Troubled BP will reportedly scrap renewable energy targets and double down on fossil fuels amid investor pressure

Struggling British energy giant, BP, plans to abandon its pledge to cut oil and gas output and refocus on fossil fuels to restore investor confidence, the Financial Times reported on Tuesday.

The outlet has reported that the company plans to announce its shift back to oil and gas at its investor day on Wednesday, citing people familiar with the matter.

BP chief executive Murray Auchincloss, has struggled to reverse a decline in BP's share price, which has underperformed against its rivals. Auchincloss, who took over in 2023, faces pressure from US activist investor Elliott Management to turn the troubled company around, the report said.

Elliott, which holds a 5% stake in BP, has been pushing for aggressive cost cuts, asset sales, and a sharper focus on profitability.

BP is expected to announce at least one major divestment, FT sources said, adding that Auchincloss has promised a "fundamental reset" to improve performance.

Analyst Irene Himona of Bernstein told the FT that this was a "make or break" moment for the company, as Auchincloss-BP's former chief financial officer-was closely associated with the existing strategy, making an abrupt shift difficult.

A transformation strategy presented by then-CEO Bernard Looney and Auchincloss in 2020 committed BP to cutting oil and gas output by 40%-the most ambitious pledge in the sector-while rapidly expanding renewables.

In 2023, BP scaled back the target to a 25% reduction as investors prioritized short-term returns over energy transition.

On Wednesday, Auchincloss is expected scrap the target entirely, according to sources familiar with the plan. The company may also sell off off wind and solar assets, Castrol lubricants, and its service station network, they suggested.

Himona suggested that Auchincloss might go even further and commit to increasing BP's oil and gas production. She noted that ExxonMobil, Chevron, and Shell have all announced plans to continue raising production.

BP currently produces around 2.3 million barrels of oil equivalent per day, down from about 2.6 million barrels per day in 2019.