Despite loud shouts of a transition to green energy, BP is currently poised to tap a new offshore gas resource off the west coast of Africa. Through just one project, this exploration could account for 1% of the total remaining global “carbon budget” to keep global temperature rises below 1.5 degrees Celsius. Despite this, BP is dogged in showing investors that it will not miss out on any oil-rally, even if it will be short-lived.
According to an investigation by Unearthed, the British oil major has already started the construction of one fossil fuel project in the region, which is close to the maritime border between Senegal and Mauritania. If fully realized, developments in the region could produce around 40 trillion cubic feet of gas over the next 30 years – enough to produce 2.2 billion tons of CO2.
This first stage – the Greater Tortue Ahmeyim project – will develop a new gas field 2.7 kilometers below the surface of the Atlantic Ocean, making it the deepest drilling venture in African history, tapping a 15 trillion cubic feet resource of natural gas. Approved two years ago with a 20-year lifetime, the project will start producing LNG in two years’ time. BP is hoping this will lay the foundation for at least two more developments in the region, which it hopes to operate for at least 30 years.
This lifespan would take BP and its fossil fuel exploits through to 2050, directly contradicting the company’s plans to reach net zero emissions by 2050 and to cut oil and gas production by 40% within a decade. The floating LNG facility at Greater Tortue Ahmeyim alone would increase BP’s LNG production capacity by 17%.
The project, which is being developed in partnership with Kosmos Energy, Petrosen and SMHPM, appears to push in completely the opposite direction of BP’s transition strategy, significantly increasing Africa’s regional supply of gas, rather than clean energy. BP currently has fossil fuel projects in Angola but has no plans to develop its first renewables projects in the sub-Saharan region.
It also comes in stark contrast to BP’s partnership with the Terra Carta Initiative, which aims to put “Nature, People and Planet at the heart of global value creation” and “put sustainability at the heart of the private sector.” It similarly contradicts the IEA’s recent statement that there can be no further fossil fuel expansion in any country beyond 2021 if global climate goals are to be met.
The Unearthed investigation places particular focus on an ecosystem that will be at severe risk due to BP’s exploits off the coast of Mauritania and Senegal. The region is home to a 580 kilometer-long and 100-meter-high cold-water reef, thought to be the largest in the world, and home to swathes of endangered marine species and migrating birds. The project’s pipeline weaves through different sections of the reef, which lies about 600 meters away on both sides of the pipeline.
In the past, BP CFO Murray Auchincloss has outlined how BP could double the size of its global LNG portfolio to as much as 30 million tons per year by 2030, with other projects including Browse LNG in Australia and Tangguh LNG in Indonesia.
This was compounded again this week by CEO Bernard Looney stating that his company will retain hydrocarbons as a core part of its strategy “for decades to come.”
If you’ve followed BP’s press releases and public statements over the past year, amid a tumultuous time for oil prices, you would have got the impression that the company’s plans to transition from an integrated oil company (IOC) to an integrated energy company (IEC) were to be taken seriously, and that in 30 years’ time, we’d be looking at a very different BP to the one we have grown used to today.
However, while BP is planning a ten-fold increase in low-carbon investment by 2030, reaching to $5 billion per year, overall investments could account for more than $15 billion, with oil and gas still significantly outweighing renewable energy. In fact, oil and gas spending is also set to increase steadily through to 2025 at least.
The renaissance of noise that BP is now making about fossil fuels comes amid fears from investors – albeit those that are apathetic about climate change – that the company will miss out on rallying oil prices in the wake of Covid-19.
BP shares, which hit their lowest since the mid-1990s last year, still sit 35% below their pre-pandemic levels. Despite a fairly strong recovery, the company’s green focus has meant that it has experienced less growth than several of its peers as oil prices have bounced back.
The price for benchmark Brent Crude oil continued to rise towards $75 per barrel this week – its highest since April 2019 – supported by a recovery in demand from the pandemic, while US crude inventories fell. At these elevated prices, greater margins mean that BP will be able to raise more cash – both from fuel sales and asset divestments – which it will be able to use in pursuing its transition strategy, as well as buying back shares to retain shareholder value.
Keen to benefit from this price rally, Looney claimed that BP “wants to run the best hydrocarbons business possible.” Rather than “the biggest hydrocarbons business possible.”