Oil giant BP takes $17.5B writedown in response to coronavirus

Oil giant BP is writing down as much as $17.5 billion in assets, the company said Monday, as the oil industry struggles to stabilize during the coronavirus pandemic.

BP said it estimates the value of its assets decreased between $13 billion and $17.5 billion after taxes. It also said it would lower its long-term oil and gas price assumptions and review prospects for fuel exploration.

In making the moves, the company cited both weakening demand and the possibility that the pandemic will speed up a transition to a lower carbon economy.

“We have reset our price outlook to reflect that impact and the likelihood of greater efforts to ‘build back better’ towards a Paris-consistent world,” BP CEO Bernard Looney said in a statement, referring to the Paris climate agreement.

“We are also reviewing our development plans. All that will result in a significant charge in our upcoming results, but I am confident that these difficult decisions – rooted in our net zero ambition and reaffirmed by the pandemic – will better enable us to compete through the energy transition,” Looney added.

The announcement comes just a week after the company said it would cut 10,000 jobs, one-seventh of its global workforce.

“The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make – I am talking millions of dollars, every day,″ Looney said in an email to staff last week. “We have to spend less money.”

BP recently announced plans to become carbon neutral by 2050, saying it wanted to invest in businesses outside of the oil and gas sector.

The industry has been hit by both low demand and international disputes during the pandemic, though oil prices have began to rebound in recent weeks.