BAKU, Azerbaijan, Feb.3
By Leman Zeynalova – Trend:
BP’s oil and gas investments are unlikely to rebound post-COVID-19, Trend reports citing GlobalData, a leading data and analytics company.
BP’s net debt is expected to increase in the first half of 2021 before reducing in the second half of the year supported by growing operating cash flow and the receipt of divestment proceeds.
BP continues to expect to reach its $35 billion net debt target around fourth quarter 2021 and first quarter 2022. This assumes oil prices in the range of $45-50 a barrel and BP planning assumptions for RMM and gas prices.
BP's future financial performance, including cash flows and net debt, will be impacted by the extent and duration of the current market conditions and the effectiveness of the actions that it and others take, including its financial interventions.
“In 2020 BP invested approximately $14 billion on activities across its portfolio, with oil and gas capital spend down 20 percent from 2019 levels. With COVID-19 continuing to limit capital allocation, plus growing investments outside oil and gas, it is unlikely that BP’s oil and gas investments will rebound post-COVID-19.
“The impacts of the pandemic have forced BP to limit its capital allocation: the company reduced capital expenditure in 2020 by around 28 percent and divested over $6 billion worth of assets. The reduction in oil and gas spend was particularly significant and going into 2021 the company expects to spend approximately $9 billion on this segment - around the same level that is targeted for 2025. Over the next few years, capital discipline will remain crucial and as the company continues to increase investment in low carbon and convenience, the prospects of a rebound of investment in its core oil and gas business is unlikely.
“2020 was a pivotal year for BP as the company embarked on its shift in becoming an integrated energy company, increasing investment in renewables and low carbon energy sources, setting out Net Zero emissions targets and re-shaping the company’s workforce as almost 10,000 layoffs were announced.”
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