BP is scaling back plans to reduce its oil and gas production as it posted record profits amid soaring oil and gas prices.
The FTSE 100 company says it now expects its fossil fuel production to fall by 25pc by 2030, compared to a previous expectation of 40pc.
It marks a stark readjustment of chief executive Bernard Looney’s strategy to shift the company towards greener energy as part of the push to tackle global warming – as the business faces what he called an “energy trilemma”.
The move comes amid heightened concern over energy security following disruption to oil and gas markets caused by Russia’s war on Ukraine.
However, BP is also increasing its investment in greener energy, planning to invest up to $65bn between 2023 and 2030 into products such as bioenergy, electric car charging, wind and solar power and hydrogen.
Mr Looney told Bloomberg TV: “The energy trilemma is we must have cleaner energy, for sure, and at the same time we must make sure that energy is secure, reliable and we must make sure that energy is affordable.
“The way that we do that is that we have to invest in today’s energy system. The reality is that today’s energy system is predominantly an oil and gas system.
“That needs investment if we are to make sure that we can keep security and affordability front and foremost and the war has shown us just how crucial that is.”
The adjustment to its strategy was announced as BP posted record profits of $28bn [£23bn], following a year of high oil and gas prices amid shortages and market disruption following Russia’s invasion of Ukraine.
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11:50 AM
Ultra-low rates to become thing of the past, says ECB chief
The European Central Bank will not need to return to ultra-low interest rates as inflation will settle in a new regime close to its 2pc medium-term target, according to a Governing Council member.
Francois Villeroy de Galhau said at an online press conference:
I personally believe that once we will have fought inflation and come back to 2pc we will be in a new inflation regime, probably closer to our target.
Then we will have probably in the medium term a level of interest rate that will be more normal than in the recent past.
Mr Villeroy said that in the shorter term the ECB will focus on tackling underlying inflation, which is “much to high”.
Euro area annual inflation is expected to have been 8.5pc in January, down from 9.2pc in December.
11:17 AM
Sunak reshapes the way Government does business
The Government has divided the business department into two ministries as Rishi Sunak carries out a mini-reshuffle.
Grant Shapps will become Energy Security and Net Zero Secretary in a department under the same name, while Michelle Donelan becomes the Science, Innovation and Tech Secretary at a new department.
Kemi Badenoch has become the new Business and Trade Secretary.
The Prime minister has also made Greg Hands the new Conservative party chairman after sacking Nadhim Zahawi over his tax affairs.
Our politics live blog has the latest reaction and explains what it means.
11:09 AM
Arm boosts revenues as it prepares to float stock
Arm, the chip design firm owned by SoftBank, reported a 28pc increase in revenue for the latest quarter as it prepares for a highly anticipated float on the stock market.
Revenue at the Cambridge-based semiconductor designer rose to $746m (£621.6m) from $581m (£484.1m) a year earlier, driven by an increase in internet-of-things gadget adoption and highly royalty rates in smartphones.
SoftBank founder Masayoshi Son has pinned high hopes on the prospects for Arm, saying at one point that he expects the firm to pull off the biggest float – known as an initial public offering or IPO – for a chipmaker ever.
Markets have moved against him however, with technology valuations sliding and the chip industry running into soft demand in key product segments.
It is not clear whether it will opt for the London Stock Exchange against New York’s two major exchanges.
Arm’s technology and designs are already pervasive throughout the electronics industry, dominating segments like mobile phones, and its customers include the likes of Apple.
10:55 AM
Boeing plans to cut about 2,000 finance and HR jobs
Boeing is to cut 2,000 office jobs in an assault on bureaucracy by the crisis-hit US planemaker.
Chief business correspondent Oliver Gill has the details:
Roughly a third of the jobs are to be outsourced to India with the remaining positions disappearing completely.
The move is part of Boeing’s push to focus on engineering and manufacturing as it struggles to keep up with delivering planes to its airline customers.
