BP is to cut investment for this year by a fifth or as much as £4bn as it adjusts to the “new reality” of lower oil prices, boss Bob Dudley said yesterday.
His stark message came as the group slumped to a £645m replacement cost loss for the fourth quarter.
BP recorded a £2.4bn hit including write-downs on assets in the North Sea and Angola and on the falling oil price.
Its results came as oil and gas exploration firm BG Group – originally a spin-off from the privatisation of British Gas – also slashed capital expenditure plans for 2015, by £4bn-£4.7bn.
Brent crude has slumped by more than half since last summer to reach nearly 45 US dollars a barrel in January though it has since bounced back to about 55 US dollars.
Mr Dudley said: “We have now entered a new and challenging phase of low oil prices through the near and medium term.
“Our focus must now be on resetting BP: managing and rebalancing our capital programme and cost base for the new reality of lower prices while always maintaining safe, reliable and efficient operations.”
Annual replacement cost profit for 2014 was down 66 per cent to £5.37bn.
However, underlying figures were not as bad as expected, showing a 20 per cent fall to £1.49bn for the fourth quarter and a 10 per cent decline for 2014 to £8.08bn.
Shares climbed as much as 6 per cent on the results and the decision by BP to cut spending in line with rivals though some of the gain ebbed away later in the session.