Storage tanks at the Port of Rotterdam in Rotterdam, Netherlands.

Elliott Investment Management is demanding BP Plc make drastic cost cuts and divestments to strengthen its future as a standalone company, people with knowledge of the matter said.

The activist investor has asked BP to slash expenses in a range of areas to bring them more in line with peers, the people said. It’s built up a nearly 5% interest in BP, according to the people, which would be worth around £3.7 billion ($4.6 billion) at BP’s current share price and make it one of Elliott’s biggest-ever bets globally.

Elliott wants BP to reshape its business to be more like other oil majors such as Shell Plc by cutting spending in areas such as renewable energy, as well as making sizable non-core asset divestments, according to the people. It’s pushing BP to refocus its capital allocation priorities so it can boost shareholder returns through buybacks and dividends, the people said.

The activist currently sees more value in overhauling BP’s operations and maintaining its independence, rather than selling out to a competitor at a small premium, the people said. Since a shift toward renewable energy under BP’s previous leadership, the company’s valuation has lagged its peers. Several of those rivals have been running the numbers over what a takeover of BP might look like, an indicator of how far the London-based behemoth has fallen.

BP has recently held some initial discussions with Elliott, according to the people, who asked not to be identified because the information is private. Elliott sees the upcoming Feb. 26 capital markets day — where Chief Executive Officer Murray Auchincloss is expected to unveil a new strategy — as a key test of management’s credibility, the people said.

Auchincloss recently told BP staff that 5% of employees would be laid off to cut costs. That would still leave BP with more than 80,000 workers. Rival Chevron Corp. on Wednesday said it plans to lay off as much as 20% of workers in a cost-cutting push. Chevron employed 46,500 people at the end of 2023 and has a market value that is roughly triple the size of BP.

BP has announced plans to spin off its offshore wind unit — the most capital-intensive renewable assets in the portfolio. It’s also looking for a partner for its solar and battery storage arm, Lightsource BP, after acquiring the remaining stake in it from its founders in the autumn, a person with knowledge of the matter said.

Elliott’s efforts to accelerate a revamp come the same week Auchincloss said a “fundamental reset” is coming to the London-based firm. It was Auchincloss’s strongest language yet publicly that change is coming, but investors and analysts are wondering whether it will be enough.

News first revealed Feb. 8 that Elliott had built a stake in BP. Even after some gains this week, BP’s stock is still down about 18% from a recent peak in February 2023, placing it among the worst performers in the Stoxx Europe 600 Oil & Gas Index, which has declined roughly 1% over the same period.

Elliott began building its stake last year, the people said. Its campaign is being run by John Pike, an equity partner who focuses on areas including energy, as well as London-based portfolio manager Gaurav Toshniwal, the people said. Pike has previously led campaigns at Phillips 66, Hess Corp. and Marathon Petroleum Corp.