BP expects to book a total of $13bn-17.5bn of post-tax impairment charges and exploration write-offs in the second quarter after revising down its long-term oil and gas price assumptions.
The company is now basing its investment plans on an average Brent crude price of $55/bl and a Henry Hub gas price of $2.90/mn Btu in the period to 2050, which is down by a respective 27pc and 31pc from its previous assumptions.
The revision is underpinned by BP's view that the Covid-19 pandemic could have "an enduring impact" on the global economy and cause "weaker demand for energy for a sustained period".
In addition, the firm said it thinks the pace of transition to a lower-carbon economy and energy system will accelerate in the aftermath of the pandemic "as countries seek to ‘build back better' so that their economies will be more resilient in the future".
BP has not revealed which assets the impairment charges and exploration write-offs relate to, nor has it said whether the amended long-term oil and gas price assumptions will have a knock-on effect on dividend policy.
"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," chief executive Bernard Looney said.
Looney set out a bold long-term ambition to sharply cut the firm's emissions in February. The company is aiming for net zero emissions across its operations and said it wants to be "net zero on carbon" in its own oil and gas output on an absolute basis "by 2050 or sooner".
