Oil major BP is embracing technology and advancements in the energy transition but is taking a cautious approach amid changing political tastes, according to the company's head.
"We'll have to be careful on the pace here" as the company looks at new sources of energy, like hydrogen, BP chief executive Murray Auchincloss told the CERAWeek by S&P Global conference in Houston, Texas, on Tuesday.
"The pace of the energy transition is unfolding at different paces in different countries," said Auchincloss. "So, we'll be pragmatic as we think our way through this energy transition."
But fiscal incentives are starting to solidify, said Auchincloss, whose company invested $3.8bn in its non-oil and gas businesses in 2023, representing about 23pc of BP's total capital expenditure.
Traditional energy sources remain key to BPs portfolio, and will for some time to come, as indicated in February when the company suggested it could grow its global oil and gas production beyond its guidance of 2-3pc/yr through to 2027. The company spends about 50pc of its capital in the US, where offshore Gulf of Mexico production specifically has become increasingly attractive.
"The Gulf of Mexico is very exciting," said Auchincloss. "I think we stand the chance to open up the next great basin in the world which is the Paleogene here in our own backyard in the United States."
Having both equity production to go along with merchant molecules is profitable for BP's legacy energy strategy, but the company plans to use that model as it explores new sources in what is to become "a much more complicated ecosystem moving forward."
Changing economics adds to the complexity, which is evident in some new energy projects that no longer seem to make the financial sense than they once did.
"Offshore wind is a challenge," said Auchincloss. In January, BP and Equinor cancelled a wind power generation contract with New York state because of rising costs. "It didn't end up how we wanted it."
