Gordon Birrell: Returns driven at the end of the day, yes.
Bernard Looney: Second question before you were interrupted.
Unidentified Analyst: Second question is a follow-up on Pri’s question around the capital allocation and the increase of $1 billion per annum for upstream and on the transition. It sounded like it’s all subject to the macro and your ability to generate the cash flow to finance that growth. So you basically have line of sight of enough projects to actually go through , is that fair?
Murray Auchincloss: Yes, there’s definitely not a lack of opportunities to spend CapEx. Let me put it that way. For ’23, ’24, ’25, short-cycle paybacks, Gordon is already getting the rigs. They’re already coming into the portfolio. The returns are super high on those. Likewise, on the trend. so I think that’s something we’ll do. And it’s robust through pretty low prices. You see where we’re holding our resilient balance point. It’s robust through pretty low prices. As you then look at the transition, we’re committed to doing these transition investments. If you cycled around the team, is doing a fabulous job on EV adoption. I wouldn’t be surprised if she does better than she’s talking about. Convenience is going very well. I think we’re very excited in the biofuel space between the refineries and additional facilities we see.
As Bernard said, the Archaea transaction is going to be faster, better. I think we’ll see lots of opportunities there. So I’d probably count on the higher end of the capital range and that we’ll drive towards that. All of this delivers EBITDA, obviously and an awful lot of the EBITDA that’s coming from the transition growth engine isn’t price sensitive. So we’ll have our higher earnings that aren’t as sensitive to the low price environment. So I’d count on us being able to manage through this time period with a fairly high activity set.
Bernard Looney: Great. And there is a big wrapper around this whole presentation, which is everything we do here has to meet our returns and our growth target has to meet. And that’s the wrapper, the underpinner the foundation of everything that we talk about today. And if the returns aren’t there, the capital doesn’t get spent. If the returns and growth are there, it will get spent. Christian?
Unidentified Analyst: from JPMorgan. So sort of one quite long question, if I may, which is 3 years ago, asked the question, well, if prices were higher, but as you said, would be very focused on CapEx. We wouldn’t increase CapEx and you’re increasing CapEx on oil through a high oil price deck. And so it sort of begs the question in terms of — I see how you have to frame a macro view and you’ve got to take a view. I agree with it in some ways, particularly in the oil piece. But what I’m struggling with is the disaggregation of value created through your macro outlook versus what you’re doing bottom up through the businesses and the proof of concept. In terms of the cash flow generated in your renewables vis-a-vis the investment and the return you’re making against a price view.
And it’s not that clear what you’re assuming in the Renewables segment as it is obviously in oil because you can just put a Brent forecast down. So how do you help us disaggregate that value creation from what is a macro call to actually creating value through the value chain in renewables, particularly when it’s becoming increasingly commoditized is sort of the part A of my question. Part B is in the spirit of changing CapEx relative to your macro view, what’s stopping you from flipping it back again if you become more bearish in one of those segments? In other words, you don’t think renewables is going to generate the same returns to reduce CapEx. I mean it sort of feels quite dynamic and fluid around CapEx versus the prevailing macro view, which can obviously change, and as you said, be very volatile.
Bernard Looney: So you’re making an assumption, I think, that we’re growing capital because we increased our price deck. That’s not the case. We’re growing capital because we want to grow — you asked for a disaggregation. It’s very clear. It’s in the deck. We deliver $5 billion to $6 billion of extra EBITDA by 2030 for get price from the investments that. $3 billion to $4 billion in hydrocarbons, $2 billion extra in our transition growth engines. So this is about growth. This is about opportunities that we see to invest both in today’s energy security and in the energy transition, all of which we believe are accretive. They drive earnings. It’s why one of the reasons we’ve raised the dividend today is because we are investing and we see more potential to grow.
So this isn’t about prices go up, CapEx goes up. It’s very, very different to that. This is a very, very disciplined focused on growth where we can meet the returns that we laid out. And I think within there, we’re very clear Murray about where that extra EBITDA comes from, how much is — I think we’re crystal clear actually in the deck on that. Murray, what have I missed?
Murray Auchincloss: Where returns settled — returns driven, Slide 18 tells you our returns and our assumptions. I’m not really sure how I’d get much clearer on that. And this is about performance really. If you go back to 2020, our balance sheet wasn’t as strong as it is now. So we’ve got a much stronger balance sheet. We’ve improved our position with the ratings agencies. It gives us the capacity to invest more, to drive more returns for shareholders. So we — it’s much more about performance and where — what the strength of the company is rather than an arbitrary view on price, which you’re right, can change every time.
Bernard Looney: Yes. So we’ll invest more. We’re going to grow the company. We’re going to deliver the returns and the shareholders are going to see increased value both through distributions like the announcement today on the dividend, but we can follow up on it. Where do I go next. Here in the back.
Unidentified Company Representative: You forgot the left side.
Bernard Looney: This is a feedback-rich organization. Just upward feedback is alive and well. Great. Go for it.
Amy Wong: It’s great to hear that. It’s Amy Wong here from Crédit Suisse. Want to take advantage of having Anja on the panel to ask a question on biogas. Clearly, you guys are making a pretty big statement with — we have the Archaea Energy acquisition. But also I just want to hear about — how do you scale business because I think what I really struggled in some of the investors sous understand how biogas business, where you’re going from landfill to landfill is a scalable business and can deliver the type of returns. And I think it was also mentioned on the panel that you’re going to do Archaea better and faster. So what’s driving some of those comments?
Bernard Looney: Amy, thank you. It’s actually Carol’s business, so we should give it to Carol. And we had Nick Stork here and his team, I think last go to founder. And we are particularly excited about this business. Go for it.p.
Carol Howle: No. We are very excited about the business, and we do see great opportunities. So I think when you look at it, I mean, at the moment, of course, we’re looking at integration, BPK platform coming together. But as Bernard mentioned previously, there’s a significant — there’s more than 80 projects in that pipeline. We’ve got the ability to do a modular scaling across each of these landfills go in there, develop the gas and bring that out and then look at different transportation routes to market. So we can increase and accelerate production. We can increase recoveries, and we can also look at accessing newer revenue streams as well. I mean in the future, we’ll have hydrogen as opportunity. But right now, we can do methanol, we can do CCS, EV Charging for Emma’s business.
We’ve got utilities interested in renewable natural gas because it’s lower CI. So it’s transportation, it’s utilities. We could take it into our refineries. There are so many opportunities around it, which creates the optionality that we like in the portfolio, it gives us an opportunity to build the best markets for that to gain premiums and also to trade around those positions. So it is certainly scalable, and we see strong returns, and we see the opportunity to invest more. And yes, hugely excited to be working with the team.
Bernard Looney: And if I could back to Christian’s point, Christian is a good example. We’re putting more money into our Archaea than Archaea would have on their own. They could have probably done 20 sites a year of that 80. We’ll do more quickly because we have the balance sheet to be able to lean into that investment. What’s the stat we’ll get 30% of that CapEx back if we get them online by 2025. So these are decisions that with the balance sheet, we can lean. It got nothing to do with the price assumption on oil. This is an opportunity driven. We’re going to speed up that pipeline and get those 80 sites online in the next couple of years. And the EBITDA from that’s going to be material without questions. So pretty exciting. Anyway, Amy, thank you. Where were you guys pointing to me, Biraj ,sorry? How are we doing, Craig? Okay? Okay. All right. All right.
