BP plunged to a $5.7 billion loss last year, its first in a decade, as the pandemic took a heavy toll on oil demand, and the energy company warned of a tough start to 2021 amid widespread travel restrictions.
Despite the weak environment, however, CEO Bernard Looney told Reuters the company's transition to a greener future remained on track. It is aiming to ramp up renewable power generation to 50 gigawatts (GW) by 2030 from 3.3 GW currently, while slashing oil output to reduce greenhouse gas emissions.
Capital expenditure is set to rise to $13 billion this year, of which $9 billion will still go to oil and gas, Chief Financial Officer Murray Auchincloss said. That compared with a budget of $12 billion in 2020.
For the last quarter of 2020, BP reported a profit of $115 million, falling short of analysts' forecasts due to weak oil and gas sales and subdued trading, it said on Tuesday.
"A tough quarter at the end of a tough year," Looney said in an analyst call.
At 0845 GMT, BP shares were down 3.8 percent at 258.9 pence.
Flagging a weak start to 2021, BP said: "We expect renewed COVID-19 restrictions to have a greater impact on product demand, with January retail volumes down by around 20 percent year on year, compared with a decline of 11 percent in the fourth quarter."
Oil demand is nevertheless expected to recover in 2021, with global inventories expected to return to their five-year average by the middle of the year, Looney told Reuters.
Tighter global natural gas markets are expected to further support profits, BP said.
Adjusted profit at its downstream - or refining and marketing - business in the fourth quarter collapsed to $126 million, less than a tenth of what it was a year earlier.
BP's shares have lost over 40 percent of their value over the past year and remain near 25-year lows, battered by concerns over oil demand due to the pandemic as well as investor doubts over BP's ability to successfully carry out its an ambitious plan to shift away from fossil fuels to renewable energy.
Rivals including Royal Dutch Shell and Exxon Mobil have also seen their market values sink in recent months.
BP's overall fourth-quarter underlying replacement cost profit, its definition of net income, of $115 million fell short of the $360 million seen in a company-provided poll of analysts.
That compared with an $86 million profit in the third quarter and a profit of $2.6 billion a year earlier.
For the year, BP reported an underlying loss of $5.69 billion, compared with a profit of $10 billion in 2019.
BP's debt pile of $39 billion is expected to rise in the first half of this year as it continues to struggle with a weak business environment, but the company said it remained on track to reduce it to $35 billion by early 2022.
At that debt level, BP plans to start share buybacks.
BP's dividend remained at 5.25 cents per share.