BP seeking to boost profits by $3 billion
BP PLC on Mar. 2 outlined its annual strategy presentation in which Chief Executive Tony Hayward said the company hopes to boost its profits before taxes by more than $3 billion/year within 3 years.
OGJ Senior Staff Writer
HOUSTON, Mar. 2 -- BP PLC on Mar. 2 outlined its annual strategy presentation in which Chief Executive Tony Hayward said the company hopes to boost its profits before taxes by more than $3 billion/year within 3 years.
Speaking to analysts, Hayward said BP forecasts its oil and gas production will grow by 1-2%/year on average during 2008-15 based upon oil prices of $60/bbl. Last year, BP said it produced 4 million boe/d, up 4% from 2008.
Hayward sees more opportunities to improve operating and cost efficiencies in both upstream and downstream operations.
He said a restructuring is under way in BP’s exploration and production operations to centralize project management, improve cost efficiencies, and ensure what he called “greater consistency into operations.”
“Whichever way you look at it, there are significant opportunities for improvement and in every case firm plans are in place to close these gaps,” said Hayward, adding, “We believe we have made a good start—but it’s only a start.”
Hayward said BP’s medium-term upstream growth is focused on deepwater production, global gas production, and managing giant oil fields. BP’s finding and development costs in 2009 were $12/boe—the lowest in 5 years.
In the next 2 years, 24 new major projects will reach final investment decision. BP intends to start 42 major projects by 2015, which are expected to contribute about 1 million to its total production by 2015.
Hayward said these new projects will more than offset the anticipated decline in currently producing fields. BP gained access last year to exploration and production assets in Iraq, Indonesia, Jordan, the US Gulf of Mexico, and Egypt.
He reaffirmed the company’s commitment to research and development spending aimed at growing its low-carbon businesses, especially US onshore wind power, biofuels, solar power project as well as carbon capture and sequestration.
BP invested $1.3 billion in alternate energy in 2009 and a cumulative total of more than $4 billion since 2006.
BP’s refining and marketing expects to improve underlying profitability by over $2 billion within 3 years. Hayward believes refining operations can be profitable even in depressed conditions like those the industry faced in 2009.
The ongoing modernization of BP North America’s refinery in Whiting, Ind., is expected to become operation in 2012, executives said. The 384,750-b/cd refinery is undergoing construction to increase its capacity to process Canadian heavy crude. The modernization is expected to cost $3.8 billion.
Hayward emphasized that safety remains a top priority for BP. A 2005 explosion killed 15 people and injured 170 others at the 446,500-b/cd Texas City, Tex., refinery. Since then the US Chemical Safety and Hazard Investigation Board issued a series of recommendations about process safety (OGJ, Sept. 8, 2008, p. 20).
Separate from the analyst presentation, BP also announced on Mar. 2 that it informed the southern African governments of Namibia, Malawi, Tanzania, Zambia, and Botswana of plans to sell its marketing businesses in these countries. This follows a strategic review by BP into its R&M businesses.
BP Africa’s Chief Executive Sipho Maseko told governments and employees in South Africa and Mozambique that the company is staying in these two countries and will be investing there.
Contact Paula Dittrick at email@example.com.