One of the largest players in the global energy industry – a company with over $194 billion USD in revenue last year – is cutting nearly 5,000 permanent employees and 3,000 contractors, according to reports. BP, ranked 5th among the largest oil and gas companies by brand value, with a market cap of $77.14 billion USD as of December 2024, has announced cuts as part of a plan to eliminate $2 billion in costs by 2026. The elimination of the employee positions represents over 5% of the company’s global workforce. Sustainability.com reports that the layoffs and firings will be a part of $500 million USD savings this year.

BP, with global headquarters in London (US operations are based in Houston) hired more than 20,000 people between 2022 and 2023. That’s the largest year-over-year increase in the company’s history. The additional talent, brought on board post-COVID, didn’t translate into the desired results. In 2023, the company’s revenues were $210.13 billion USD, a decline of $30 billion (or over 14%) year-over-year. The company’s stock fell about 17% during 2024, a time when competitor Exxon Mobil (the largest energy company in the world) saw its stock price rise by 5%.

Focusing on Oil & Gas, Reversing on Renewables

According to an exclusive report in Reuters, CEO Murray Auchincloss will tell investors the company is abandoning its target to grow renewable generation capacity 20-fold between 2019 and 2030 to 50 gigawatts. Other oil and gas companies have shifted their portfolios to traditional fossil fuels, where returns are more predictable. Unnamed sources close to the recent announcements have shared that the company plans to divest certain assets and cut other low-carbon investments to reduce debt and boost revenues. Activist investor Elliott Investment Management has been using its 5% stake to influence tighter cost discipline and other changes for BP’s oil and gas operations.

Five years ago, Auchincloss’s predecessor, Bernard Looney, pledged to cut oil and gas output by 40% amidst ambitious goals for renewables. In 2023, the company lowered its projected cuts in oil and gas production to 25%.

Changes in the Oil & Gas Industry: CEO Making Moves

“We have got more we need to do through this year, next year and beyond, but we are making strong progress as we position BP to grow as a simpler, more focused, higher-value company,” the CEO wrote to staffers.

Auchincloss took the top spot at the company in 2023, on an interim basis, and was given the job permanently just over one year ago. With a 25-year history at the firm, including work as the CFO, shareholders reacted positively to the Auchincloss appointment. “His assured leadership, focus on performance and delivery and deep understanding of the opportunities and challenges in the energy transition will serve bp well as we continue our disciplined transformation to an integrated energy company,” said Helge Lund, Chair of BP.

Rival Shell Oil, a company whose revenues grew 5.5% during 2024 (according to Reuters), has also reduced its workforce under CEO Wael Sawan. In addition to layoffs and job cuts, Shell has reduced oil and gas exploration by 20% and has made cuts in its low-carbon division.

Global Market for Oil and Gas Tightens

In addition to workforce reductions, BP remains focused on delivery, safety and efficiency. In December of 2024, the company announced a joint venture in wind renewable energy, for example, with Japanese power generator, JERA. This new venture allows BP to divest itself of most of its wind energy renewables – and follow industry trends to double-down on traditional oil and gas revenues.

Across the energy industry, industry leaders like Chevron, Exxon and Shell have kept their focus on traditional oil and gas. “Geopolitical disruptions like the invasion of Ukraine have weakened CEO incentives to prioritise the low-carbon transition amid high oil prices and evolving investor expectations,” Rohan Bowater, analyst at Accela Research, told Reuters. He said BP, Shell and Equinor reduced low-carbon spending by 8% in 2024. Demand for oil and gas is slowing, driven by reduced demand in China, and the industry is anticipating tighter financial constraints ahead.