BP (BP.L) has sharply downgraded its oil price expectations for the coming decades, predicting the coronavirus crisis will accelerate a shift towards greener energy.
The oil and gas giant said on Monday it would lead to a write-down of between $13bn and $17.5bn (£13.9bn) in is earnings for the second quarter. Its share price slid 5.5% in early trading in London.
Its figures now suggest benchmark brent crude prices will average at $55 a barrel between next year and 2050, with gas prices also revised downwards. A spokesperson said it marked a drop of around 30% on previous forecasts.
CEO Bernard Looney said in a statement it increasingly appeared that COVID-19 would have an “enduring economic impact.”
He said: "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.”
READ MORE: BP to slash 10,000 jobs on slump in demand
BP had already vowed in mid-February to become a “net zero company” by 2050 at the latest.
The latest statement confirmed some of its exploration prospects are now up in the air, with a review of whether development will go-ahead. An assessment is also underway of the knock-on effect on the value of the group’s intangible assets.
It comes a week after the company announced 10,000 job losses as part of a drastic cost-cutting plan triggered by the slump in oil prices (CL=F) in recent months.
The job cuts, equivalent to 15% of the company’s global workforce, will mainly affect senior office-based roles, the company said.
“The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make,” Looney said in a webcast to employees last week.
Looney told employees that BP was aiming to reduce capital expenditure by $3bn (£2.4bn) in 2020, and operating expenditure by $2.5bn.
“To me, the broader economic picture and our own financial position just reaffirm the need to reinvent BP. While the external environment is driving us to move faster — and perhaps go deeper at this stage than we originally intended — the direction of travel remains the same,” he told staff.