Murray Auchincloss: Lydia, that might have been 3 questions. It was 2.5, okay, very good. I’ll let Kate handle the second set on challenges for simplification. So I think the easiest way to think about this is the past 4 years has been about origination. The scale of the hopper we built in the hydrogen and solar, in offshore wind, in oil and gas, everywhere, you can see, we have tons of options to move forward. And the big challenge is to now get the organization, the engineers and the commercial people to move away from origination to execution. That’s the big challenge. So forcing the pace to get to decisions so we can increase cycle time to increase value, reallocating the people to the right places and then stopping the old stuff.
As always in large corporations, stopping the old stuff is a perpetual challenge and that’s probably the challenge the leadership team and I have is really getting people to really focus on the stuff and not pursuing other things. At the same time, there’s a huge opportunity inside technology. We’ve made immense strides on digital over the past 10 years, especially in the upstream business. We’ve now struck a deal with Microsoft to be their — one of their founding partners on AI Copilot. We’re getting it in the hands of our engineers and across the company. And trying to figure out what are the best things to go after at scale is a key challenge because the opportunities are enormous in this space. So to me, it’s all about focus, if I’m honest.
It’s all about focus and getting the organization to focus and then let go the other stuff. That’s the biggest challenge that we’ll have moving forward. Kate?
Katherine Thomson: Yes. Thanks, Lydia. Maybe I’ll talk about the $14 billion first, and then I’ll come back to your question on CapEx and share buybacks. So the way I think about the $14 billion — and Murray talked about the drive to 2025 and all of the confidence that we have and the momentum that’s currently around the company, the operations are performing really well. We’ve got a number of things that come online over the next 2 years. That gives us enormous confidence in terms of the underlying operations and our ability to deliver the business outcome. So that bit I don’t feel is in the picture in terms of deciding where we go with the $14 billion. For me, it’s really about environment. And if there’s a fundamental change in the environment, then obviously, our cash flows are going to change in relationship to that.
So that’s why we’ve anchored it on current conditions. We went to current rather than reasonable because we wanted to give you something that was objective and not subjective. So that’s why we went with current market conditions, and you know what those are. In terms of CapEx and share buybacks, so I wouldn’t interpret the tightening of the CapEx guidance to 16 as being part of the affordability of the 14. I see the CapEx tightening is a real symbol of our focus on the fact that we are going to be hugely disciplined in how we allocate our capital and very much, very much returns driven. Our sanctions have to hit hurdle. Otherwise, we won’t move them through. And I think that’s really important. Murray and I are incredibly clear on that. We’ve done a lot of inorganic activity, which we’ve talked about over the last couple of years.
I think going forward, there’s probably a less space for that for the next couple of years. I think the 16 feels about right based on the activity set that we’ve got today loaded and the tightness that we see around the big — certainly, the upstream yards around the world we wouldn’t really want to — couldn’t really do it well, actually, if you were to take that up. So I wouldn’t link the share buyback upgrade to the CapEx tightening. The CapEx tightening is about discipline and focus. The share buyback is around the confidence that we have in the balance sheet and the underlying performance of the business to deliver, and that’s what’s generated our ability to upgrade and enhance. Thanks, Kate. I’ll go online now, Paul Cheng, Scotia Bank.
Paul?
Paul Cheng: Murray, I just want to go back into your prepared remarks say [indiscernible], and you also — in your early comment that you want to say, let’s go some of the pivots behavior and focusing on more efficient. So from that standpoint is the organization structure need to be adjusted or that you can do all that within the current organization structure.
Murray Auchincloss: Great. Thanks, Paul. Appreciate the question. It was a touch hard to hear you, so I think I’ll try to answer the question. If I don’t answer the question, let us know, please. I think the question was organization structure. Do we feel we have the right organization structure to move to delivery? Look, we made a huge change in organization structure back in 2020, probably the largest organization structure in our 114-year history. I don’t want to do that again. That was needed, but really demanding on people and demanding on the corporation. Some of those changes took a couple of years to enact in places like Europe. So I don’t want to do mass change of structure. I don’t think we need to either. However, there are places where we’re inefficient.
