The pandemic's effects are still felt even after the lockdown measures started to ease, and the travel restrictions are beginning to more and more relaxed. One of the biggest Oil companies in the world, BP, is amongst companies that, besides the pandemic, was also hit by the negative prices that Oil reached a while ago.
Today, the company released a statement in which it is writing down the value of its assets by $17.5 billion. It represents 6% of the overall value. The move has been said to come as the company shifts away from fossil fuels. Also, the world needs now less fuel, and in the long run, it predicts a cut of 27% for Brent Oil in the next thirty years.
The company will start effectively to write down the value of the assets at the next earnings report on August 4. Moreover, once it starts to invest in cleaner energy, it will stop developing a particular type of Oil and investing in gas fields. But, the company already said it would reduce the emissions by zero until 2050.
Besides the $17.5 billion got from the write-down, the company will cut 10,000 jobs or approximately 15% of its workforce to reduce costs.
The IEA report from last month showed that the Oil demand could reach the 2012 levels by dropping at an average of 9 million barrels per day. Some experts believe that the market could never again reach the 2019 levels because increase in demand for clean energy.
BP is not the only company that had to take measures to combat the effects of the pandemic. Shell, one of its competitors, cut the payment of the dividends to the shareholders.
BP stock price fell almost 5% during today’s trading session.
Sources: edition.cnn, marketwatch.com