BP 2014 Annual Report Download - page 33

Downstream
In 2014 we saw continued improvement in our
process safety and delivered strong operational
performance resulting in profit and operating cash
flow growth.
Our business model and strategy
Our Downstream segment has significant operations in Europe, North
America and Asia, and also manufactures and markets products in
Australasia, Africa and Central and South America.
Downstream is the product and service-led arm of BP, made up of
three businesses:
 Fuels – includes refineries, fuels marketing and convenience retail
businesses, together with global oil supply and trading activities that
make up fuels value chains (FVCs). We sell refined petroleum
products including gasoline, diesel and aviation fuel.
 Lubricants – manufactures and markets lubricants and related
products and services globally, adding value through brand,
technology and relationships, such as collaboration with original
equipment manufacturing partners.
 Petrochemicals – manufactures products at locations around the
world, mainly using proprietary BP technology. These products are
then used by others to make essential consumer products such as
paint, plastic bottles and textiles.
We aim to run safe and reliable operations across all our businesses,
supported by leading brands and technologies, to deliver high-quality
products and services to meet our customers’ needs.
 Fuels marketing and lubricants – we will invest in higher returning
businesses which have operating cash flow growth potential.
 Portfolio quality – we will maintain our focus on quality by high-
grading of assets combined with capital discipline. Where businesses
do not fit our strategic frame, we will seek to divest.
 Simplification and efficiency – we have launched a simplification and
efficiency programme to support performance improvement and to
make our businesses even more competitive.
Implementing this strategy is expected to lead to a growing
downstream earnings profile and increasingly make the business more
robust to external environmental impacts. Growing operating cash
flows and capital discipline should ensure that Downstream remains a
source of increasing cash flow for BP.
Our performance summary
 For downstream safety performance see page 41.
 We continue to deliver strong operational performance across our
refining system with the Whiting refinery now fully onstream.
 We acquired the aviation fuel business, Statoil Fuel and Retail
Aviation AS, to expand our Air BP business in Scandinavia.
 We launched a new product, Castrol EDGE boosted with Titanium
Fluid Strength Technology in our lubricants business.
 We sold our lubricants global aviation turbine oils business and
completed the sale of our LPG marketing businesses.
 We announced that we will halt refining operations at the Bulwer
refinery in Australia in 2015.
 In petrochemicals, we decided to invest and retrofit some of our
operations in the US and Europe with new proprietary technology
while ceasing certain other operations in our aromatics business as a
result of our strategic review.
4.9
6.0
2.9 2.9
Downstream profitability ($ billion)
Underlying RC profit before interest and tax
RC profit before interest and tax
2010 2011 2012 2013 201
4
7
6
5
4
3
2
1
6.5
3.6
5.6 5.5
3.7
4.4
See Financial performance on page 30 for the main factors influencing
downstream profit.
Outlook for 2015
 We anticipate a weaker refining environment due to narrowing crude
differentials in the low crude price environment.
 We expect the financial impact of refinery turnarounds to be
comparable to that in 2014.
 We expect gradual improvement in the petrochemicals margin
environment.
The storage tanks, pipes and towers at BP’s Rotterdam refinery, which can
run at least 70 different kinds of crude.
Our strategy focuses on improving returns, growing operating cash
flow★, and building a quality Downstream business that aims to lead
the industry as measured by net income per refining barrel. Our five
strategic priorities are:
 Safe and reliable operations – this remains our first priority and we
continue to drive improvement in personal and process safety
performance.
 Advantaged manufacturing – we aim to continue building a top
quartile refining business by having a competitively advantaged
portfolio which is underpinned by operations excellence. In
petrochemicals we seek to create a business with higher earnings
potential which is significantly more robust to a bottom of cycle
environment.
Defined on page 252. BP Annual Report and Form 20-F 2014 29
Strategic report