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* BP slashes size of exploration team in transition plan
* Company hits brakes on search for new oil and gas
* Geologists and scientists diverted to renewable division
* GRAPHIC: BP's slowing exploration https://tmsnrt.rs/3sHB82x
By Ron Bousso
LONDON, Jan 25 (Reuters) - Nothing escapes the winds of
change now sweeping through BP, not even the exploration team
that for more than a century powered its profits by discovering
billions of barrels of oil.
Its geologists, engineers and scientists have been cut to
less than 100 from a peak of more than 700 a few years ago,
company sources told Reuters, part of a climate change-driven
overhaul triggered last year by CEO Bernard Looney.
"The winds have turned very chilly in the exploration team
since Looney's arrival. This is happening incredibly fast," a
senior member of the team told Reuters.
Hundreds have left the oil exploration team in recent
months, either transferred to help develop new low-carbon
activities or laid off, current and former employees said.
The exodus is the starkest sign yet from inside the company
of its rapid shift away from oil and gas, which will
nevertheless be its main source of cash to finance a switch to
renewables for at least the next decade.
BP declined to comment on the staffing changes, which have
not been publicly disclosed.
Reuters spoke to a dozen former and current employees of BP
who highlighted the massive challenges the company faces in its
transition from fossil fuels to carbon neutrality.
Looney made his intentions clear internally and externally
by lowering BP's production targets and becoming the first oil
major CEO to promote this as a positive to investors seeking a
long-term vision for a lower-carbon economy.
BP is cutting some 10,000 jobs, around 15% of its workforce,
under Looney's restructuring, the most aggressive among Europe's
oil giants including Royal Dutch Shell and Total.
The 50-year-old, a veteran oil engineer who previously
headed the oil and gas exploration and production division, aims
to cut output by 1 million barrels per day, or 40%, over the
next decade while growing renewable energy output 20 fold.
Despite the changes, oil and gas will remain BP's main
source of revenue until at least 2030.
And Looney's drive to reinvent BP has done nothing to boost
its shares, which hit their lowest level in 25 years late in
2020 and dropped 44% in the year, mostly over doubts whether it
will be able transform and make the profits it aims for.
The change marks the end of an era for exploration teams
from Moscow and Houston to BP's research headquarters in Sunbury
near London, with farewell gatherings held on Zoom in recent
months, they added.
"The atmosphere was brutal," a former employee said at the
time of last year's lay-offs.
For BP's whittled down exploration team, led by Ariel
Flores, the former North Sea boss, the focus has narrowed to
searching for new resources near existing oil and gas fields in
order to offset production declines and minimize spending.
"We are in a harvest mode and what isn't being said is that
BP is going to be a much smaller company without exploration," a
second source in BP's oil and production division said.
Flores was not available for comment.
Data from Norwegian consultancy Rystad Energy shows BP
acquired around 3,000 square kilometres of new exploration
licences in 2020, its lowest since at least 2015 and far less
than at Shell, which acquired around 11,000 square kilometres,
or Total, which bought some 17,000 square
kilometres.
Although global exploration activity slowed last year due to
the COVID-19 pandemic, the drop at BP was mainly a result of the
change in strategy, four company sources said.
Oil and gas exploration has been the spearhead of companies'
evolution into huge multinationals that delivered enormous
profits to shareholders over the decades.
BP began reducing its spending on exploration under former
CEO Bob Dudley in response to the 2014 oil price crash, aiming
to use technology to unlock more oil and gas reserves.
Looney is driving the exploration budget even lower, to
around $350 to $400 million per year. That is around half of
what BP spent in 2019 and a fraction of the $4.6 billion spent
on exploration in 2010.
BP last year also wiped $20 billion from the value of its
oil and gas assets after slashing its outlook for energy prices.
At those lower price assumptions, BP no longer considered many
of its oil and gas reserves worth developing.
BEYOND PETROLEUM
BP, which started as the Anglo-Persian Oil Company in 1908
and has since discovered massive fossil fuel resources in places
such as Iran, Iraq, Azerbaijan, the North Sea and the Gulf of
Mexico, has attempted to diversify into renewables before.
Under CEO John Browne BP launched "Beyond Petroleum,"
investing billions in wind farms and solar power technology, but
the vast majority of the investments failed.
Looney believes his plan will succeed with unprecedented
government support for the energy transition and technological
advances that make renewable energy more affordable than ever.
He has enlisted Giulia Chierchia, a former McKinsey executive to
oversee the development of BP's strategy.
And a team of geologists and data crunchers led by
Houston-based Kirsty McCormack, who was previously in the
exploration unit, will now apply analytics used to study and map
rock structures in search of fossil fuels to develop low-carbon
technologies such as carbon capture, usage and storage (CCUS)
and geothermal energy, company sources said.
Absorbing carbon dioxide emitted by heavily polluting
industries and injecting it into depleted oil reservoirs is seen
as key in the energy transition by helping to offset emissions.
Other oil veterans have also been reassigned, with Felipe
Arbelaez, who previously headed BP's oil and gas operations in
Latin America, now leading its renewables business and Louise
Jacobsen Plutt, an experienced oil engineer, now senior vice
president hydrogen CCUS.
BP also poached staff from Uber, Toyota and Silicon Valley
to boost its understanding of electric vehicles, power markets,
renewables and expanding its capabilities in big data.
Franziska Bell, a former Toyota employee, is vice president
for data and analytics at BP while Justin Lewis joined the
company in July to head its high-tech start-up venture after
working as a software engineer at Tesla.
The transformation has been met with a mix of awe and
concern among employees who are wondering if the pace is
sustainable and whether it is enough for BP to compete in a
rapidly-changing energy world.
Some senior current and former employees warned that BP
risks rushing into investments in new fields before fully
understanding how they will fit into a transformed company,
while abandoning long-standing sources of cash.
"There is so much internal change that it will be a big job
to pick up the organisation and get things going," a senior
employee in the exploration division said.
(Reporting by Ron Bousso; Editing by Alexander Smith)
