BP has said it will cut the valuation of its oil and gas assets by up to $17.5 billion (£13.9bn) after tax in a move that will raise questions about the company’s plans for its North Sea business.

The move reflects concerns that oil and gas prices may remain much lower than expected for years as a result of the slump in demand caused by the Covid-19 coronavirus pandemic.

READ MORE: Fresh warning on scale of challenge facing North Sea amid coronavirus crisis

BP also noted it has reviewed its investment plans after adopting the ambition to achieve net zero in terms of carbon emissions by 2050.

Chief executive Bernard Looney expects the importance of oil and gas to BP’s business to reduce as its investment in areas such as renewable energy increases.

The announcement came as Oil & Gas UK unveiled a plan to cut the carbon emissions associated with North Sea operations by 50% over the next decade.

The industry body stepped up calls for the UK Government to agree a support deal to underpin the future of the sector, which has been hammered by the plunge in commodity prices caused by the coronavirus.

Oil & Gas UK reckons firms in the North Sea supply chain could play a key part in the development and deployment of technologies that could be used to reduce carbon emissions. These include renewable energy and carbon capture and storage facilities.

The update from BP highlights that the giant is adapting its plans in response to the downturn amid the growing consensus about the need to reduce carbon emissions to slow climate change.

READ MORE: Plans for hefty job cuts at BP fuel concern about prospects on North Sea operation

Mr Looney said the company had been developing its strategy to become a more diversified, resilient and lower carbon company.

“As part of that process, we have been reviewing our price assumptions over a longer horizon,” he noted.

“That work has been informed by the Covid-19 pandemic, which increasingly looks as if it will have an enduring economic impact.”

The review also reflected the expectation that the pandemic will accelerate the pace of transition to a lower carbon economy and energy system.

BP said it will appraise projects on the assumption the Brent crude price will average around $55 per barrel from 2021 to 2050. It previously assumed Brent would average $75/bbl on a 20-year timeframe.

Brent sold for around $39/bbl yesterday compared with about $70/bbl in January

BP said it would cut the valuation of its tangible property, plant and equipment, including producing oil and gas fields, by $8bn to $11bn before tax. BP will write $8bn to $10bn off the valuation of intangible exploration assets.

It did not give details of any changes made to the valuation of North Sea assets.

READ MORE: Will coronavirus turn North Sea into a bargain basin?

In April the company revealed it had cut the valuation of its North Sea assets by around £350 million in the first quarter.

BP recently agreed to accept significant changes to a deal it had agreed in January to sell stakes in two big North Sea developments to Premier Oil.

Oil & Gas UK said the measures included in its plan would remove over nine million tonnes of CO2 equivalent greenhouse gas emissions from operations over the next decade. It said this would be the same as taking nearly two million cars off the road for a year.

The organisation expects the target to be achieved through operational changes that will help firms increase efficency, reductions in flaring and venting, and major capital investment programmes aimed at using electricity rather than gas, to power offshore facilities.

Chief executive Deirdre Michie said: “The coronavirus pandemic and low oil and gas prices have had a devastating impact on the UK’s offshore oil and gas industry.”

She added: “We need a green recovery which supports jobs, supply chain companies and energy communities.”

READ MORE: Scottish Government launches £62m Energy Transition Fund amid oil and gas industry slump

Energy minister Kwasi Kwarteng said the oil and gas sector has a vital role to play in the energy transition. He added: “The UK Government will continue to work tirelessly with all partners to deliver a dynamic Sector Deal.”

Charlie Kronick, senior climate adviser for Greenpeace UK, said BP appeared to have recognised that the climate emergency is going to make oil worth less.

”Accelerating the switch to renewable energy will be vital not only to the climate but to any oil company hoping to survive in a zero carbon future,” said Mr Kronick.

“BP must protect its workforce and offer training to help people move into sustainable jobs in decommissioning and offshore wind.”