Good morning and welcome to the 112th Annual General Meeting of BP PLC. It is now 11 a. M. A quorum is present and I formally declare the meeting open. My name is Helge Lund and I'm BP's Chairman.
And I'm chairing our meeting today from Norway. Due to the measures put in place by the U. K. Government in response to the COVID-nineteen pandemic, this year's AGM is a combined physical and electronic meeting. This means that while shareholders, proxies and others are not able to attend in person, you're still able to participate fully using BP's electronic meeting platform.
Our aim with this meeting format is to make this occasion as open, accessible and informative for our shareholders as possible in the circumstances. To those of you who would ordinarily have attended the AGM in person, May I express our appreciation for your understanding at these times. As part of the meeting today, we will hear from our CEO, Bernard Looney and our Senior Independent Director and Chair of the Remuneration Committee, Paula Reynolds. And later in the meeting, we will also be addressing questions submitted by shareholders. But first, I will hand over to Ben Matthews, our company secretary, to address the procedural elements of this meeting.
Thank you, Helga, and good morning, everyone. The notice convening this meeting was published on the 26th March. As such, the required notice period has been satisfied. And therefore, unless there is any objection, it is proposed that the notice is taken as read. Thank you.
The notice is taken as read. Voting on all resolutions today will be by way of a poll through the electronic meeting platform. Instructions on how to vote are now displayed on your screen. When the Chairman declares today's poll open in a few moments' time, a list of all resolutions and voting choices will appear on your device. You can vote at any time from the point at which the poll is declared open to when voting is closed.
When it comes to voting on each resolution, select the choice corresponding with the way in which you wish to vote. When selected, the box will turn green highlighting your selection. Please note that there is no submit button, So you can change your vote or correct any mistakes. If at any time you wish to change your mind before the poll closes, Simply press the correct choice to override your previous selection. To cancel your vote, press cancel.
To return to the voting screen whilst the poll is open, select the voting icon. When the Chairman declares that the poll has closed, Your last choice will be submitted automatically. The voting results will be provided via our regulatory announcement And displayed on our website as soon as practicable after the meeting. Now turning to questions. We encourage shareholders to submit them in advance of the AGM.
Please be aware that the answers to all questions received prior to 11 am On the 5th May can be found on the company's website atbp.com/agm. In addition, shareholders are welcome to ask questions during the meeting. It would be appreciated if questions could be kept short And relevance to the business of the meeting. Instructions on how to ask a question are now displayed on your screen. If you wish to raise a question on the electronic meeting platform, please select the messaging icon at the top of your screen And type your question into the text box at the bottom of the page.
Alternatively, if joining by telephone, PLC? An operator will be on hand to assist with further instructions On how to ask a question using this method. I'll now hand back to you Helga for the formal business of the meeting.
Thank you, Ben, for that explanation. The poll is now open for voting and will remain open until the end of our question and answer session today. In a few moments, I will say something about the resolutions proposed. But first, I want to share some reflections on the past year, a year that has been extraordinary in every sense. The pandemic has cost over 3,000,000 lives so far and many millions more jobs.
For long periods, large parts of the world have been in some form of lockdown, up to half the global population at the time. Because demand for energy is so closely linked to human activity, our sector was hit hard. That in turn contributed to a steep fall in share values for oil and gas companies, including BP. Within BP itself, our people continue to work under tough COVID restrictions. I want to thank them.
In extraordinary times, they have responded with extraordinary commitment. In refineries, at our retail stations, at sea on our platforms, they have faced real risks and have helped keep energy supplies flowing. Yet even as the U. S, U. K.
And China are bouncing back from the pandemic, the virus is resurgent in India and parts of South America. Any optimism we feel must be tempered by what we know of the suffering still being endured in so many places by so many. Our hearts are with them. Nevertheless, we can acknowledge that this year, we do have reasons for optimism that we did not have a year ago. At the time of our last AGM, the world had no COVID-nineteen vaccines, nor did anyone know how soon one could be produced, nor whether it will prove effective.
Now the world has more than a dozen effective vaccines. Despite an uneven start, more than 1,000,000,000 doses have been delivered so far and deployment is steadily accelerating. Likewise, the energy industry is on a better footing than it was when we last met. Thanks to the efforts of OPEC plus a broad economic recovery, the oil supply is rebalancing and prices are significantly higher. BP itself is in a better position too.
And last year, we met having just launched our new purpose, a new ambition and into all the uncertainty of the pandemic, we were confident that the major change could be delivered safely and profitably, as Bernard put it, that BP could perform while transforming. But we also knew that the month ahead would be challenging. We were at the beginning of the biggest reinvention in BP's history, pivoting from being an international oil company to an integrated energy company. We were yet to launch the strategy that would deliver that change along with a new financial frame and investor proposition that will support it. And all with a new CEO, a new leadership team and a workforce operating remotely in exceptionally difficult conditions.
Yet now, much of that is already behind us. Bernard's team has made very significant progress and we can now see that BP's new strategy is starting to work. It has just delivered a strong set of 1st quarter results. So BP is indeed performing while transforming. But most significant of all for the world and for BP, the past year has seen major geopolitical movement on climate.
We have seen China set a new net zero target, the EU initiate a far reaching green deal, the U. K. Launch of plan for a green industrial revolution and the U. S. Recommit to the Paris Agreement.
These developments only strengthen our belief that BP's new direction is the right one. So we have reasons for optimism about the years ahead and what they hold for BP and our shareholders. But we also recognize that the journey this far has demanded difficult decisions. Turning BP into a leaner, nimbler, flatter company, what we call reinventing BP, required a restructure that will see close to 10,000 people leave our company. And our new distribution policy saw BP cut its dividend and not a difficult decision, but won the Board judged to be the necessary for BP's transformation.
And I believe BP's new Financial Frame and Investor Proposition should instill confidence as should the strong progress BP is making in meeting its financial priorities. I expect that progress to continue. So just as I'm grateful to those on BP's operational frontline, I'm grateful to BP's leadership for the commitment they have shown in executing the strategy we have set out. They have achieved major change while running BP's operations safely and efficiently. And I thank Bernard and his team for that and for their determination to see the job through.
That determination will be needed. This will be a long journey and a challenging one. That brings me to the resolutions proposed for voting today. Of the 13 resolutions, the Board supports 12. But we concluded that the Resolution 13 is not in the interest of BP or its shareholders.
Although the resolution suggests otherwise, asking us to change our targets and aims now would necessitate changing the strategy we set for BP only last year. And looking ahead, in practice, the resolution would constrain BP's ability to adjust its strategy in future as the energy transition unfolds. For those reasons, we urge shareholders to vote against Resolution 13, and you have until the end of our question and answer session today to submit your vote. Finally, I want to especially thank you, our shareholders. BP is fortunate to have many shareholders with holdings large and small who have given BP consistent support whether through smooth sailing or turbulent times.
The past year has been among the most turbulent of all, and we are grateful for your continuing support. Just as we welcome the support for our many new shareholders. Since the beginning of last year, we have received investment and other endorsement from those who told us that they would not have considered supporting BP were it not for the transformation we have begun. We look forward to repaying that faith you are placed in BP. Thank you.
And Bernard, over to you.
Thank you, Helga, and my thanks to everyone joining. This is the 2nd AGM since I've been in this role and the 2nd time we are meeting Remotely. But whether we meet in person or virtually, these gatherings are important. It's a chance for us to update you, BP's owners, On the company's performance, it is your chance to raise any questions or concerns and we will do our very best to respond. It has been an incredibly tough period.
COVID-nineteen, above all else, is a human tragedy. And now it feels like the world is on 2 divergent paths. Some of us are planning for a return to life more like what we knew before the pandemic. Many others are dealing with rising infection rates and deaths. I'm getting regular updates on the situation in places such as India and Brazil and it is nothing short of heartbreaking.
