British oil and gasoline company BP (British Petroleum) signage is being pictured in Warsaw, Poland, on July 29, 2024.
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British oil major BP on Tuesday reported its weakest quarterly earnings in nearly four years, weighed down by a slump in crude prices and lower refining margins.
The energy firm posted underlying replacement cost profit, used as a proxy for net profit, of $2.3 billion for the July-September period. That beat analyst expectations of $2.1 billion, according to an LSEG-compiled consensus.
BP reported net profit of $2.8 billion for the second quarter of the year and $3.3 billion for the third quarter of 2023.
The firm’s third-quarter results were the weakest since the fourth quarter of 2020, when industry profits cratered during the coronavirus pandemic.
“We have made significant progress since we laid out our six priorities earlier this year to make bp simpler, more focused and higher value,” Murray Auchincloss, CEO of BP, said in a statement.
“In oil and gas, we see the potential to grow through the decade with a focus on value over volume. We also have a deep belief in the opportunity afforded by the energy transition – we have established a number of leading positions and will continue high-grading our investments to ensure they compete with the rest of our business.”
Oil prices fell by more than 17% in the third quarter amid concerns about the outlook for global oil demand.
BP maintained its dividend at 8 cents per share after raising it in the second quarter and said it would keep the rate of its share buyback program unchanged at $1.75 billion over the next three months.
The company said it is committed to announcing a further $1.75 billion share buyback in the fourth quarter but warned that, as part of an update to its medium term plans in February next year, it intends “to review elements of our financial guidance, including our expectations for 2025 share buybacks.”
Analysts at RBC Capital Markets said Tuesday that given the weaker macro environment, it expects BP to trim its shareholder returns next year.
“However we also expect BP to walk away from its ‘surplus payout ratio’ guidance and move towards the rest of the sector on a CFFO payout, which would also allow more room for de-leveraging,” they added. CFFO refers to cash flow from operating activities.
‘BP on the back foot’
Net debt rose to $24.3 billion in the July-September period, up from $22.6 billion at the end of the second quarter. BP said the increase was primarily driven by lower operating cash flow, higher capital expenditures and lower divestment.
Shares of London-listed BP fell around 1% on Tuesday morning. The stock price is down over 15% year-to-date, underperforming its European rivals as investors continue to question the firm’s investment case.
BP CEO Murray Auchincloss speaks at the panel dicscussion during the Abu Dhabi International Petroleum Exhibition and Conference held at ADNEC Exhibition Center on October 2, 2023.
Ryan Lim | Afp | Getty Images
“Against a backdrop of difficult trading conditions, this last quarter has not been plain sailing for BP and profit is considerably lower than it was this time last year,” John Moore, senior investment manager at wealth manager RBC Brewin Dolphin, said in a research note.
“Oil price conditions, combined with the costs associated with simplification of the business has put BP on the back foot,” Moore said.
“There has been a feeling of uncertainty around the company’s strategic financial priorities but the announcement of share buybacks and dividends today will be welcomed by the market,” he added.
Oil and gas production
BP’s latest results come shortly after reportsemerged the company scrapped its pledge to reduce oil and gas production by 2030, rolling back a core tenet of the firm’s ambition to achieve net zero emissions by the middle of the century — or sooner.
The move, reported by Reuters on Oct. 7, citing three unnamed sources, would be viewed as further evidence of CEO Auchincloss’s plan to prioritize near-term returns from the firm’s more profitable fossil fuel operations.
BP was also said to be targeting several new investments in the Middle East and the Gulf of Mexico to boost oil and gas output, the news agency reported.
A BP spokesperson told CNBC: “As Murray said at the start of year in our fourth quarter results, the direction is the same – but we are going to deliver as a simpler, more focused, and higher value company.”
Britain’s Shell and France’s TotalEnergies are scheduled to report quarterly results on Thursday, with U.S. majors Exxon Mobil and Chevron set to follow suit on Friday.
Last week, Norwegian oil and gas producer Equinorreported a 13% drop in adjusted operating income in the July-September period, missing analyst expectations.
Wind energy powered 20% of all electricity consumed in Europe (19% in the EU) in 2024, and the EU has set a goal to grow this share to 34% by 2030 and more than 50% by 2050.
To stay on track, the EU needs to install 30 GW of new wind farms annually, but it only managed 13 GW in 2024 – 11.4 GW onshore and 1.4 GW offshore. This is what’s holding the EU back from achieving its wind growth goals.
Three big problems holding Europe’s wind power back
Europe’s wind power growth is stalling for three key reasons:
Permitting delays. Many governments haven’t implemented the EU’s new permitting rules, making it harder for projects to move forward.
Grid connection bottlenecks. Over 500 GW(!) of potential wind capacity is stuck in grid connection queues.