Airlines are desperate to get their hands on Boeing’s 737 Max aircraft, which will cut carriers’ fuel costs and reduce emissions.
But the planemaker has repeatedly failed to meet delivery deadlines as the tragic crashes of two of the planes in 2018 and 2019 casts a long shadow over operations.
Although the 737 Max jets have been signed off as safe by regulators, Boeing has been hit by supply chain problems and production delays.
10:31 AM
Adani stocks rally after $113bn wipeout
Shares in India’s Adani Group have rallied a day after it prepaid some loans, bringing relief to investors that have seen $113.6bn (£94.6bn) wiped off the conglomerate’s market value.
The group, led by billionaire Gautam Adani, has been roiled by days of market turmoil after US short-seller Hindenburg Research alleged two weeks ago that it had engaged in stock manipulation and used tax havens. It also said the group had unsustainable debt.
Adani Group has denied the allegations, saying it complies with all laws and has made necessary disclosures over time. Nonetheless, investors dumped its shares as concerns of financial contagion grew.
On Monday though, Adani Group said it will pre-pay $1.11bn (£920m) of loans on shares.
Separately, JPMorgan said the group companies were still eligible for inclusion in the bank’s bond indexes.
The group’s flagship company Adani Enterprises was trading 14.7pc higher today, but still around half the level seen before the Hindenburg report was released.
10:19 AM
Pound falls toward $1.20
The pound is heading back towards $1.20, having recovered from earlier dipping below the mark to its lowest level in a month.
The movement comes amid uncertainty in the bond market. The UK’s 10-year gilts briefly fell towards 3.22pc but now stands up one basis point on the day to 3.25pc.
Sterling has fallen 0.2pc today.
09:47 AM
Bank of England wants more women in leadership roles
The Bank of England wants to hire more women into management roles and move its leadership away from its present all-male team.
Deputy Governor Dave Ramsden said 35pc of senior managers are female, up from 20pc in 2014, but the bank is targeting up to 44pc by 2028.
The Bank of England is led by Governor Andrew Bailey and four deputy governors along with a chief economist, all of whom are men.
Three of the nine people on the Monetary Policy Committee are women, while Sarah Breeden was promoted to the head of financial stability in 2021. Speaking at an event on women in economics, Mr Ramsden said:
I’m very conscious that as one of an all-male team of governors here at the bank, the focus of today’s event hits
uncomfortably close to home.
Like many organisations, the Bank of England has made real strides forward. We need to keep building on that.
09:35 AM
Russia-linked LockBit hackers threaten to publish Royal Mail data
A Russia-linked hacking gang has claimed credit for the cyber attack that has crippled Royal Mail, threatening to publish stolen data from the company online.
Senior technology reporter Matthew Field has the details:
The LockBit ransomware gang published an update on its official forum, warning it would publish “all available data” on Feb 9.
The Telegraph revealed in January that the LockBit gang, which is believed to have close links to Russia, was behind the attack.
The cyber attack shut down the postal service’s international export services, causing significant delays to overseas mail and leaving millions of parcels stuck in limbo.
Read how the hack is still impacting Royal Mail.
09:22 AM
Gas prices recover but cold snap nearing end
European natural has recovered slightly even with the end of a short-lived cold spell in sight while healthy stockpiles are helping tackle any boost in demand.
Benchmark futures fell as much as 2.3pc, after two days of modest gains, but have since clawed back losses after BP revealed record profits and raised its dividend, indicating confidence in its business going forward.
The ongoing chilly weather in parts of western and central Europe, coupled with low wind output, is raising gas consumption.
But temperatures are expected to rebound soon and could remain above seasonal norms for the next two weeks, according to forecaster Maxar Technologies.
Prices have declined about 25pc this year, and are hovering near levels last seen before the Russian invasion of Ukraine.
However, the Resolution Foundation think tank said: “The huge volatility in gas prices over the past year means we can’t assume energy prices will continue to fall, and they could well rise from their current levels with the outlook still dependent on temperatures in Europe and the unpredictable situation in Ukraine.”