Around the world, we have lost colleagues to the virus and our thoughts are with their families. Many of us have a family member or friend who has died or been taken ill. And more people around the world have been diagnosed with COVID in recent weeks than at any other point since the virus emerged. At BP, we will continue to play our part supporting our people, our customers, our partners and our communities, just like we have throughout the last year, a year that will be remembered for pain, for sadness and for loss of life. And I want to pay tribute to our frontline staff who have kept our plants and platforms, our forecourts and shops running.
They have sacrificed so, so much and they have earned our deep respect. I also know this past year has been tough for shareholders. I recognize the financial impact on you of a reset dividend and a lower share price. At the same time, I wholeheartedly believe in the strategy we have laid out and which we are now focused on delivering. As Helga said, this past year has been Extraordinary in every sense and that's certainly true for BP.
In February 2020, we launched our new purpose and net zero ambition. And we also announced our intention to reinvent BP, our biggest reorganization in decades. Then in August, we unveiled our strategy to from an international oil company into an integrated energy company or from IOC to IEC. And at the same time, we said we were committed to performing while we transform BP. We are beginning to show that over time we can transition BP to a lower carbon future and at the same time deliver competitive cash returns for our investors.
There need not be a choice. But this all starts with safety, our core value. This is so important to me and the company. I know from firsthand experience the pain it can cause when things go wrong. That's why we consolidated a single set of principles that define BP safety culture, how we expect everyone to lead with care, With trust and to be able to feel to speak up when they see something that looks wrong.
These safety leadership principles apply to everyone and they start with me. Throughout the past year, our colleagues have looked after each other And now we are making good progress in reestablishing maintenance activities that have been disrupted and bringing people back to our offices where we can do so safely. Nothing is more important than caring from our people. And as we like to say, a safe business is a good business. And so we delivered a strong set of results for the Q1 of this year, generating $11,000,000,000 of cash inflow From operating cash and divestment proceeds, we are being very disciplined with capital and very disciplined with costs.
We expect our capital outlay to be around $13,000,000,000 this year, over $6,000,000,000 lower than in 2019. Our cash costs this year are expected to be $2,500,000,000 lower than in 2019 and on track to be $3,000,000,000 to $4,000,000,000 lower by the end of 2023. That has contributed to our net debt falling by $18,000,000,000 in the space of a year from $51,000,000,000 in April 2020 to around $33,000,000,000 today even during the pandemic. This disciplined approach has enabled us to more than meet our net debt target of $35,000,000,000 and move to a new phase of our financial frame around a year earlier than planned. We are committing to use at least 60% of our surplus cash flow to buy back BP shares subject to maintaining a strong investment grade credit rating, in effect returning the money to you, our shareholders.
We hope you'll find this combination of our resilient dividend plus buybacks a really attractive shareholder proposition. That was our intention when we set out our financial frame alongside our strategy. At the same time as delivering for today, we have been making significant strategic progress for tomorrow. In the last year alone, we have delivered 6 major oil and gas projects around the world, adding 335 1,000 barrels a day of higher margin production capacity. We have moved into offshore wind, establishing businesses in the U.
K. And the U. S, the world's largest offshore wind market and its fastest growing. We've grown rapidly in solar energy. Our brilliant solar joint venture, LightSource BP, grew its development pipeline by around 3 gigawatts net to BP last year and another 1.4 gigawatts in the last quarter.
We've increased the profitability of our convenience businesses, adding around 300 convenience stores and growing the gross margin by over 10% year on year. We've made EV charging faster and easier to find, expanding the number of electric vehicle charging points to more than 10,000. And by joining forces with BMW and Daimler and with Volkswagen, We plan to see more customers being directed right to our growing network of chargers. We started laying the foundations for 10% share of key hydrogen markets by leading the U. K.
Biggest blue hydrogen project. We've got plans underway for the U. K. 1st net zero industrial hub working with other energy companies. And we formed new partnerships to help our net zero ambition with cities like Houston and Aberdeen as well as some of the world's leading companies including Amazon, Microsoft, Qantas and Uber.
This is exactly what we mean when we talk about performing while transforming. It's about being purpose led and performance driven. It's about doing well for investors and making a difference in the world. It's about delivering cash for shareholders today and transforming BP for tomorrow. We have made a strong start and we greatly appreciate all your support.
We do not take it for granted. I'm optimistic about the year ahead. The team is in a groove. We're focused on the right things, Safe and reliable operations, managing cost and capital and disciplined step by step strategic moves. Thank you for listening and back to you, Helga.
Thank you, Bernard. I will now hand over to Paul Reynolds, Senior Independent Director and Chair of the Remuneration Committee, who will make a few remarks about the role of our Remuneration Committee in 2020 and some of the key decisions it has taken.
Thank you, Helga. Now and again I ask Bernard, Have you put any deposits into your savings account lately? The savings account I'm referring to when I ask them is not a financial account at a bank. Rather, the savings account is the metaphor for how we need to balance our commitment to work with setting aside the time, energy and attention to care for those around us. There has never been a year where the need for setting aside time to care for others has overlapped so much with the challenges of working.
For those at BP engaged in frontline operations where reporting to work was deemed essential, work potentially meant Exposing oneself and one's family to COVID-nineteen. For those who work from home, there was no bright line between working and schooling or childcare. Work, as we know it, did not confine itself to anything like regular hours. And for 1,000 of our BP people, this last year was One where we made more withdrawals than deposits into our metaphorical savings accounts. What's clear from these last months is that what glues us Together at BP goes far deeper than what we pay people.
In a year of unprecedented sacrifice on the part of 1,000 of our people, How does one fairly pay for dedication? Alas, with this question as a backdrop, the remuneration committee faced Three considerations, not just on executive pay, but on rewards for the entire workforce. First was affordability. BP experienced unprecedented financial losses for 2020 despite the efforts of our people. 2nd was moderation.
While BP people were at work, 1,000,000 were out of work during the pandemic around the world. And third was ensuring the success of the energy transition. Despite the pandemic, we've made a commitment to a new strategy, and we needed to make sure that we were rewarding delivery on that strategy. In close consultation with major shareholders who were willing to engage, the Remco made the following decisions. We froze the Salaries of a number of the organizations across BP for up to 12 months in some cases and held flat the wages of selected PLC.
For approximately 6 months, while we took steps to realign our business operations to the new realities of COVID-nineteen. Despite success in achieving our 2020 operational and environmental targets, we made no payout under our annual bonus plan. Simply put, we did not have the financial performance that merited a payout. For participants in our performance share equity plan of The grants made that were measuring performance for the 3 years ending December 31, 2020, We authorized vesting of approximately 1 third of those shares. Again, simply put, our financial performance did not justify vesting at Target.
We postponed the granting of additional performance shares in 2020 until the company's performance was stabilized so that the potential price of the Grants was reasonable and stable. And then last, to mitigate the effects of our austerity moves on frontline workers, BP is now an Credited real living wage employer in the U. K, which ensures that at all company owned facilities, employees are paid at least the real living wage. We're now reviewing how to achieve a similar result across other countries where BP does business. BP has a substantially smaller workforce in 2021 as we resize the company for the energy transition.
The REMCO has established several new programs the organization. First, all employees with the exception of our CEO recently were granted an above market Pay increase for 2021 following last year's pay freeze and workforce reductions. We've Established a new one time all employee share plan. Every BP employee worldwide Is receiving a form of equity grant that will mature in the next 4 years. And we've adopted metrics and targets for both 2021 Annual Bonus Plan and the 2021 Performance Share Plan that's specifically aligned to BP's new strategy, targets and aims, And we reviewed these with key shareholders before we put them in place.
With this work Done. My Board colleagues and I are undertaking a series of listening sessions this year to make sure we're gaining the authentic feedback from BP colleagues around the world. As well, we look forward to productive additional conversations with our shareholders as we collectively navigate this energy transition. In closing, let me express my appreciation to my Board colleagues, to our leadership, to our employees around the world And to our shareholders for their understanding and support.
Thank you, Paul. We will now proceed to the part of the meeting where questions raised by shareholders can be addressed. May I remind you to keep your questions short and relevant to the business of the meeting? I would also like to remind you that the poll is still open, So please cast your votes for each resolution via the electronic meeting platform if you have not done so already. We expect to spend around an hour or so responding to questions from shareholders.
