‘Doing the accounts without the innkeeper‘, or rather, without the shareholder. This is how one can sum up the disgraceful administration of Bernard Looney, the former CEO of BP who resigned suddenly last year due to inappropriate relations with some employees. The British energy giant is going through a period of deep crisis due to some of Looney’s business plans and rash forecasts – above all, the decision to invest heavily in renewables (in particular, in very expensive offshore wind power) and to significantly reduce energy production from traditional sources such as fossil fuels, on the basis of projections on the decline in oil consumption that turned out to be completely wrong.

BP now stands for Back to Petroleum?

The company is now counting on successor Murray Auchincloss to reverse the course and green direction taken by his predecessor, in order to revive the company’s accounts and share value (with the share price having lost more than 15% year-on-year) and restore shareholder confidence, with drastic spending review measures and downsizing the workforce.

Paying the price, as often happens, will be the workers. Last Thursday, in fact, the British giant, formerly known as British Petroleum, announced its intention to make around 4,700 employees redundant in its worldwide offices by the end of the year, even resorting to artificial intelligence tools to determine which employees to leave unemployed. In addition to these, it will cut about 3,000 employees and external consultants, for redundancies that, in total, should therefore reach 7,700 (about 5% of the total workforce of 90,000 resources), in a broader rationalisation and cost-cutting plan of about USD 2 billion by 2026; a plan that alone, Auchincloss emphasised, will not be enough to put an end to the corporate crisis, announcing the need for further cuts in the near future.

On the other hand, in the last quarter, as at 30 September, the company accounts showed signs that were alarming to say the least, with revenues down by 10% and, even more worryingly, profit margins down (-95%). A worrying outlook for a company whose net debt has exceeded the ‘monstrous’ figure of $24 billion.

The new CEO, intent on reversing his predecessor’s business plans, has already suspended, defunded, or completely scrapped many projects related to clean hydrogen and low-carbon power generation, gradually reverting to gas and oil in an effort to bring the company’s zero profit margins back to acceptable levels. These decisions confirm what emerged last October in a Reuters article which, citing anonymous sources, announced the company’s intention to abandon its unrealistic goal of reducing its oil and gas production by 25 per cent by 2030. Regarding the reduction of the massive offshore wind commitment, the company announced a joint venture with Japan’s JERA last month. According to research by the investment bank Jefferies, the partnership is expected to allow BP to reduce the financing requirements of its renewable energy projects from USD 10 billion to USD 4 billion until 2030.

Not only BP

Joining the British ‘supermajor’ in the deep review and reduction of environmental targets are some of the industry’s biggest competitors, including compatriot Shell and Norway’s Equinor. According to rumours, Equinor is making deep cuts in the workforce of its renewables division, and Shell has announced that it will not start any new offshore wind power projects, limiting itself to keeping in operation the wind farms it currently owns in Europe, the US and the UK.

Although, as we have seen, the trend in the private sector is now reversed, the long-term damage of the offshore wind bubble, in economic and employment terms, is likely to be alarming. In the public sector, moreover, the commitment to the energy source in question knows no bounds. Take, for example, the case study of Poland, which, as reported by the PAP news agency and Reuters, intends to invest as much as EUR 144 billion in wind farms off the Baltic Sea, whose builders should include the aforementioned Equinor. Figures, those Polish ones, which alone are enough to make S&P’s estimates, which last September quantified Europe’s investments in offshore wind energy by 2030 in the order of 270 billion, already outdated. An amount of public funding that cannot be justified, given the very low financial sustainability of a technology that, as things stand, is one of the most expensive at our disposal, as witnessed by the recent estimates of the U.S. Energy Information Administration, which calculate the cost without subsidies of offshore wind energy at over $120 per MWh generated. A collective blunder for which we risk paying the price for many years to come.