You are on page 1of 62

Refining & Marketing Welcome

November 30th

Iain Conn Chief Executive Refining and Marketing


November 30th

Cautionary statement
Forward-looking statements - cautionary statement This presentation and the associated slides and discussion contain forward-looking statements with respect to the operations and businesses of BP and certain of the plans and objectives of BP with respect to these items. These statements generally, but not always, are identified by the use of words such as will, expected to, is intended to, project or similar expressions. In particular, these include certain statements regarding: anticipated improvements, increases, sources and timing in operating cash flow and margins; refinery divestment plans; anticipated timing of exploration and production projects to come on stream by 2014 and the expected margins from such projects; repositioning of US Fuels Value Chains and halving US refining exposure; the anticipated timing for completion of and final proceeds from the disposition of certain BP assets; the timing and composition of major projects including expected start up, completion and margins; expectations regarding the impact on costs of turnaround and related maintenance expenditures; expectations or plans for increased investment; investments in technology and capability; improvements in refining efficiency; expectations for fourth-quarter refining margins; the disclosure of refining and marketing results in BPs Group financial reporting; the timing for completion of the Whiting refinery upgrade, other refining upgrades and logistics optimization; the expected level of operating cash flow to be generated and production potential following the Whiting refinery upgrade; the projected marketing to refining cover after the Carson and Texas City divestments; the expected impact on fourth-quarter production of the ongoing seasonal turnaround activity across BPs portfolio; expected fourth-quarter and full-year 2011 production; expectations for returns and earnings momentum in refining and marketing; the ability of the fuels business to continue to deliver competitive returns; performance outlook including the anticipated level of earnings delivery in 2011 and earnings growth by the end of 2012; earnings and returns momentum beyond 2012; the proportion of earnings derived from growth markets; the anticipated level of market growth in Australasia, Turkey, South Africa and Poland; the level of further earnings growth generated by the base business; the increase of investment that will deliver sustainable growth; the projected volume of petrochemicals and lubricants growth and demand by 2020; the deployment of Cativa to the joint venture with Indian Oil Corporation; improvements in Eastern hemisphere Fuels Value Chains including growth in access; the deliverability of new technologies and growth projects in the Middle East and Asia and growth earnings from the Petrochemicals business; the proportion of earnings from non-OCED markets by 2015 in the lubricants business; relationships with large resource holders. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors including the timing of bringing new fields onstream; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; changes in taxation or regulation; regulatory or legal actions including the types of enforcement action pursued and the nature of remedies sought; the impact on our reputation following the Gulf of Mexico oil spill; exchange rate fluctuations; development and use of new technology; the success or otherwise of partnering; the successful completion of certain disposals; the actions of competitors, trading partners, creditors, rating agencies and others; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism or sabotage; and other factors discussed under Principal risks and uncertainties in our Form 6-K for the period ended 30 June 2011 and under Risk Factors in our Annual Report and Form 20-F 2010 as filed with the US Securities and Exchange Commission (SEC). Reconciliations to GAAP - This presentation also contains financial information which is not presented in accordance with generally accepted accounting principles (GAAP). A quantitative reconciliation of this information to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found on our website at www.bp.com. Statement of Assumptions: The operating cash flow projection for 2014 stated in this presentation reflects our expectation that all required payments into the $20 billion Trust Fund will have been completed prior to 2014. The projection does not reflect any cash flows relating to other liabilities, contingent liabilities, settlements or contingent assets arising from the Macondo incident which may or may not arise at that time. As disclosed in the Stock Exchange Announcement, we are not today able to reliably estimate the amount or timing of a number of contingent liabilities. Cautionary note to US investors: We use certain terms in this presentation, such as resources, non-proved resources and references to projections in relation to such that the SECs rules prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262. This form is available on our website at www.bp.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or by logging on to their website at www.sec.gov. Tables and projections in this presentation are BP projections unless otherwise stated.

