BP to eliminate about 5% of workforce, CEO says

BP is eliminating 4,700 positions internally, about 5% of its workforce, and more than 3,000 contractor jobs, CEO Murray Auchincloss told staff on Thursday, as the London-based energy giant seeks to reduce costs.

More cost-cutting efforts are planned this year and beyond, Auchincloss said. The company has stopped or paused 30 projects since last June to focus on the ones that make the most money. A digitization drive, including pushing artificial intelligence across departments, is key to these plans, he said.

BP has fallen further behind its fellow oil majors during Auchincloss's tenure as CEO, and is now worth less than half as much as Shell. It's even being caught by companies that were once just a fraction of its value.

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Faced with this performance, investors want to see change. The expectation is that Auchincloss will announce in February a further shift back toward oil and gas, yet there are many questions about whether this can be accomplished quickly enough. 

The job cuts come days after BP announced it was delaying next month's strategy update and relocating it to London from New York to give Auchincloss more time to recover from a medical procedure.

"I understand and recognize the uncertainty this brings for everyone whose job may be at risk, and also the effect it can have on colleagues and teams," Auchincloss wrote in an email to BP employees, which was also provided to Bloomberg. "We have got more we need to do through this year, next year and beyond, but we are making strong progress as we position BP to grow as a simpler, more focused, higher-value company."

BP shares rose 1.4% to 428.8 pence on Thursday in London trading.

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BP's fall in recent years reflects strategic miscalculations that extend far beyond Auchincloss's single year as permanent CEO. His predecessor Bernard Looney embraced low-carbon energy, made a faulty prediction that global oil consumption had already peaked and drove expensive forays into offshore wind — only to be fired for his personal conduct before the strategy could be realized.

BP has since been watering down Looney's strategy incrementally. It slowed the planned reduction in its oil and gas output in February 2023, stopped or paused a series of clean hydrogen projects, and in December announced the spin-off of its entire offshore wind business.

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But the company has resisted making the more forceful pivot back into fossil fuels that some investors have been demanding. It has repeatedly reassured shareholders that it has enough untapped resources to fulfill its production plans, yet since 2020 it has given the green light to just one major oil project, the Kaskida field in the Gulf of Mexico. This long period of upstream neglect will make it more difficult to achieve a quick turnaround, analysts say.

The company aims to cut costs by $2 billion by the end of 2026. Its net debt was about $24 billion at the end of the third quarter.