Wednesday, 5 March, 2025 / Edition 48

I hope you are enjoying the wonders of spring where you live. We have started planting seeds for vegetables in our backyard.

Now, let’s examine two energy news bytes from last week.

Shangyou Nie

Editor, Well Read

BP Revamps Investment Strategy

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Last week during its capital market update, BP announced that it is resetting its strategy to grow oil and gas business and reduce investments in renewables.

What they’re saying:

• BP now believes “oil and gas will be needed for decades to come,” and “global demand for oil and gas to 2035 continues to be robust.”

• The company added “the pace and shape of the energy transition is uncertain.”

• BP’s CEO Murray Auchincloss admitted “Our optimism for a fast transition was misplaced, and we went too far too fast.” He added, “We acknowledge performance has not been where we want it to be.”

• “It would be nice to be back to where we were before Macondo,” Auchincloss told the Financial Times, hoping to return to its former $200 billion market cap, from its current $86 billion.

• “I’m really focusing on American investors,” said Auchincloss. “We’re more American than an awful lot of the American companies are.”

BP’s new approach:

• BP will lower its overall capital investment to $13–14 billion annually from $15 billion in 2025.

• Seventy-five percent of capital will be invested in upstream, 20 percent in downstream, and 5 percent in low carbon energy.

• BP has removed all specific targets for renewables.

• BP plans to move the wind and solar business “off the balance sheet.”

• BP plans to divest $20 billion assets from now until 2027, potentially including its lubricant business.

Upstream investments:

• BP has dropped its previous plan to cut oil and gas production. Instead, it plans to grow its production to 2.5 million barrels of oil equivalent per day by 2030, from the current 2.3 million barrels per day.

• Upstream investments will be aimed at accessing discovered resources in the “Middle East, Azerbaijan, and Trinidad” and increasing exploration expenditure.

• More than 80 percent or $10 billion will be invested in upstream from 2025–2027.

• About 70 percent of upstream investment will be for oil and 30 percent for gas.

• The new upstream strategy includes “disciplined expansion of biogas.”

• BP and Iraq will also set up a new operating company, which will develop the Kirkuk oil field and three adjacent fields—Bai Hassan, Jambur, and Khabbaz—with up to 20 billion barrels of oil equivalent.

Renewable investments:

• BP wants to grow its wind and solar business in a “capital-light way,” to leverage third-party finances.

• BP will invest $1.5–2.0 billion annually through 2027—$5 billion per year less than previously.

• For low carbon energy business, BP will focus on five to seven projects that will help to “decarbonize operations” or “establish CCS and hydrogen hubs.”

• Lower energy business will include biofuels in Brazil, biogas in the United States, and EV charging stations in China, the United States, and Europe.

What to watch:

• Elliott Investment Management, one of BP’s largest shareholders, believes BP’s updated strategy did not go far enough. What will Elliott do next?

• Who might become the buyer/partner for BP’s divestment and dilution program?

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Two Successful Wells Drilled in Namibia

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After mixed news from Namibia last month, two successful wells were announced last week. One is Galp Energia’s Mopane-3X well, and the other is Rhino Resources’ Sagittarius-1X wildcat.

Galp’s new discovery:

• Galp announced it has made a new and significant oil and gas-condensate discovery with the Mopane-3X well.

• Mopane-3X is located in 1,200 meters of water depth, some 18 kilometers from the initial discovery of Mopane-1X in the PEL 83 Block.

• The well was spudded on 2 January 2025. Galp successfully drilled, cored, and logged it.

• Light oil has been encountered in two stacked reservoirs, AVO-10 and AVO-13, as well as in a deeper sand.

• Mopane-3X found higher-than-expected pressures that indicate high exploration potential in the southeast region of the Mopane complex. This region was initially estimated to contain as much as 10 billion barrels of oil resources.

• Mopane-3X is the fifth well that Galp (operator, and 80 percent) and its partners Namcor (10 percent) and Custos Energy (10 percent) have drilled in PEL 83.

• Galp’s share price increased nearly 9 percent upon the news.

What they’re saying:

• “These additional discoveries in an entirely new section further demonstrate the scale and quality of the Mopane complex,” said Robert Bose, CEO of Sintana Energy, which holds 49 percent equity in Custos.

• Galp stated, “The reservoir’s log measures confirm good porosities, high pressure, and high permeabilities.”

Rhino Resources’ discovery:

• Rhino Resources announced that Sagittarius-1X encountered hydrocarbons.

• Sagittarius-1X is located in the deepwater PEL 85 in the offshore Orange Basin, Namibia. The well is at 1,400 meter of water depth. Samples have been collected to analyze rock and fluid properties in the Upper Cretaceous reservoir.

• Rhino is the operator (42.5 percent), with partners Azule Energy (42.5 percent; a 50:50 joint venture between BP and ENI), state company Namcor (10 percent), and Korres Investments (5 percent).

• The well was spudded on 18 December 2024. It reached its total depth on 6 February 2025.

• Sagittarius-1X is the first of a two-well campaign.

What they’re saying: Guido Brusco, ENI’s chief operating officer of global natural resources and general manager, said, “The well penetrated a hydrocarbon reservoir with 90 meters of gross thickness, with no observed water contact.”

Much-needed news for Namibia: Before last week, Namibia had experienced headwinds in its deepwater oil and gas development.

• Chevron drilled one unsuccessful well, while Shell considered its discoveries not economically viable.

• TotalEnergies CEO Patrick Pouyanné announced that its recent Tamboti-1X well result was “not good” and cannot be tied back to the floating production storage and offloading for the Venus Field. Pouyanné  also said that the final investment decision for the Venus Field might be delayed from 2025 to “the beginning or first half of 2026.”

• TotalEnergies recently estimated the designed capacity for the Venus Field would be 150,000 barrels per day, smaller than previously thought, due to reservoir issues.

What to watch:

• Will Galp’s latest discovery help it to find an operating partner to develop the Mopane complex?

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✉️ To get in touch with Shangyou, send an email to editorial@aapg.org.