Please do submit your questions now and where questions touch on similar themes or issues, we will seek to address them together to ensure an efficient running of the meeting. I see that we are ready to proceed. And I would now like to ask Ben Matthews to introduce the first question over to you, Ben.
Thank you very much Helga. Thank you and good morning everybody. So we've received a number of questions From a shareholder, Mr. McGibbon. Several of these questions relate to climate, so we'll take these together.
He's asked Question 1, can BP align CapEx plans with a 1.5 degree scenario? 2nd, will BP ensure Sites are appropriately decommissioned and employees supported to transition at the end of assets Paris aligned lifetimes. And third, two questions related to Australia. How does production of the Browse Basin align with BP's target Of net zero ambitions by 2,050 and what are BP's plans to prevent the Northwest Shelf project becoming a stranded asset. Mr.
McGibbons also asked a question on buybacks, which we'll cover a little later on in the meeting. In relation to question 1, perhaps Helge, I could ask you to respond to that question first of all. And then for questions 2 and question 3, perhaps, Bernard, you'd be able to pick up those questions. Thank you. Helga?
Thank you, Ben, and thank you, Mr. McKibben, for your excellent and important question. So our strategy doesn't assume any particular temperature rise. We use outlooks and scenarios to inform a range of possible pathways which the energy transition may take over the next 30 years or so. So each may be associated with different temperature outcomes.
And it is impossible to identify a most likely scenario. So our strategy is designed to be resilient to a wide range of scenarios and a range of temperature outcomes, including 1.5 degrees and well below 2 degrees per the Paris climate goals. One role of our investment governance is to align our investment with our strategy and we're focusing on that. We evaluate new material CapEx investments for consistency with Paris and disclose the details in our annual report, which we will continue to do according to the Climate Action 100 resolution that was approved a couple of years back. So perhaps, Bernard, over to you for the next three questions.
Great. And thanks, Helga, and hello, everyone. Thank you all for your Pardon being online with us today. Mr. McGibbon, great questions.
Obviously, very knowledgeable of our business. The first one around decommissioning and added to that a question around the just transition that I can take. On decommissioning, what I would say is that we'll obviously decommission our assets in line with our responsibilities. And those responsibilities would Local laws and regulations clearly, but also our own internal practices, procedures and standards. And I think the word that you use is appropriately decommissioned.
And I think we can say that for sure. The second part of that question, which is a great one, is around What are we going to do with people and how do we help people if they reach the end of their career in a hydrocarbon acid that has reached the end of its life? In our new sustainability framework, which we just launched in the last few months, one of the things that we've done In the past 12 or 15 months, AIM 12, there are 10 aims, 5 to help people, improve people's lives and 5 for Helping improve the planet. And the one around people, AIM12 is about just transition, which is where your question is going to. Maybe just a couple of comments on that.
One is we have close to 10,000 people leaving the company during our current restructuring, what we call Reinvent BP. It's not a just transition per se, but it is it could be viewed as such in some ways. And what we are doing is providing people that are leaving with more resources, more support, more help, I think than we have done in the past to try and help them prepare for the next phase of their career, which may well be in a very different industry. The other thing that I would say is that within the company, just for your interest, there are people who are transferring already from the hydrocarbons business Into, let's call it, the renewables businesses. We have actually yesterday Kerry, who runs our people Organization, people in culture organization, I think we've got over 100 roles now advertised in Dev Sagnal's organization, Gas and Low Carbon Energy.
And people inside the company are able to apply for those and that will be them transitioning their careers. And then finally, I would say is that not just are we helping our employees, but we're also helping Cities to transition, Aberdeen being a great example, Long, an oil and gas city where I once worked myself when I started out my career and now with a very clear net zero ambition and BP partnering with them. So hopefully that gives you a little sense around that. And the next question was around Australia. And you talk about Browse and North West Shelf.
I think great questions. Australia is a hugely Important country for BP has been for many decades and will continue to be. No decision has been made Yes. On Browse, any decision that we will make will be based, as you might imagine, around economics, around the environmental impact and around consistency with strategy. In terms of the environmental impact, and I think where your question is headed, We'll look at it in the round of the value chain.
I think most people would agree that part of Asia getting off coal To a China just coming having come out with a net zero ambition for 2,060, it's going to have to get off coal. And one way to help it do that Is on to natural gas, on to LNG. So I think natural gas is a big part of the future. It's a big part of the transition. And we will have to look at that project when we come to approve it in its totality in a Scope 1, Scope 2 and Scope 3 emission sense.
Northwest Shelf, which is our existing asset there that is operated very, very well by Woodside. They do a wonderful job operating that asset. In terms of it being stranded, we continue to extend the life of that asset. More and more gas infrastructure in the area has got the potential To flow through that existing infrastructure and indeed browse if it is approved and sanctioned will find that as its home. So that's what we're doing with the operator there Woodside to make sure that it is not a stranded asset.
I hope that helps give you a little bit of context around what we're doing. Thank you.
Thank you very much for that response Helga. Thank you for picking up that response too. If I may, I'll move to the next question. It's a question from Mr. Stephen Duckworth.
Good morning, Mr. Dagware. Thank you for your question. You're speaking on behalf of ShareAction. Your question is that we welcome BP's commitment To cut fossil fuel extraction by 40% by 2,030, though it does not cover emissions from all marketed products or investments.
I'm asking BP to explain how it will tightly limit any reliance on CDR in its net zero strategy In line with credible 1.5 degree pathways with low or no overshoot. I wonder whether Helga, we might pass that question directly to Bernard to respond to.
Very good. Thank you, Ben. Stephen, great Obviously, and again, you're obviously very familiar with the content of our strategy. Thank you for your interest in it. We are focused on 3 aims.
You may remember we've got 10 aims in as part of our net zero ambition. Aim 1 is about the operational emissions that are associated with our work. And I'm pleased to report, as you probably know, that we Took those emissions down by 16% between 2020 2019. The second is around aim 2 and that's around what we call what we think is very important is the carbon content Of our upstream production. Basically what happens when our upstream production gets combusted not always by BP, in fact, most of the time not by BP, but nonetheless those emissions released into the atmosphere.
And this is where Our 40% reduction in production, which I appreciate you acknowledging, comes into account. And we've taken that down By about 9% year on year on 2020 versus 2019. And the key here is absolute emission reductions. So these are all absolute numbers. And then finally, as you say, it's marketed products.
And we have a name to reduce the intensity of our marketed products by 50% by 2,050. And we're very much on a plan, sorry, to enable us to do so. Your specific question is in relation to what you call CDRs. We might call it offsets or natural climate solutions. I think we mean the same And the answer to your question simply is that if we look to our near term targets, they're not so near term out to 2,030 BP does not rely On any form of offsets to meet the emission reductions, which are typically between 30% 40% in absolute sense By 2,030.
So we do not rely on offsets natural climate solutions. That does not mean that we don't believe in them. I think there's a very Clear school of thought that Natural Climate Solutions and offsets are part of helping the world get to net 0. It is all about quality. We got to make sure the quality is right.
It is important that there is a marketplace there that's well managed and well regulated. And we support the work of Bill Winters and Mark Carney and their efforts around this. But the simple answer is we do not rely on what you call CDRs or we would call offsets of any Sense to meet our 2,030 emissions reductions. Thanks, Stephen, for the question.
Thank you, Bernard. Thank you, Mr. Doug Wirth. If I may move on to the next question from Jessica Wirth. Jessica, good morning.
Thank you very much for your question. Bernard, maybe I'll ask you to pick this up directly. The question is, Should BP be consistent in its reporting on production volumes from its stake in Rosneft? Is presented as a positive asset to the Upstream business, but not included within the company's net zero aims or the planned 40% Production cut. Should the company therefore use the more accurate figure of 27% for your production cut?
Jessica, thank you. Thanks for the question. And I think I'll just make a couple of comments, if I may. I think it's important that people Realize we are a 20% owner in Rosneft. Obviously, we don't control what the company does.