And we’ll do a gradual program over time of driving efficiency into the business and the structure. There are places where we’ve got overlapped that we need to think about how to do it better. So that will be something in our minds. But big corporate structural change, no. Changes to reporting segments, I prefer not. I think that’s not something that’s going to help delivery of our targets in 2025. But look, I’m going to challenge the corporation and challenge ourselves to simplify everywhere we can. You felt it in the buyback guidance today, simpler guidance to help the market. You’ll just see us continuing to push that and push that, but I don’t want to do a giant wave now. Paul, did I answer your question?
Paul Cheng: Yes. Maybe that if I can. Along the way, you guys have done a number of joint ventures whether [indiscernible] but from an organization or data management, joint venture, a lot of time is difficult. So if you’re trying to make it more simplified going forward, so we assume going forward, you will revise lesser on the joint venture structure? Or was that this is a different topic and you don’t think it matters?
Murray Auchincloss: I don’t relate to the JV structure as a mechanism to simplify or not on business delivery. I relate to the joint venture structure as a mechanism to more efficiently create value. So if you think back to Lightsource bp, we took it off balance sheet. We geared it up 5 years ago, and we let it grow on its own. That decision was about giving them independence so they could grow rapidly. They’ve now hit the limits of that, and we need to bring them back in, reset it and have a new model moving forward. But it was all a value-based decision as opposed to an efficiency-based decision. Think about BPX in the Lower 48, we decided once we bought BHP to allow that entity to have an OMS but not an OMS that was of a similar quality to our offshore businesses and that allows it to operate more freely, access acreage faster, do contracting faster, et cetera.
So for that particular basin, solar and BPX, we felt that, that separate model would help them deliver more efficiently. So to me, it’s about the structure that we use, is all about how do you create max value. That’s how I think about it and that’s how we will continue to think about it moving forward. Thanks for the question, Paul. Just back on the line one more, and then we’ll come back into the room. Roger Read, please. Roger?
Roger Read: I guess probably coming back around on a couple of the questions already been asked. I just want to make sure I understand, on the improvement in EBITDA that you’re looking at for $70 base, Brent, is there a way to think about that from a how much is likely from, let’s call it, the conventional production side, whether it’s the gas or the oil piece? And is that a mix issue with these new projects coming in? Or is there something else in terms of OpEx reduction we should be paying attention to? That’s kind of question number one. And then in terms of the financial frame on the returns here of capital, and I appreciate the clarity, I think that’s a nice step forward. If I think about your returns as a percentage of EBITDA compared to some of your peers, it’s still on the lower end.
So I’m just wondering, do you think about it as strictly what BP is capable of or do you want to try to close the gap longer term with peers in terms of, call it, ratios or percentage metrics?
Murray Auchincloss: Great. I’ll let Kate answer the second one. On, EBITDA, so just 2025 is the — I think what your question is, Roger, hope so, because I don’t carry the 2030 numbers is tightly in my head. But for 2025, if you normalize 2023 to ’25 conditions, we’re at $44 billion of EBITDA moving towards $46 billion to $49 billion in 2025. We obviously have growth in the upstream that we’ve been talking about. There are divestments along the way that may or may not happen. Some of these ones are pretty tricky, but there are some potential divestments we’ve talked about in the past that may be part of that mix as well. But the new projects that are coming on are of higher quality to the existing business. I think the uplift is about 15% to 20%.
So you should see margin mix impact from the upstream across the time period. So that’s the first part of your question. Additionally, we talked about the transition growth engines earlier. We see growth of 1 up to 3 to 4 based on the acquisitions we’ve done and the direction of travel with the rest. So I think that should help you think about how we get into that $46 billion to $49 billion realm. Probably the first half of it is the historical oil and gas business and refining business, and the second half is the transition growth engines as well. I feel pretty underpinned on the $46 billion to $49 billion, to be honest. I think we’ll hit that quite easily. Kate?
