Illustration: Aïda Amer/Axios
BP is writing down the value of its assets by up to $17.5 billion and is slashing its long-term oil price assumptions as it projects the coronavirus pandemic will have an "enduring impact on the global economy."
Why it matters: Monday's announcement signals how one of the world's most powerful energy companies sees COVID-19 changing the industry's landscape in lasting ways.
- "BP's management ... has a growing expectation that the aftermath of the pandemic will accelerate the pace of transition to a lower carbon economy and energy system, as countries seek to ‘build back better’ so that their economies will be more resilient in the future," the company said.
- CEO Bernard Looney, in a statement, said the pandemic reinforces BP's long-term climate plan announced in February to shift its business toward low-carbon sources and become a "net zero" company over several decades.
The big picture: The oil-and-gas giant, in announcing the second-quarter charges and write-offs, sees the potential for weaker energy demand for a "sustained period."
- BP is also reviewing whether to develop some of its discoveries, the company added when announcing that it cut its long-term oil price assumption by roughly 27%.
- The company now sees Brent crude prices averaging $55-per-barrel in the 2021–2050 period, and lowered its long-term natural gas price forecast sharply too.