Should BP get more credit for its turnaround effort?

0:02Good morning from the Financial Times. Today is Wednesday, February 11th. And this is your FT News Briefing. We're going to bring you the latest on the Epstein files fallout. And Cuba's energy supply is hanging on by a thread. Plus, look, we know BP has had it rough lately, but one of our columnists thinks that we should cut the oil major a little more slack. I'm Mark Filippino, and here's the news you need to start your day.

0:35U.S. Senators grilled Commerce Secretary Howard Lutnick yesterday during a hearing. He said he visited Jeffrey Epstein's private island with his family back in 2012. I did have lunch with him as I was on a boat going across on a family vacation. My wife was with me, as were my four children and nannies. I had another couple with, they were there as well with their children, and we had lunch on the island. Lutnick is facing a lot of scrutiny over his ties to the late convicted sex offender. Department of Justice documents released last month show he had more extensive contact with Epstein than previously thought.

1:16The Commerce Secretary is the latest high-profile figure to feel the heat since the DOJ's most recent Epstein file dump that came last month. Politicians including U.S. President Donald Trump, former President Bill Clinton, and the U.K.'s former ambassador to the U.S., Peter Mandelson, have all appeared in the documents. White House Press Secretary Caroline Levitt said on Tuesday that Trump fully supports Lutnick and considers him a very important member of the team.

1:47Cuba is telling international airlines that it won't be able to supply them with jet fuel starting this week. That's because the country hasn't had an oil or fuel delivery for about a month now. U.S. President Donald Trump wants regime change in Cuba, so he cut off Venezuelan supplies to the island and pressed Mexico to stop its shipments. Now, in addition to affecting everyday Cubans, the embargo is starting to hit one of the country's main sources of revenue, tourism. The FT's Jude Weber joins me now to discuss this. Hi, Jude. Hi, Mark. So just how bad is this oil embargo for Cuba's tourism industry?

2:24Oh, it's bad. I mean, I spoke to somebody from Melia International. It's a Spanish hotel chain yesterday, and they said they do have fuel. It's not like they have none at all, but they really have to sort of look after it to make sure that they're not, you know, wasting it. What hotels are doing are closing some of their hotels and moving people into other hotel, you know, other establishments, so they're not trying to keep the lights on in more than one hotel. And this is also hitting airlines very hard as well. Air Canada has cancelled flights. It said that it will send empty planes to pick up its passengers, but it won't be sending any new planes out there.

2:58So this is really starting to bite, I think, in the tourist industry. And tourism used to be obviously a very big money earner for Cuba. Now, how is the energy embargo affecting ordinary Cubans? I think on ordinary Cubans, it's very, very difficult. I mean, power cuts in the provinces outside Havana have been really commonplace, lasting half a day often. They've now spread to Havana as well. I spoke to somebody the other day who said, you know, you were getting 12, 15-hour power cuts in Havana, which you hadn't had before. People who have medical treatment are worried, I think, that they're not going to be able to get their hospital treatments.

3:35What President Miguel Diaz-Canel has done is introduce rationing and sort of special measures. The thing is, though, that the energy crisis really isn't hitting everybody equally. In Havana today, you see solar panels, for example, for people who have the money. You see people who have access to money. There's plentiful food that they can buy in shops. But if they're on Cuban wages, well, that's beyond their reach. And those are the people who really will be hurt the most by this energy and fuel crisis. Jude, why is the US doing this to Cuba? Well, the US wants regime change in Cuba. It's an autocratic regime.

4:12It's a one-party state. and the U.S. has long been against this Cuban regime. And now, you know, the Cuban president said that he was open to negotiations without preconditions, but then he imposed the precondition was that, you know, we can't talk about regime change. You know, we can't change our model. What alternatives does Cuba have? Does it have any options that it can turn to? Not immediately. Venezuela has been a big supplier. But last year, in fact, Mexico overtook Venezuela, and that's because of the blockade that the U.S. had on the Venezuelan oil industry. Russia has said they're going to try and help as much as they can.

