2012 Annual General Meeting: Chairman’s Speech
Speaker: Carl-Henric Svanberg
Speech date: 12 April 2012
Venue: Excel conference centre, London, UK
Speech date: 12 April 2012
Venue: Excel conference centre, London, UK
Ladies and gentlemen, good morning.
I am Carl-Henric Svanberg, and on behalf of the Board in BP I welcome you to our 2012 Annual General Meeting.
2011 was a year of continued challenges but also important progress for BP — a year in which we re-laid the foundations of the Company.
Let me highlight the critical points.
How we are making BP a stronger and safer Company.
The changes we have made to your Board.
And the road ahead for BP, your Company, and what this will mean for you in terms of shareholder value over the longer term.
Let us go back twelve months — we met together, here in this room, after a troubled year.
A year that had seen the tragic accident and oil spill in the Gulf of Mexico.
In our response, together with management, the Board set three priorities.
Safety and risk management to be enhanced and embedded.
Trust to be regained.
Value creation to be achieved through the execution of a clear strategic plan.
Our CEO Bob Dudley will talk more about this in a few minutes but I want to be clear, turning each of these priorities into effective action continues to require tremendous energy and commitment — from everyone within the Company.
Let me first describe the Board’s strategic approach for this work.
For many years, BP operated as a decentralized organization. Different business units often had local ways of working.
We are now building a company where we can leverage our global strength.
A company that is more efficient and focused.
A company, that is designed to meet the tough challenges and great opportunities that lie ahead.
Above all, a company that delivers value.
So - we are stepping away from a system that is a legacy of our past, and the acquisitions we have made along the way.
I am Carl-Henric Svanberg, and on behalf of the Board in BP I welcome you to our 2012 Annual General Meeting.
2011 was a year of continued challenges but also important progress for BP — a year in which we re-laid the foundations of the Company.
Let me highlight the critical points.
How we are making BP a stronger and safer Company.
The changes we have made to your Board.
And the road ahead for BP, your Company, and what this will mean for you in terms of shareholder value over the longer term.
Let us go back twelve months — we met together, here in this room, after a troubled year.
A year that had seen the tragic accident and oil spill in the Gulf of Mexico.
In our response, together with management, the Board set three priorities.
Safety and risk management to be enhanced and embedded.
Trust to be regained.
Value creation to be achieved through the execution of a clear strategic plan.
Our CEO Bob Dudley will talk more about this in a few minutes but I want to be clear, turning each of these priorities into effective action continues to require tremendous energy and commitment — from everyone within the Company.
Let me first describe the Board’s strategic approach for this work.
For many years, BP operated as a decentralized organization. Different business units often had local ways of working.
We are now building a company where we can leverage our global strength.
A company that is more efficient and focused.
A company, that is designed to meet the tough challenges and great opportunities that lie ahead.
Above all, a company that delivers value.
So - we are stepping away from a system that is a legacy of our past, and the acquisitions we have made along the way.
BP’s new more centralized organization enables us to better
I witnessed significant progress myself during the year when I visited our US operations, including Alaska as well as Azerbaijan and our oil sands projects in Canada.
During the year, the Board supported and challenged Bob and his team as they worked to enhance BP’s processes, systems and culture.
The Board also initiated a review of the way the Company manages, reports and acts on risk.
And we have enhanced and grown the Safety & Operational Risk function.
And to be clear - safety and value creation go hand in hand.
It is about each employee having clear and well defined tasks and responsibilities, training and tools, as well as support and ways to access expertise in critical situations.
It is about getting it right the first time.
Therefore there is no conflict between safety and value creation.
So - let me now talk about trust. In an industry that makes a vital contribution to everyday life, BP can only be successful if we have the trust of the people and the societies where we work.
- align the Company around a set of clear and consistent standards, that define our way of working
- unite us through a common set of values
- align our approach to risk
- encourage the sharing of knowledge and capability
- all within one system of remuneration
I witnessed significant progress myself during the year when I visited our US operations, including Alaska as well as Azerbaijan and our oil sands projects in Canada.
During the year, the Board supported and challenged Bob and his team as they worked to enhance BP’s processes, systems and culture.
The Board also initiated a review of the way the Company manages, reports and acts on risk.
And we have enhanced and grown the Safety & Operational Risk function.
And to be clear - safety and value creation go hand in hand.
It is about each employee having clear and well defined tasks and responsibilities, training and tools, as well as support and ways to access expertise in critical situations.
