When BP posted its first quarterly loss in 7 years this week, its CEO Tony Hayward said he’d start cutting costs and try to become more efficient. The knife is already out, as BP says it will cut back on its plans to invest in biofuels produced by D1 oils.
FT: The announcement marks a further diminution of BP’s plans for alternative energy following cuts in its solar cell production in Australia. BP also recently ended its wind power business outside the US, as well as scrapping two projects for power stations that could capture and store their carbon dioxide emissions.
In June 2007 D1 announced a 50-50 joint venture with BP to plant 1m hectares with jatropha by the end of 2011. BP also took an option to buy 16 per cent of D1 at 251p a share.
As the FT points out, the investment is a relative drop in the bucket, as BP earned $25.6 billion in 2008. However, the company posted a $3.3 billion loss in the last quarter. On the conference call after the earnings report came out, BP said it needs oil to hit $50-60 in order to be profitable for 2009. Even if the company can get back to breakeven, there’s no reason to think it will rush back into atlernative energy investments.