Release date: 6 February 2018
Whether in 2018 or 2021, safe, reliable and efficient operations remain at the core of BP’s business. The focus on systematic, disciplined and process-driven operations will be constant. Results from 2017 revealed a continued reduction in the overall number of process safety incidents, while personal safety data showed that the frequency of recordable injuries remained below BP’s five-year average.
But, there is always more to do.
Using a crawler for inspections on the BP's Thunder Horse platform, taking people out of harm's way
“Safety is at the root of everything,” says group chief executive, Bob Dudley. “We want everyone to go home in the same shape that they came to work.
“Good safety is good business; when people are safe, the assets run reliably and that, in turn, leads to reliable financial results. It’s a virtuous circle and something that we cannot relax on, ever.”
BP expects to add 900,000 barrels per day from new major projects by 2021, with 35% higher margins on average than its 2015 portfolio. This growth will come from its list of quality upstream projects in advantaged oil basins and gas regions, with developments selected for their lower costs or higher margins.
BP's Khazzan project with two workers in silhouette at sunset
There are more than 20 major projects on BP’s list between now and 2021, with 13 already in construction and six final investment decisions due in 2018. The seven major project start-ups in 2017 contributed to a 12% production increase, with further growth expected to be added this year from another six projects.
“In a changing energy mix, oil and gas will still play their part, but only the most competitively produced resources will reach the market,” says chief executive for Upstream, Bernard Looney. “BP has a distinctive upstream portfolio that is fit for this future, with a range of options that play to our strengths today and provide attractive opportunities for growth.
“Take for example, two high margin basins with price leverage: the Gulf of Mexico and the North Sea. In our plans right now, the combined production of these two basins will be higher in 2025 than they are today, without any new exploration. That demonstrates the strength of our future options.”
BP’s downstream businesses – including its refineries, petrochemicals operations and fuels marketing and lubricants brands – expect to deliver more than a $3 billion increase in earnings between 2016 and 2021. More than two-thirds of this growth should come from BP’s marketing businesses, with the remainder from manufacturing.
BP retail service station in London at dusk
The full-year results for 2017 already put the downstream well on track to meet these goals: the past year saw $7 billion in underlying pre-tax earnings, up almost a quarter on 2016, and one of the best years on record.
“Looking ahead, our strong brands, premium products and new business models give me great confidence for growth momentum to 2021 and beyond,” says Tufan Erginbilgic, chief executive for Downstream.
"Our retail and lubricants businesses are both differentiated through strong market positions, brands and distinctive customer offers. This differentiation enables our growth in existing markets and supports plans to expand our footprint in new material markets such as Mexico, India, Indonesia and China.
“In refining, our facilities are strategically located with good access to advantaged feedstocks, while in petrochemicals, we have competitively advantaged technology and have reduced our cash breakeven by more than 40% versus 2014.”
BP is also preparing for a lower carbon future. Activities across the business reflect the commitment to help advance the energy transition, through a strategy and investment choices that are flexible to many different scenarios.
FreeWire mobile electric vehicle charging unit on a BP forecourt in London, UK
Priorities on this agenda include reducing emissions in its own operations, developing products that will help customers reduce theirs and investing in new businesses. With one of the largest operated renewables portfolios among its peers, BP will look to stay at the forefront of changing global needs, with around $500 million set to be spent annually on renewables, new technologies, venturing and research.
“The energy transition is one of the great challenges of our time,” says deputy chief executive, Lamar McKay. “At BP, we want to be part of the solution. Most – if not all – areas of BP have significant efforts underway, from advanced mobility studies to digital transformation. We’re looking at both the long-term and at how we can make an impact today.
“There are lots of opportunities. When I talk to our people, they’re excited by being part of a business that wants to do the right thing. I believe it’s part of BP’s DNA to make a difference.”
The business will keep its focus on returns for shareholders. With disciplined cost and capital spending and a simpler, more efficient organization, BP is already delivering what it outlined in the five-year plan announced in 2017.
There is more to come, although the bar has been raised higher according to Brian Gilvary, chief financial officer. “We’ve beaten the market’s expectations every quarter in the past year – that’s a good start for four out of 20 quarters. But, when you do that, it raises expectations just a bit more.
“Importantly, the balance sheet has got stronger through 2017, and our Gulf of Mexico spill payments are manageable within our financial frame. I think we’re in a very strong place for a rapidly changing world.”