Agenda
Refining & Marketing overview Fuels Breakout sessions: Petrochemicals Lubricants Fuels & lubricants technology tour Wrap up Nick Elmslie Tufan Erginbilgic Angela Strank Iain Conn
5

Iain Conn and Richard Hookway Steve Cornell and Tufan Erginbilgic

The R&M team here today


Iain Conn Chief Executive Refining & Marketing Richard Hookway Tufan Erginbilgic Chief Operating Officer Eastern Hemisphere Fuels, Global Lubricants, Aviation and LPG Chief Financial Officer Refining & Marketing Charles Cameron Head of Technology Refining & Marketing Steve Cornell Chief Operating Officer US Fuels Jeanne Johns Head of S&OR Refining & Marketing Nick Elmslie Chief Operating Officer Global Petrochemicals Angela Strank Technology Vice President Fuels & Lubricants
6

Moving BP Forward Safety : Trust : Value Growth


Putting safety and operational risk management at the heart of the company New Safety and Operational Risk organization Investment in maintenance Reorganized upstream Rebuilding trust $20bn Trust Fund: now 50% funded Settlements with Mitsui/Weatherford/Anadarko Pursuing value growth Dividend resumed $19bn(1) divestments agreed New access: India, Trinidad, Australia, Azerbaijan, UK, Indonesia, South China Sea, Brazil Iraq initial production Refining & Marketing earnings momentum continues
(1) Excluding the proposed sale of BPs interest in PAE. This sales agreement was terminated on 6th November. 7

Moving BP Forward A 10 point plan


What you can expect
1. Relentless focus on safety and managing risk 2. Play to our strengths Exploration Deepwater Giant fields Gas value chains World class downstream business Relationships and technology 3. Stronger and more focused 4. Simpler and more standardized 5. More visibility and transparency to value

Moving BP Forward A 10 point plan


What you can measure
6. Active portfolio management to continue Further $15bn over the next two years including two US refineries Unit cash margins on new wave of projects expected to be double existing average(1) 7. New upstream projects onstream with higher margins

8. Generate around 50% more annually in operating cash flow by 2014 versus 2011 at $100/bbl Around half from ending US Trust Fund payments(2) / around half from operations 9. Half of incremental operating cash for re-investment, half for other purposes including distributions 10. Strong balance sheet Gearing in lower half of 1020% range

(1) Assuming a constant $100/bbl oil price and excluding TNK-BP (2) See Statement of Assumptions under Cautionary Statement

Safety and operational risk management

Organization Operating management system WILG Safety and operational risk


Impact

Risk identification and mitigation planning


Likelihood
1 2 3 4 5 6 7 8 A

10

The evolving challenge of energy demand


US
4 4

EU(1)
4

China

3 Billion toe

0 1990

2010 Renewables*

2030

0 1990 Hydro

2010 Nuclear

2030 Coal

0 1990 Gas

2010 Oil

2030

(1) Todays borders * Includes biofuels Source: BP Energy Outlook 2030

11

R&M operates three business models


Fuels: Integrated refining, marketing, logistics, supply, optimization and trading linked to global markets Lubricants: High growth, high return global business leveraging brand, technology and relationships Petrochemicals: High growth, high returns with leading technology Asia focused with strong global market shares
12

R&M: How we are organized


Strategy / Policy / Code of Conduct
Fuels Safety and operational risk Technology Finance Information technology and BSCs(1) HR, PSCM(2) and other functions Number of strategic performance units 11 1 1 Petrochemicals Lubricants

Supply optimization and trading


(1) Business service centre (2) Procurement supply chain management

13

Our five priorities since 2007


Safe operations and OMS(1)

Behaviours and core processes

Restoring missing revenues and earnings momentum

Business simplification

Repositioning cost efficiency

(1) Operating Management System

14

R&M today
13 Strategic Performance Units (SPUs) Focused on quality, not quantity Two significant divestments in progress Texas City refinery and Southern West Coast fuels business(1) On-track for record earnings(2) in 2011 50%+ of earnings2 sourced from growth markets(3) Pre-tax operating returns(4) of ~11% Material contribution to Group operating cash flow growth
(1) Including Carson refinery (2) Based on pre-tax underlying replacement cost profit which is pre-tax replacement cost profit or loss adjusted for non-operating items and fair value accounting effects (3) Asia (including China and India), Australasia, Central and Eastern Europe, Former Soviet Union, Southern Africa, Middle East, South and Central America (4) Pre-tax returns based on pre-tax average capital employed including goodwill (based on 12 months to 30 Sep 2011) 15