Dutch front-month gas, Europe’s benchmark, was up 1.7pc at €57.87 a megawatt-hour.
09:11 AM
Nintendo’s profit slips amid chips crunch
Japanese video game maker Nintendo recorded a slight drop in in profit in April to December as it maintained strong sales of its Switch console games.
Nintendo’s net profit in the first nine months of the fiscal year through March was 346bn yen (£2.2bn), down 5.8pc from 367bn yen in the same period of the previous year.
Nintendo, the Kyoto-based maker of Pokemon and Super Mario video games, did not provide a breakdown of quarterly numbers.
Among the games selling well were “Splatoon 3,” a paint-shooting game, “Pokemon Scarlet and Violet” and “Nintendo Switch Sports.”
Nintendo sold fewer machines compared to a year earlier, partly because a shortage in computer chips, a critical part for the console, due to disruptions from the pandemic crimped production, the company said.
Nintendo lowered its full fiscal year profit forecast to 370bn yen (£2.3bn), from the 400bn yen (£2.5bn) it had projected in November. Previous fiscal year profit was 477.7 billion yen.
08:56 AM
‘The reality is today’s energy system is oil and gas’, says BP chief
BP chief executive Bernard Looney has defended the company’s energy investment plans after announcing record profits. He told Bloomberg TV:
What we’re doing today is we’re announcing that we’re leaning into our strategy.
Our strategy is designed to help the world solve what is known as the ‘energy trilemma’.
The ‘energy trilemma’ is we must have cleaner energy, for sure, and at the same time we must make sure that energy is secure, reliable and we must make sure that energy is affordable.
The way that we do that is that we have to invest in today’s energy system. The reality is that today’s energy system is predominantly an oil and gas system.
That needs investment if we are to make sure that we can keep security and affordability front and foremost and the war has shown us just how crucial that is.
So we’re investing more into that and – not or – and at the same time we’re investing into the energy transition. We’re announcing more money into the transition.
08:38 AM
BP boosts the FTSE 100
The FTSE 100 rose as bumper results from oil giant BP and a rally in energy stocks helped buck the gloom in global markets as investors worried about the prospect for higher interest rates.
The blue-chip index rose 0.5pc to 7,871.85, while the broader European index was flat.
BP rose as much as 3.8pc after it reported a record profit and increased its dividend by 10pc in a sign of confidence in the market’s continued strength.
The wider oil & gas index jumped 2.1pc as crude prices rallied nearly 2pc on optimism about recovering demand in China and concerns over supply shortages following the shutdown of a major export terminal after an earthquake in Turkey.
The midcap FTSE 250 index fell as much as 0.3pc, with Morgan Advanced Materials slumping 8.1pc after the industrial firm said a cyber security incident reported in January could cost the company about £8m to £12m.
08:29 AM
Government needs ‘proper’ windfall tax, says Miliband
Shadow climate secretary Ed Miliband called on the Government to bring forward a “proper” windfall tax on energy companies, after BP reported that underlying profit more than doubled to $27.7bn (£23bn) last year.
The Labour MP said:
It’s yet another day of enormous profits at an energy giant, the windfalls of war, coming out of the pockets of the British people.
What is outrageous is that as energy giants rake in these sums, Rishi Sunak still refuses to bring in a proper windfall tax.
This is why people are sick and tired of the way the country is run under the Tories.
In just eight weeks time, the Government plans to allow the energy price cap to rise to £3,000. Labour would use a proper windfall tax to stop prices going up in April.
08:25 AM
BP under pressure to make wind and solar more profitable
BP is the latest oil and gas company to report record annual profits for 2022, with Shell last week reporting annual profits of $39.9bn.
Energy correspondent Rachel Millard has the latest:
The sums have triggered calls for tougher windfall taxes to help consumers battling high energy bills. The IPRR think-tank said the profits were “scandalous”.
