British oil giant BP lowered its oil and gas prices outlook and said it would take up to $17.5 billion writedown in its second-quarter earnings. The company also noted that it would accelerate the transition towards renewables and away from fossil fuels. BP’s assumptions for Brent crude oil prices were cut to $55/barrel for 2021 through 2025, while its assumptions for Henry Hub gas price was reduced to $2.90/MMBtu. Both assumptions were cut by about 30%.
The company also raised its estimates on the price it will need to pay governments for carbon dioxide emission from $40/ton of CO2 to $100/ton in 2030. This results in estimated write-offs and non-cash impairment charges of about $13 billion to $17.5 billion after-tax, BP said.
Last week, BP announced a plan to reduce the workforce by 15% as a response to the COVID-19 pandemic. BP also said that the health crisis had accelerated its drive to increase its focus on renewable energy.