R&M key financial and operating dimensions


12 months to end Sept 2011
Pre-tax capital employed inc goodwill Earnings(1) Organic investment(2) Pre-tax operating returns(3) Refining capacity(4) Total marketing sales Petchems capacity(4),(5) No. of countries R&M markets within No. of employees ~$55bn ~$6bn ~$4bn ~11% ~2,700 kbpd ~3,300 kbpd ~18,300 ktpa ~70 ~35,000
Plus ~15,000 site employees

(1) (2) (3) (4) (5)

Pre-tax underlying replacement cost profit or loss adjusted for non-operating items and fair value accounting effects Organic capital expenditure excluding acquisitions and asset exchanges Pre-tax returns based on pre-tax average capital employed including goodwill As at 31st December 2010 Including Gelsenkirchen and Mulheim petrochemical volumes which are financially reported within the Fuels business

16

Underlying performance improvement

Performance recovery complete by 2009


Pre-tax underlying RC profit $/bbl

10 9 8 7 6 5 4 3 2 1 0 0 4 8 12 16
2009 2008 2007 2010 2004 2005 2006 2011 YTD

>$2bn incremental earnings vs 2009

+$5bn earnings in 2007 environment

~$5bn incremental earnings in 2009 vs 2007 environment

On-track to deliver +$2bn of incremental earnings by end 2012 vs 2009

20

BP's Refining Marker Margin (RMM) $/bbl (1)

Yellow regression line represents $2bn incremental earnings guidance, 2012 vs 2009 (1) RMMs are simplified regional margin indicators based upon product yields and a "marker" crude oil deemed appropriate for the region. 17

Competitive position Net Income per barrel


Including chemicals Rolling 4 quarters
$/bbl
7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11

Excluding chemicals rolling 4 quarters


$/bbl
7.0 6.0 5.0

BP

4.0

BP
3.0 2.0

Competitors

1.0 0.0 -1.0

Competitors

Note: BP Net Income = Pre-tax underlying replacement cost profit (less 30% notional tax rate) divided by refining capacity Competitor set = ExxonMobil, Shell, Total and ConocoPhillips

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11

18

Historical portfolio performance


Pre-tax underlying replacement cost profit by business - $bn
7
200

Business Environment
(Indexed 2004 = 100)
350

Refining & Petchems Margin Environment

6 5 4 $bn 3 2 1 0
2004 2005 2006 2007 2008 2009 2010 2011(2)

180

160

250

140

200

120

Petrochemicals VCM Fuels RMM

150

100

100

80

50

60 2004 2005 2006 2007 2008 2009 2010 2011

Fuels(1)

Lubricants

Petrochemicals
RMM = Refining Marker Margin VCM = Variable Contribution Margin 19

(1) Segment costs have been allocated to the Fuels business (2) 2011 data is BP estimate

Lubricants Base Oil Price

Lubricants Base Oil Price

300

R&M earnings volatility

7 6 pre tax underlying replacement cost profit ($bn) 5 4 Fuels 3 2 1 0


2007 2008 2009 2010 4Q10 to 3Q11

R&M Total

Lubric ants Petchems

20

Net Investment
5 4 3 2 1 $bn 0 -1
Organic Capex Depreciation Total Net Investment (3)

-6 -7 2005(1) 2006 2007 2008 2009 2010 2011(2)


21 (1) Includes $8.3bn proceeds for Innovene sale (2) 2011 BP projections (3) Total net investment = organic capital expenditure less proceeds from disposals

Value growth world class downstream business


The highest quality downstream business Hydrocarbon value chains delivering leading returns and cash flow growth

Incorporating three business models: Fuels (including optimization and trading) Lubricants Petrochemicals

22

World class downstream business


Safe and reliable operations Becoming a leader in process safety Industry leading reliability and availability Excellent execution Compliance, rigour, discipline, efficient use of resources Effective organization and capability Portfolio quality and integration driving leading cash margin capability Right asset configuration, technology, channels, brands and integration Enables advantaged operations to deliver leading utilization rates Drives cash margins and cash flow delivery Growing margin share exposure to growth Expansion of competitive margin capability Building growth market positions Disciplined investment and portfolio management Financial framework Operating cash flow growth