And that's why We have chosen not to do what we have always done in the past. There's no change to our historical reporting here. We have not included their emissions in our historical and we don't today. And I think importantly, Jessica, we're very transparent about that. So it's not like we're trying to say one thing and behind the scenes we mean something else.
From the 12th February, we've been crystal clear that this is our Stream oil and gas production, it doesn't include Rosneft. And I would go so far as to say that People can therefore do as you have just done. It's a 40% reduction in our upstream production. Or in your instance, if you want to include that, It's a 27% reduction. I think in either way, in either case, it's a material, material number And quite unique, I would add, in our sector.
So your point is well made. Your math is correct. We're doing what we've done historically. And we're, I hope, very, very transparent about that. So Jessica, thank you for the question.
Again, thank you, Bernard and thank you, Jessica for your question. The next question that we have is a question from Chris Garrard. Mr. Garrard, good morning and welcome. You for your question.
Which is given that proven oil and gas reserves are more than enough to take the world beyond 2 degrees C of global Heating, does any further new exploration not heighten the risk of stranded assets and run counter to the targets of the Paris Agreement Such as Burrup Hub in Western Australia, which may lead to fossil gas production until 2,070. Perhaps Helvi you might want to make any initial response to this and Bernard may have some other comments to make. Thank you.
Thank you, Ben. And thank you, Chris, for the question. It's, of course, a very central and important question. And I think the context here is that we need oil and gas in the decades to come, although we expect far lower demand for oil and gas in 2,050 and beyond as we have described earlier in our strategy. So we don't intend on this call to discuss particular projects, but any further new material CapEx investment decision would need to be evaluated against our criteria for Paris consistency as we have committed to in the context of the Climate Action 100 plus disclosure resolution.
And reflecting our net zero ambition, we have taken a very hard look at the role of exploration. We don't intend to enter into new countries for exploration as you have seen. And our exploration and access capital spend has already reduced. And over time, we expect it to reduce further. So I think we are adequately addressing your key challenge.
So I leave it back to you then.
Thank you, Helga. Thank you very much again Mr. Gerhard for the question. The next one we have is from Mr. Steve Pullum.
Can BP guarantee that no hydrogen will be extracted from BP's hydrocarbon assets. Bernard, that sounds like it's a question for you, if that's okay.
Well, thank you, Ben. Thank you, Steve for the question. Guarantees are Always very hard to make in today's world as you might imagine. But here's what I can tell you about hydrogen. Hydrogen is a potentially a very, very key part of the energy transition.
We talk about electrification a lot. In transport, we talk a lot about electric vehicles. But the reality Is that not everything can be electrified, heavy industry where high heat Is required. Heavy duty trucks, I was listening to Daimler a few days ago talking about a 40 ton Truck going up a hill, that's a very difficult problem to solve from an electric or a battery standpoint. And therefore, we come to solutions like hydrogen.
BP has a lot of experience in hydrogen. As Murray always reminds me, we've been Producing hydrogen for our refinery business for decades. And therefore, we have a long history in it. The question, of course, is how do we make cleaner And greener hydrogen over time, and we come to the conversation around blue and green hydrogen. Our own view, Steve, Is that the world will need both blue and green hydrogen, green being hydrogen, as you know, I think from your question, which is produced from renewable energy.
Blue hydrogen being produced with natural gas, which is a hydrocarbon. But importantly, having the carbon emissions captured and sequestered underground. We believe that the world will need Both forms of hydrogen in the future. BP intends to play a big role in hydrogen In the future, in fact, we've just announced here in the United Kingdom that we will develop what we think will be The largest hydrogen facility, I think 1 gigawatt by 2,030, and it will be a blue hydrogen project. So I hope that gives you a sense of what our aspirations are.
We think that we will claim at least 10% of hydrogen in key markets Beyond 2,030, it's a part of our future. And the world will need both blue and green because quite frankly the demands on renewables Where the world to just get its hydrogen from green be just extraordinarily large. And therefore, we think To give the hydrogen economy the best chance, we need to lean in on all fronts. And we're also doing a project In Lingen at our refinery in Germany with Orsted, which will be green hydrogen being fed into a refinery. So for BP, it will be a combination.
And I think that's the right thing for the world as well. So thanks for the question, Steve.
Thank you again. And thank you very much for the questions, to Polon. It doesn't appear that we have any other questions on this particular area. So what I would suggest is that we pick up next two questions that relates to Share buybacks. And the first of those questions is from Adam McGivern.
And that question is Your first quarter investments, including buying back €500,000,000 of your own shares after last year, Have their commercial viability heavily reliant on the carbon pricing models that you use. Why won't you release the data being used For this to shareholders so they can make more informed decisions. And the second connected question to that is from another shareholder, Mr. Philip Clark, thank you again for the question, Mr. Clark.
Can I log my disappointment that you are restarting share buybacks having recently halved the dividend, Given the importance of the BP dividends to the UK, but also the excessive debt in the group, are share buybacks really appropriate? I wonder Helge whether you wanted just to make any initial comments on that and then perhaps either Mario or Bernard might wish to respond to the questions directly.
Yes. Thank you, Ben. Of course, the capital frame have been a very important part of the strategy discussion of the Board over the past 1.5 years. And we have developed together with management and the executive team a framework which we deliver on the strategy. The starting point is a resilient dividend, as we had talked about earlier in this meeting, make sure we continue to strengthen the balance sheet and have an investment grade, strong investment grade on the balance sheet.
And then we need appropriate fund to develop The company according to our strategy, 1st, invest in low carbon and renewable energy to evolve the strategy of BP and secondly, to continue to invest in a resilient and competitive hydrocarbon portfolio. And finally, we have committed to shareholders that we will buy back at least 60% of surplus cash as we move forward. Perhaps on the reporting and the other question, Mario, you can respond to that. Thank you.
Great. Thank you, Chairman, and good morning, everybody. Thank you, Adam, for your questions. Very much appreciated. As far as The question on why won't we release data being used to shareholders.
I think I just referenced you to Page 28 inside our annual report. In there we provide oil price, gas price, carbon pricing, refining margins. That's fairly transparent. So I think that should help shareholders understand what our investment frameworks are, what our key assumptions are. And if you look through pages 28, 29 and 30, it provides further details about our the way that we invest and how we remain compliant with the Paris pathway.
So I hope that helps Answer that question. I think on share buybacks versus the dividend, I think just to emphasize One point that Helge has made. We really want to make sure that the dividend is resilient. We attempt to balance the dividend at $40 Brent, dollars 11 refining margin and $3 Henry Hub. That's something that we're aspiring to do over the period 2021 to 2025.
It's important in our minds that you can count on that dividend. And if we started increasing it again, It would call into question that balance point and make it more difficult to assume that you can start to you can continue to get it. Remember, it was only 2 quarters ago that the price of oil was $44 There are still a lot of coronavirus cases around the world. And of course, there's still around 8,000,000 barrels a day of oil that OPEC Plus is holding back. So the environment remains uncertain.
We think it's very, very sensible to make sure that dividend is resilient. And we think the best way that we can manage surplus is through share buybacks, as Helga said. And for 2021, we've decided to buy back With our surplus, we've decided to buy back 60% and the residual 40% goes to strengthening the balance sheet as you suggest. So I hope Mr. Clark that helps you.
Marie, thank you very much. And again, thank you for the question. We have another question, a follow on question from you, Mr. Clarke. So I'll go straight to that.
The question is that BP stated that net debt fell to below $40,000,000,000 However, that was only because you issued some 12,000,000,000 Dollars worth of hybrid bonds for the inexplicable reasons that are classified as equity. These were very expensive, add up to 4.875%. Two points on this. Is it not misleading to say Net debt has fallen when we have $12,000,000,000 of hybrid bonds on the balance sheet excluded from the calculation. And second, Why have you issued such expensive debt?
Is it because of the accounting that allows these to be misleadingly classified as equity? If I may, Algo, I'd suggest that's a question for Murray to pick up.
Great. Okay. Thank you, Mr. Clark again for your question. Just to go back to the financial frame then, 5 priorities.
