The company, fresh from outlining plans to axe almost 10,000 jobs on COVID-19 fallout, said in a statement that it will suffer a negative impact of between $13 billion and $17.5 billion (11.4 billion euros and 15.3 billion euros) in non-cash impairments and write-offs.
“With the COVID-19 pandemic having continued during the 2nd quarter of 2020, BP now sees the prospect of the pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period,” BP said, adding the virus was set to accelerate a transition to lower carbon energy.
The group continued: “BP has revised its long-term price assumptions, lowering them and extending the period covered to 2050.
“As part of its long-term strategic planning, and in the context of its continuing focus on capital discipline, BP is also reviewing its intent to develop some of its exploration intangible assets.
“These actions will lead to non-cash impairment charges and write-offs in the 2nd quarter, estimated to be in an aggregate range of $13 billion to $17.5 billion post-tax.”
BP chief executive Bernard Looney warned that the COVID-19 pandemic “increasingly looks as if it will have an enduring economic impact.”
“So, we have reset our price outlook to reflect that impact…. 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…will better enable us to compete through the energy transition.”
BP now expects European benchmark London Brent North Sea oil prices to average $55 per barrel between 2021 and 2050, while it also lowered its guidance for gas prices.
The London-listed energy major had announced plans one week ago to axe “close to 10,000” jobs, or almost 15% of its global workforce.
And it warned that oil prices had plunged well below the level which the group needed to turn a profit.