23

Earnings momentum
Sources of earnings growth in a 2009 refining environment
14 12 Actual pre-tax returns % 10 8 6 4 2 0 Growth market positions and cash margin capability Whiting Refinery Modernization Project 10 9 Delta incremental earnings $bn 8 7 6 5 4 3 2 1

2007

2008

2009

2010

2011

2012

2013

2014

Growing gross margin

Restoring missing revenues

Cost efficiency

Pre-tax returns based on pre-tax average capital employed including goodwill (%); actual 2007-2010, 2011 BP projection
BP projections 24

Operating cash flow momentum


Sustaining leading returns in the base Invest to maintain competitive position Improve efficiency and margin capture capabilities Working capital efficiency Improving cash margin capability Whiting Refinery Modernization Project on-stream 2013 Cherry Point clean diesel Toledo continuous catalytic reforming Integration, trading and optimization Premium fuels, Castrol Edge Petrochemicals and lubricants technology Marketing channel management Growth market positions Petrochemicals Asia Lubricants growth markets Refining and fuels developments Operating cash flow

Other cash margins & growth markets WRMP

2014 operating 2011 operating Growth Divested cash at cash at drivers operations and $12/bbl RMM 1 environment 2 $11/bbl RMM 1 $113/bbl crude $100/bbl crude

(1) Refining Marker Margin (2) Includes working capital movements

25

Moving R&M forward


What you can expect Focus on safe, reliable, excellent operations Delivery of >$2bn pa of pre-tax underlying performance improvement by 2012 vs 2009 Industry leading returns Material earnings and operating cash flow growth Portfolio management Focus on cash margin quality Exposure to growth markets Leveraging technology innovation Disciplined investment Increased transparency of performance What you can measure Pre-tax underlying replacement cost profit growth Annual net income per barrel Annual pre-tax operating returns
26

Fuels Steve Cornell and Tufan Erginbilgic


November 30th

28

The fuels business


Refining and manufacturing

Fuels value chain supply enabled by optimization and trading


Supply and distribution Sales and marketing

Rack (Terminal) Price

Crude Market Price

Refined product

Supply optimization and trading


29

Consumers

Crude

Fuels: Where we operate

Key sales & marketing operations BP owned refinery Joint BP owned refinery Refineries announced for divestment

Global aviation fuels and LPG Global supply optimization and trading operations
30

How we capture refining margins


External value driver: Product Cracks/Margins Strategic value driver: Configuration and scale Operational value driver: Availability Efficiency

USGC Product Cracks vs Mars, $/bbl


40 Gasoline Diesel 30

Coking

Refining Margin
2009 2010 2011

Cracking

20

HSK*

10

0 2008

Low

Medium

High

HSK* - Hydroskimming

Yield of gasoline and distillate

31

How we optimize supply/distribution margins


External value driver: Volatility Strategic value driver: Tankage capacity Market position Operational value driver: Crude selection Inventory optimization Channel of trade
Buying : Early / Late Capture market opportunities: Price Zone differences Daily price changes

US market daily price change

Crude

Daily sales volume optimization


Demand profile: ratable
Branded Retail

Low Volume/price elasticity

Selling : Fast / Slow

Demand profile: variable


UnBranded Reseller

Product

time

High

Supply optimization and trading


32

High-graded portfolio - Refining


Global refining quality
250 Current BP Divestment plans 11 BP Divestments 00 12 09 Texas City Alliance Mombasa Carson Post 2013
95% 100%

Refining utilization vs competition(1)

Average Refinery Size (kbd)

BP Divestments 200 Alliance Coryton Grangemouth Lavera Mandan

00 10 Mombasa Reichstett Salt Lake Singapore Yorktown


90%

Competitors

Divested 00>12

85%

BP
150
80%

75%

Competitor Range BP

100 7 8

Nelson Complexity

Source: Oil & Gas Journal 2010

Size represents absolute scale of Refining portfolio

(1) Competitor set is other International Oil Companies reported crude throughput divided by crude capacity 33

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11

10

11

70%

High-graded portfolio fuels marketing


Marketing cover(1) of refining capacity
1.8

Retail asset quality


2.2 2.0 1.8 1.6 1.4 1.2 1.0 Estimated market share 3 0.8 10% 15% 20% East of Rockies Iberia Australia Poland 25%
Lower than industry average Better than industry average

