Oil giant BP plunges into US$16.8-bn quarterly loss

BP plunged into a net loss of almost $16.85 billion in the second quarter, the British oil giant announced Tuesday, as the coronavirus pandemic ravaged demand for oil, sending prices tumbling.

“The ongoing severe impacts of the COVID-19 pandemic continue to create a volatile and challenging trading environment,” BP said in its earnings statement.

“Looking ahead, the outlook for commodity prices and product demand remains challenging and uncertain,” it added.

The quarterly loss after tax of almost $16.85 billion (14.10 billion euros) compared with net profit of $1.82 billion in the second quarter of 2019, BP said.

“In particular, our reset of long-term price assumptions and the related impairment and exploration write-off charges had a major impact,” said chief executive Bernard Looney. 

Alongside its results, BP set out details on how it expects to achieve “net zero” carbon emissions for the company by 2050.

Switching from an international oil company to an “integrated energy company”, BP said that over the next decade its oil and gas production is expected to reduce by at least one million barrels of oil equivalent a day, or 40 percent when compared with 2019 levels. 

“This coming decade is critical for the world in the fight against climate change, and to drive the necessary change in global energy systems will require action from everyone,” Looney said. 

The Irish national, who became CEO of BP in February, had previously said he wanted “net zero” carbon emissions for the company by the middle of the century.

In the immediate future, BP must rebuild its finances and Looney has already decided to axe around 10,000 jobs, or 15 percent of its global workforce owing to the coronavirus fallout on energy demand and prices.

After companies worldwide closed their doors and airlines grounded planes at the height of the COVID-19 outbreak towards the end of the first quarter, oil prices dropped off a cliff, causing them to briefly turn negative.

Prices have however rebounded sharply in recent months as governments ease lockdowns and businesses slowly reopen.

In order to raise much-needed cash, BP recently announced the sale of its petrochemical business to privately-owned rival Ineos for $5.0 billion.

BP’s previous CEO Bob Dudley kick-started a $15-billion divestment programme.

In the past year, the energy major also agreed  to sell its Alaska operations to Hilcorp Alaska for $5.6 billion.

Together the disposals were aimed at recouping $10 billion to finance BP’s $10.4-billion purchase of US oil and gas operations belonging to mining group BHP Billiton.