters in Sunbury near London, with the farewell events Zoom has held in recent months.
“The atmosphere was cruel,” a former employee said during last year’s dismissal.
For BP’s cut-off investigation team led by Ariel Flores, the former North Sea boss, the focus has shifted to seeking new resources near existing oil and gas fields to compensate for production declines and reduce spending.
“We are in a harvest mode and what is not being said is that BP is going to be a much smaller company without investigation,” said a second source in BP’s oil and production division.
Flores was not available for comment.
Data from the Norwegian consultancy firm Rystad Energy shows that BP obtained approximately 3,000 square kilometers of new exploration licenses in 2020, the lowest since at least 2015 and much less than Shell, which acquired approximately 11,000 square kilometers, or Total, which purchased approximately 17,000 square kilometers. has.
Although global exploration activity slowed last year due to the COVID-19 pandemic, the decline at BP was mainly due to the change in strategy, four sources from the company said.
(Graph: BP’s delayed exploration -)
(Graph: BP Research Expenditure -)
Exploration of oil and gas has been the spearhead of the development of companies in large multinational companies that have made huge profits for shareholders over the decades.
BP began reducing its exploration spending under former CEO Bob Dudley in response to the 2014 oil price crash, aiming to use technology to unlock more oil and gas reserves.
Looney raises the research budget even lower to about $ 350 million to $ 400 million a year. That’s about half of what BP spent in 2019 and a fraction of the $ 4.6 billion spent on exploration in 2010.
BP also wiped out $ 20 billion of the value of its oil and gas assets last year after narrowing its outlook for energy prices. Due to the lower assumptions of the price, BP no longer considers many of its oil and gas reserves.
(Chart: BP Share Performance -)
FURTHER PETROLEUM
BP, which started as the Anglo-Persian Oil Company in 1908 and has since discovered massive resources for fossil fuels in places like Iran, Iraq, Azerbaijan, the North Sea and the Gulf of Mexico, has previously sought to diversify into renewable energy.
Under CEO John Browne BP, ‘Beyond Petroleum’ started, investing billions in wind farms and solar technology, but the vast majority of investments failed.
Looney believes his plan will succeed with unprecedented government support for the transition to energy and technological advances that make renewable energy more affordable than ever before. He used Giulia Chierchia, a former McKinsey CEO, to oversee the development of BP’s strategy.
And a team of geologists and data crunchers led by Houston-based Kirsty McCormack, who was previously in the exploration unit, will now apply analyzes used to study and map rock structures in search of fossil fuels to reduce low-carbon technologies such as carbon capture. develop. use and storage (CCUS) and geothermal energy, company sources said.
The absorption of carbon dioxide released by highly polluting industries and injected into depleted oil reservoirs is seen as the key to the energy transition by helping to compensate for emissions.
Other oil veterans were also redistributed, with Felipe Arbelaez, previously head of BP’s Latin America oil and gas operations, now leading his renewable venture, and Louise Jacobsen Plutt, an experienced oil engineer. , now senior vice president hydrogen CCUS.
BP has also stripped staff from Uber, Toyota and Silicon Valley to increase their understanding of electric vehicles, power markets, renewable energy and expand its capacity in big data.
Franziska Bell, a former Toyota employee, is vice president of data and analysis at BP, while Justin Lewis joined the company in July to head the high-tech company, after serving as software engineer at Tesla.
The transformation has sparked a mix of awe and concern among employees wondering whether the pace is sustainable and whether it is enough for BP to compete in a rapidly changing energy world.
Some current and former employees have warned that BP runs the risk of investing in new fields before understanding how it will fit into a transformed business while abandoning money resources for a long time.
“There’s so much internal change that it’s a big task to pick up the organization and get things going,” said a senior employee in the exploration department.
(Graphically: spending Big Oil -)
(This story is to correct paragraph 11 by removing foreign words)
Reporting by Ron Bousso; Edited by Alexander Smith