# BP makes record profit in 2022, slows shift from oil
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-07
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: BP Reports Record $28 Billion Profit in 2022, Dividend Hike Sparks Climate Controversy
Meta Description: BP reported a record profit of $28 billion in 2022, angering climate activists by scaling back on slashing oil and gas output and carbon emissions reduction
URL: https://financedigest.com/bp-makes-record-profit-in-2022-slows-shift-from-oilhtml

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By Ron Bousso and Shadia Nasralla

LONDON (Reuters) – BP 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, Exxon Mobil and Chevron 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](https://www.financedigest.com/should-we-be-more-cautious-about-contactless-1-in-4-young-adults-with-contactless-cards-say-theyve-increased-their-spending.html "Should we be more cautious about contactless? 1 in 4 young adults with contactless cards say they’ve increased their spending") in both sectors by $1 billion with a sharper focus on developing low-carbon biofuels and hydrogen.

But it [scaled back](https://www.financedigest.com/mifid-ii-why-you-should-not-scale-back-your-implementation-efforts.html "MIFID II: WHY YOU SHOULD NOT SCALE BACK YOUR IMPLEMENTATION EFFORTS") 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](https://www.financedigest.com/finnair-to-cut-costs-reduce-fleet-to-return-profitable.html "Finnair to cut costs, reduce fleet to return profitable") emissions from fuels sold to customers to 20-30% by 2030, from 35-40%. BP still aims to reduce its total [emissions to net](https://www.financedigest.com/norways-wealth-fund-tells-firms-to-set-net-zero-emission-goals.html "Norway’s wealth fund tells firms to set net zero emission goals") zero by 2050.

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](https://www.financedigest.com/oil-gains-after-iea-sees-demand-rising-to-record-high.html "Oil gains after IEA sees demand rising to record high") in Exxon shares.

If the bulk of your investments remain tied to [fossil fuels](https://www.financedigest.com/eu-approves-effective-ban-on-new-fossil-fuel-cars-from-2035.html "EU approves effective ban on new fossil fuel cars from 2035"), 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](https://www.financedigest.com/shareholder-group-iss-backs-barclays-board-over-former-ceo-staley.html "Shareholder group ISS backs Barclays board over former CEO Staley") Follow This said.

Rival Shell was ordered by a Dutch court in 2021 to commit to a 45% [reduction in its overall emissions](https://www.financedigest.com/seenthis-launches-emissions-dashboard-to-enable-advertisers-to-analyse-data-reduction-and-emission-savings-on-campaigns.html "SeenThis launches Emissions Dashboard to enable advertisers to analyse data reduction and emission savings on campaigns") by 2030 from 2019 levels, a decision Shell has appealed.

BP’s $4.8 billion fourth-quarter underlying replacement [cost profit](https://www.financedigest.com/suedzucker-quarterly-profits-surge-73-5-despite-cost-rise.html "Suedzucker quarterly profits surge 73.5% despite cost rise"), 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](https://www.financedigest.com/oil-prices-stable-heading-for-weekly-gain.html "Oil prices stable, heading for weekly gain").

But for the year, BP’s $27.6 billion profit exceeded its 2008 [record of $26 billion despite](https://www.financedigest.com/bentley-cruises-to-record-sales-in-2022-despite-china-drop.html "Bentley cruises to record sales in 2022 despite China drop") 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](https://www.financedigest.com/uks-bellway-to-buy-back-shares-hike-social-housing-output.html "UK’s Bellway to buy back shares, hike social housing output") $11.7 billion in 2022.

BP shares rose 5.4% by 1326 GMT to their highest [since early](https://www.financedigest.com/first-quarter-dash-for-cash-largest-since-early-2020-bofa.html "First quarter ‘dash for cash’ largest since early 2020 -BofA") 2020.