1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 2004

BP

Competitors 2

2005

2006

2007

2008

2009

2010

Market Effectiveness Ratio (4)

1.6

(1) (2) (3) (4)

Total marketing sales divided by refining crude distillation capacity Competitors include ExxonMobil, Shell and Total BP share of industry retail sales BP data estimates BP market share divided by BP share of site numbers for branded sites BP data estimates

Germany West Coast US Southern Africa UK Bubble 9

34

How we drive sales and marketing margins


External value driver: Consumer preferences Strategic value driver: Format / Operating Efficiency Operational value driver: Differentiated Offers

Germany Importance of site factors to consumers


62 55
5 4 No fuel margin required 3 2 1 0

BP UK Relative fuel margin required for cash break even

Premium Fuels
UK Relative Fuel Margins Premium v Standard Fuels
M&S C-Store Kiosk
25 20

29 18 15 14 14 13

Fuel margin-1 required -2


-3 -4

Fu el pr i Lo ce ca tio n H ou rs Fa Bra Fr st s nd e ie nd rvi ce ly se r Fu vi c e el qu C aliy ar w as h

15 10 5 0 Gasoline Diesel

Premium fuel Standard grade fuel 35

BP and M&S in the UK: How we secure sales and marketing margins

Source: Experian Catalyst Q3, 2011, BP internal data

Source: Experian Catalyst Q3, 2011, BP internal data

BP/M&S partnership now extends to 135 stores Strong growth in store sales in M&S partnership stores post conversion Format is the market leader in the forecourt industry
36

Repositioned US Fuels business

ANS Crude
ANS Crude adv +$1-2 /bbl

Canadian Crude
Canadian Crude adv +$3-4 /bbl

Cherry Point Traded Product Supply

Whiting Toledo1

Strategic Fit of US Portfolio


Highly integrated value chains focused in northern tier of US

Gulf Coast Crude

Significant location advantage for Canadian crude access Pipeline access provides unique competitive flexibility related to mid continent crudes Product logistics provide good support for refinery production
37

JV refinery

Whiting Refinery Modernization Project


Whitings capacity to process heavy crude is transformed
Light, sweet crude Medium, sour crude Heavy, sour crude

Before

After

Whitings sources of value


Indexed Pre-tax underlying RC profit $/bbl of capacity 600 500 400 300 200 100 0 2 4 6 8 10 12 Mid West Refining Marker Margin $/bbl
Whiting post project performance for a range of WTI Lloydminster differentials Mid West historical performance range

On-stream performance at average 3Q 2011 refining environment Regression line established from rolling 4Q average 1Q021Q07 Based off nameplate capacity as stated in F&OI = maximum sustainable rate for a 30 day period

38

Key global margin capture opportunities


Eastern Hemisphere Market growth Fuels: Australasia, Turkey, South Africa, Poland, China Convenience: Rhine, Australasia, Poland, UK US Margin growth Whiting refining modernization project Cherry Point clean diesel Toledo continuous catalytic reforming Margin growth Gelsenkirchen yield improvement New access China: pursuing refining options Global Aviation: Building positions in growth markets especially BRIC(1) countries
39

Key sales & marketing operations


(1) Brazil, Russia, India and China

Moving the fuels business forward


What you can expect Focus on safe, reliable, excellent operations Industry leading refining availability and utilization Active portfolio management Re-position US fuels business Continued focus on quality Strengthen winning fuel value chain positions Whiting investment Focus on margin capability Focus on growth geographies and market segments Continued focus on efficiency Competitive returns What you can measure Pre-tax underlying replacement cost profit Annual pre-tax operating returns Solomon availability and refining utilization
40

Lubricants Tufan Erginbilgic


November 30th

42

Lubricants: What is the business


We create superior value for our customers & consumers through the development & sale of differentiated lubricants and related products

Automotive
~70% of sales

Industrial, Aviation, Marine


~30% of sales

employees

7300

countries with direct operations


43

45

Lubricants: Profit track record


Indexed pre-tax underlying replacement profit Indexed Gross Margin & Total Costs

400 300 200

Gross Margin

150

Important source of growth for R&M ~$1billion of pre-tax profit added since 2006 Profit driven by top line and efficiency Gross margin growth of 7%pa 2006-10 Costs below 2006 level

