A potential commitment to renewable energy comes close on the heels of predictions of solar power as a possible multibillion-dollar market
Terry Macalister
BP Amoco is considering a massive expansion of its renewable energy programme over and above the $250-million it has already earmarked to spend over the next five years.
In a move that will delight its environmental critics, such as Greenpeace, the oil major plans to approach leading investors to see whether they would support a significant change of tack.
The move follows a rebellion at the recent annual meeting when a surprising number of shareholders voted in favour of a “green” motion despite opposition from the board.
Any increase in investment would almost certainly be focused on solar power in which BP Amoco has already established an industry lead. A senior executive privately admitted that both the company and its main investors had been shaken by the vote at the annual meeting.
But the BP Amoco executive said the group was determined to act positively on the issue. “At the next round of meetings with investors, if they do not raise the issue, which I am sure they will, then we will. If they want us to step out a bit then let’s hear them give us their support,” he explained.
The investment would represent a sea change in thinking about the future of the group, which is already moving away from oil to more environmentally friendly fuels such as gas.
But the BP Amoco executive said there was no question of the second-biggest oil company in the world becoming a renewable energy group overnight. It could take 20 or 30 years before that happened.
The potential commitment to renewable energy came on a day when a leading figure in the sector predicted solar power would become a multibillion-dollar market.
Dr Jeremy Leggett, CEO of the Solar Century, told an alternative energy conference called by Dresdner Kleinwort Benson that solar power would “be to the 21st century what the microchip was to the 20th”. He said the fossil fuel sector was entering its autumn years.
Plans to spend $250-million over five years are significant but a drop in the ocean when put next to the group’s other investment plans. This week it said it intended to spend $10-billion to $11- billion, mainly on gas projects, over the next two years.
Gas production is set to jump 0,24- billion cubic metres a day by the end of this year, giving BP Amoco the equivalent of 3,6-million barrels of liquids, two thirds of the group’s production portfolio. Oil output will remain steady at two million barrels a day.
BP Amoco, which has just won approval for the takeover of America’s Arco, unveiled record first-quarter profits of $2,7- billion. These were up 256% on the same period last year, mainly boosted by a big turnaround in crude prices.
BP Amoco CEO Sir John Browne said the outlook for the year was good with a “broadly positive environment”. The company would now be entering a period of consolidation, however, with divestments and cost savings to come.