BP 2008 Annual Report Download - page 5

BP Annual Report and Accounts 2008
Group chief
executive’s review
Driving
forward
Tony Hayward Group Chief Executive
24 February 2009
Highlights
• Progress with safe and reliable operations.
• Major projects delivered and revenues restored.
• Complexity and costs being reduced.
In a year that will be remembered for extremely volatile
oil prices and exceptional stock market turbulence, BP
delivered an excellent set of results. We made good
progress on achieving safe and reliable operations, and
delivered strong operational momentum that reduced
the performance gap with our competitors.
During the year we benefited from record
high oil prices. Replacement cost profit for the year
was a record $25.6 billion, with a return on average
capital employed greater than 20%. We outperformed
the FTSE 100 by 17% and our ADSs outperformed
the S&P 500 index of large cap US by 2%.
At the start of the year what priorities
did you set out for BP?
Safety, people and performance, and these remain
our priorities. Our number one priority was to do
everything possible to achieve safe, compliant and
reliable operations.
Good policies and processes are essential but,
ultimately, safety is about how people think and act.
That’s critical at the front line but it is also true for the
entire group. Safety must inform every decision and
every action. The BP operating management system
(OMS) turns the principle of safe and reliable operations
into reality by governing how every BP project, site,
operation and facility is managed.
Our work on safety has been acknowledged inside
and outside the group. For instance, the board’s
independent expert, L Duane Wilson, continues to
report on our progress in implementing the improvements
recommended by the BP US Refi neries Independent
Safety Review Panel and identify areas that need more
focused attention. Our most recent employee survey
indicated employees are also seeing the results of our
work to enhance safety. Clearly, there is more to do
and safety remains at the front of our minds. Beyond
safety, we are also committed to high ethical standards
and legal compliance in all aspects of our business.
We have continued to enhance and improve compliance
programmes in areas such as our integrated supply
and trading function.
In last year’s Annual Report and Accounts
I described the forward agenda we were pursuing to
close the competitive gap by making BP a simpler
and more efficient organization. Throughout 2008
we maintained our focus on reducing cost and
complexity, and embedding a strong performance
culture throughout the group. We achieved success
on both counts. Layers of management have been
removed, there is accountability for performance
at all levels and we have created a strong focus
on leadership behaviours.
How have these priorities affected your people?
First, I would like to thank our employees for
the part they have played in turning around BP’s
performance. Their determination and commitment
have been truly remarkable and we have come a long
way in a short time. At the same time, we continue to
provide excellent support for employees. From learning
and development to diversity and inclusion, we are
enabling people to achieve sustained high performance.
Less complexity means we can now clearly identify
top performers – both businesses and individuals –
and reward them appropriately.
How did Exploration and Production perform?
It was an excellent year, with major projects such
as Thunder Horse in the Gulf of Mexico and Deepwater
Gunashli in Azerbaijan coming onstream. That, together
with safe and reliable performance from our existing
operations, contributed to underlying production
growth – in contrast to the falling output of our major
competitors – and more than compensated for the
effects of Hurricanes Ike and Gustav and other
operational issues. Rigorous cost control and effi ciency
offset the significant cost inflation that hit our sector.
The start of production at Thunder Horse was an
important milestone in terms of recovery and renewal.
It was also a good year for exploration with major new
discoveries in Algeria, Angola, Egypt and the Gulf of
Mexico. We also gained new access to oil sands in
Canada and shale gas in the US, as well as gaining
licences to explore in the Canadian Arctic. 2008
was our 15th consecutive year of delivering reported
reserves replacement of more than 100%.
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