The head of BP predicted that the AI revolution would trigger a global demand surge for fossil fuels. BP said it will ramp up its gas production over the next few years.
Murray Auchincloss said that demand for energy, including renewable sources like wind and solar, will be “very strong” in the face of a boom of generative AI tools, such as ChatGPT.
AI is powered by data centres. Each search made in ChatGPT, for example, consumes about 10 times more energy than a normal browser search due to the amount of calculations required.
Mr Auchincloss stated: “Gas will likely go down a bit this decade, and then grow significantly in the decades to come… Generative AI will create an even greater level of electricity demand.”
According to the International Energy Agency, the amount of energy consumed in the 8 000 data centres around the world is expected to increase by 73pc by 2026 to 800 Terawatt Hours (TWh).
The UK, by comparison, consumes 321 Terawatt Hours of electricity per year.
Google, according to data experts Digiconomist’s research, would require as much energy to power an entire country the size Ireland to switch its search engine operations over to AI.
Mr Auchincloss, speaking as BP released its annual results said that the company would take a “pragmatic approach” to the green energy transformation, while it scales down plans to reduce carbon emission.
BP’s results for 2023 revealed that profits would drop from $27.7bn dollars to $13.8bn dollars, but shares grew by 5pc as the figures exceeded analyst expectations.
In Tuesday’s report, BP announced a rapid share buyback program as Mr. Auchincloss tries his best to win back shareholders.
Bluebell Capital, an activist investor, had targeted BP last month and called on the company to abandon “irrational”, net-zero commitments championed in part by former CEO Bernard Looney.
The latest annual report of the company shows its continued commitment to oil. Production increased by 8.6pc to 1.4m barrels of oil-equivalent per day in 2023’s last quarter.
Oil production was 6.7pc more than 2022.
BP, however, expects the production levels to continue to rise: “BP expects that first-quarter 2024 upstream production will be higher than fourth-quarter 2023.”
The increase in production is expected to be due to BP’s investment in North Sea fields like Seagull and Murlach, where tax incentives linked to windfall levy encouraged BP to invest.
Mr Auchincloss stated that BP has paid £1.2bn to the UK Treasury in taxes for 2023. Of this, £600m came from windfall levies.
Multiple drilling projects have also been undertaken in the Gulf of Mexico – a sensitive area following the Deepwater disaster of 2010, when 11 people were killed in an explosion.
The company also paid another $1.2bn for oil spills last year.
Mr Auchincloss stated: “We believe we can increase oil production by 2 to 3 percent up until 2027.” A series of investment decision could extend these increases until 2030.
BP has said that its low-carbon and renewable energy businesses are also growing despite the increase in oil production.
The report stated: “The pipeline of renewables increased by 21.1 gigawatts in the entire year. BP was awarded the rights to build two North Sea offshore projects in Germany (4GW), and there was an increase in the dedicated hydrogen renewables (12.4GW).
BP has also increased its global network of EV charging points by more than a third, to 29,000 chargers. This was achieved through a joint venture formed with the energy company Iberdrola for the installation of 5,000 fast chargers throughout Spain and Portugal.
Mr Auchincloss stated that China was a major target for expansion. “China is five to ten years ahead of the other EV markets.” They are far ahead in terms of battery and charging technology, and they have a high adoption rate for EVs – about 40% of all new cars sold. Now we’re number two on the EV charging market.
The results signal the end of a turbulent period for BP.
Mr Looney, who was fired last September for having multiple relationships with co-workers, which he hadn’t been “fully transparent”, despite the requests of BP’s Board of Directors.
BP’s Board said that Mr Looney committed “serious misbehavior” and forfeited up to £32.4m of bonuses.
Mr Auchincloss, who was originally appointed as interim chief executive, was confirmed last month as his permanent successor.
Kate Thomson, formerly the chief finance officer of BP’s production and operation business, has now filled his former position as BP’s chief financial officers.