SIX months after announcing his ambition to turn BP into a net zero business, new chief executive Bernard Looney has moved to show his declaration was more than a public relations stunt.

As the oil giant posted a $16.8 billion (£13bn) second quarter loss that underlined the scale of the challenges posed by the coronavirus crisis on Tuesday, Mr Looney unveiled details of a formal change of strategy.

READ MORE: BP to slash oil and gas production as coronavirus and climate concerns prompt change of strategy

After spending more than a century focused on oil and gas production, BP intends to become an integrated energy company that helps address broader issues as well as making money for shareholders.

He said the company will increase investment in low carbon energy ten-fold over the next decade, from $500 million annually, to $5bn.

The focus will be on building scale in renewables and bioenergy and seeking early positions in hydrogen and carbon capture usage and storage.

Over the same period production of oil and gas is expected to fall by 40 per cent, from 2.6 million barrels of oil equivalent a day (mmboe/d) in 2019 to around 1.5mmboe/d.

BP also plans to invest heavily in reducing the carbon emissions associated with its oil and gas output and the use of its products across the supply chain.

Mr Looney declared: “We believe our new strategy provides a comprehensive and coherent approach to turn our net zero ambition into action.”

The shift reflects what appears to be a genuine commitment on Mr Looney’s part to ensure that BP makes a contribution to addressing the climate change challenge.

READ MORE: BP strikes $5bn deal to sell petrochemicals unit to Grangemouth refinery owner

He said: “This coming decade is critical for the world in the fight against climate change, and to drive the necessary change in global energy systems will require action from everyone.”

But the change is also driven by an element of hard-headed commercial realism. BP noted the fallout from the coronavirus crisis could weigh on demand for oil and gas for years.

The company said its directors had a “growing expectation that the aftermath of the pandemic will accelerate the pace of transition to a lower carbon economy and energy system, as countries seek to ‘build back better’ so that their economies will be more resilient”.

Against that backdrop it would be commercially questionable to say the least for BP to leave plans to develop its oil and gas portfolio that were developed before the pandemic unchanged.

However, Mr Looney also provided a further sign that there has been a deeper change in the mindset by announcing that BP would halve its dividend payout to 5.25 cents per share for the second quarter, from 10.5 cents for the preceding three months.

Corporations have come under pressure to cut payouts to shareholders amid the fallout from the coronavirus, which has caused hardship for so many people.

READ MORE: Glasgow technoogy firm defends dividend amid 'noise' about payouts to shareholders

BP had increased its first quarter payment, from 10.25 cents for the preceding three months.

Mr Looney reckons the cash saving BP will make from rebasing the quarterly dividend at 5.25 cents will free up resources that it can use to invest in support of the energy transition. He expects to generate good returns on that investment, which will be shared with investors through share buy backs.

The signs were on Tuesday that the strategy update had made a favourable impression across a range of groups that take an interest in what oil and gas firms do.

With shares in BP closing up 18.2p, 6.5%, at 299.25p investors seemed to like the sound of Mr Looney’s plans.

Specialists heaped praise on BP.

Luke Parker at oil and gas consultancy Wood Mackenzie said: “No company of BP’s stature had gone as far, or committed so unequivocally, to transforming itself in the face of the energy transition.

“The guidance that BP laid out … brings that transformation to life – makes it real. It constitutes the clearest and most detailed roadmap to Big Energy that any of the Majors have provided to this point.”

Mark Nelson at investment firm Killik & Co said BP had been repositioned to participate in, rather than be left behind by, the energy transition.

Even environmental activists struck a positive note. Mel Evans, senior climate campaigner for Greenpeace UK, said: “BP has woken up to the immediate need to cut carbon emissions this decade.

“Slashing oil and gas production and investing in renewable energy is what Shell and the rest of the oil industry needs to do for the world to stand a chance of meeting our global climate targets.”

Executives at Shell may dispute claims that BP has stolen a march on its rivals.

READ MORE: Shell finance chief highlights potential of bumper Shetland field as oil giant slashes dividend

In May the Anglo-Dutch giant announced the first cut in its dividend since the Second World War as it looked to conserve cash to allow it to invest in supporting the energy transition. Its chief executive, Ben van Beurden, has laid out plans for how the company expects to help decarbonise the energy system and wider supply chains.

However, as Greenpeace made clear BP’s strategy announcement only represented the start of a long process.

It is concerned that BP has retained its holding in Russian oil giant Rosneft.

The onus will be on BP and Shell to demonstrate on a regular basis that they are delivering on their plans.

Updates on progress should form part of the quarterly reporting cycle.

The hope will be that both could help to maximise the potential of renewable energy technologies such as wind and hydrogen power in Scotland and of carbon capture, storage and usage projects.

French oil giant Total is investing heavily in offshore wind in Scottish waters as is Norway’s Equinor.

There will also be concern about what the strategy changes will mean for the key North Sea oil and gas industry.

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

BP and Shell retrenched in the North Sea in response to the oil price plunge from 2014 to 2016.

They have invested heavily in big new fields in the relatively under-explored West of Shetland region, which is likely to attract further attention. The fear is that spending will be cut in less favoured areas off Scotland with worrying implications for the supply chain.

Other firms are making cutbacks in the North Sea following the slump in oil and gas prices this year.

Ironically, North Sea industry body Oil & Gas UK announced yesterday that it had formed a small and medium sized enterprise forum citing concern that a growing number of smaller companies may not survive the current economic pressures and the fallout from the coronavirus.

It said: “With the oil and gas industry entering yet another downturn so soon after the last and as we work towards the energy transition, we’re particularly worried about the impact this will have on our small businesses.”