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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  BP plc    BP.   GB0007980591

BP PLC

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Pandemic's "great reset" makes energy firms invest more in renewables - execs

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09/15/2020 | 12:12am EDT

* Petronas re-thinks portfolio after "great reset"

* Shell still sees "huge future" in hydrocarbons

* Vitol calls on energy industry to invest more in CCS

* Carbon pricing key for CCS to take off - Citi

SINGAPORE, Sept 15 (Reuters) - The economic trauma caused by the coronavirus pandemic persuaded energy companies to step-up investments in renewables, hydrogen and other low carbon alternatives, but fossil fuels will remain dominant for the foreseeable future, industry executives said.

Reeling from the onset of the pandemic, global oil consumption shrank by more than 20% in the second quarter and prices hit their lowest in decades, making companies rethink how fast they should make the transition away from reliance on oil and gas.

"Everyone's talking about this great reset ... What do we need to do to survive this?" Arif Mahmood, Petronas' executive vice president and CEO of downstream, said at the virtual Platts APPEC 2020.

"Energy transition will be pushed forward much faster," he concluded.

The Malaysian state energy company posted a $5 billion loss in April-June and has set up a team to reshape its portfolio and expand in solar and wind for power generation.

Oil majors such as BP have set ambitious targets while Chinese state energy companies tiptoed into renewables.

Felipe Bayon, chief executive of Colombia's Ecopetrol, said the company wants to go from zero to 300 megawatts (MW) in renewable power generation by 2022 for its own use.

Besides expanding into solar and wind for power generation, more energy companies are researching blue hydrogen produced from natural gas and using carbon capture and storage (CCS) to reduce emissions in the process. The hydrogen could be used in power plants and fuel cell vehicles.

Royal Dutch Shell is involved in biomethane, biofuels and hydrogen and has done "significant work" on CCS as the energy major strikes a balance between energy transition and its core hydrocarbons business, Mark Quartermain, Shell's vice president of crude trading & supply, told the conference.

"We understand that energy transition is coming. We still see, of course, a huge future in our hydrocarbon business, but when it comes to energy transition we need to be in these markets," he said.

Heads of research at commodity trader Vitol and Citigroup expect CCS to be the next key area of development.

"Hydrogen and carbon capture are more likely in short term to be contributing to decarbonization," Giovanni Serio, Vitol's global head of research, said, calling on the industry to invest more in CCS.

"Some countries are finding ways through credit systems and other mechanisms to price carbons...It's what's really needed for carbon capture to take off," Ed Morse, managing director and global head of commodities research at Citigroup said.

However, "the cost structure of hydrogen is just not competitive enough...it's there but it could be end of the decade phenomenon," Morse said. (Reporting by Florence Tan, Chen Aizhu and Koustav Samanta; Editing by Simon Cameron-Moore)

Stocks mentioned in the article
ChangeLast1st jan.
BP PLC -2.84% 232.4 Delayed Quote.-49.28%
CITIGROUP INC. 0.81% 42.19 Delayed Quote.-47.62%
ECOPETROL S.A. -1.01% 1965 End-of-day quote.-40.72%
LONDON BRENT OIL 0.58% 41.73 Delayed Quote.-36.73%
ROYAL DUTCH SHELL PLC -1.49% 11.224 Delayed Quote.-56.45%
WTI 2.39% 40.317 Delayed Quote.-35.93%
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Financials (USD)
Sales 2020 188 B - -
Net income 2020 -20 685 M - -
Net Debt 2020 44 545 M - -
P/E ratio 2020 -2,42x
Yield 2020 11,3%
Capitalization 46 784 M 59 544 M -
EV / Sales 2020 0,49x
EV / Sales 2021 0,39x
Nbr of Employees 67 600
Free-Float 93,2%
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Number of Analysts 22
Average target price 4,77 $
Last Close Price 2,32 $
Spread / Highest target 198%
Spread / Average Target 105%
Spread / Lowest Target 20,9%
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Bernard Looney Chief Executive Officer & Director
Helge Lund Chairman
Andy Hopwood COO & Executive VP-Upstream Strategy
Murray Auchincloss Chief Financial Officer
Angela Rosemary Emily Strank Chief Scientist & Head-Downstream Technology
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1st jan.Capitalization (M$)
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NESTE OYJ55.19%43 182
PTT-26.14%30 318