It is about getting it right the first time.
Therefore there is no conflict between safety and value creation.
So - let me now talk about trust. In an industry that makes a vital contribution to everyday life, BP can only be successful if we have the trust of the people and the societies where we work.
As we all know, you cannot win someone’s trust simply by saying ‘trust me’. You earn trust through your actions; through what you do.
During the year, we worked closely with governments, regulators and our industry —
Demonstrating the enhancements we are making to risk management —
And sharing the lessons we have learned.
In the US, we continued to meet our commitments to those affected by the accident and reached important settlements with several parties involved.
By making priorities of safety and trust, we reinforce the foundations of a strong BP, a BP that can deliver sustainable value.
In the past we measured our success by barrels of hydrocarbons produced.
We now measure success on the value we generate for you, our shareholders.
We have therefore taken a hard look at our portfolio —
Disposing what has a higher value to others, seeking to release value earlier in the life of our assets.
We are playing to our strengths. BP has always been one of the great explorers – we’re now doubling our investment in exploration.
It’s a sign of confidence in our abilities that we were awarded over 300, 000 square kilometers of new exploration licenses last year — a record in BP’s history, unprecedented over recent decades.
Value creation must of course be reflected in the dividend.
We restored dividend in 2011 and recently increased it by 14%.
These are important steps in the right direction, but they are just the start of the journey.
The Company continually looks for ways to form new relationships and partnerships around the world.
During the year, we worked closely with governments, regulators and our industry —
Demonstrating the enhancements we are making to risk management —
And sharing the lessons we have learned.
In the US, we continued to meet our commitments to those affected by the accident and reached important settlements with several parties involved.
By making priorities of safety and trust, we reinforce the foundations of a strong BP, a BP that can deliver sustainable value.
In the past we measured our success by barrels of hydrocarbons produced.
We now measure success on the value we generate for you, our shareholders.
We have therefore taken a hard look at our portfolio —
Disposing what has a higher value to others, seeking to release value earlier in the life of our assets.
We are playing to our strengths. BP has always been one of the great explorers – we’re now doubling our investment in exploration.
It’s a sign of confidence in our abilities that we were awarded over 300, 000 square kilometers of new exploration licenses last year — a record in BP’s history, unprecedented over recent decades.
Value creation must of course be reflected in the dividend.
We restored dividend in 2011 and recently increased it by 14%.
These are important steps in the right direction, but they are just the start of the journey.
The Company continually looks for ways to form new relationships and partnerships around the world.
Russia is particularly important for BP.
Since its formation in 2003, TNK-BP has paid BP around 19 bln dollars in dividends. 2011, alone, we received 3.7 bln dollars and our share of the assets are now worth over 25 bln dollars.
All from an initial stake of around 8 bln dollars.
That’s what I call a good investment.
We are fully committed to Russia, but there – as elsewhere – the nature of our industry is rarely straightforward.
However, this will not hold us back. BP didn’t become one of the world’s great companies by being timid.
Let us now turn to the Board and the changes we have made.
We have sought skills and experience relevant to the strategy, and the challenges that BP will face in the future.
After this meeting, eight of our eleven Non-executive Directors will have served less than three years, which represents substantial refreshment.
Andrew Shilston and Professor Dame Ann Dowling have recently joined us.
Andrew was finance director at Rolls-Royce.
But he is also an oil man, with years of experience at Enterprise Oil and Cairn Energy.
Ann Heads up the Department of Engineering at Cambridge and brings exceptional academic and engineering expertise.
Brian Gilvary is our new Chief Financial Officer, with 20 years at BP.
Byron Grote, our previous CFO, stays with us as the Director responsible for corporate business activities.
After nearly six years on the Board, Bill Castell has decided not to seek re-election.
Since its formation in 2003, TNK-BP has paid BP around 19 bln dollars in dividends. 2011, alone, we received 3.7 bln dollars and our share of the assets are now worth over 25 bln dollars.
All from an initial stake of around 8 bln dollars.
That’s what I call a good investment.
We are fully committed to Russia, but there – as elsewhere – the nature of our industry is rarely straightforward.
However, this will not hold us back. BP didn’t become one of the world’s great companies by being timid.
Let us now turn to the Board and the changes we have made.
We have sought skills and experience relevant to the strategy, and the challenges that BP will face in the future.
After this meeting, eight of our eleven Non-executive Directors will have served less than three years, which represents substantial refreshment.
