Although we can’t predict the future, insights from our Energy Outlook and Technology Outlook help shape our strategic thinking. We consider how policy, consumer behaviour and advances in technology could affect the pace of the energy transition and how we produce and use energy in the coming decades.
All our projections see renewables growing at a fast pace – but with oil and gas continuing to play a prominent role over the next two decades. That’s why our portfolio is a balance of advantaged oil and gas, a competitive downstream, the trading of all forms of energy and a wide range of low carbon businesses.
Each year, we reinvest about one tenth of the capital employed in new opportunities. At current rates, we produce our proved reserves over 11 years on average. Our rolling programme of activity gives us significant flexibility to redefine our business as the world’s energy needs evolve.
When making strategic decisions, we consider different potential medium-term supply and demand scenarios – including a faster transition to lower carbon sources. To be prepared for uncertainties and opportunities, we test whether a potential investment makes commercial sense using a range of oil, gas and carbon prices.
We believe this approach – actively planning how we can contribute to and be competitive in the energy transition – gives us resilience, whatever the pace and path the world chooses. To reinforce this belief, we base part of our long-term executive compensation on delivery of this strategy.
1 How do we think the energy mix could look in 2040?
2 How do we see energy markets evolving?
Oil and gas demand rises lead to a supply crunch and higher prices
Oil and gas remain cheaper in the long term
Driven by policy and advancements in renewables and energy efficiency
3 What are our strategic priorities?
Growing gas and advantaged oil in the upstream
Invest in more oil and gas, producing both with increasing efficiency
Market-led growth in the downstream
Innovate with advanced products and strategic retail partnerships
Venturing and low carbon energy
Pursue new opportunities to meet evolving technology, consumer and policy trends
Modernizing the whole group
Simplify our processes and enhance our productivity through digital solutions
4 How do our top leaders get rewarded on lower carbon progress?
We base 20% of our longer-term share awards on progress against our strategic priorities. This includes measures on our performance in gas, renewables, venturing and renewables trading.
As an underpin, the board considers progress on issues such as reducing emissions, improving our products and creating low carbon businesses – as well as total shareholder return, safety and other environmental factors – before determining the final vesting outcome for these longer-term awards.
BP’s board and executive team annually review our strategy.