BP's 'long, painful decline': Why next year could be tougher

(Image credit: Simon Dawson/Bloomberg via Getty Images)

published 17 April 2025

Even by the standards of corporate announcements, BP’s latest update was remarkably vague. The long-suffering shareholders in one of the UK’s biggest global companies might think it matters quite a bit who will be chairing their firm, yet the oil major does not seem to believe that the details are a big deal. While Helge Lund is going to be stepping down, the exact time of his exit will simply be “in due course” and “most likely during 2026”, according to a statement on 4 April.

Still, activist investors led by the hyperaggressive Elliott Management – which has built up a stake of nearly 5% in BP – will be relieved to hear that Lund is on the way out. Along with others, they have been pushing for far-reaching changes at the company. These cannot come soon enough. BP is now worth only half as much its great rival Shell, although the two businesses used to be neck and neck. Over the past five years, BP’s shares have risen by just 9%, while Shell is up by 64%, and ExxonMobil is up by 168%. It has been perfectly clear to everyone that something has gone badly wrong.

BP's bad bet on green energy

True, some things have already started to change. Murray Auchincloss, the CEO since September 2023, unveiled a renewed focus on oil and gas back in February. The firm has already started to shift away from the emphasis on green energy that has dominated much of the last 20 years.

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Even so, while there is plenty of talk, there is not yet much sign of anything actually happening. BP needs to move faster. It is hard to believe the outgoing chairman is not part of the problem. After all, Lund had backed BP’s previous strategy under its former CEO, Bernard Looney. This involved moving away from oil and gas, including an ambition to cut its hydrocarbon output by 40% over the course of this decade. BP made a mistake when it made such a big bet on green energy when it should have been building up its oil reserves and betting on fracking to develop new resources.

While BP has been focusing on renewable energy, the shale industry has been booming in the US and elsewhere. Last year alone, there were $105 billion-worth of acquisitions in the US shale industry, led by ExxonMobil’s acquisition of Pioneer Natural Resources and Chevron’s acquisition of Hess. Huge amounts of wealth have been created, and many of the major oil giants have turned themselves into big players in the shale industry. BP could have been leading that.

Even if it missed out on the early boom, it could have been opening up new fracking fields, now that the industry is expanding in countries such as Argentina, and it could have been using its influence in the UK to make the argument that we should be developing our own shale resources instead of relying on gas shipped in from abroad. Instead, BP ignored it and left the field open for others. It has made no huge new discoveries of oil or gas, and it has not joined in the bidding for the shale companies in the same way its major US rivals have. There have been plenty of opportunities for expansion in the energy industry over the last few years. But BP appears to have missed almost all of them.

Yet more dither and delay

Those are more than just minor mistakes. They are indicative of a culture that has been making the wrong decisions for many years now. Next year is likely to be even tougher.

In the wake of the global financial chaos triggered by Donald Trump’s tariff wars, the oil price has slumped to just $60 a barrel, just half the $120 it reached in 2022. It may well fall below $50 over the course of the summer. That will hit the major oil companies hard, and BP was hardly in great shape to start with.

The last thing BP needs is a long search for a successor. Lund should have stepped down on 4 April and announced his successor immediately. Together with a new CEO, there would then have been a team in place that could start turning the business around. Instead, there will be yet more delays and another year of indecision – and that will only prolong BP’s painful decline.

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Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.