The ongoing severe impacts of the Covid-19 continue to create a volatile and challenging trading environment, BP says

LONDON • BP plc plunged into a net loss of almost US$16.85 billion (RM71.11 billion) in the second quarter (2Q), the British oil giant announced yesterday, as the coronavirus pandemic ravaged demand for oil, sending prices tumbling.

“The ongoing severe impacts of the Covid-19 pandemic continue to create a volatile and challenging trading environment,” BP said in its earnings statement.

“Looking ahead, the outlook for commodity prices and product demand remains challenging and uncertain,” it added.

The quarterly loss after tax of almost US$16.85 billion compared to net profit of US$1.82 billion in the 2Q of 2019, BP said.

“In particular, our reset of long-term price assumptions and the related impairment and exploration write-off charges had a major impact,” CEO Bernard Looney said.

Alongside its results, BP set out details on how it expects to achieve “net-zero” carbon emissions for the company by 2050.

Switching from an international oil company to an “integrated energy company”, BP said over the next decade its oil and gas (O&G) production is expected to reduce by at least one million barrels per day (bpd), or 40% when compared to the 2019 levels.

“This coming decade is critical for the world in the fight against climate change, and to drive the necessary change in global energy systems will require action from everyone,” Looney said.

The Irish national, who became BP CEO in February, had previously said he wanted “net-zero” carbon emissions for the company by the middle of the century.

In the immediate future, BP must rebuild its finances and Looney has already decided to axe around 10,000 jobs, or 15% of its global workforce owing to the coronavirus fallout on energy demand and prices.

After companies worldwide closed their doors and airlines grounded planes at the height of the Covid-19 outbreak towards the end of the 1Q, oil prices dropped off a cliff, causing them to turn negative.

However, prices have rebounded sharply in recent months as governments ease lockdowns and businesses slowly reopen.

In order to raise the much-needed cash, BP recently announced the sale of its petrochemical business to privately owned rival Ineos Capital Ltd for US$5 billion.

Former BP CEO Bob Dudley kick-started a US$15 billion divestment programmes.

In the past year, the energy major also agreed to sell its Alaska operations to Hilcorp Alaska LLC for US$5.6 billion.

Together, the disposals were aimed at recouping US$10 billion to finance BP’s US$10.4 billion purchase of US O&G operations belonging to mining group BHP Billiton. — AFP