Priority number 2 is the balance sheet. What we're focused on the balance sheet was achieving our net target of $35,000,000,000 We did that 12 months ahead of time And we ended the Q1 around $33,300,000,000 of net debt. It's a well defined figure. We've defined it since August 4 when we launched it. It excludes the hybrids as they're treated for as equity Per the international accounting standards.
So I think we've been fairly clear on how we do that. They are not. They're a perpetual part of our balance sheet. So it seems sensible for us to classify it that way. And we feel very confident moving forward that this is an important part of the balance sheet and how we measure it.
It's important to have a diversified set of investors not only in our equity but in our debt. That's why we're lengthening the nature of our debt and that's why we've diversified it to things like hybrid bonds as well. It's not out of it's nothing unusual for the sector to do this to have a well diversified debt book. Many of our competitors do it as well. So we think it's a sensible thing to do as well.
Thank you, Ben.
I'll just add to that if I may. Mr. Clark, I think just Two things that I would add, if I may. So you mentioned the word misleading. I think Murray has made it very, very clear that it's not misleading.
It's entirely in Accordance with international practice standards and of course approved by our auditors. So I wouldn't want anybody to I think that it is in any way misleading because it's not. It's entirely transparent and entirely in compliance. And the other part of your question was you say it's the only reason and you have only in capitals why our net debt came down. That's not Quite true.
Our net debt was $51,000,000,000 at the end of the Q2 of 2020. It was actually probably went higher than that intra quarter. But at the end of last quarter, it was SEK33,300,000,000. Yes, you're quite right. The hybrid was a big part of that.
But it wasn't the only part. So were divestment proceeds. So was the work that we've done and the team has done around costs. So we're taking $2,500,000,000 a year out of running the business Between 2019 2021. And we've also brought our capital down.
So it was partly driven by the hybrid, but not The only reason. So I just wanted to add those clarifications to that. Thank you.
Marie, thank you, Bernard. Thank you for the additional clarity. And thank you again, Mr. Clark for your question. The next question that we have Is from Mr.
Tipak Thacker. Thacker, good morning. Thank you very much for your question. The question is what will happen to the Profitability of BP and shareholder value from the transition from oil to renewable energy. Helke, did you want to pick that up first of all?
Yes, perhaps I can make some initial comments and put the context and maybe leave it back to Maria subsequently to follow-up. If you look at the broader what we're trying to achieve is to reflect a changing energy market. And we estimate that the market will go through very significant transformation and change over the next few decades. And of course, we all see that That change has already started. So at BP, we have 2 big challenges.
1 is to make sure that the hydrocarbon portfolio is as resilient and competitive as possible from a carbon point of view and from a cost point of view. Secondly is to invest smartly into Low Carbon Businesses and Renewable Moving Forward. And to cater for that, we have put out It's a very strict investment criteria in terms of alignment with strategy, returns, volatility, ratability, the value of integration, we look at sustainability and of course risk. We have also changed the capital allocation process. We have a very clear capital frame as you have seen.
We have central allocation run by the CEO and the CFO and their team, stringent and differentiated hurdle rates to make sure that we invest into the right opportunities. And also as this is a transformation, a change process, we also need an investment process that is agile and also dynamic and flexible. So in the short to medium term, we have sort of a target of bringing a return on capital return on capital employed to 12% to 14% by 2025. And Murrij, you might want to add a few perspectives.
Yes. Great. Thanks, Helga. Thank you, Mr. Thacker for the question as well.
If you go back to the presentation that we made to the market in September, We divided the business in 3, a resilient hydrocarbons business where we see the returns of 12% to 14% through the first half of the decade. We have customer and products where we see returns of 15% to 20%. And we have low carbon where we receive returns of 8% to 10%. I suppose the point that you're raising is resilient hydrocarbons 12% to 14% versus renewables in the 8% to 10% range. I think the thing that we have to think about as shareholders as we look at that is that there's a lot of volatility in the hydrocarbon space.
You only need to look back at the past 12 months to see what's happened with oil price. And although we plan on a $50 to $60 world, obviously lower price world has happened just 12 months ago. So that 12% to 14% is subject to extreme volatility based on what happens to oil and gas price and refining margins. As contrasted with low carbon energy where you're able to lock in those returns through contracts and through financing And achieve a much more stable level of return. So we think as we move forward through the decade and into the next decade That will be able to sustain profitability and it will be much more stable than it has been in the past, creating what we think the market recognizes as a better Investment for shareholders long term.
So I think Chairman is the only thing that I'd add to that.
Marie, thank you. Helga, thank you for the response. And again, Mr. Fager, thank you very much for your question. We have another question from you Mr.
Clark. Thank you. You're keeping us busy this morning. The question is that the move to renewables or non oil and gas is a smart move and BP's leading position is to be applauded. Can you please break the financial results of these developing businesses out of OB and C to create a new segment alongside Upstream and Downstream So we can follow the progress being made.
I think maybe, Bernard, you'll be able to pick up the question here. Thank you.
Very good. It's Philip, Adrian Clarke, I see. So Philip, I hope you don't mind me calling you Philip. So the move to thanks, first of all, for the support on the move that the company is making. We recognize that, of course, there will always be different opinions, but we are Very, very confident, I guess, and optimistic that this move, as Helga and Murray just described, will create long term value for our shareholders and is the right thing for the world.
So your acknowledgment and support means a lot. So thank you. You referred to the reporting structure. The good news is we've done just what you have asked us to do. Murray, I think it was April 4.
When was it that we announced our new reporting?
March. March 18
or 19. March. March 18
or 19. March. Okay.
So just recently in the past several weeks, We have announced our new reporting methodology for the company. And that will report The new business out of OB and C, which was our for those who don't know our historical way of where the Renewables business was reported into a new segment, so to speak, in your language. So We have hydrocarbons. We have consumer and mobility. We have the gas and low carbon business broken out.
So you will be able to see Exactly. I think the type of information that you want. It's not inside OB and C any longer. And I would add there is no more Upstream and downstream, to be consistent with our ambition to transition the company, we have chosen to report And reorganize differently. And therefore, upstream and downstream are for the past.
We now have production and operations, which is where the oil business is. We have customer and products, which is where the most of the downstream used to be. And we have gas and low carbon energy, which is where the renewables that you Are referring to are now and used to be an OB and C. So I think we've done exactly I hope what you would look for and you can see that In our most recent 1Q stock exchange announcement. So that's a good place to go and have a look.
And we can follow-up if you need to. Thank you.
Great. Thank you. Thank you very much indeed. And again, Mr. Clark, thank you for your question.
Chairman, if I may, a point of order that's been raised by one of our shareholders, Mr. Hermann. And the question is whether The time to vote on the poll will be slightly increased due to the time delays using the various platforms that we have. Just to reassure you, Mr. Hermann, we are still very much active in terms of the poll for the resolutions Presented for discussion at this shareholder meeting and we'll give you ample time to complete your voting via the platform that's available to you.
Sorry for the That's available to you. Sorry for the slight latency, not least because of the physical distances that we're trying to cover all at one time. But Hopefully that addresses your question. Thank you for that. Chairman, if we may, then we'll move on.
We have a Call on the line from Mr. Andy Jones from Federated Hermes representing Climate Action 100 plus. Andy, hopefully you can hear us well. Welcome to BP's AGM today. Over to you.
Thank you.
Thank you, Ben. To the Chairman, members of the Board and shareholders, this statement is supported by the shareholders and shareholder representatives co leading Engagement with BP under Climate Action 100 plus Aviva Investors, EOS at Tel Aviv Hermes and Legal and General Investment Management. We must begin by acknowledging the extraordinary challenges of 2020 and the twin tests of the global pandemic and mounting climate pressures. In particular, we acknowledge the extra efforts of BP staff keeping the business running and pushing through major strategic change during this time. Since last year's AGM, we have been reassured by the strengthening of the company's commitment to strategy and transparency on climate action And its response to the Climate Action 100 plus resolution passed 2 years ago, calling for the company to set out its strategy consistent with the Paris goals.
