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Chapter three | |
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 In the equation for delivering long-term shareholder value in the oil, gas and petrochemicals industry, there is one constant: the need to manage risk. Few industries face the operating challenges that BP and its competitors experience on a daily basis: geographic, economic, technical or any combination of these. For BP, maximizing value while managing risk is both a discipline and an opportunity. It is a discipline that enables us to make the right choices as consistently as possible. In recent years, we have spoken of BP's strategy as focused on a 'distinctive set of opportunities'. More explicitly, these opportunities are a series of large investments that allow us to direct our people, assets and market positions in a balanced way. This portfolio of investments helps insulate us against volatility in differing economic conditions, broadens our competitive horizons and supports consistent returns to shareholders.  This balance in choice continues to be a hallmark of our strategy. The stakes, however, are being raised. The opportunities that remain in our
world are growing in their demands and complexity. Even the most attractive projects require a demonstration of staying power and a scale of
financial, human and physical resources to answer industry challenges. How do we win in this environment?It begins upstream, through renewal. BP maintains a portfolio of investments that offers diversified sources of growth and the ability to replace production while minimizing the effect on profitability. Diversity in investment choice also extends downstream to our customer-facing businesses. For BP, maximizing value is a function of making the best investment choices in the most promising places at the most advantageous moment. We believe that this difference in portfolio quality provides BP with advantages in exploration and production efficiency and the potential both for margin improvement in all our businesses and for stronger cash flow. |
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