BP has been forced to reduce the price of its oil from 75 US dollars per barrel to 55 because of the ongoing effects of coronavirus.
The reduction, and other non-cash charges, could cost the oil giant between £10.4bn and £14bn, its new boss Bernard Looney has revealed
BP said that the Covid-19 pandemic could have an ‘enduring impact’ on the global economy and prices were unlikely to bounce back to pre-coronavirus levels for quite some time.
Looney recently revealed his plan to make BP carbon-neutral by the middle of the century, and his latest words spin the Covid-19 pandemic as a way to accelerate global efforts to tackle climate change and meet targets set out in the Paris Agreement.
‘We have reset our price outlook to reflect that impact and the likelihood of greater efforts to “build back better” towards a Paris-consistent world,’ he said.
‘We are also reviewing our development plans. All that will result in a significant charge in our upcoming results, but I am confident that these difficult decisions – rooted in our net-zero ambition and reaffirmed by the pandemic – will better enable us to compete through the energy transition.’
It’s thought that BP could be prepared to walk away from oil fields it was planning to develop.
‘BP is also reviewing its intent to develop some of its exploration prospects and consequently is assessing the carrying values of the group’s intangible assets,’ it said in a statement.
Last week, revealed that BP would be slashing 10,000 jobs in part because of the coronavirus crisis.
The price of oil fell to below 19 dollars per barrel for Brent crude oil earlier this year, as a glut of supply and falling demand hit the market, but has since recovered some ground.
Speculation is now rife that BP’s dividend cannot survive, especially as rival oil giant Shell has slashed its dividend by two-thirds – the first reduction since the Second World War.
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