On strategy, we welcome the focus on absolute emissions reduction and ultimate net zero goal in the Upstream business, Showing leadership in becoming the 1st oil and gas major to commit to a managed decline of hydrocarbon production in line with a finite carbon budget. We also welcome BP's articulated return expectations, which provide investors with further reassurance that the company remains committed to its chosen pathway. On transparency, in the form of the Climate Change 100 plus resolution of 2019, We thank the Board for its market leading disclosure of how it regards CapEx to be consistent with the Paris goals, It now includes a strengthening of the investment criteria for new capital investment decisions with higher hurdle rates and shorter payback periods And which helps underline BP's commitment to capital discipline. In March, the Climate Action 100 plus net zero Company benchmark was published offering the first detailed and comprehensive assessment of the performance of the initiative target companies. Relative to BP performed well with good recognition for its work on CapEx, range of targets, trade associations, Climate governance and transparency.
However, the benchmark again highlights a number of concerns and aspects of the strategy and its implementation. We ask for further clarity and strengthened commitment across the following five areas. 1, For many investors, BP's aim 3, a 50% reduction in carbon intensity of products sold by 2,050 does not appear consistent with becoming a net dealer company or achieving the Paris goals. Investors need to see either further evidence of its alignment or strengthening of this aim to achieve net zero emissions. 2, similarly, while acknowledging the company's progress to date, we are concerned that oil and gas price assumptions remain high relative to a range of external Paris consistent benchmarks as acknowledged by the company's auditors.
We also further evidence of how the Board regards the assumptions used by BP as power is consistent. And if they are not, They are reviewed and revised downwards as necessary. 3, against the backdrop of the recently announced strategic agreement, Investors are keen to understand how BP's relationship with Rosneft is compatible with becoming a net zero company. We ask for a clearer indication of how it is encouraging prospect to adopt a Paris aligned strategy. 4, We recognize the need for asset disposal, but asked BP to outline its approach toward responsible divestment to ensure all divestments are consistent with the company's commitment to help the world get to net 0.
And 5, on lobbying, we welcome Monday's published progress update and expanded list of trade association memberships. We request confirmation from the chair that BP will continue to review its membership in trade associations deemed misaligned or partially aligned with the Paris goals, and we ask that potential actions be set within a specified time frame. Further, we ask that the company optimizes Understanding of climate scenarios, mitigation action and technology to maximize its positive global influence and advocacy on this agenda, in particular in emerging markets. Finally, good engagement between BP and investors will be critical in understanding and PLC. We would like to thank you and your colleagues for the continued regular and constructive engagement And look forward to building on our dialogue this year as we seek to resolve these few issues, which we regard as critical to continued support for the strategy.
Thank you.
Andy, thank you very much for your intervention and we have benefited from engaging with Climate Action 100 plus over the past 2 years, as we have developed our net zero ambition and our strategy to deliver it. I hope you can see that the influence you have had on both dimensions. While we clearly don't always agree on everything, I know we share the same goal for BP and the world to get to net 0. In particular, I would like to thank Climate Action 100 plus for their regular and constructive engagement. We look forward to building on our dialogue as we work on the 5 issues you raised today.
We regard your continued support for this strategy as very, very important to us. The Board and I are confident that the company has a strategy that taken as a whole is consistent with the Paris goals. And we are very pleased with the progress the team has made in just the 1st year. A new purpose, new net zero ambition, a new business strategy led by a new CEO, a new leadership team and being delivered by a new leaner flatter organization. Together, they are aiming to reduce oil and gas production by around 40%, increase our low carbon spending tenfold and to have developed 20 times as much renewables capacity and for around 50% of our CapEx to be in transition investments all by 2,030.
In addition to short, medium and long term targets and aims, they have introduced new detailed disclosures so that we and our shareholders and other important stakeholders can measure operational and strategic progress. And even as they are preparing the company for the future, they have strengthened the balance sheet, bringing cost and net debt down and introduced a new distribution policy. And of course, they have done all this in the midst of a global pandemic and a market collapse for our main products, all the while running our operations safely. So from the perspective of the Board, we could hardly have asked Bernard, the leadership team and our people to deliver more. Now the Board, the leadership team and our people are focused on executing the strategic plan and delivering our operational and financial targets.
But be in no doubt, we are committed to the LNG transition. So, Bernard, perhaps you want to add a few points here too and specifically on some other questions. Over to you, Bernard.
Thank you, Helga. And thanks very much for the opportunity to comment. CA 100 plus It's been a big part of this. So I completely agree with you Helge. We're only where we are now really because of the constructive Engagement that we've had really with a wide range of shareholders and including Andy and the team at Climate Action 100 Plus and we value our engagement with you, Andy.
It's had a real impact. I think you've seen that. I mean, just from my own perspective, all I would add before addressing the five points, transforming a company, a 112th AGM today, 112 year old company, is not something as you might imagine that can be done overnight, but we're on it. Every member of the team is working tirelessly, I would say, to transition BP for The benefit of our shareholders and for the benefit of the world. And it has only been 15 months since we launched That net zero ambition, it seems like a lifetime ago, doesn't it?
And it's only less since it's only 9 months really since we launched the strategy. And In that time, we've made, I think, if I may say, I think we made incredible progress. 1st and foremost, the debate here is about Should be about actual reduction in emissions. And we've made a substantial reduction in our absolute emissions over the last year. But not just that.
We've built 2 offshore wind businesses in 2 of the best locations in the world. We've gone from 0 to over 7 gigawatts in the space of 6 or 8 months. The solar joint venture that we have, LightSource BP, is growing at an incredible pace. Electric vehicle charging, I think we've increased the number of charge points by around 40%. And that's before we get to the things that we talk about with Murray and The dividend policy and the planning prices and the impairments and the write offs and the restructuring of the company and so on.
And importantly, as the Chairman mentioned, At the same time, and I think you acknowledge it, Andy, and I appreciate it, safely and reliably delivering the energy that the world has needed throughout the pandemic. And If I may say, I'm in awe of the people at BP, especially those people on the front line. I just heard from one Gentleman who is in Angola for 5.5 months away from his family in Scotland, keeping our operations running there, Returning to Scotland after 5.5 months away from his family and going into 2 weeks of quarantine. That's the type of sacrifice That many of our people on the front line have undertaken. It truly is extraordinary.
Now we took on board obviously a huge amount of feedback as we developed our And we've had regular constructive personally I've had a dialogue with CA-one hundred Plus, which has helped us, helped the progress that we're making. We're very pleased with that. And our view and certainly the view of the shareholders that I speak to is that rather than revisiting a strategy we just laid out 9 months ago, the vast majority of investors want us to get on and deliver it. And that's what we are doing. And of course, at the same time, we'll keep up The dialogue, it's really important.
It definitely makes us better. But you made 5 points, Andy. So enough of a preamble. Let me get to the first one. Your first question was about AIM3, our AIM3 and investors wanting to see a strengthening Of this aim, aim 3 is one of the of 10 aims to get BP to net 0 and of course to help the world Get to net 0.
And you know because you're studied in this, there is no single path To Paris and there's no single kind of metric that measures Paris consistency. And that's why we've put this together as a package of Aims and metrics. And we've got some for absolute carbon emissions reductions. Thank you for acknowledging the reduction in production. Absolute Emissions have to come down.
We've got some for carbon intensity reductions. We've got some for low carbon advocacy where we push for Conditions around the world that support a lower carbon transition just like we did in Washington State in the United States, just like we're doing in the East Coast the United States just like we're doing here in Britain. And the support for greening companies who want to be lower carbon. So Life cycle emissions from our product sales may go up in the short term even as their carbon intensity comes down. We've been transparent about that.
It's a consequence of helping to meet that growing consumer demand in emerging markets, particularly India and China. And The belief here is that having established the infrastructure in those countries, we can over time help these Countries decarbonize. And the model is what we're doing in the U. K. And Germany today where we're taking our existing retail networks and we're using that infrastructure now To convert them to EV charging.
