BP 2013 Annual Report Download - page 38

BP Annual Report and Form 20-F 201334
thousand barrels per day
Refinery throughputsa2013 2012 2011
US 726 1,310 1,277
Europe 766 751 771
Rest of world 299 293 304
Total 1,791 2,354 2,352
%
Refining availabilityb95.3 94.8 94.8
thousand barrels per day
Sales volumes
Marketing salesc3,084 3,213 3,311
Trading/supply salesd2,485 2,444 2,465
Total refined product sales 5,569 5,657 5,776
Crude oile2,142 1,518 1,532
Total 7,711 7,175 7,308
a Refinery throughputs reflect crude oil and other feedstock volumes.
b Refining availability represents Solomon Associates’ operational availability, which is defined as
the percentage of the year that a unit is available for processing after subtracting the annualized
time lost due to turnaround activity and all planned mechanical, process and regulatory
maintenance downtime.
c Marketing sales include sales to service stations, end-consumers, bulk buyers and jobbers
(i.e. third parties who own networks of a number of service stations) and small resellers.
d Trading/supply sales are sales to large unbranded resellers and other oil companies.
e Crude oil sales relate to transactions executed by our integrated supply and trading function,
primarily for optimizing crude oil supplies to our refineries and in other trading. Fifty-nine thousand
barrels per day relate to revenues reported by the Upstream segment.
Logistics and marketing
Downstream of our refineries, we operate an advantaged infrastructure
and logistics network which includes pipelines, storage terminals and road
or rail tankers, where we seek to drive excellence in operational and
transactional processes, and deliver compelling customer offers in the
various markets in which we operate.
We blend and market biofuels in our FVCs; almost 6.5 billion litres of
biofuels were blended into finished product in 2013, mainly in Europe and
the US. Biogasoline (bioethanol) and biodiesel (hydrogenated vegetable oils
and fatty acid methyl esters) demand continues to grow, primarily in
Europe and the US, as regulatory requirements demand higher blending
levels. In response we continue to develop blend capabilities and to work
with regulators, biofuels suppliers and other stakeholders to improve the
sustainability of the biofuels we blend and supply.
We supply fuel and related convenience services to retail consumers
through company-owned and franchised retail sites, as well as other
channels, including wholesalers and jobbers. In addition, we supply
commercial customers within the transport and industrial sectors.
Number of retail sites operated under a BP brand
Retail sitesf 2013 2012 2011
US 7,700 10,100 11,300
Europe 8,000 8,300 8,200
Rest of world 2,100 2,300 2,300
Total 17,800 20,700 21,800
f The number of retail sites includes sites not operated by BP but instead operated by dealers,
jobbers, franchisees or brand licensees that operate under a BP brand. These may move to or
from the BP brand as their fuel supply or brand licence agreements expire and are renegotiated in
the normal course of business. Retail sites are primarily branded BP, ARCO and Aral. Excludes
our interests in equity-accounted entities that are dual-branded.
Supply and trading
BP’s integrated supply and trading function is responsible for delivering
value across the overall crude and oil products supply chain. This structure
enables the optimization of BP’s FVCs to maintain a single interface
with the oil trading markets and to operate with a single set of trading
compliance processes, systems and controls. The oil trading function
(including support functions) has trading offices in Europe, the US and
Asia and employs around 1,800 people. This enables the function to
maintain a presence in the more actively traded regions of the global oil
markets in order to gain an overall understanding of the supply and
demand forces across this market. It has a two-fold strategic purpose
in our Downstream business.
First, it seeks to identify the best markets and prices for our crude oil,
source optimal feedstocks for our refineries, and provide competitive
supply for our marketing businesses. Wherever possible, the group will
look to optimize value across the supply chain. For example, BP will often
sell its own crude and purchase alternative crudes from third parties for
its refineries where this will provide incremental margin.
Second, the function seeks to create and capture incremental trading
opportunities by entering into a full range of exchange-traded commodity
derivatives, over-the-counter (OTC) contracts and spot and term contracts.
In order to facilitate the generation of trading margin from arbitrage,
blending and storage opportunities, it also owns and contracts for storage
and transport capacity.
The group’s risk governance framework seeks to manage and oversee the
financial risks associated with this trading activity, which is described in
Financial statements – Note 19.
The range of contracts that the group enters into is described in Certain
definitions – commodity trading contracts on page 270.
Aviation
Our global aviation business, Air BP, is one of the world’s largest and
best-known aviation fuels suppliers, serving many major commercial
airlines as well as the general aviation sectors. We have marketing sales
in excess of 465,000 barrels per day. Air BP’s strategic aim is to maintain
its position in the core locations of Europe and the US, while expanding its
portfolio in airports that offer long-term competitive advantage in material
growing markets such as Asia and South America.
LPG
We have neared completion of the sale of our global LPG marketing
business, which sells bulk and bottled LPG products. We will retain focus
on LPG when it is deeply integrated in refinery operations and autogas
sectors in order to optimize refinery and retail operations. As of
31 December 2013, the sales of the LPG business in six out of eight
countries had been completed. The remaining two countries are expected
to be completed in 2014.
Our lubricants business
Our strategy is to leverage technology, brand, and relationships, with a
focus on our premium brands, to deliver growth and sustainable returns.
Our lubricants business manufactures and markets lubricants and related
products and services to the automotive, industrial, marine, aviation and
energy markets across the world. Our key brands are Castrol, BP and Aral.
Castrol is a recognized brand worldwide and we believe it provides us with
a significant competitive advantage. In technology, we apply our expertise
to create quality lubricants and high performance fluids for customers in
on-road, off-road, air, sea and industrial applications globally. We divide our
lubricants business up into five customer sectors: automotive, marine,
industrial, aviation and energy.
We are one of the largest purchasers of base oil in the market, but have
chosen not to produce at scale in base oil or additives manufacturing.
Our participation in the value chain is focused on areas of competitive
differentiation and strength. These fall into three main areas:
• We develop formulation and the application of cutting-edge technologies.
• We create and develop product brands and clearly communicate their
benefits to our customers.
• We build and extend our relationships with customers so we can better
understand and meet their needs.
In 2013, the automotive sector saw signs of recovery in new passenger
vehicle demand across several key markets including China, the US and
certain European countries. For 2013, lubricants base oil prices averaged
below 2012, which benefited margins. A significant share of profit growth
has come from emerging markets, where we are developing a strong base
to capture further growth.
The global lubricants market remained challenging in 2013 as a result of
economic slowdown and low demand growth. The automotive sector saw
declines in new passenger vehicle demand across Europe and India, which
were partially offset with growth in North America, China and Brazil.
Industrial demand remained under pressure from a weak manufacturing
sector.
We continue to increase lubricants revenues through our strategy of
exposure to growing markets, technology investments and targeted
marketing programmes. More than 35% of sales revenues were from
non-OECD countries in 2013.