After a near-decade-long tenure during which he won plaudits for restoring BP’s (BP.) fortunes, Bob Dudley has stepped down in style after the oil producer beat fourth quarter expectations and raised its dividend (4 Feb).

His successor Bernard Looney, an internal appointment, arguably faces almost as difficult a task as Dudley encountered when he assumed control in the wake of the Gulf of Mexico oil spill in 2010.

The most existential threat facing the business is growing awareness and commitment to action on climate change. BP is investing in renewables but its footprint is practically invisible compared with the average 3.8m barrels of oil equivalent a day the company produced in 2019. The big question is whether pressure from asset managers will increase and how Looney will respond.

The difficulty in addressing the ESG issue is that the investment required to drastically reshape the portfolio would have to compete with the ongoing cost of its generous dividends – perhaps the key attraction of the shares. BP’s room for manoeuvre is further hampered by net debt of $45.3bn.

Looney will also likely have to steer the business through periods of oil price volatility, balancing taking costs out of the business when prices fall, with having the capacity to take advantage if and when they recover.

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