Mr Looney took over in 2020, and quickly announced plans to reduce BP’s focus on oil and gas and shift towards greener energies, amid huge pressure to cut carbon emissions.
However, he has also been under pressure from shareholders to show he can get similar returns from wind and solar power, which can be lower but more stable.
The company said today it expected to achieve returns of more than 15pc from bioenergy, “double-digit” returns from hydrogen, and 6-8pc from renewables.
08:08 AM
BP increases dividends after record profit
BP has increased its dividend and extended share buybacks after posting a record profit for 2022.
The oil and gas giant is delivering significant rewards to investors — a 10pc increase in the dividend and an extra $2.75bn of buybacks — while also highlighting a contradiction at the heart of Europe’s oil industry.
As major producers talk increasingly about the need to cut emissions and switch to cleaner energy, their polluting fossil fuel business is becoming ever more lucrative as a result of Russia’s invasion of Ukraine.
The company has also rowed back on the level of carbon emissions it aims to cut from oil and gas production.
The company said it would evenly split new investment between low-carbon energy and oil and gas, spending up to $8bn on each by 2030.
08:04 AM
Markets rise after record BP profits
Markets have opened higher following the record-breaking profits announced by BP and its plans to row back on emissions targets.
The FTSE 100 was up 0.4pc to 7,841.43 after the open while the midcap FTSE 250 rose 0.1pc to 20,423.62.
07:56 AM
Start of 2023 ‘has brought some stability’ to house prices
Let’s quickly go back to house prices, which remained flat in January according to Halifax,
The pace of annual growth has continued to slow, to 1.9pc from 2.1pc in December, which is the lowest level recorded over the last three years.
The average house price is now around £12,500 (4.2pc) below its peak in August last year, though it still remains some £5,000 higher than in January 2022 (£276,483).
Halifax director Kim Kinniaird said:
The start of 2023 has brought some stability to UK house prices, with the average house price remaining largely unchanged in January at £281,684, a very small decrease on December.
We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years.
As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand.
For those looking to get on or up the housing ladder, confidence may improve beyond the near-term.
Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.
07:46 AM
BP ‘laughing all the way to the bank’ says TUC
TUC general secretary Paul Nowak, reporting on the record BP profit figures, said:
As millions struggle to heat their homes and put food on the table, BP are laughing all the way to the bank.
Hard-pressed families will rightly feel furious – they are being treated like cash machines.
This boils down to political choices.
Ministers are letting big oil and gas companies pocket billions in excess profits. But they are refusing to give nurses, teachers and other key workers a decent pay rise.
We need a government on the side of working people, not fat cat energy producers.
That means imposing a higher windfall tax on the likes of BP and Shell. It means giving public servants fair pay. And it means giving households extra financial support as bills rise this April.
07:43 AM
BP ‘mining gold out of vast suffering’
Greenpeace UK’s head of climate justice, Kate Blagojevic, said:
BP is yet another fossil fuel giant mining gold out of the vast suffering caused by the climate and energy crisis.
What’s worse, their green plans seem to have been strongly undermined by pressure from investors and governments to make even more dirty money out of oil and gas.
This is precisely why we need governments to intervene to change the rules.
She added: “It’s time to stop drilling and start making polluters, not communities, who did least to cause the problem, pay the price for the climate damage they are causing all around the world.”
07:37 AM
BP cuts climate change pledge
Oil giant BP has made a big cut to the ambition of its climate change pledge.
The business said it expects the carbon emissions form its oil and gas production will fall by between 20-30pc by 2030, when compared to 2019. Its previous target had been a 35-40pc drop in emissions.
It comes as the business said that its oil and gas production will be around two million barrels of oil equivalent a day in 2030.
This is 25pc lower than in in 2019, but its previous plan had been to cut production by 40pc.
Chief executive Bernard Looney said:
We need continuing near-term investment into today’s energy system, which depends on oil and gas, to meet today’s demands and to make sure the transition is an orderly one.
We have high-quality options throughout our portfolio, allowing us to choose only the best.
