Worst Year in A Decade: BP Suffers $5.7 Billion Loss
The oil giant lost a multi-billion-dollar fortune in the past year as pandemic woes have kept people at home. The annual loss is calculated to be at around $5.7 billion for 2020. This comes as COVID-19 restrictions have reduced global oil demand and fuel consumption.
A troublesome 2020
COVID-19 restrictions certainly took a heavy toll on oil demand, given the ongoing travel restrictions set in place last year. This has resulted in BP losing over 40% of its share value and investors still worry about BP’s capacity to carry out its ambitious renewable energy plan. BP generated a net income of just $115 million in the last quarter of 2020, which actually fell short of the $360 million expected by the company’s analysts. Poor oil and gas sales and weak trading were to blame.
A better 2021?
2021 has also been off to a weak start. Retail volumes were down 20% this January compared to last year’s Q4 11% decline. As of yesterday, BP shares were down 3.8% at 258.9 pence. Apart from that, capital expenditure is set to rise to $13 billion in 2021, with $9 billion being allocated towards oil and gas. That said, experts have predicted that oil demand will recover in mid-2021 and global inventories are should return to their average 5-year level in 6 months or so.
What’s on the horizon for BP?
BP’s pile of debt is expected to increase to $39 billion in the first half of 2021. Nevertheless, the British company has stated that it is still on track to decrease its debt to $35 billion by 2022. In spite of the weak business environment, BP’s CEO, Bernard Looney, has stated that one of the company’s main goals remains to transition to greener technologies. The plan is to increase renewable power generation to 50GW by the year 2030. This will go hand-in-hand with BP’s program to reduce greenhouse gas emissions by cutting oil production in the long run.