BP Annual Review 2003 Introduction Performance highlights Chairman's letter Group chief executive's review It starts here Financial performance Business performance Environmental and social performance Summary accounts Summary corporate governance Summary directors' remuneration report Board of directors Annual general meeting and information for shareholders Further information	Petrochemicals Strategy Focus portfolio on seven core products. Compete through technical superiority, operational excellence, deep customer relationships and accessing advantaged investment opportunities. Build organizational capability to increase margin capture and continue to drive cost efficiencies and improve returns throughout the business cycle. Focus BP focuses on seven core products – purified terephthalic acid (PTA), paraxylene, acetic acid, acrylonitrile, ethylene, high-density polyethylene (HDPE) and polypropylene (PP) – that enhance the everyday lives of consumers. Part of BP's customer-facing activity, these core products are eventually used in the manufacture of a wide variety of consumer goods, including plastic drinks bottles, computer housings, adhesives, inks, rigid packaging, pipes, food packaging and automobile components, as well as textiles for clothes and carpets. Our core products have been selected on the basis of growth characteristics, proprietary technology, leadership positions and group integration value. Petrochemicals delivered a result of $606 million in 2003, a decrease of 21% from 2002. Our production for the year was a record 27,943 thousand tonnes, compared with 26,988 thousand tonnes in 2002. This reflected our capacity additions and lower turnaround activity. Faced with the most challenging business environment in recent years, we delivered a stable operational performance, with returns steady. Overall, chemicals indicator margins were similar to 2002, but fluctuated throughout the year. This performance reflects high and volatile feedstock costs, particularly in Europe, and slow growth in demand. The segment's result was further reduced by several non-routine items, continuing portfolio reductions and lower income from SARS-affected businesses in Asia. Throughout the year, we continued to focus on our core products. Our operational priorities were safety, margin capture and driving cost efficiency in a difficult business environment. Overall, 2003 cash fixed costs were reduced compared with 2002, while the business grew. The operations at our sites continued to be good as utilization improved. As a result of growth and portfolio management, our seven core products now account for 70% of our capital employed in this segment. Our production capacity increase in 2003 reflected our Asian PTA additions, the Veba acquisition, a world-scale HDPE plant in Cedar Bayou, Texas, and growth, albeit slow, in market demand. Projects under development in 2003 included the final commissioning of the BP Zhuhai Chemical Company in Guangdong province (our first PTA venture in China), the start-up of the CAPCO PTA plant in Taiwan, progress on our SECCO ethylene cracker joint venture near Shanghai and expansion of the Chocolate Bayou olefins facility on the US Gulf Coast. Importantly, 2003 also brought a realignment of the petrochemicals organization. The segment is now structured around its core-product strategy, while retaining its executive leadership in key regions of the world. This more natural alignment of businesses with strategy is intended to provide greater organizational focus and operating performance. In this section   Exploration and Production   Gas, Power and Renewables   Refining and Marketing Petrochemicals   Related links   Lord Browne's review of 2003   Group chief executive's review A brief description of our reporting terms   Results definition

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