Oil giant BP is planning to cut its oil and gas production by 40 per cent over the next decade while investing billions into clean energy instead.

It's part of the multinational corporation's new strategy that was announced in an Aug. 4 press release.

"We believe our new strategy provides a comprehensive and coherent approach to turn our net-zero ambition into action," said chief executive officer Bernard Looney.

He also called the coming decade "critical for the world in the fight against climate change".

Net zero emissions by 2050

The major strategic overhaul will see BP increase their investment in low carbon energy 10-fold to about US$5 billion (S$6.85 billion) a year by 2030.

Over the same period, BP plans to reduce oil and gas production by at least one million barrels of oil a day — a 40 per cent reduction from the company's 2019 levels.

The new strategy, said BP, would go some way to helping the company realise its ambitions of net zero emissions by 2050.

By 2030, emissions from the multinational's operations will be 30 to 35 per cent lower, while emissions associated with carbon in upstream oil and gas productions would be lowered by 35 to 40 per cent, read the press release.

"Energy markets are fundamentally changing, shifting towards low carbon, driven by societal expectations, technology and changes in consumer preferences," said chairman Helge Lund.

"And in these transforming markets, BP can compete and create value, based on our skills, experience and relationships."

Huge 2nd quarter loss, dividend cut

The dramatic pivot towards renewable energy came in tandem with an announcement of a huge US$16.8 billion (S$23 billion) second-quarter loss.

BP also wrote down the value of certain assets such as untapped oil and gas reserves. This was due to reduced forecasts for the price of oil, said the company.

In addition, BP will be cutting its dividend to 5.25 U.S. cents per share per quarter, which CNN reports is a 50 per cent reduction.

The plan will be to keep dividends at that level for future quarters, according to BP's press release.

The company also committed to returning at least 60 per cent of surplus cash flow to shareholders via share buybacks once net debt was reduced to US$35 billion (S$47.98 billion).

"I want to acknowledge the impact the reset dividend will have on many – whether individual retail investors or large holders," said Looney.

"However, it is a decision that we wholeheartedly believe is in the long-term interest of our stakeholders."

Top image from from BP's Facebook page