The prediction comes as a result of the company's expectation of weak demand for energy for a prolonged period and a faster transition away from fossil fuels due to the ongoing Covid-19 pandemic.
BP’s revised investment appraisal long-term price assumptions are now an average of around US$55/bbl for Brent and US$2.90 per mmBtu for Henry Hub gas, from 2021 – 2050. These lower long-term price assumptions are considered by BP to be broadly in line with a range of transition paths consistent with the Paris climate goals.
BP has also revised its carbon prices for the period to 2050 and these now include a price of US$100/teCO2 in 2030.
The company has also said that it reviewing its intent to develop some of its exploration prospects and consequently is assessing the carrying values of the group’s intangible assets.
BP’s 2Q20 results are expected to be released on 4 August 2020.
“In February we set out to become a net zero company by 2050 or sooner”, said Bernard Looney, BP's CEO.
“Since then we have been in action, developing our strategy to become a more diversified, resilient and lower carbon company. As part of that process, we have been reviewing our price assumptions over a longer horizon. That work has been informed by the Covid-19 pandemic, which increasingly looks as if it will have an enduring economic impact.
“So, we have reset our price outlook to reflect that impact and the likelihood of greater efforts to ‘build back better’ towards a Paris-consistent world. We are also reviewing our development plans. All that will result in a significant charge in our upcoming results, but I am confident that these difficult decisions – rooted in our net zero ambition and reaffirmed by the pandemic – will better enable us to compete through the energy transition.”
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/15062020/bp-predicts-impairments-of-up-to-us175-billion-in-2q20/
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