BP has announced write-offs of up to $17.5bn as it expects the Covid-19 pandemic to have a lasting impact on the global economy and reduce demand for energy over a longer period, and to speed up the shift to a lower carbon economy.
The energy giant now expects Brent crude oil to average around $55 a barrel between 2021 and 2050, and $2.90 per million British thermal units for Henry Hub gas, the benchmark for natural gas. The new forecasts are 27% and 31% lower respectively than the average prices used in its latest annual report.
BP’s management also expects that the aftermath of the pandemic will accelerate the pace of transition to a lower carbon economy and energy system, as countries seek to make their economies more resilient in the future.
BP chief executive Bernard Looney said: “So, 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. 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.