So that model is there and we can replicate it in places like India. And at the same time, we're advocating across the world for those lower carbon policies that I mentioned that can accelerate the uptake of low carbon and enable us to move faster as well. And I think a lot of people want the transition to be A switch and an event and I wish it was, but it's not. This is a massive, massive system That has been built over many, many decades. And therefore, it is a process.
It's a greening process. We're 100% a part of that process. We're 100% in support of a rapid transition and we've weighted our strategy and our target and our aims for that. So hopefully that gives you a little Sense, but we can talk more about this. Your second question was about our assumptions about the future of oil and gas prices and consistency with Paris.
As you know, we reviewed our prices just last year as part of our strategy planning process. As shareholders will know all too well, the review, which was informed by those lower price assumptions led to significant impairment charges and expiration write offs. And you can find a lot of detail in the annual report that we published in March. I think and we consider, I guess, our central case planning price assumptions to be Broadly in line with a range of transition paths, which are consistent with Paris goals. And I have to say that the auditors, Deloitte, Did as well in their report.
And of course, we'll we do keep those price assumptions under periodic review. Point 3 you made, Andy, was about the relationship between BP and Rosneft. Helga mentioned it earlier. It's not always a popular thing to say, but it is the truth. The world is going to be using oil and gas for some time.
And undoubtedly over time it will use less. And that core belief is why we're focusing our oil and gas production On higher margin barrels and more efficient production. And that's why we've set a goal to have it be about 40% smaller By 2,030. And that's Brazilian hydrocarbons, part of our strategy. The same core belief is why we see values value, sorry, for Shareholders in BP's strategic relationship with 1 of the world's most cost advantaged and I would add lowest Greenhouse Gas Intensity Producers.
Rosneft's greenhouse gas intensity per barrel of oil produced is lower than most of the major oil and gas companies, including BP. And as with the cash flow from our own production, the dividends that we receive from our investment in Rosneft can help us drive Our transformation and I guess to be clear and we should say this, Rosneft is technologically an excellent company. Is an excellent company overall. It's committed to improving its emissions and its environmental performance. I know this firsthand.
It has its own Carbon strategy to 2,035, which include targets on emissions reductions, targets on methane intensity, 0 routine flaring, Goals on CCUS, goals on renewables. And we cooperate, actively cooperate with Rosneft on carbon and on sustainability. And We'll continue to work together on reducing emissions. And as you referenced, we signed a strategic collaboration agreement in February. And it's focused on supporting the carbon management and sustainability activities of both companies.
And It's important because it formalizes key elements of our collaboration on sustainability, carbon reduction and low carbon opportunities. So that's a little bit about Rosneft. Point 4 was a question about divestment and net 0. Three things I would say briefly about our approach, Remembering and bearing in mind the point that a lot of people don't sometimes realize, we typically do not own the resources Where we operate, we develop them on behalf of the state. So it's not for us to say we want to wind them down.
I think this is a very important point. But the three points are, our volume reduction is not just about divestments. We plan to explore less. Our exploration budget used to be $2,000,000,000 to $3,000,000,000 a year. It's less than $500,000,000 Murray this year.
We're going to we're reducing our capital in hydrocarbons. We used to spend $17,000,000,000 to $19,000,000,000 in hydrocarbons this year will spend $7,000,000,000 to $8,000,000 So it's not just a divestment story. The second is, of course, that divestment proceeds enable us to reinvest in the transition. So that is a net benefit, we would say. And finally, it's our experience, Andy, that the companies we sell to, they're not somehow immune from the societal pressures and challenges In the financial system either.
So they're very much open to those. So that's our approach. Divestment is part of our strategy. It helps us decarbonize BP and get BP closer to net 0. And that's a responsibility that we have to our shareholders.
And it helps us diversify BP, scaling those low carbon businesses that contribute to the world getting closer to net 0. And then Final point was about lobbying and trade association memberships. And we can follow-up on any or all of this and we will I'm sure. Helga and I have spoken about this numerous occasions actually. Helga, you will agree, I know.
It is and remains An important discussion for the Board. We've discussed it at the Board as well. And I'm very happy to confirm that we will keep our memberships under review. I think it's important, of course, that we remember that trade associations do much more than lobbying. There is Oftentimes a huge focus on safety, on standards and on learning.
And quite frankly, as you would hope, I think, This forms an important part of any decision that we make. But there has to be reasonable alignment of views and positions. We left 3 associations last year after a review of 30 of our memberships, specifically looking at our alignment on climate. We found we're only partially aligned with 5 more and we've worked with them over the past year to see if we can influence them to move closer to our position on things like Methane and carbon pricing. And of course, this Monday, we reported on this, as you said, 2 days ago in an update.
And the process works. Progress can be uneven as we said, but we have in general seen movement towards where we are. We'll keep the dialogue going just like we do with you, working for greater alignment. But if we can't find that alignment, then we will leave if we have to. So In terms of timeframes, I think we'll publish another more comprehensive review next year.
It's ongoing. It's important for us. And we are, of course, happy to keep that dialogue with Climate Action 100 going. So A little bit of a long answer for which I apologize, but you raised 5 excellent points that I think obviously given The shareholding that you represent are relevant to many, many shareholders and that's why we wanted to give a little bit of a fulsome response. But most of all, thank you for your challenge of us and your backing of us.
It's not an easy journey we're on. We need a bit of support. And Climate Action 100 plus is doing just that. So thank you. Helga?
Great, Bernard. Thank you. And thank you again, Andy, for your interventions. BP has really evolved ambition in part because of your engagement with us over the last couple of years. And we are better positioned to achieve it again in part because of your engagement with us in this period.
We have many stakeholders who look to us for many reasons: for energy, for jobs, for business, for support for their community and not at least for competitive financial returns and financial security in their lives. The needs are many and we look to serve them through our new purpose reimagining energy for people and our planet. And I can assure you that the Board believes we can do that best through being open and transparent in our advocacy and reporting and inclusive in our engagement. And we have aims to challenge ourselves on these things and make ourselves better. So we will value your ongoing support and challenge.
And thank you. Now I think then we have to make further progress with our meeting. Back to you.
We do. And thank you very much Helga. And again, thank you, Andy Jones. Thank you, Climate Action 100 for your statement. So the next question is from Steve Pullum.
Mr. Pullum, welcome. Thank you for your question. Maybe, Bernard, I could ask you to pick the question up. But the question is that if BP is not relying on offsetting to meet its net zero targets, Why is BP investing in offset targets?
Steve, thanks again for the question. The answer is very simple. As part of our ambition, which is to get BP to net 0 and to help the world get to net 0, we have 5 aims to get BP to net 0, we have 5 to help the world get to net 0. And this latter 5 is why we are doing what we are doing in the matter Of Natural Climate Solutions, you're right. We're investing in Natural Climate Solutions assets.
We trade in the carbon offset market. And we see natural climate solutions as an important Part of helping getting the world to net 0. And in fact, our new sustainability strategy, aim18, talks about our objective is to help scale the market in natural climate solutions, which we think the world needs and Can be a good business for BP. But you are correct in saying that between now and 2,030, we will not be relying on offsets to meet Our emissions reductions. So hopefully that helps, Steve.
Bernard, thank you. And Mr. Pullen, thank you for the Question, if I may just, Chairman, if I may just remind shareholders that the poll is still open and we'll close when we finish The question and answer session. So please do cast your votes if you haven't already done so. Next up, we have A question from Mr.
Garrard. Chris Garrard, thank you very much for the question. The question is given the opposition to Shell's Sponsorship of London Science Museum Carbon Capture Exhibition, will BP be taking To review its own relationship with the Science Museum Group and more broadly its involvement in cultural sponsorship. Ben, if I may pass it over to you.
Great. Thanks, Ben. Thanks, Chris, for the question. I can't comment on what another company is doing with the Science Museum. I like The ideas around the Carbon Capture Exhibition, I think that sounds great.