Slow electrification. Europe’s economy isn’t electrifying fast enough to drive demand for more renewable energy.
Brussels-based trade association WindEurope CEO Giles Dickson summed it up: “The EU must urgently tackle all three problems. More wind means cheaper power, which means increased competitiveness.”
Permitting: Germany sets the standard
Permitting remains a massive roadblock, despite new EU rules aimed at streamlining the process. In fact, the situation worsened in 2024 in many countries. The bright spot? Germany. By embracing the EU’s permitting rules — with measures like binding deadlines and treating wind energy as a public interest priority — Germany approved a record 15 GW of new onshore wind in 2024. That’s seven times more than five years ago.
If other governments follow Germany’s lead, Europe could unlock the full potential of wind energy and bolster energy security.
Grid connections: a growing crisis
Access to the electricity grid is now the biggest obstacle to deploying wind energy. And it’s not just about long queues — Europe’s grid infrastructure isn’t expanding fast enough to keep up with demand. A glaring example is Germany’s 900-megawatt (MW) Borkum Riffgrund 3 offshore wind farm. The turbines are ready to go, but the grid connection won’t be in place until 2026.
This issue isn’t isolated. Governments need to accelerate grid expansion if they’re serious about meeting renewable energy targets.
Electrification: falling behind
Wind energy’s growth is also tied to how quickly Europe electrifies its economy. Right now, electricity accounts for just 23% of the EU’s total energy consumption. That needs to jump to 61% by 2050 to align with climate goals. However, electrification efforts in key sectors like transportation, heating, and industry are moving too slowly.
European Commission president Ursula von der Leyen has tasked Energy Commissioner Dan Jørgensen with crafting an Electrification Action Plan. That can’t come soon enough.
More wind farms awarded, but challenges persist
On a positive note, governments across Europe awarded a record 37 GW of new wind capacity (29 GW in the EU) in 2024. But without faster permitting, better grid connections, and increased electrification, these awards won’t translate into the clean energy-producing wind farms Europe desperately needs.
Investments and corporate interest
Investments in wind energy totaled €31 billion in 2024, financing 19 GW of new capacity. While onshore wind investments remained strong at €24 billion, offshore wind funding saw a dip. Final investment decisions for offshore projects remain challenging due to slow permitting and grid delays.
Corporate consumers continue to show strong interest in wind energy. Half of all electricity contracted under Power Purchase Agreements (PPAs) in 2024 was wind. Dedicated wind PPAs were 4 GW out of a total of 12 GW of renewable PPAs.
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In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss the official unveiling of the new Tesla Model Y, Mazda 6e, Aptera solar car production-intent, and more.
As a reminder, we’ll have an accompanying post, like this one, on the site with an embedded link to the live stream. Head to the YouTube channel to get your questions and comments in.
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The Chinese EV leader is launching a new flagship electric sedan. BYD’s new Han L EV leaked in China on Friday, revealing a potential Tesla Model S Plaid challenger.
What we know about the BYD Han L EV so far
We knew it was coming soon after BYD teased the Han L on social media a few days ago. Now, we are learning more about what to expect.
BYD’s new electric sedan appeared in China’s latest Ministry of Industry and Information Tech (MIIT) filing, a catalog of new vehicles that will soon be sold.
The filing revealed four versions, including two EV and two PHEV models. The Han L EV will be available in single- and dual-motor configurations. With a peak power of 580 kW (777 hp), the single-motor model packs more power than expected.
BYD’s dual-motor Han L gains an additional 230 kW (308 hp) front-mounted motor. As CnEVPost pointed out, the vehicle’s back has a “2.7S” badge, which suggests a 0 to 100 km/h (0 to 62 mph) sprint time of just 2.7 seconds.
To put that into perspective, the Tesla Model S Plaid can accelerate from 0 to 100 km in 2.1 seconds. In China, the Model S Plaid starts at RBM 814,900, or over $110,000. Speaking of Tesla, the EV leader just unveiled its highly anticipated Model Y “Juniper” refresh in China on Thursday. It starts at RMB 263,500 ($36,000).
BYD already sells the Han EV in China, starting at around RMB 200,000. However, the single front motor, with a peak power of 180 kW, is much less potent than the “L” model. The Han EV can accelerate from 0 to 100 km/h in 7.9 seconds.
At 5,050 mm long, 1,960 mm wide, and 1,505 mm tall with a wheelbase of 2,970 mm, BYD’s new Han L is roughly the size of the Model Y (4,970 mm long, 1,964 mm wide, 1,445 mm tall, wheelbase of 2,960 mm).
Other than that it will use a lithium iron phosphate (LFP) pack from BYD’s FinDreams unit, no other battery specs were revealed. Check back soon for the full rundown.