BP warned of $4-5 billion in write-offs in green energy business

British BP will have to write off assets worth $4-5 bln after a failed attempt to turn towards green energy. The losses are associated with the revaluation of the cost of low-carbon energy projects, the development of which the major refuses for the sake of improving profitability.

BP warned in an operating report published on January 14 that it will reflect $4-5 billion in write-downs in its financial statements for the fourth quarter of 2025. The oil giant did not specify which projects were the cause, but noted that the write-downs will affect "predominantly" the gas and low-carbon energy division, which includes hydrogen projects, CO2 capture technologies and the Lightsource solar business. The write-downs will not affect BP's reserve replacement cost-adjusted earnings (equivalent to the net income of U.S. oil companies, but excluding one-time factors), the company emphasized.

In a "fairly pessimistic" Financial Times assessment of its operating report, BP expects "weak" results from oil trading, "average" performance from gas trading, and oil and gas production volumes at the same level as the previous quarter. Despite the write-downs, BP said its net debt - a constant cause for investor concern - fell by $3-4 billion in the fourth quarter, and proceeds from asset sales for the full year 2025 were about $5.3 billion, against a previous forecast of "over $4 billion." The British major will publish its full financial report on February 10.

Shares of BP at the opening of trading in London fell in price by 1.5%. Quotes of rival Shell fell by 0.7%. The consensus on BP shares, formed by MarketScreener based on the opinions of 19 analysts, is now "above the market" (Outperform, corresponds to a recommendation to buy). The average target price calculated by the site assumes growth of BP quotations by 9% in the nearest year.

BP is radically scaling back its clean energy projects following a "fundamental reset" of strategy announced in April 2025 by now former CEO Murray Okincloss. As part of its return to conventional energy sources - oil and gas - BP has sp un off its wind business into a separate joint venture with Japan's Jera, and is also trying to sell at least 50% in Lightsource. In December 2025, the company abandoned its H2 Teesside hydrogen plant project in the UK.

The change in strategy has seen BP shares outperform many rivals in 2025, but Okincloss himself unexpectedly left his post just before Christmas. According to the FT's sources, BP's new chairman Albert Manifold may have "lost patience" with the company's slow decision-making. In April 2026, Okincloss will be replaced by Meg O'Neill, who previously headed Australian energy company Woodside.

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