BP 2009 Annual Report Download - page 13

Our Exploration and Production segment conducts upstream and
midstream activities in 30 countries and we are the largest producer of
oil and gas in North America. The segment’s geographical coverage in
these activities currently includes Angola, Azerbaijan, Canada, Egypt,
Russia, Trinidad & Tobago (Trinidad), Norway, the UK, the US and
locations within Asia Pacific, Latin America, North Africa and the Middle
East. Our Exploration and Production segment also includes gas
marketing and trading activities, primarily in Canada, Europe and
the US. In Russia, we have an important associate through our 50%
shareholding in TNK-BP, a major oil company with exploration assets,
refineries and other downstream infrastructure.
In Refining and Marketing, we market our products in more than
80 countries, with a particularly strong presence in the US and Europe,
as well as major activities in Australia, Southern Africa, India and China.
In the US, we own or have a share in five refineries and market primarily
under the Amoco, ARCO, BP and Castrol brands. We are one of the
largest gasoline retailers in that country. In Europe, we own or have a
share in seven refineries and we market extensively across the region,
primarily under the Aral, BP and Castrol brands. Our long-established
supply and trading activity is responsible for delivering value across the
crude and oil products supply chain. Our petrochemicals business
maintains a manufacturing position globally, with an emphasis on growth
in Asia. We continue to seek opportunities to broaden our activities in
growth markets such as China and India.
Refining and Marketing
BP’s global presencea
•BP refinery (wholly or partly owned)
•Petrochemicals site (s)
aThe green shaded circles indicate
the approximate coverage of BP’s
integrated fuels value chains.
Our market
Energy markets remained volatile in 2009,
reflecting the dramatic drop in world economic
activity early in the year and indications of
economic recovery in the second half. Looking
ahead, the long-term outlook is one of growing
demand for energya, particularly in Asia,
alongside challenges for the industry in meeting
this demand. Rising incomes and expanding
urban populations are expected to drive
demand, while the evolution towards a lower-
carbon economy will require technology,
innovation and investment.
World oil consumption declined for a second successive year during
2009, with growing demand in non-OECD countries once again more
than offset by falling consumption in OECD countries. Average crude
oil prices for 2009 were lower than in the previous year, breaking an
unprecedented string of seven consecutive annual increases. Natural
gas prices also weakened in 2009 and were highly volatile. Refining
margins fell sharply as oil demand contracted and substantial amounts
of new refining capacity came onstream.
Economic context
The world economy began to show signs of recovery in the latter part
of 2009 and this is expected to continue through 2010, but economic
growth in 2010 is likely to be muted in the OECD countries. Growth in
global oil consumption is expected to resume as the world economy
recovers from recession.
In 2009, concerns about the volatility of commodity and financial
markets, combined with renewed focus on climate change and the early
experiences with efforts to reduce CO2emissions in the EU and
elsewhere, led to an increased focus on the appropriate role for markets,
government oversight and other policy measures relating to the supply
and consumption of energy.
The concept of peak oil – the time after which less oil is available
to the world – continues to hold the interest of some commentators,
although global proved reserves have tended to rise over time and
remain sufficient to support higher levels of production. Meanwhile, the
consumer response to higher prices and an increased focus on energy
efficiency have served to constrain demand. We expect regulation and
taxation of the energy industry and energy users to increase in many
areas over the short to medium term.
aWorld Energy Outlook 2009. ©OECD/IEA 2009, pages 622-623: ‘Reference Scenario, World’.
BP Annual Report and Accounts 2009
Business review
11
Business review
Business review – Group overview