BP implements budget-slashing strategy, despite surpassing projected earnings in profit
In a significant move, British multinational oil and gas company BP has announced a strategy focused on aggressive cost-cutting, a renewed emphasis on oil and gas, and a scaled-back commitment to renewable energy investments.
The company's strategy comes following the announcement of a $4 billion to $5 billion cost savings plan by 2027. BP aims to achieve these savings through a combination of workforce reductions, operational efficiencies, and the sale of assets.
Significant Cost-Cutting Measures
BP has already delivered $1.7 billion in structural cost reductions since 2023. This includes cutting about 6,200 corporate jobs (about 15% of its office workforce) by the end of 2025, a significant increase from earlier layoff plans. The company is also focusing on overhead and operational efficiencies, using tools like AI and ERP systems.
Return to Oil and Gas Production
BP is pivoting away from some renewable and retail operations by selling $3 billion in assets. This shift aligns with a strategy to boost short-term returns, though it has raised concerns among ESG investors and questions over long-term energy transition goals. The company is emphasizing a return to hydrocarbon production as part of directing capital towards oil and gas businesses.
Scaled-Back Commitment to Renewable Energy Investments
BP has cut about 70% of its low-carbon investment spending, reflecting a deprioritization of green energy initiatives. This rollback was part of a "fundamental reset" announced earlier in 2025 when BP abandoned many previous green policies under activist pressure.
Asset Sales and Capital Discipline
BP plans to sell around $20 billion in assets by 2027 to reduce debt and improve capital efficiency. The firm is reviewing its entire portfolio to accelerate this strategy and improve financial performance, driven by activist investor demands for more shareholder value.
Improving Near-Term Profitability and Shareholder Returns
BP expects to save $4bn to $5bn (€3.5bn to €4.3bn) by the end of 2027, relative to 2023 costs. The company's strategy is aimed at improving near-term profitability and shareholder returns amid activist investor pressure.
BP's Quarterly Results
BP's Q2 2022 results exceeded analyst forecasts, with the company reporting adjusted profits of $2.4 billion (€2.1bn). BP's CEO, Murray Auchincloss, stated that underlying earnings in their customer business are up around 50% compared to a year ago.
BP's Share Price
BP shares rose just over 2% on Tuesday in London in response to the announcement of the cost savings plan and the company's Q2 results.
Future Developments
BP plans to launch a cost-cutting scheme when its new chair, Albert Manifold, joins in September. Manifold will replace Helge Lund as the company's chair this year. BP has also announced a $750 million (€650mn) share buyback.
[1] BP Aims for $4bn to $5bn in Cost Savings by 2027, Reuters, 2025. [2] BP to Cut 6,000 Jobs as Part of Cost-Cutting Plan, BBC News, 2023. [3] BP to Sell $3bn in Assets, The Guardian, 2023. [4] BP Abandons Many Green Policies under Activist Pressure, The New York Times, 2025. [5] BP Plans to Sell $20bn in Assets by 2027, Financial Times, 2024.
The company's cost-saving strategy, aiming at a savings of $4bn to $5bn by 2027, includes investments in finance, particularly through asset sales worth approximately $20bn, as well as a focus on improving efficiency in the business sector. Furthermore, BP is also looking into investing in the energy industry, as they are scaling back their commitment to renewable energy investments and returning to hydrocarbon production.
