Bernard Looney: Good answer. We’ll take it as a short answer, Lucas. Thank you, Lydia.
Lucas Herrmann: It’s Lucas Herrmann, BNP Paribas. A couple as well, if I might. And perhaps the first ties in with 1 of Lydia. So 15% to 20%. it’s an obvious allocation question, 15% to 20% return in hydrocarbons, great than 15% biogas, great than 15% in electrification or EV, 10% or so in hydrogen and 6 to 8 unlevered in renewable. so explain to me or just timing to me, the 6 to 8 In renewable and their electrons, there are a commodity, you can buy them in. So why allocate in that direction. That’s the first question. And the second is to Murray, and it’s just maybe to Carol. And it’s how do we think about the LNG optimization trading business in terms of pricing this year? And I asked simply because gas prices globally have clearly come back a long way, but you position a long way forward.
So when I think about the profit delta, the price would imply for the year. What can you tell me to afford me comfort that what I see on the screen today, TTF and BP, JKM relative to last year is not something I’d necessarily affect volume aside, Murray, for the Gas and Power or the gas and low emission business. I hope that was clear.
Bernard Looney: Possibly to people who understand the market well, which is Carol. So Carol, I’m going to ask you to lead off on that. Murray can add if you wish us to. But Carol go for it. And Anil will ask you to take the 6% to 8% question, please. Go ahead, Carol.
Carol Howle: So yes, we have seen, as you said, a reduction in prices since last year. But I think there are also — when you look at the fundamentals of the market, there’s potentially still tightness going forward when you look at growing demand, China coming back in, for example, East unlocking. We did lose a lot of demand through winter, warm winter. That’s something that we’ll continue to watch going forward. So I think we’re looking at the supply-demand balances. We’re looking at all of the factors. They’re not all necessarily bearish, I’ll just say it on that perspective. and we have a portfolio which we’ve created around optionality so that’s pricing centers, it’s demand centers, it’s volume, it’s flexibility. And our job is to monetize that for and I think the team have done a great job of doing that over multiple years over multiple market conditions, but I’m sure Murray can give us the right nomenclature for the performance.
Murray Auchincloss: You guys have performed tremendously. Just to add any word. Lucas, it’s not about high price, low price, it’s about volatility, and there’s not an awful lot of supply out there right now. So that suggests volatility. So we look to Carol’s organization to manage that volatility. And I think there’s — they continue to be well positioned to do that.
Bernard Looney: And I think the A lot of the contracts and supply that we’re bringing on in the coming years. Importantly, were deals that were signed many, many years ago, not in the last year in the middle of some of the biggest price spikes in history, but many, many years ago. So also a great place as Carol grows from 19 to 25 by 2025. So Anja, 6% to 8% returns in renewables and power, why should we be an attractive business for BP?
Unidentified Company Representative: And I would slightly disagree if I made to your statement, there’s an abundance of green electrons around the world. Actually, this is not the case. We invest — we allocate capital to own renewable assets. if you believe this is a critical control point. So if you think about projects like RA, for example, in Australia, this is largely off-grid renewables. And it’s 70% of the total CapEx of the project. So we need a leading edge capability to deliver the green electrons at the lowest cost of energy. This is absolutely crucial for the success of this business. If you think moving to Europe, if you think about how to scale a hydrogen business in Europe, — it is all about scaling offshore wind because this is the only scalable technology in Europe, which can deliver gigawatts of, let’s say, green electricity in service of green hydrogen production.
This is why we believe we need to play in offshore wind because there are regions around the world where this is the only scalable technology. And I think this is how we think about it. If there are liquid markets, if there’s an abundance of green electrons, and we can buy them in a way cheaply competitively. We will not deploy capital in renewables, but we believe definitely for this decade to come, we have to because it is absolutely crucial.
Bernard Looney: Great. Thank you, Anja. Thank you, Carol. Os, then we’ll keep going.
Oswald Clint: Thank you very much. Just back on the returning average capital employed numbers, the — so I think 2020, we said up to 2% was delivered over the last 20 years. The last 3 years, we’ve added 4%. As we look out to that in 2025 and beyond, which is a big number. How much is the trading contribution in that, please? I’d love just to tie that perhaps, Carol, back to Anja say, do you believe that trading electrons, you can trade and add value here? I think coming from your old company and others, utilities tend to say it’s not quite possible. So I’d love you to square that circle, please. And then secondly, sorry, you’re deepening or higher conviction on EV Convenience, to Emma. Can you help us a little bit more on pricing across fleets, Hertz, Scottish Police Force, Uber London. I mean how much of that is helping it to 15% returns in that business and even some of the trucking that you’re doing in Germany. Is there an array of pricing here that’s helping?
Bernard Looney: Thank you, Oswald. Let’s start off. Murray, 18%, how much includes trading on your trading electrons. Do we make money and Carol may want to add together both of you guys and Emma. So Murray?
Murray Auchincloss: Yes. I don’t think I’ll guide on what’s trading as a component of the 18%, Os. That would be a little bit tricky for Carol moving forward. But I will say that Carol had a stunning track record over the last 3 years, 4% on average ROCE for the group, so you can calculate the numbers now, I’m sure. And Carol has a growing portfolio ahead of her with our biogas, with LNG expanding, and I think the profitability of trading will really depend on a few things. First, continuing volatility. Those continuing volatility happen as per Lucas’ question. Second, can we continue to manage gross margin competition because it’s a competitive space and can we continue to do a good job so far, so good. And I think I’d put my confidence in Carol and her team and then we have growing LNG.
So as Lucas says, it’s volume, not price, but again, it’s volatility. So I think I’m not going to guide on it, but certainly, we have a fabulous capability here in place. and I’m confident Carol and Heron organization will do just fine.
Bernard Looney: Thank you. Steve, Anja and Carol will agree on trading electrons, who wants to do that one.
Unidentified Company Representative: I’d kick it off, Yes. So I think So one of the questions previously was around integration, and we do work very closely across each other. We’re looking at power value chain seamlessly, fabulously seamlessly we think about routes to market, we think about how we want to lock positions in. We think about whether it’s corporate, industrial self-supply. We take trading positions around that. We look at greening of products. And so we won’t be giving numbers, but we did have a strong power trading delivery last year, and that is because we’ve built up this position across assets, corporates merchant and what we call virtual strategies. That’s in the U.S. We’re building that in the U.K. and Europe, and we’re also supporting around the Australian renewable energy hub.
Bernard Looney: Anything to add.
Carol Howle: Perfect answers always. Murray, I’d like to say that you’re bringing these guys up on the stage. I think we should…
Murray Auchincloss: Is it easier for you and I.
Bernard Looney: Brilliant. And deepening EVs, Emma, are deepening where the return is coming from pricing and so on.
