With Lightsource bp, we had a partner that’s a private individual. They have grown and scaled this business tremendously, but they’ve reached the ability — they’ve reached their max ability to finance this. So it’s a little bit like the Aker BP situation where they didn’t have enough cash to grow. So this was the moment in time for them to cash out for us to take over Lightsource bp. It has a couple of advantages for us to structure it this way right now. Coral has a fantastic trading business and demand for natural gas coupled with solar and battery technology continues to grow and grow and grow. We’re seeing some really big demand coming out, especially from cloud providers, who have GenAI. Just the demand curves are asymptotic, is that the right word?
I don’t know. Whatever the right word is, huge, huge demand for these things. So being able to control that entity, package these things together and provide those trading options or those packages of energy is really important. The second thing is, if green hydrogen does move, you’re going to want control of the developer if that happens. Why? So you avoid giving margin away to third-party developers that can be quite high. So at this moment in time, it makes an awful lot of sense to bring that in, repackage it, straighten it out, pointed towards helping Carol’s business, helping Anja’s business. And I think that creates distinctive advantage for us right now. We will continue to bring partners in for develop and flip. We’ll contemplate what we do with the developer itself.
Should we bring in a partner or not, that’s something we’ll keep thinking about and we’ll remain very agile. But they have different circumstances. I hope those examples give you a sense of how we think about these things, which is how do you drive max value through different points in cycle in these entities. So I hope that helps answer the question, Chris. Kate?
Katherine Thomson: Yes. So Chris, current market conditions. So a couple of things I’d say, one, is I think it’s important to anchor yourself around the fact that the cash flows of our company not driven by an oil price alone. So it’s a basket of commodities, it’s oil price, it’s gas price, it’s refining margins. You know that. And you can look at where we’ve been year-to-date so far to get a sense of where we’re thinking on that. What I would say is that the confidence that we now have in our balance sheet to tolerate movements around that gives you a sense that we can be comfortable in the fact that we’ll be able to distribute the $14 billion in a range around where those prices have been year-to-date. If we see a fundamental disconnect in the market, then, of course, we’ll need to talk to the Board and update you, if that happens.
But for now, the confidence we have in the business performance and the momentum we’ve got, the confidence that we’ve got and the strength of our balance sheet allows us to be confident that we can deliver the $14 billion at prices around where they’ve been year-to-date. That’s how I hold it.
Oswald Clint: Oswald Clint, at Bernstein. It looks like — I mean just backing out maybe $4.5 billion of trading last year, I always like to try and dig into this. So it looks like, again, as Kate was saying, you hit the 4% number. So that’s great. I guess just in this next two years, can you just talk about — again, the confidence maybe linked to that last question and points to macro is — at this macro, you can keep doing that quantum in 2024, 2025 what — including the new businesses trading around those. Just again describe the confidence around delivering that through this year and next. And then secondly, Murray, you said there are 4 generations in the oil and gas business. You’re sitting and then you see — I’m just curious about your appetite for a little bit more liquids growth potentially through the portfolio. We have the 3% to 2027. How do you think about bringing some more through, service cost inflation, all of that put together, please?
Murray Auchincloss: Yes, sure. Maybe I’ll take both of these, sorry, Kate. Liquids, yes. So what we told everybody in Denver is that we see the capacity to grow our oil production, so to speak, by 2% to 3% through 2027. As we look ahead over the next 2 years, we have some big decisions on sanctions as well that will determine what happens beyond that, Os. So you have Cabo Frio in Brazil. You’ve got Kaskida, Tiber, Gila in the Gulf of Mexico and the Paleogene [indiscernible] Northern Canada, you have clear expansion. You have Abu Dhabi expansion. I’m probably missing some that I can’t think of off the top of my head, but you have these massive projects, some of which are held 100%. I think Paleogene 9 billion barrels 100%. Let’s see how we go on those.
And if we decide to sanction more of them rather than less, then I think we can do better than that 2% to 3%. But I’m not going to be focused on volume. I’m going to be super focused on returns and what’s the right returns as we look across that versus the gas portfolio as well. There’s a plethora of potential gas sanctions as well. So I think that’s the task of 2 years ahead. That’s why I highlighted it. Our reserve replacement ratio has been a bit low in the past. It’s going to get back much more competitive now, as we look at this 12% to 16% sanctions across the next 2 years. What the volume outcome from that will be? Hard to predict. We’ve given you 2 million a day by the end of the decade, 2% to 3% growth through ’27 on oil, but I think the sanctions will really determine that.
So as we get through ’24 and ’25 and decide those, then we’ll update you in due course about what 2030 really looks like based on all those sanctions. So I have a bias for returns. I don’t necessarily have a bias for volume or oil gas on returns by ourselves. On trading, to have Carol’s performance contract conversation in front of everybody, we remain deeply confident in our ability to generate the returns in the future that we have in the past, is my starting point. If you think back to 2020, ’21, ’22, ’23, the world has seen a tremendous amount of volatility from COVID to the invasion of Ukraine, to events in the Middle East, to recessionary forces. That’s just created incredible volatility. As you look ahead, oil demand continues to be very strong, and there’s not very much spare capacity outside Saudi really.
So capacity is tight. In refining, we’ve seen a lot of shutdowns on refineries. Today, the diesel complex is short. I’m sure tomorrow the gasoline complex will be short. These things keep changing because of all the outages that sit around us. Natural gas, we feel okay about it right now, but a cold snap in the winter and one of the years changes the position on natural gas as well. So my own sense is that the world is quite volatile. It’s quite volatile, and our businesses — our trading business is set up to manage volatility and do well in a volatile time frame. Second, we’re growing the business, more LNG, 25 by ’25 is underpinned. I think 28 by ’30 is already underpinned as well by a couple of contracts we’ve done in Oman and in Canada, Woodfibre.
So you can already see those coming into the portfolio. So you’ve got a bigger LNG portfolio to take advantage of. We’ve started purchasing larger positions inside power as well so we can power a couple with gas. That was EDF in the U.S. and another transaction in Germany recently in January. So we’re scaling up that. At the same time, our biofuels is growing, more coprocessing through each of our refineries. These are very capitally efficient small modules that buildup 5 or 10 kbd of capacity quite quickly with lots of biofuels trading, and there’s lots of price volatility in that space as well. So I think we will — I think I’m very comfortable with the 4% moving forward. You might ask Carol in private time if she feels as comfortable as I do.
But I think given the growth of the business, the amount of investment we’re putting into it and the volatility that we see ahead, I think we’re well positioned moving forward. Hope that helps to answer. Great. Why don’t we go to the next question, Lydia, and then I’ll go to Paul online. Lydia?
Lydia Rainforth: And just say I am delighted to both of you individually and for the BP, for the roles that you now have and thank you also for the longevity of the guidance as well in terms of the buyback. But Murray, you’ve talked about was in a simpler higher-value BP, which all sounds great because that you’d ever say it’s going to be more complex. But what stops you from get there? What are your biggest challenges over that next 8 quarters? And then for Kate, the buyback you talked you at least $14 billion. So what moves you from that? is it operational or is it kind of — is it purely price related? And linked to that, how do you think about CapEx versus buybacks?
