BP is selling its oil assets in Mexico as it seeks to focus even more on its renewable energy business.
The political environment in the country is another reason for the decision, Bloomberg reported.
BP has already sold some of its stakes in Mexican oil projects and is currently returning some blocks it won at auctions to the Mexican oil industry regulator, a company representative told Bloomberg.
Like other supermajors, BP entered Mexico during the administration of Enrique Peña Nieto, which enacted sweeping reforms aimed at opening up Mexico’s markets to foreign companies.
Since leftist Andres Manuel Lopez Obrador became president, however, there has been a marked change in attitude. The current government wants to reestablish state-owned companies as the dominant players in energy markets, including Pemex, the oil major.
That’s despite Pemex’s financial troubles and lack of capacity to conduct on its own the exploration and production activities that would reverse the long-term decline in Mexico’s oil production.
According to the Bloomberg report, one of the projects that BP has already quit is a deepwater one, in which it partnered with French TotalEnergies and Norway’s Equinor. The Norwegian company also quit the project, with TotalEnergies buying both their shares.
Another project that BP quit was a shallow-water block it won the rights to develop together with TotalEnergies, Equinor, Hokchi Energy, and Qatar Petroleum. According to the supermajor, the likelihood of success at the block was “very low,” hence its decision to quit it.
BP has one of the most ambitious renewable energy programs among Big Oil majors, first announced in 2020 when Bernard Looney took the reins from Bob Dudley as chief executive.
The company plans to have 20 GW of renewable energy generation capacity by 2025, rising to 50 GW by 2030. As part of its transition to a low-carbon company, BP is also betting big on natural gas and hydrogen, along with carbon capture and storage.