And for People who've got a lot of expertise of taking carbon out of the ground, I think many of those same people are well placed to Help put carbon back in the ground, which is what carbon capture is all about. I would also add that Serene Blatchford, I think, does an absolutely fantastic Job of running the Science Museum and keeping it very, very relevant in today's society and modernizing it and progressing it in a way which is consistent with its name, being at the cutting edge, so to speak, of what is happening in society. In terms of our own relationship to arts and culture, Chris, we've been doing this for Across the world for over 50 years, I think something like 53,000,000 people Have engaged in events or whatever that had been supported by BP over that time period. I think that's just here in the U. K.
Actually. And it's nothing more and nothing less than part of our commitment To give back. We operate as part of society. We operate as part of communities around the world and here in the U. K.
And it's a natural thing to want to give back. That's what our People want to work for BP who are good people trying to do the right thing and they want us to give back just like we did, For example, during the pandemic where we have given free fuel to all the emergency services vehicles in Britain, Both in the first lockdown and in this most recent lockdown. There's nothing more to it than simply giving back. Now Clearly, there are some who take a different view. But from our perspective, our position has always been That the world is going to do better with dialogue and engagement.
That's our view. Others may have a different view, but that's our view. And therefore, we want to continue to be involved in such things. But of course, we're not the only party In those agreements and we'll never as you might imagine impose ourselves on anybody. But I'm proud of what the company has done over decades in the arts.
There's nothing more to it than us taking an opportunity to give back a little bit to society. And we'll continue to work with institutions in the future that want to work with us and that's what we would intend to do. But it's Part of a broader part of our agenda around being good members of society and trying to add a little bit to the communities in which we work. So Chris, I hope that helps a little bit around the context on how we think about Arts and Culture. Thanks for the question.
Thank you, Bernard. And thank you again, Mr. Gara for your question. There are then a couple of questions relating to people and culture matters. And maybe Bernard, I can again point To you to answer the first question at least.
A question from Mr. Hermann, Gabriel Hermann, welcome. Thank you very much for your question, Which is following Elon Musk's diagnosis of Asperger's former autism is BP neurodiverse in its recruitment and working culture? And working culture. Do you want to pick that up?
Very good. Thank you. And Gabriel, thank you very much for the question. So the first thing that I would say is that diversity and inclusion is a huge part of our agenda in BP. I'm very proud of the fact that one element of diversity, I think it's almost 40% now Of the top 120 executives in the company are female as one measure of diversity.
It's why we focus on mental health So much within the company because it's an incredibly inclusive topic. It touches everyone inside our organization. But there are many forms of diversity. And neurodiversity is one of them. And it has an important place Inside our D and I framework, what we call our D and I framework, we are putting Steps in place to increase the awareness and definitely acceptance across BP and foster what I would call greater cognitive Diversity in our workplace.
We recently ran neurodiversity awareness training sessions for people in BP, and We're looking to recruit people that for our newer diverse individuals. And I'm in contact With someone inside the company in Eastern Europe who helps us with keeping this agenda live and is very encouraged by what We are doing in this space and I think he's been on some of the social media that we do recently. So diversity comes in all formats, Different shapes and sizes, so to speak. Neurodiversity is absolutely in our sites. It's part of our framework.
We're doing education inside the company and it is part of our recruitment plan. So Gabriel, I hope that helps you a little bit with And any advice you have, please feel free to follow-up.
Terrific. Thank you. Thank you, Bernard, again. And Mr. Hammond, thank you very much for your question.
The next people and culture related question is from Esme, Lily White, on behalf of ShareAction. Delighted to see BP being accredited As a living wage employer in 2020, thank you for making this commitment to your staff. The Living Wage Foundation have launched the living hours standard. I'd like to ask for an overview of BP's approach to setting contracts including the minimum number of hours and notice periods of shifts. Bernard Is that something you could pick up?
Very good. Well, Esme, thank you for your question. I'm delighted that we did this actually last year. And one of the reasons why it became very clear that this Was the right thing to do was when I had a call with retail staff here in the U. K.
And I come from an upstream background. And therefore, when I think of the frontline, I think Tend to think of people working in offshore facilities or on drilling rigs or in refineries. And that's how I Think about had thought about the frontline, but I found myself talking to a group of people who were really on the frontline, dealing with customers Each and every moment of the day in the midst of a pandemic. So really, really at the cutting edge providing frontline Essential services to people across the country. And that was one of the reasons why we adopted the U.
K. Living wage, which provides an hourly rate, which is above the government minimum. I think it's £9.30 And London, I think it's a little higher at £10.75 We're very aware of obviously the work that's being done on the living hours standard. We're in Contact with the Living Wage Foundation on that, and we will liaise with them or are liaising with them. And we will come back I think in the future when that engagement has ended and talk about your question specifically Around minimum hours and notice periods.
And that's just for the United Kingdom. And we have to think also that we're a global company. And we're also reviewing what our approach is throughout the world. So thanks for the acknowledgment. I'm really, really glad that we did it.
I couldn't imagine a group of people that I'm more proud of in terms of what they did last year, our retail staff at the frontline all around the world. Brilliant job. And this was a small token of our appreciation for the work that they did. And by the way, I would add That, that received the full support of the remuneration committee led by Paula and by the main board, obviously, led by Helga. So thank you for the question, Esme.
Bernard, thank you again. And Ms. Silio, I thank you for the question. Next we have a question from Ms. Elsa McPherson.
The question is I have experienced problems with receiving voting papers through the post. I received the voting form, but no notice Of this AGM, which also happened last year. Could we confirm that in the future, voting papers will be sent by post, Including the notice of meeting, etcetera. But if I may just respond to that quickly, thank you for again for the question. As you would What we strive to do is to be efficient in terms of the use of paper.
It is after all shareholder funds that we are using to communicate with our shareholders and we encourage wherever it is possible to do so, shareholders to interact With BP online. What I'd like to suggest, Ms. Macpherson, is that we contact you directly afterwards and we can just run through the Process for registering online if that's what you'd like to do. And that will be an efficient and secure way in which to communicate As between you and BP. Of course, alternatively, we can, of course, make arrangements for you to continue to receive All shareholder communications through the post, if that's what you'd prefer.
So we'll be in touch with you straight after this. But thank you for the question. The next following question then is another question from Mr. Clark, it's Philip Clark again. Thank you for the question.
How many shareholders are on this call and how does that compare with the normal meeting At the XL Centre. So on this call, right now, we have around 80 or so shareholders, I'm told by the team here, plus a number who are watching online via the bp.com registration point. On the second part of your question, how does that compare with the normal meeting at the normal physical meeting? Well, that sort of depends upon where it is that we are hosting that meeting. As you may be aware, we are sometimes in London.
We've also been in Manchester. We've also been in Aberdeen, and we've been trying to be in London for the last couple of years, but for the challenges presented by the pandemic. Normally that number is around 100 or so shareholders, sometimes more, as I say, depending upon the physical location of that meeting. But I hope that helps and I hope that answers your question Mr. Clark.
Helga, from my side, I'm told that we don't have any further questions of substance Relating to the business of this AGM or the resolutions that have been put to the meeting. So if I may hand it back To you for any other remarks you'd like to make. Thank you.
Thank you, Ben, for leading us through this and the poll is now closed and the results will be provided via a regulatory announcement and displayed on our website as soon as practicable after the meeting. As we conclude our meeting, I would like to My gratitude to 3 groups of people who have made it possible. First, I thank the BP team, which has delivered this hybrid AGM. It has been no small task, but your determination demonstrates your commitment to reinventing BP. And second, I thank my fellow members of the Board.
The AGM is rightly so the moment each year when the way the company is run attracts closest scrutiny. Yet behind the scenes, the BP Board is meeting, corresponding and debating the whole year through. And I want to thank board members for their diligence. And I want especially to thank Professor Dame Ann Dorling and Brenton Nelson who are each stepping down from the Board at the conclusion of this meeting following respectively 9 11 years of exemplary service. 3rd and finally, I would like once more like to thank you, our shareholders, for your continued support of our company.
That support makes everything else possible. Thank you. And this concludes the 2021 BP PLC AGM. Please stay safe and thank you and goodbye.