Senior Staff Writer
HOUSTON, Feb. 7 -- BP PLC is seeking to improve the financial performance of its refining and marketing assets, said BP Chief Executive Tony Hayward Feb. 5 while discussing companywide 2007 financial results.
"Although our fourth-quarter profits were very disappointing in refining and marketing in particular, we made good, step-by-step progress in bringing new oil and gas fields on stream and rebuilding refining capacity during the period," Hayward said.
Hayward also said that BP plans to cut 5,000 jobs companywide by mid-2009, and he believes the company can reduce corporate overhead by 15-20%.
Speaking during a webcast from London, he called BP's downstream performance "unacceptable" and 'very poor" compared with the downstream financial performance of BP's competitors.
"The principal reason is poor reliability in some of our US refineries, which is compounded by the complexity and overhead structure of the business segment," Hayward said.
BP's downstream business has been under scrutiny since 15 people died in a Mar. 23, 2005, blast at its 460,000 b/cd Texas City, Tex., refinery. About 180 people were injured.
Hayward said BP recommissioned the three units at Texas City necessary to allow restarting the remaining crude distillation capacity. The final sour crude unit is mechanically complete and expected to be fully operational during the first quarter.
"By mid-2008, we expect most of the economic capability at the Texas City refinery to have been restored," he said. "There is far more to do than merely restoring US refining reliability. We are absolutely determined to transform our downstream business as a whole. It will not happen overnight, but we believe that the performance gap with our competitors can be progressively narrowed in the next few years."
Downstream reports loss
Lower US refining margins, higher refining outages, and higher costs contributed to a fourth-quarter refining and marketing loss of $1.8 billion in the US, including nonoperating charges of $977 million, BP's financial results showed.
That compared with a loss of $421 million a year ago, including a nonoperating gain of $25 million.
US downstream costs for 2007 included repairs, recommissioning, and operating costs at the Texas City and Whiting, Ind., refineries.
BP executives believe the 2008 financial performance will be boosted from improved refining availability.
Following repairs, the 405,000 b/cd Whiting refinery is expected to return to its full crude capacity in the first half of this year. By yearend 2007, BP restored Whiting to its available distillation capacity of 300,000 b/d.
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