BP is preparing for a financial hit of up to $4.5bn following a substantial write-down in its energy transition division, as the company retreats from ambitious green targets.
The FTSE 100 energy giant announced on Tuesday that its third quarter update – due at the end of the month – will include a post-tax impairment charge ranging between $3bn and $4.5bn.
Transition businesses hit
"These charges are primarily attributable to transition businesses in the gas & low carbon energy segment," BP said.
The move follows a significant scaling back of environmental ambitions from the oil and gas major, which earlier this year cut its planned transition capital expenditure by more than $5bn annually to a target of up to $2bn, as reported by City AM.
Alex Pugh, analyst at Freetrade, said: "BP spent years trying to reinvent itself as an energy company, and this quarter it looks set to have made its money being a very good refinery... Another $3bn to $4.5bn of expected write-downs, mostly on low-carbon businesses, shows the green dream still isn't fully paid for."
Asset sales and debt reduction
During the final quarter of 2025, the firm projected write-downs of between $4bn and $5bn (£3.7bn) after beginning to reassess its strategy for transition assets and partnerships within the gas and low-carbon sector.
BP has started offloading and restructuring elements of its transition division, including the disposal of the bulk of its clean-energy and transition-focused venture capital portfolio to growth investor Verdane in July 2026. This comes in the wake of mounting pressure from activist investor Elliott Management, which increased its stake to more than five per cent last year, pushing BP to ditch its green commitments, cut renewable energy investments and ramp up spending on fossil fuels.
BP has separately forecast a significant reduction in its net debt to between $13.5bn and $14.5bn, down from $22.3bn in the second quarter of the year.
Refining margins and production
Stronger refining margins – the difference between the cost of crude oil and the market value of finished fuels like diesel and gasoline – are also anticipated to deliver an earnings boost of between $1.9bn and $2.1bn compared to the previous quarter.
The improvement in margins follows a similar development at rival Shell, which is set to reap substantial gains from the global surge in fuel prices. Oil prices climbed above the $100 mark throughout September, driven by the continuing conflict in Iran.
BP expects its upstream production to come in at between 2.19m and 2.24m barrels of oil equivalent per day, compared to approximately 2.2m barrels in the preceding quarter.
Leadership shake-up
Last week, G7 leaders agreed to release 100m barrels of emergency diesel and oil in an effort to avert a supply crisis. The bloc of advanced economies confirmed they would collaborate with the International Energy Agency to accelerate releases from their emergency stockpiles "in light of ongoing market pressures".
BP's senior leadership has undergone a significant shake-up over the past year, following a high-profile boardroom dispute that culminated in the removal of former chair Albert Manifold in May. This followed the exit of former chief executive Murray Auchincloss, who left his position after less than two years at the helm. He was succeeded by former Woodside chief executive Meg O'Neill, who officially took up the role in April.
O'Neill is set to deliver her inaugural strategy update in New York in December.