100
Total Cost

100 0
2006

Pre-tax Profit
50
2007 2008 2009 2010

Capital employed below 2006 level Pre-tax returns on capital employed now in excess of 20%

Data indexed to 2006 Total cost includes cash & non-cash costs

44

Automotive lubricants: Where we participate

Core lubricant markets Lubricant growth markets Other country presence

45

Lubricants value chain

Additives
Manufacturing

Procurement Base Oil


Manufacturing

Formulation
Active participation

Blending
Selective participation

Marketing & Sales


Active participation

Active participation

Limited / no participation

46

The lubricants environment


Increase in lubricants demand(1) 2010 to 2020
Billions of litres per annum

Growth in premium lubricants(1) 2010 to 2020


Annual growth rate

4%
4

2%

0 OECD BRIC Rest of World

0%
Premium Non-premium

(1) based on external industry estimates of Inland lubricants demand

47

How do we win?
Brand

WILG

Technology

Customer Relationships
48

Lubricants: Competitive positioning


100 75
Aware Accept

Global Brand Equity(1)

50 25 0

Prefer Loyal

Category Average

(2)(2) Synthetic/Premium Lubes Synthetic/Premium Lubes

BP partnerships with vehicle OEMs Global partnerships


Audi Ford BMW Jaguar Seat Tata VW

Proportion of Sales (2)


50%

Relative BP unit margins 2

Regional partnerships
Citroen Mazda SAIC Honda Peugeot Toyota

25%

MAN
0% 0

Skoda
Nonpremium Premium

Market

BP

Volvo

Land Rover
(1) Based on a Millward Brown 2011 survey of customers in 18 key automotive market-segment combinations (2) BP estimates based on available industry data and internal analysis. Expressed as a percentage of total automotive engine lubes sales. 49

Lubricants: Supply chain efficiency and simplification


Number of blending plants(1)
Non- OECD

OECD

Number of countries with direct presence

2006

2007

2008

2009

2010

(1) wholly owned by BP and joint ownership

Number of product and pack variants

2006

2007

2008

2009

2010

Other (2) Automotive


2006 2007 2008 2009 2010

(2) Industrial, Marine and Aviation products

50

Lubricants: Our portfolio and performance


Profit Growth(1)

2010
Return on Sales(2)
20%

2006
RoW BRICs OECD OECD BRICs
15%

RoW

Top Quartile Midpoint (3)

Consumer sector companies

Fuchs
10%

BP Valvoline

Castrol India Limited Market Capitalisation


$2.5bn

5%

Consumer sector companies


0%

Median (3)

2006
-5%

2007

2008

2009

2010

$0.6bn

End 2006

End Oct 2011

(1) Pre-tax underlying replacement cost profit size of pie represents relative size of profit (2) Rolling four quarters, pre-tax basis (3) Based on average 2006-10 performance of around 3,000 consumer sector companies

51

Moving the lubricants business forward


What you can expect Focus on safe, reliable, excellent operations Growing margin share Increasing exposure to growing non-OECD markets Increasing premium share of sales Ongoing disciplined investment in Lubricant technology Brand Customer relationships Sustaining leading returns in the industry What you can measure Pre-tax underlying replacement cost profit Annual return on sales Annual ratio of premium to total lubricant sales
52

Petrochemicals Nick Elmslie


November 30th

53

Petrochemicals: A global manufacturing and marketing business


Develop and Deploy Proprietary Technology

Manufacture at Scale

Market our Products

employees

2,500

Feedstocks

Strategic Relationships
Joint Venture Model in Asia
Independent Manufacturing & Marketing Companies

Sinopec Petronas Samsung

JVs in Asia

10

CPC Corporation Mitsui Chemicals


54

Formosa Chemicals

Customers

Petrochemicals: Where we operate


PTA sites Acetyls sites PX sites O&D site

Capacity focused in Asia


By Product - 2010 By Region1 mtpa2
16
O&D PTA

Product
US & Europe

12 8

Total (mtpa) 53 38 14

Share of Global Capacity #1 #2 #3 14% BP 11% Sinopec 22% Celanese 10% Yisheng 10% ExxonMobil 18% BP 7% Mitsubishi 8% BP 9% SOPO

