Activist investor Bluebell Capital Partners is urging BP to urgently change course, saying it is “highly questionable” whether the oil company's strategy of reducing fossil fuel investment in favor of clean energy has any chance of success.
Giuseppe Bivona, partner and co-chief investment officer at Bluebell, said on Tuesday that the FTSE 100 energy company's low share price compared to its US and European peers in recent years had been “completely disappointing” and that the company should now think about using capital in a “rational way”.
“This was the result of a strategy aimed at blindly downsizing BP's core oil and gas business and venturing into other clean energy businesses where, frankly, it is highly questionable whether BP has any at all has a chance of success,” Bivona told CNBC’s “Squawk Box Europe.”
“The path to reach net zero by 2050 is very narrow, meaning it is very unlikely that we will reach net zero in 2050. Don't get me wrong, I'm very happy that all of us – not only.” “The big oil companies, as part of society, are striving for this goal,” he added.
“But I think it is very rational for a company to assume as a base case a scenario that is actually very, very unlikely to occur. And in this regard, we are not asking BP to deviate from its strategy, but to change it from strategy to reality.”
His comments come shortly after it was revealed that Bluebell co-founders Bivone and Marco Taricco wrote a letter to BP Chairman Helge Lund and then-interim CEO Murray Auchincloss in October. Auchincloss has now been appointed permanent CEO of the British oil and gas group.
Bluebell's letter, first reported in the Financial Times on Monday, said BP's investment strategy assumes a “drastic decline in oil and gas demand, which we believe is completely unrealistic.”
In response to the letter's publication, a BP spokesman said the company “welcomes constructive engagement” with its shareholders.
A general view of the BP logo and petrol station forecourt sign on January 22, 2024 in Southend, United Kingdom.
John Keeble | Getty Images News | Getty Images
“We recently met with most of our major shareholders and continue to receive support for our strategy. “We continue to make significant progress, remain focused on execution and are confident that the strategy will enhance bp's value and create sustainable long-term value for shareholders,” BP said.
Bivona declined to disclose Bluebell's stake in BP, saying it was below a reporting threshold. The relatively small but influential London-based company, which focuses on large-cap European stocks, has already launched campaigns against French food giant Danone and mining giant Glencore.
Under the leadership of Bernard Looney, who resigned in September after less than four years in office, the oil giant had promised that its overall emissions would be 35 to 40 percent lower by the end of the decade.
The company, which was one of the first energy giants to announce plans to cut emissions to net zero “by 2050 or sooner,” toned down those climate plans last year.
On Feb. 7, it said the company would instead seek a 20% to 30% cut, noting it would need to continue investing in oil and gas to meet demand.
Bluebell's Bivona said last year's announcement was a “clear admission” of a strategic error and now further adjustment is needed.
“I am very pleased with the discussion we are having with BP, which is already listening and is proving to be a company willing to work constructively with all of its shareholders,” Bivona said.
Shares in BP rose slightly on Tuesday afternoon in London. The company is expected to report its fourth-quarter and full-year 2023 results on February 6.