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BP plc 112th Annual General Meeting:

Webcast Transcript

Wednesday, 12th May 2021

This transcript contains minor modifications from the original for accuracy or clarification, none of which change the substance of the original.

AGM TRANSCRIPT

Helge Lund: We will now proceed to the part of the meeting where questions raised by shareholders can be addressed. May I remind you to keep your questions short and relevant to the business of the meeting. I would also like to remind you that the poll is still open, so please cast your votes for each resolution via the electronic meeting platform if you have not done so already.

We expect to spend around an hour or so responding to questions from shareholders. Please do submit your questions now, and where questions touch on similar themes or issues, we will seek to address them together to ensure the efficient running of the meeting. I see that we are ready to proceed.

Shareholder: Can BP align Capex plans with a 1.5 degree scenario? Will BP ensure sites are appropriately decommissioned and employees supported to transition at the end of assets' Paris-aligned lifetimes? Thirdly, two questions related to Australia, how does production of the Browse Basin align with BP's net zero ambition by 2050? What are BP's plans to prevent the North West Shelf project becoming a stranded asset?

Helge Lund: Our strategy does not assume any particular temperature rise. We use outlooks and scenarios to inform a range of possible pathways which the energy transition may take over the next 30 years or so. Each may be associated with different temperature outcomes and it is impossible to identify a most-likely scenario so our strategy is designed to be resilient to a wide range of scenarios and a range of temperature outcomes including 1.5 degrees and well below 2.0 degrees for the Paris Climate Goals.

One role of our investment governance is to align our investment with our strategy and we are focusing on that. We evaluate new material Capex investment for consistency with Paris and disclose the details in our annual report, which we will continue to do according to the Climate Action 100 Plus resolution that was approved a couple of years back.

Bernard Looney: Great questions, obviously very knowledgeable of our business. The first one around decommissioning and added to that a question around just transition I can take. On decommissioning what I would say is that we will decommission our assets in line with our responsibilities and those responsibilities would include local laws and regulations. However, also our own internal practices, procedures and standards. I think the word that you use is appropriately decommissioned and I think we can say that for sure.

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The second part of that question which is a great one is around what are we going to do with people and how do we help people if they have reached the end of their career in a hydrocarbon asset that has reached the end of its life.

In our new sustainability framework which we just launched in the last few months, one of the things that we have done in the past 12 or 15 months, there are ten aims. Five to help people and improve people's lives and five for helping the planet. The one around people, Aim 12, is about just transition which is where your question is going to.

Maybe just a couple of comments on that. One is we have close to 10,000 people leaving BP during our current restructuring that we call Reinvent BP. It is not a just transition per se but it could be viewed as such in some ways. What we are doing is providing people that are leaving with more resources, more support and more help I think than we have done in the past to try and help them prepare for the next phase of their career, which may well be in a very different industry.

The other thing that I would say is that within BP, just for your interest, there are people who are transferring already from the hydrocarbons business into, let us call it, the renewables businesses. Yesterday Kerry, who runs our People & Culture organisation, advertised over 100 roles in Dev Sanyal's organisation, Gas & Low Carbon Energy. People inside BP are able to apply for those and that will be them transitioning their careers.

Then finally I would say not just are we helping our employees but we are also helping cities to transition, Aberdeen being a great example. Long an oil and gas city where I once worked myself when I started out my career and now with a very clear net zero ambition and BP partnering with them. Hopefully that gives you a little sense around that.

The next question was around Australia, and you talk about Browse and North West Shelf. I think great questions. Australia is a hugely important country for BP, has been for many decades and will continue to be. No decision has been made yet on Browse. Any decision that we will make will be based as you might imagine around economics, around the environmental impact and around consistency with strategy.

In terms of the environmental impact and I think where your question is headed, we will look at it in the round of the value chain. I think most people would agree that part of Asia getting off coal and with China just having come out with a net-zero ambition for 2060, it too is going to have to get off coal. One way to help it do that is on to natural gas, on to LNG. I think natural gas is a big part of the future. It is a big part of the transition and we will have to look at that project when we come to approve it in its totality in a Scope 1, Scope 2 and Scope 3 emissions sense.

North West Shelf, which is our existing asset there, is operated very, very well by Woodside. They do a wonderful job operating that asset. In terms of it being stranded, we continue to extend the life of that asset. More and more gas infrastructure in the area has got the potential to flow through that existing infrastructure and indeed Browse if it is approved and sanctioned will find that as its home. That is what we are doing with the operator there, Woodside, to make sure that it is not a stranded asset. I hope that helps give you a little bit of context around what we are doing. Thank you.

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Stephen Duckworth (ShareAction): We welcome BP's commitment to cut fossil fuel extraction by 40% by 2030 though it does not cover emissions from all marketed products or investments. I am asking BP to explain how it will tightly limit any reliance on CDR in its net zero strategy in line with credible 1.5 degree pathways with low or no overshoot.

