BP has told its shareholders that it could write down the value of its assets by up to $17.5bn (£14bn) as it reduced its long-term forecast for oil prices and warned that the COVID-19 pandemic would have a lasting impact on the global economy.
The petro-chemical company dramatically cut its forecast for Brent crude oil prices to $55 a barrel from $75 a barrel and said the coronavirus crisis would speed up the shift to a lower-carbon economy.
BP has forecast lower oil prices for decades to come as governments speed up plans to cut carbon emissions in the wake of the coronavirus pandemic. It has cut price forecasts by about 30%, and expects Brent crude to average $55 a barrel from now until 2050.
In an unscheduled update, Bernard Looney, BP’s chief executive, said: “In February we set out to become a net zero company by 2050 or sooner. 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.”
Shares fell 5% to 306p after the unscheduled update was published on Monday, making it one of the biggest fallers on the FTSE 100.
BP said the aftermath of the pandemic would accelerate the pace of transition to a lower-carbon economy and energy system, as countries seek to make their economies more resilient in the future.
Last week, the firm announced plans to cut 10,000 jobs following a global slump in demand for oil.
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