BP 2008 Annual Report Download - page 6

November 2008
Tony Hayward
discusses operating
priorities with
employees at the
BP Carson refi nery,
California, US.
How far has Refining and Marketing
addressed its most critical problems?
We made good progress on achieving safe, compliant
and reliable operations. We improved refi ning availability
on an annualized basis from 83% to 89% and restored
full economic capability at the Texas City and Whiting
refineries. In our fuels value chains we are achieving
greater integration between refi neries, terminals,
pipelines and retail sites. The international businesses,
which include lubricants, petrochemicals, aviation
and marine fuels and liquefied petroleum gas, have
performed well. We have also started to address
overhead cost by reducing senior level headcount and
by simplifying the marketing footprint. Now it’s about
driving greater consistency and effi ciency through
the business to capitalize on the leadership positions
we enjoy in the most valuable markets.
How is BP responding to the twin challenges
of energy security and climate change?
Our job is to help meet the world’s energy needs
today, invest in the next generation of energy sources
and support the transition to a low-carbon economy.
Alternative energy production is growing but currently
represents just 2% of global energy production, so the
world will need fossil fuels for years to come – even
if demand slows – and we will play an important role
by meeting this need while developing options for
the future.
In 2008 we responded to these challenges by
investing nearly $22 billiona in our businesses – an increase
of 13% on 2007. Along with supporting our work on
exploration, appraisal, development and the turnaround
in Refining and Marketing, we also invested $1.4 billion
in alternative forms of energy such as wind, solar,
biofuels and carbon capture and storage (CCS). Looking
ahead, on the issue of greenhouse gas (GHG) emissions,
we believe legislation is required to ensure that a cost
of carbon is included in the price of everything. This
would enable companies such as BP to make even
greater investments in low-carbon energy. We favour
cap-and-trade as it provides environmental certainty
based on an absolute emissions cap. A global system
is the ultimate objective, but progress must be made
at national and regional levels fi rst.
It is getting tougher for BP and others to
access new resources; do international oil
companies really have a sustainable future?
International oil companies thrive at the frontiers of the
energy industry taking on challenges others are either
unwilling or unable to address. BP continues to agree
significant new deals, from oil sands to the Beaufort
Sea in Canada as well as making new discoveries in
Algeria, Angola, Egypt and the Gulf of Mexico. We
have also resolved the dispute with our TNK-BP joint
venture partners in Russia.
We secure these agreements because we
can build enduring relationships and have technical
capabilities and experience distinct in our industry.
Research and technology play a vital role here. By
improving the efficiency of fossil fuel recovery and
discovery, promoting fuel conversion and developing
low-carbon alternatives, we are helping to provide
affordable, sustainable energy for today and tomorrow.
What is the plan for Alternative Energy;
what role will it play in BP’s portfolio?
With both energy demand and carbon emissions rising,
the world needs every sustainable, affordable energy
source available. We invest a significant amount in
alternative energy technology compared with our peers
and, for us, the key question is which technologies
will make the greatest contribution to meeting energy
demand while providing BP with strong growth
businesses. In 2008 we prioritized areas with signifi cant
long-term growth potential – wind, solar, biofuels and
CCS – and directed the majority of our $1.4 billion
investment in the year to these areas.
Is BP entering its centenary year in
good shape?
On the basis of our 2008 performance, I believe we
can declare that ‘BP is back’. Clearly, however, we
must continue to adjust to market conditions. Oil and
gas prices go up and down; our job is to ensure we
can compete and thrive through every part of the cycle,
something we’ve been doing for 100 years. Despite
the challenges ahead, I am confident that we now
have the positive momentum and fl exibility required
to achieve success as we begin our next century. •
5
a Excluding acquisitions and asset exchanges and excluding the
accounting for our transactions with Husky Energy Inc. and
Chesapeake Energy Corporation.