No more Big Oil: Former BP boss calls for sector split-up to boost investment

Oil giants should split into separate smaller companies in a bid to boost investment into the world’s renewable energy transition, the former boss of BP has said.

Both Shell and BP have said that they are stronger as whole companies, so they can use their oil winnings to invest in greener options.

However, Lord Browne (pictured), who helmed BP from 1995 to 2007, said that oil and gas producers need to step up on the road to net zero carbon emissions by “separating low and zero-carbon activity from their fossil-fuel business”.

“The former is rapidly growing, less capital intensive and valued at a premium by investors, whereas the business of hydrocarbons is capital intensive, unloved by the market and in decline,” he wrote in Time magazine.

Browne, now a senior adviser at technology-focused private equity firm General Atlantic, added that the move would help unlock how much low-carbon businesses are actually worth.

“If companies take steps to separate these very different types of activity into two corporate entities, investors can allocate their capital more efficiently and the true value of the low-carbon businesses embedded within large hydrocarbon producers will become clearer,” he added.

His comments come as Shell continues to bat off calls from activist investor Third Point to break up, which the energy giant’s boss Ben van Beurden argued against, because “a very significant part of this energy transition is going to be funded by the legacy business”.

The latest boss of BP, Bernard Looney, has also denounced the option, saying in November that it was better able to fund its growth as an integrated company.