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BP imposes company-wide hiring freeze, sources say

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BP pauses new large renewables investments

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CEO eyes investments and acquisitions in oil and gas

By Ron Bousso

LONDON, June 27 (Reuters) - BP's new CEO Murray

Auchincloss has imposed a hiring freeze and paused new offshore

wind projects as he places a renewed emphasis on oil and gas

amid investor discontent over its energy transition strategy,

sources at the company said.

The moves, which have not previously been reported, are part

of a decision by Auchincloss to slow down investments in big

budget, low-carbon projects, particularly in offshore wind, that

are not expected to generate cash for years, said several

sources at BP who declined to be named.

They mark a stark reversal from the direction the CEO's

predecessor Bernard Looney took to rapidly move away from fossil

fuels. This has weighed on BP's shares as returns from

renewables shrank, while profits from oil and gas soared in the

wake of the COVID-19 pandemic and Russia's invasion of Ukraine.

BP has reassigned dozens of people tasked with identifying

new renewables opportunities to projects already underway such

as offshore wind in Britain and Germany, three sources said.

Auchincloss and Chief Financial Officer Kate Thomson have

prioritised investing in and even acquiring new oil and gas

assets, particularly in the Gulf of Mexico and in the U.S.

onshore shale basins, where BP already has large operations,

company sources briefed on the matter said.

BP will also consider investing in biofuels and some

low-carbon businesses that can generate returns in the short

term. Earlier this week, BP agreed to buy grain trader Bunge's

50% stake in Brazilian sugar and ethanol joint venture BP

Bunge Bioenergia for $1.4 billion

It is also expected to make some job cuts in renewables,

although no specific targets have been given, the sources said,

adding that BP has imposed a company-wide hiring freeze, with

only a few exceptions including frontline and safety personnel.

Auchincloss has promised a pragmatic approach since taking

over in January, four months after Looney resigned for failing

to disclose relationships with employees.

In May Auchincloss announced a $2 billion cost saving drive

by the end of 2026 relative to 2023. The 53-year-old also cut

his executive leadership team from 11 to 10 members.

BP said in a statement to Reuters that Auchincloss

introduced six priorities "to deliver as a simpler, more focused

and higher value company".

The priorities include focusing the business and delivering

"the next wave of efficiencies and BP's growth projects".

"The actions we are taking are part of delivering this - and

of course are all in service of our aim of growing the value of

BP," it said.

BP's most high profile external hire under Looney was

Anja-Isabel Dotzenrath, a former head of RWE Renewables who

joined in 2022 to lead its renewables and gas division but

stepped down for personal reasons in April.

Her successor, veteran BP executive William Lin, is expected

to put a greater focus on gas operations when he takes over in

the coming months, two sources said.

Shares in BP have underperformed rivals in recent months,

raising speculation that it could be a takeover target.

That has piled pressure on Auchincloss as he seeks to

reassure investors who are juggling the need to decarbonise the

global economy with rising near-term demand for fossil fuels.

BP spent $2.5 billion on renewables, hydrogen, EV charging

and biofuels in 2023, out of a total capex of $16 billion.

BACK TO BLACK

BP is the only major oil company to have oil and gas output

reduction targets. Shell last year shifted its strategy to focus

on high-return business, scaling back investments in many

renewables and low-carbon energy businesses.

In February 2023, BP slowed its cornerstone pledge to cut

oil and gas output between 2019 and 2030 from 40% to 25%. It

kept its 2030 renewables targets, including the development of

10 gigwatt of installed capacity.

Auchincloss last month further softened the language on the

2030 target.

In another sign of change, BP has hired several new staff to

its exploration team, headed by Bryan Ritchie since May, as it

tries to replenish its reserves in order to sustain and even

grow output.

BP is also allocating more capital and workforce to

developing new fields such as the Kaskida, Tiber and Gila

discoveries in the Gulf of Mexico.

In recent weeks it also overhauled its mergers and

acquisitions division by combining it with the business

development division under Sam Skerry, three sources said.

Last October BP said it had 18 billion of barrels of oil and

gas equivalent in resources which represent 20 years of its

current production that could be developed to sustain its 2022

production level within its returns target.