4:52There's similar sort of noises coming from China, but there are no immediate sources, not least because President Trump has said that anybody supplying or selling oil to Cuba will be hit by tariffs. That's the FT's Jude Weber. Thanks so much, Jude. Thanks, Mark.

5:14Ukraine is planning to hold a presidential election and a referendum on a peace deal with Russia. It's expected to happen by May 15th. Sources tell the FT that the move comes as the White House increases pressure on Kyiv to wrap up peace negotiations in the spring. If Ukraine doesn't hold these elections, the country risks losing proposed U.S. security guarantees. The two votes line up with a push by the U.S. to have all documents signed in order to bring the conflict to an end by June. Ukraine's President Volodymyr Zelensky laid the U.S. plans out to reporters last Friday. An election would be a big shift for Zelensky.

5:51He's said that holding one is impossible. The country is under martial law, millions of its citizens are displaced, and 20 % of the country is under Russian occupation. Zelensky's office and the White House did not respond to requests for comment.

6:11It's almost Valentine's Day, and one of our columnists thinks that BP should get a little bit more love for its turnaround efforts. You see, BP hit pause on a share buyback program yesterday. It's the first oil major to make this kind of move. And instead, the UK company will focus on cutting its$22 billion debt pile after an ambitious push into green energy backfired. Camilla Palladino is the deputy head of LEX at the FT, and she thinks we should all be giving BP a little bit more credit for its efforts. She joins me now. Hi, Camilla. Hi. So what exactly is BP not getting enough credit for? It is in a stronger position than it was, but investors don't seem to give it credit for that.

6:52Its shares fell 6.5 % yesterday when it cut its share buyback. And the move had been much telegraphed. The FT has been writing for a long time that BP needs to cut its share buyback to conserve cash for debt. So it shouldn't have been such a surprise. And it was very negatively received. And it's been doing good things. It's been cutting costs. They're also selling assets. They've sold 65 % of this US lubricants business called Castrol for$6.5 billion. And they've completely spruced up their C-suite. So they have a new chief executive, Meg O 'Neill, who's joining from April 1st, and a new chairman who started in July, Albert Manifeld.

7:35I think it's important to put this all into context. Why are share buybacks so important to investors in this industry? So that's a really good question. They're more important to European oil companies' equity story than they are to U.S. oil company equity stories. It was less reliant on share buybacks and dividends. And I think it's partly because European oil majors didn't see growing oil production because of the green transitions. The requirement was not so much to grow the oil production. It was to give back the cash that they made to shareholders. So it's been a major part of the investment case for the European oil majors.

8:17And, you know, they've hit lower oil prices. And so in this context, paying out so much cash to shareholders becomes difficult across the board. But Shell, for example, confirmed its$3.5 billion buyback for the coming quarter. So they've not cut. Total's been trimming. And we'll see what happens to the other majors. Looking ahead, BP made its biggest discovery in 25 years off the coast of Brazil. How important is that for the company? So it's very important for the company. Some companies make big discoveries and some don't. And BP has made a huge one. And yesterday they said that it contains an estimated 8 billion barrels of liquids, oil and condensates.

8:58And Citigroup analysts have said that the net present value of this discovery could be 15 to 20 billion dollars. So that's pretty big. European and American oil companies have been quite bad on the whole at finding new resources. If you recall, the date at which the world was supposed to hit peak oil was as early as the end of this decade. So finding lots of new oil fields to produce lots more new oil was not as high up on the agenda as maybe it was in the past. and it's now come back up the agenda. So it's going to be very important for them and it revitalizes their longer term growth prospects.

9:42You mentioned that BP has a new set of executives, including a CEO. What do they need to focus on to not only make unhappy investors happy, but as the company itself said, revive its fortunes? They also said that they need to be urgent. So one of the first things I think the new executives need to do is actually get debt down. One of the things that disappointed investors yesterday was that despite the fact that the company saved money on the share buyback, it didn't change its estimate of what net debt it expects to have in 2027. And then I think it'll be about delivery. So BP, because of this big discovery that it's made, it's a bit transformational for them, such a large discovery.

10:26And I think people will be watching to see how quickly they can get it on. Camilla Palladino is the deputy head of Lex at the FT. Thanks, Camilla. Thank you. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.