GRAPHIC: BP’s annual results- https://www.reuters.com/graphics/BP-RESULTS/zdvxoakoepx/chart.png

![](https://www.globalbankingandfinance.com/wp-content/uploads/2023/02/1122.jpg)

ENERGY TRANSITION

BP reiterated [plans to divide its spending to 2030 equally between the oil](https://www.financedigest.com/factbox-u-s-offers-new-details-on-plan-to-cap-russian-oil-prices.html "Factbox-U.S. offers new details on plan to cap Russian oil prices") and gas business and its energy transition businesses, upping the total budget to up to $18 billion from a previously guided upper range of $16 billion.

Transition businesses, such as renewables and electric vehicle charging, [account for around](https://www.financedigest.com/5-common-mistakes-around-accounts-payable-automation.html "5 Common Mistakes Around Accounts Payable Automation") 30% of the current budget compared with 3% in 2019.

BP kept it returns outlook for renewables largely unchanged at 6%-8%, without taking into account debt, even though global offshore wind production [costs have soared](https://www.financedigest.com/amazon-other-retailers-revamp-free-shipping-as-costs-soar.html "Amazon, other retailers revamp ‘free’ shipping as costs soar") in recent months.

Looney said BP’s wind and [solar production will focus more on providing renewable power](https://www.financedigest.com/public-power-corp-rwe-to-build-five-solar-farms-in-greece.html "Public Power Corp, RWE to build five solar farms in Greece") to generate biofuels and low-carbon hydrogen, doubling down, particularly in the United States where the landmark Inflation Reduction Act offers investment credits and tax cuts.

BP, whose trading operations further boost renewables returns, maintained plans to have 50 gigawatts (GW) of renewable [projects under development](https://www.financedigest.com/cordant-projects-to-develop-eleven-moxy-hotels-across-uk.html "Cordant Projects to develop Eleven Moxy Hotels across UK") and 10 GW operating by 2030.

It said it [expects returns](https://www.financedigest.com/lufthansa-expects-further-significant-improvement-after-return-to-profit.html "Lufthansa expects further ‘significant improvement’ after return to profit") of upwards of 15% from its bioenergy business and its combined electric vehicle charging and convenience store businesses, while looking for double-digit returns on hydrogen.

It aims to translate this into a core [profit from the transition businesses](https://www.financedigest.com/pizza-firm-dp-eurasia-delivers-profit-rise-evaluating-russian-business.html "Pizza firm DP Eurasia delivers profit rise, evaluating Russian business") of $10 billion-$12 billion by 2030, out of targeted total group earnings before interest, tax, depreciation and amortisation (EBITDA) of $51 billion-$56 billion.

BP also wants to [increase its focus on renewable natural gas](https://www.financedigest.com/demand-for-automotive-gas-charged-shock-absorbers-market-to-be-fuelled-by-rapid-shift-in-consumer-perception-and-increasing-awareness.html "Demand for Automotive Gas Charged Shock Absorbers Market to be Fuelled by Rapid Shift in Consumer Perception and Increasing Awareness") having last year acquired U.S. producer Archaea [Energy for $4.1 billion](https://www.financedigest.com/petrofac-hitachi-energy-receive-14-billion-agreement-from-tennet.html "Petrofac, Hitachi Energy receive  billion agreement from TenneT"), and it has also set a target to produce 0.5 million-0.7 million tonnes a year of low-carbon hydrogen to initially supply its own refineries.

BP, which increased its 2030 oil price forecast by $10 to $70 a barrel, will [focus its global oil](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") and gas operations in nine regions, with plans to sharply increase output from its U.S. shale [business and in the Gulf](https://www.financedigest.com/gulf-bank-moves-paper-digital-records-help-alaris-kodak-alaris-business.html "Gulf Bank Moves from Paper to Digital Records with Help of Alaris, a Kodak Alaris business") of Mexico.

GRAPHIC: BP’s [quarterly profits-](https://www.financedigest.com/ericssons-quarterly-core-profit-misses-expectations.html "Ericsson’s quarterly core profit misses expectations") https://www.reuters.com/graphics/BP-RESULTS/zgpobkjakvd/chart.png

![](https://www.globalbankingandfinance.com/wp-content/uploads/2023/02/121.jpg)

(Reporting by Ron Bousso and Shadia Nasralla; Editing by Kirsten Donovan and Mark Potter)


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