BP shares at 25-year low after revealing clean energy plan

By Rahul Vaimal, Associate Editor
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A week after the UK based oil giant British Petroleum (BP) revealed its plan to shift into clean-energy, the company saw their share price fall to a 25-year low.

The new CEO of BP Plc Bernard Looney and his team took more than 10 hours three days last week, in a tender to convince the world that the oil and gas giant could adapt to a low-carbon future without giving up returns.

On Thursday, BP’s stock closed in London at 232.4 pence, which marks lowest since October 1995 and the dip indicates that shareholders weren’t convinced by Looney’s new plan. Moreover, the falling crude prices and fears of the second wave of the coronavirus didn’t help.

The Global Head of Governance at Aviva Investors, Mirza Baig says that the investors are still doubtful especially because this plan was imposed on the company by climate change.

Even though Looney joined the company in February as CEO, the BP Week of this month was his crucial moment, which was meant to convince the world about his plan to make the oil firm “net-zero” energy by 2050. It also aimed to persuade the shareholders to stay with the company as it reduced 50 percent of its dividend in August.

BP’s strategy is to reduce oil and gas production and at the same time to expand its renewables business. Looney has promised investors he could give the investors a return of 8-10 percent, even though it is not eye-catching returns that an oil development company can bring in, but for clean-energy missions, it is more attractive than others.

Mirza Baig
Mirza Baig
Global Head of Governance
Aviva Investors

“BP’s challenge lies in the building up of its skillset in renewable energy solutions and a competitive advantage in its chosen areas that allows investors to believe they can deliver attractive financial returns from the capital allocated”

Stuart Lamont, an investment manager at Brewin Dolphin Holdings says that for BP to attain its aim of low-carbon by 2030 a significant growth is needed in the coming years with a guaranteed balance between working toward decarbonization targets while gaining greater returns for shareholders.