Andrew Shilston and Professor Dame Ann Dowling have recently joined us.
Andrew was finance director at Rolls-Royce.
But he is also an oil man, with years of experience at Enterprise Oil and Cairn Energy.
Ann Heads up the Department of Engineering at Cambridge and brings exceptional academic and engineering expertise.
Brian Gilvary is our new Chief Financial Officer, with 20 years at BP.
Byron Grote, our previous CFO, stays with us as the Director responsible for corporate business activities.
After nearly six years on the Board, Bill Castell has decided not to seek re-election.
Bill has made a substantial contribution to the Board, not least as chair of the safety, ethics and environment assurance committee. He is unable to join us today, but I speak for the whole Board when I thank him for all he has done.
Bill’s role as senior independent director will be taken by Andrew Shilston, who as I said just joined. He will be supported by Antony Burgmans, our longest serving Board member.
During the year, Antony became chair of the remuneration committee and Brendan Nelson became chair of the audit committee.
Paul Anderson has taken over as chair of SEEAC.
Ian Davis has continued as the chair of the Gulf of Mexico committee which has been invaluable in allowing the main Board to manage its work during the restoration of the Gulf of Mexico and the litigation.
We have been through tough times, but I can tell you that the enthusiasm and commitment of this Board to the success of the company is total – as is mine.
I want to thank all of our directors for their efforts and advice.
I thank Bob Dudley and his executive team for all they have done over the year.
I thank our employees for their commitment in making BP a stronger, safer organization.
So, what lies ahead for your Company?
BP’s Energy Outlook, 2030, points to a 40% demand increase for energy over the next 20 years.
In mature economies, energy consumption is expected to be flat despite continued economic growth and CO2 emissions have peaked.
But in the world’s emerging markets, billions of people are striving to reach the same standard of living which we enjoy today —
And that’s driving economic growth and energy demand.
The encouraging development of new forms of energy continues —
But hydrocarbons will still dominate over the next several decades with an over 80% share of energy produced —
Bill’s role as senior independent director will be taken by Andrew Shilston, who as I said just joined. He will be supported by Antony Burgmans, our longest serving Board member.
During the year, Antony became chair of the remuneration committee and Brendan Nelson became chair of the audit committee.
Paul Anderson has taken over as chair of SEEAC.
Ian Davis has continued as the chair of the Gulf of Mexico committee which has been invaluable in allowing the main Board to manage its work during the restoration of the Gulf of Mexico and the litigation.
We have been through tough times, but I can tell you that the enthusiasm and commitment of this Board to the success of the company is total – as is mine.
I want to thank all of our directors for their efforts and advice.
I thank Bob Dudley and his executive team for all they have done over the year.
I thank our employees for their commitment in making BP a stronger, safer organization.
So, what lies ahead for your Company?
BP’s Energy Outlook, 2030, points to a 40% demand increase for energy over the next 20 years.
In mature economies, energy consumption is expected to be flat despite continued economic growth and CO2 emissions have peaked.
But in the world’s emerging markets, billions of people are striving to reach the same standard of living which we enjoy today —
And that’s driving economic growth and energy demand.
The encouraging development of new forms of energy continues —
But hydrocarbons will still dominate over the next several decades with an over 80% share of energy produced —
And it is important to recognize the essential role that hydrocarbons will continue to play in fuelling progress around the world.
In this world of great opportunity our determination is to significantly enhance the value of BP:
You will see BP live up to its commitments to local communities and to society.
Finally, you will see BP re-pay the loyalty shown by you, our shareholders by creating material rewards.
In all of this I assure you that we as a Board will commit all energy and expertise to the realization of these objectives.
BP is a great company with a great history and I am convinced a great future.
As your Chairman, I am determined to lead a BP that can succeed in meeting the opportunities ahead.
I thank you for the support you have shown.
I thank you for being here today.
In this world of great opportunity our determination is to significantly enhance the value of BP:
- By actively managing our portfolio.
- By expanding our exploration activities
- And by working with our partners to explore for oil in increasingly difficult areas
You will see BP live up to its commitments to local communities and to society.
Finally, you will see BP re-pay the loyalty shown by you, our shareholders by creating material rewards.
In all of this I assure you that we as a Board will commit all energy and expertise to the realization of these objectives.
BP is a great company with a great history and I am convinced a great future.
As your Chairman, I am determined to lead a BP that can succeed in meeting the opportunities ahead.
I thank you for the support you have shown.
I thank you for being here today.
