Oil and gas assets account for the bulk of BP’s losses
Ahead of BP’s full-year results due tomorrow morning, new research suggests that fossil fuel holdings, rather than renewables, account for the majority of the company’s losses and impairments.
The past decade has been challenging for BP, with the energy giant persistently underperforming many of its peers. The company is now hoping for a major reset, having outlined an updated energy transition strategy at the end of 2024 and appointed a new CEO in late 2025.
A key narrative underpinning BP’s strategic reset is the assumption that its clean energy business has been the main driver of recent write-offs. In its fourth-quarter trading statement released last month, BP acknowledged impairments in the range of $4–5 billion, stating these were “primarily in its transition business”. Over the past year, the company has spun off its wind energy arm and cancelled several hydrogen developments as it doubled down on oil and gas exploration.
Tomorrow’s full-year results are seen as a key litmus test for the company’s shifting strategy. However, a new report from the Australasian Centre for Corporate Responsibility (ACCR) challenges the assumption that renewables are responsible for the bulk of BP’s losses.
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According to research published by ACCR, around 75% of BP’s disposal losses and impairments since 2020 relate to oil and gas assets. While a $5 billion loss in the transition business is significant, ACCR argues it should be viewed in the context of roughly $54 billion in total losses and impairments over the past five years — equivalent to around half of the company’s current market capitalisation.
Capital expenditure is another key factor, ACCR says. Transition assets account for between 7.5% and 12.4% of impairments, but have represented only around 7% of BP’s capital expenditure. By contrast, oil and gas operations account for roughly 75% of disposal losses and impairments and 65% of capital expenditure since 2020.
Nick Mazan, oil and gas sector strategy lead at ACCR, said: “BP seems to be pointing to a cracked window while the foundation of the house is quietly sinking. The attention given to the recent impairments in BP’s transition business is misdirected when the upstream business deserves just as much scrutiny. Increasing capex in an underperforming business like oil and gas makes little sense to investors, who would benefit more from the company showing capital discipline across its whole portfolio, not just renewables — especially at a time when the demand outlook for oil and gas is so uncertain and supply is expected to outstrip demand in the coming years.”
The report follows an announcement last week that ACCR, alongside a coalition of asset owners — including several large LGPS funds, Nest, and Swiss pension fund Publica — plans to file a shareholder resolution. The resolution calls on BP to provide greater transparency on the cost-competitiveness and overruns of individual projects, and to demonstrate how they are delivering shareholder value.
