BP makes record profit in 2022, slows shift from oil

BP announced a record $28 billion profit for 2022 on Tuesday and increased its dividend, but upset environmentalists by abandoning commitments to cut back on oil and gas production and cut carbon emissions by 2030.

 British Petroleum Gas Station sign in London.

LONDON, Feb 7 (Reuters) - BP (BP.L) reported on Tuesday a record profit of $28 billion for 2022 and hiked its dividend, but infuriated climate activists by rowing back on plans to slash oil and gas output and reduce carbon emissions by 2030.

The blockbuster profit follows similar reports from rivals Shell (SHEL.L), Exxon Mobil (XOM.N) and Chevron (CVX.N) last week after energy prices surged in the wake of Russia's invasion of Ukraine, prompting new calls to further tax the sector as households struggle to pay energy bills.

Three years after CEO Bernard Looney took the helm with an ambitious plan to pivot BP away from oil and gas towards renewables and low-carbon energy, the company said it will increase annual spending in both sectors by $1 billion with a sharper focus on developing low-carbon biofuels and hydrogen.

But it scaled back plans to cut oil output, now aiming to produce 2 million barrels of oil equivalent per day by 2030, down just 25% from 2019 levels compared with previous plans for a 40% cut.

As a result, BP reduced its ambitions to cut emissions from fuels sold to customers to 20-30% by 2030, from 35-40%. BP still aims to reduce its total emissions to net zero by 2050.

"We need lower carbon energy, but we also need secure energy, and we need affordable energy. And that's what governments and society around the world are asking for," Looney told analysts.

While many investors backed Looney's strategy, which he told Reuters "is working", BP's shares have significantly underperformed top Western energy companies since the CEO took office, remaining largely flat compared with a 17% gain for Shell and a nearly 80% rise in Exxon shares.

"If the bulk of your investments remain tied to fossil fuels, and you even plan to increase those investments, you cannot claim to be aligned" with the 2015 U.N. backed goals to battle climate change, Mark van Baal, founder of activist shareholder group Follow This said.

BP's $4.8 billion fourth-quarter underlying replacement cost profit, its definition of net income, narrowly missed a $5 billion company-provided analyst forecast.

The results were impacted by weaker gas trading activity after an "exceptional" third quarter, higher refinery maintenance and lower oil and gas prices.

But for the year, BP's $27.6 billion profit exceeded its 2008 record of $26 billion despite a $25 billion writedown of its Russian assets.

That allowed it to boost its dividend by 10% to 6.61 cents per share, after halving it in the wake of the pandemic, and announce plans to repurchase $2.75 billion worth of shares over the next three months after buying $11.7 billion in 2022.

BP shares ended 7.6% higher on the day, their best daily performance since November 2020.


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