We will prioritise projects where we can deliver quickly, at low cost, using our existing infrastructure, allowing us to minimise additional emissions and maximise both value and our contribution to energy security and affordability.
07:24 AM
BP scales back oil and gas cuts as boss warns of ‘energy trilemma’
BP is scaling back plans to reduce its oil and gas production as it posted record profits amid soaring oil and gas prices.
The FTSE 100 company says it now expects its fossil fuel production to fall by 25pc by 2030, compared to a previous expectation of 40pc.
It marks a stark readjustment of chief executive Bernard Looney’s strategy to shift the company towards greener energy as part of the push to tackle global warming – as the business faces what he called an “energy trilemma”.
The move comes amid heightened concern over energy security following disruption to oil and gas markets caused by Russia’s war on Ukraine.
However, BP is also increasing its investment in greener energy, planning to invest up to $65bn between 2023 and 2030 into products such as bioenergy, electric car charging, wind and solar power and hydrogen.
Mr Looney told Bloomberg TV: “The energy trilemma is we must have cleaner energy, for sure, and at the same time we must make sure that energy is secure, reliable and we must make sure that energy is affordable.
“The way that we do that is that we have to invest in today’s energy system. The reality is that today’s energy system is predominantly an oil and gas system.
“That needs investment if we are to make sure that we can keep security and affordability front and foremost and the war has shown us just how crucial that is.”
The adjustment to its strategy was announced as BP posted record profits of $28bn [£23bn], following a year of high oil and gas prices amid shortages and market disruption following Russia’s invasion of Ukraine.
07:20 AM
House price declines slow in January
House prices were flat last month, according to an influential index, halting their biggest decline since the global financial crisis in 2008.
The average sale price stood at £281,684 in January, down barely from £281,713 in December, according to lender Halifax.
The annual rate of house price growth has slowed to 1.9pc, down from 2.1pc in December.
The figures are slightly more positive than data published by Nationwide earlier this month, which said the average sale price fell to £258,297 in January, down from £262,068 in December, a fall of 0.6pc.
It comes after the Bank of England raised interest rates by half a percentage point to 4pc on Thursday, heaping more pressure onto mortgage payers.
07:11 AM
Good morning
Losses in house prices slowed down in January after four months of declines according to the Halifax.
The lender said that the average sale price stood at £281,684 in January, down barely from £281,713 in December.
5 things to start your day
1) Energy bailout to cost half as much as feared | MPs and economists call for tax cuts as predicted size of subsidies slashed to £69bn
2) Hoarding ‘Britcoin’ to be banned over bank run fears under Sunak’s digital currency proposals | Frictionless digital transfers may increase the risk of commercial banking collapses, officials say
3) Only economic ‘war footing’ can beat Biden’s subsidy blitz | Business leaders urge Rishi Sunak to unveil radical reforms as US races to attract foreign investment
4) Google’s Bard to challenge ChatGPT for AI chatbot crown | The technology behind the chatbot will be integrated into Google’s search engine
5) Royal Mail strike called off after union slip-up | CWU leaders cancel walkouts after a legal challenge over their validity
What happened overnight
Asian share markets mostly stabilised after steep losses in the past 24 hours, while the US dollar remained elevated as investors considered the prospects for interest rates to remain higher for longer in many developed economies.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4pc, after US stocks ended the previous session with mild losses.
Australia’s S&P/ASX200 was trading higher ahead of the Reserve Bank’s decision but slid into negative territory after the official cash rate was raised by 25 basis points. The benchmark index closed down nearly 0.5pc.
Tokyo shares ended flat as investors sat on their hands ahead of Federal Reserve chair Jerome Powell’s remarks later in the day.
The benchmark Nikkei index edged down less than 0.1pc to 27,685.47, while the broader Topix index added 0.2pc to 1,983.40.
Hong Kong’s Hang Seng Index was trading 0.7pc higher and China’s bluechip CSI300 Index was up 0.1pc.
