Beata Zawrzel/ZUMA
This story was originally published by the Guardian and is reproduced here as part of the Climate Desk collaboration.
BP’s shareholders can expect a multibillion-dollar payout this year after the oil giant reported better than expected quarterly profits of almost $2.8 billion and set out plans to develop a new oil hub in the Gulf of Mexico.
The oil company has angered green groups by giving the go-ahead to develop potential oil resources of 10 billion barrels from the new Kaskida project 250 miles Southwest of New Orleans, after scaling back its green investments in the last quarter.
At the same time it will raise its dividend payments by 10 percent while buying back stock worth $1.75 billion over the next three months to bring its total buy-backs for the first half of the year to $3.5 billion—and $7 billion for 2024 as whole.
In total BP has paid out $14.8 billion to shareholders since June 2023, the month that marked the start of the world’s first year-long breach of the 1.5 C heating limit, according to an analysis by Global Witness.
Alice Harrison, head of fossil fuel campaigns at the campaign group, said: “While millions of us struggle with high temperatures and high bills, BP are raking in billions of profits, paying out massive dividends, and doubling down on dirty new oil and gas projects.”
The shareholder windfall comes after BP reported better-than-expected profits of $2.76 billion for the three months to the end of June, compared with analyst forecasts of $2.54 billion for the quarter. The shares rose 2 percent in early trading on Tuesday.
“Fossil fuel companies like BP are turning a blind eye to climate breakdown, so now governments must act.”
The company warned investors earlier this month to expect “significantly lower” profit margins from its refining business, which could wipe between $500 million and $700 million from its earnings for the quarter.
It also told investors it would take a $2 billion writedown resulting from a plan to scale back its refining operations at its Gelsenkirchen biofuels refinery in Germany by a third from next year in response to weaker demand.
The chief executive, Murray Auchincloss, said BP was committed to delivering “a simpler, more focused and higher-value company” for shareholders. But the strategy has angered climate campaigners by appearing to scale back its green investments while pushing forward high-value fossil fuel projects.
In addition to cutting investment in its German biofuels refinery the company has also ruled out further investment in offshore wind while driving forward plans for major oil projects.
Auchincloss told the Guardian that BP is committed to transforming the company from an oil company to an “integrated energy company” and has set out plans to build between five and 10 green hydrogen projects this decade to help produce sustainable aviation fuel and decarbonize BP’s refining operations.
He said BP was poised to go ahead with two green hydrogen projects, which produce the carbon-free gas through electrolysis using renewable power, at its Castellón refinery in Spain and at its Lingen plant in Germany.
BP is also leading the world in biofuels, biogas, and electric vehicle charging infrastructure, Auchincloss said. “What the world needs now is construction—not more targets and pathways. That’s what we’re doing. We’re getting things done.”
Although the oil company’s underlying replacement cost profit—the metric most closely observed by City analysts—reached $2.8 billion for the second quarter, its reported result showed a $165 million loss, compared with a reported profit of $2.3 billion in the same quarter last year, because of the refinery writedown.
Harrison said: “Fossil fuel companies like BP are turning a blind eye to climate breakdown, so now governments must act. Rather than propping up the climate-wrecking fossil fuel industry, we need them to make polluters pay for the damage they have already caused, and steer us towards a cleaner, greener future.”