PTA PX

Acetyls

4
PX

Asia

0 2004 2010 (1) Excludes Gelsenkirchen and Mulheim volumes reported within fuels business (2) Million Tonnes per Annum

Acetic Acid

55

Value chains PTA, PX & Acetic Acid


Methanol Carbon Monoxide Refinery Reformer Mixed Xylenes PX1 PTA2 Polyester

Acetic Acid

Automotive, Construction, Coatings, Consumer Goods

PET Resin, Fibre, Films & Specialities

(1) Paraxylene (2) Purified Terephthalic Acid

56

Value chains Olefins and Derivatives (O&D)

Polyethylene Naphtha Feedstock 1.3mtpa Ethylene Ethylene Propylene Polypropylene Polystyrene Butadiene Acrylonitrile

57

The petrochemicals environment


30 25 Capacity, Demand, mtpa 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0.8

PTA - China Capacity / Demand & Global Utilisation


China Demand China Capacity Global Utilisation

1.1 Global Utilisation

1.0

PTA & Acetic Acid are forecast to grow at 6.5%pa China PTA demand has grown by 15% CAGR(1) over the last decade Petrochemical margins driven by supply demand balance

0.9

Acetic Acid - Global Operating Rate & China Spread 800 Margin over Methanol, $/te 700 600 500 400 300 200 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Global Operating Rate China Spread 90% 85% 80% 75% 70% 65% 60% 100% Global Operating Rate, % 95%

(1) Compound annual growth rate

58

Petrochemicals: Our performance


Performance vs. our competitors is top of the range in terms of RoS Differentiated returns are the result of advantaged technology, market access and operational efficiency In 2010 our profit exceeded $1bn for the first time with 60% coming from the high growth markets of Asia
Return on sales (1)
BP Competitor range Competitor average

2004 2005 2006 2007 2008 2009 2010


Indexed profit 300 Indexed profit(2)
Unit costs
(3)

(2)

& Unit Costs

(3)

Indexed to 2004=100

100

Profit(2)

100

60

(1) Post tax adjusted to comparable basis (2) Pre-tax underlying replacement cost profit indexed to 2004 (3) Cash Fixed Costs indexed to 2004

0 2004 2005 2006 2007 2008 2009 2010

40
59

Unit Costs

200

80

(3)

Petrochemicals: How do we win?

Operational Excellence

Technology

Petrochemicals

Strategic Relationships
Co-location
Indorama China Resources JBF
60

Joint Ventures
Sinopec Petronas Samsung CPC Corporation Mitsui Chemicals Formosa Chemicals

Advantaged technology PTA example


PTA Technology Evolution, $/te Indexed
100% Fixed cost Variable cost Energy Capital

75%

50%

25%

0%
1980's Plants 1990's Plants Zhuhai 1 Zhuhai 2 Zhuhai 3 Industry Average Best Available

Industry Average and Best Available are calculated using The PCI Consulting Group published information 61

Moving Petrochemicals forward


What you can expect Focus on safe, reliable, excellent operations Growing margin share Extension of JV model in Asian growth markets Development of next generation technologies Deployment of new and existing technology Ongoing disciplined investment Sustain leading cost position Focus on cash generation in US / Europe What you can measure Pre-tax underlying replacement cost profit Petrochemical volumes Annual return on sales

62

Iain Conn Chief Executive Refining and Marketing


November 30th

63

Value growth world class downstream business


The highest quality downstream business Hydrocarbon value chains delivering leading returns and cash flow growth

Incorporating three business models: Fuels (including optimization and trading) Lubricants Petrochemicals

65

Moving R&M forward


What you can expect Focus on safe, reliable, excellent operations Delivery of >$2bn pa of pre-tax underlying performance improvement by 2012 vs 2009 Industry leading returns Material earnings and operating cash flow growth Portfolio management Focus on cash margin quality Exposure to growth markets Leveraging technology innovation Disciplined investment Increased transparency of performance What you can measure Pre-tax underlying replacement cost profit growth Annual net income per barrel Annual pre-tax operating returns
66

You might also like