Bernard Looney: Stephen, a great question and again you are obviously very familiar with the content of our strategy. Thank you for your interest in it.

We are focused on three aims. You may remember we have got ten aims as part of our net zero ambition. Aim 1 is about the operational emissions that are associated with our work, and I am pleased to report, as you probably know, that we took those emissions down by 16% between 2019 and 2020.

The second is around Aim 2 and that is around what we think is very important which is the carbon content of our upstream production. Basically, what happens if our upstream production gets combusted, not always by BP, in fact most of the time not by BP, but nonetheless those emissions are released into the atmosphere. This is where our 40% reduction in production, which I appreciate you acknowledging, comes into account. We have taken that down by about 9% year-on-year on 2020 versus 2019. The key here is absolute emission reductions so these are all absolute numbers.

Then finally, as you say, it is marketed products and we have an aim to reduce the intensity of our marketed products by 50% by 2050 and we are very much on a plan to enable us to do so. Your specific question is in relation to what you call CDRs. We might call it offsets or natural climate solutions, I think we mean the same thing.

And the answer to your question simply is that if we look to our near term targets, they are not so near term out to 2030, BP does not rely on any form of offsets to meet the emission reductions which were typically between 30% and 40% in absolute sense by 2030, so we do not rely on offsets or natural climate solutions. That does not mean that we do not believe in them. I think there is a very clear school of thought that natural climate solutions and offsets are part of helping the world get to net zero.

It is all about quality. We have got to make sure the quality is right. It is important that there is a marketplace there, that is well managed and well regulated, and we support the work of Bill Winters and Mark Carney and their efforts around this. But the simple answer is we do not rely on what you call CDRs or what we would call offsets of any sense to meet our 2030 emissions reduction. Thanks for the question.

Shareholder: Should BP be consistent in its reporting on production volumes from its stake in Rosneft. It is presented as a positive asset to the upstream business, but not included within the company's net zero aims or the planned 40% production cut. Should the company, therefore, use a more accurate figure of 27% for your production cut?

Bernard Looney: Thanks for the question, and I think I will just make a couple of comments if I may. I think it is important that people realise we are a 20% owner in Rosneft, and obviously we do not control what the company does and that is why we have chosen to report as we have always done in the past, there is no change to our historical reporting.

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We have not included their emissions in our historical reporting and we do not today. And I think importantly we are very transparent about that so it is not like we are trying to say one thing and behind the scenes we mean something else.

From 12th February, we have been crystal clear that this is our upstream oil and gas production. It does not include Rosneft. And I would go so far as to say that people can therefore do as you have just done, it is a 40% reduction in our upstream production or in your instance if you want to include that a 27% reduction1. I think in either way in either case, it is a material, material number and quite unique, I would add in our sector.

So your point is well made. We are doing what we have done historically and we are, I hope very, very transparent about that, so thank you for the question.

Shareholder: Given that proven oil and gas reserves are more than enough to take the world beyond 2 degrees celsius of global heating, does any further new exploration not heighten the risk of stranded assets, and run counter to the targets of the Paris Agreement such as Burrup Hub in Western Australia, which may lead to fossil gas production until 2070?

Helge Lund: Thank you, the question is of course a very central and important question. And I think the context there is the thought we need oil and gas in the decades to come, although, we expect far lower demand for oil and gas in 2050 and beyond as we have described earlier in our strategy.

So we do not intend to discuss particular projects, but any further new material Capex investment decision would need to be evaluated against our criteria for Paris consistency, as we have committed to in the context of the Climate Action 100+ disclosure resolution.

And reflecting our net zero ambition, we have taken a very hard look at the role of exploration. We do not intend to enter into new countries for exploration as you have seen, and our exploration access capital spend has already reduced. And over time, we expect it to reduce further. So I think we are adequately addressing your key challenge.

Shareholder: Can BP guarantee that no hydrogen will be extracted from BP's hydrocarbon assets?

Bernard Looney: Thank you for the question. And guarantees are always very hard to make and in today's world as you might imagine, but here is what I can tell you about hydrogen.

Hydrogen is a potentially a very, very key part of the energy transition. We talk about electrification a lot. In transport, we talk a lot about electric vehicles. But the reality is that not everything can be electrified. Heavy industry, where high heat is required, heavy duty trucks, I was listening to Daimler a few days ago talking about a 40 tonne truck going up a hill. That is a very difficult problem to solve from an electric or a battery standpoint, and therefore we come to solutions like hydrogen.

1 No view is expressed on the accuracy of the 27% reduction referred to by the shareholder question. Inclusion of Rosneft would however be expected to change the planned percentage reduction in bp's production.

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