SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act
of 1934
for the period ended 16 April,
2009
BP p.l.c.
(Translation of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the
registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F
|X| Form 40-F
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----------------
Indicate by check mark whether the registrant by furnishing the
information
contained in this Form is also thereby furnishing
the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of
1934.
Yes
No |X|
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BP AGM Speeches by
Chairman
and Group Chief
Executive
Chairman
,
Peter
Sutherland
Good morning Ladies and
Gentlemen.
My name is Peter Sutherland and
on behalf of the board here today, welcome to the 100
th
AGM of BP.
I am sorry to say that Erroll
Davis is unable to join us today.
I am sure that I speak for all
of us in paying our respects to the 16 people who died in the helicopter crash in
the
North Sea
on April
1.
They were being transported by
a company of high repute.
They were contractors working
on BP's Miller platform.
This is a platform which is
being decommissioned. We send our deepest condolences and our sympathy to their
families and friends alike. The accident is a tragic reminder of why it is that we
have an absolute
and
relentless
focus on safety. An
investigation is underway
by the
authorities
and BP is providing every
assistance. Events like these hit a closely knit community like
Aberdeen
and those who work
offshore in the
North Sea
, very hard. Let me reassure
you that we are giving all the support we can to those affected
.
Returning to today's business,
BP has come
a long
way since 1909. In those
days, the Anglo-Persian Oil Company, as we were known then, had a handful of
employees and only one asset: a promising concession from the Shah of Persia, where
we had made a great discovery but still had
very little
production.
I dug out the prospectus from
the first share issue in May 1909 the other day and I was interested to see that we
managed to attract the cream of Edwardian society as directors, including Lord
Strathcona, a former Canadian High Commissioner, as first chairman; and Prince
Francis of Teck, the brother-in-law of King George V.
There was actually somebody
called Sutherland listed as a trustee for the debenture holders, but he was a
Duke.
I'm afraid to say not related
to me.
.
Scroll forward 100 years and
the modern BP is now one of the world's great enterprises, with operations across
the globe, producing some 4m barrels of oil equivalent a day, while trading and
transporting, refining and retailing millions more.
And the company continues to
evolve. BP led the industry in recognising the dangers of climate change and we are
making pioneering investments in Alternative Energy. I want to make it clear we
remain firmly committed to that
policy.
In times like these -
especially in times like these - we should remember that abundant energy has
powered an unprecedented century of economic growth. Energy means light, heat and
transport. It is essential for prosperity and
absolutely necessary
for
development. BP and its fellow
International Oil Companies make an important contribution to energy security and
consequently to the welfare of the word. We should never allow our critics to
detract from that essential purpose.
Throughout our history,
from
Iran
in 1909
to
Alaska
in the 1950s, the North
Sea in the 1970s and
Angola
today, we have always
worked on the frontiers of the energy industry. We build relationships and apply
our technology to bring energy to the consumers of the world.
Today BP is the largest
investment in many pension funds, the biggest dividend payer in
the
London
market, the biggest
taxpayer in the
UK
and
in
Russia
, and the biggest energy
investor in the
United States
.
I have had the privilege
to
c
hair this Board
for the past 12
years
; the period has been a time of
major change for BP.
The truly transformational
series of deals which started over 10 years ago has meant that the scope of our
operations are now truly global.
I wish that I could take the
credit for this transformation.
We have had a truly excellent
team of executives who have led the Company during this time and a Board which
was
always
there when it was
needed
and it presented robust
challenges when required
.
We all now know that there have
been some "downs" as well as "ups".
I am proud too that
t
here has been an enhanced focus
on safety in the environment and on standards generally.
I believe that the
Company
has led the way in corporate
governance and
is fit for the purpose of
meeting the new challenges of our time.
We have every reason to be
quietly proud of our record. But we should be humble about it too, because all of
us on the board, and in the Group generally, know our job is to hand BP on to the
next generation in better condition than we found it.
We always knew the run-up to
our centenary was going to be an important period in our history. But we never
foresaw that it was also going to be a momentous year for the world economy. It is
incredible to think that just last summer the oil price was more than $140 a barrel
and fears about so-called Peak Oil were widespread.
In the space of a few months,
we have gone from BP reporting two consecutive quarters of record profits, to a
recession in most of our major markets. There are few precedents, even in our own
history, for such a rapid and dramatic deterioration in the business
environment.
Of course, the oil price is a
key determinant of the performance of the Group, but it is by no means the only
one. Just as important is what we ourselves do - how we run our operations, how we
use technology and how we allocate our capital. In that regard, I am glad to report
that on most serious measures the Group put in an excellent performance last year.
Whether you look at safety, reserve replacement, production growth, refinery
availability, cost control or profits, 2008 was the year
that
BP returned to form. The
Group is well on the way to closing the gap with its competitors and proved it can
deliver what it has promised.
We had some notable successes
during the year - both strategic successes and operational ones. These are due, in
large part, to the efforts of the group chief executive Tony Hayward and his team.
He will say more about those in a moment, but they include the restoration of full
economic capacity at the
Texas City
refinery and continuing
success in the deepwater
Gulf of Mexico
, where BP is now the number
one producer. Thunder Horse, the world's largest semi-submersible platform, is a
showcase for what BP can achieve and is currently producing more than 300,000
barrels of oil equivalent a day.
I am also delighted that we
reached a settlement with our Russian partners at TNK-BP. We have retained 50%
ownership of the third largest oil company in a prolific hydrocarbon province and
that investment continues to be a success.
I would like to turn now to
you, our investors.
I think that I once likened our
Annual meeting to being more like a gathering of the United Nations.
The breadth of the issues which
we discuss on days like today really does reflect the scope of our operations and
the issues to which we as a Company have to be responsive.
We never forget that the
shareholders run the Company and we recognise that that ownership is becoming ever
more diverse.
Three Sovereign Wealth Funds
are now in our top 20 shareholders.
41% of our shares in held in
the
UK
, 37% in
the
US
and the balance over the
rest of the world.
I value the discussion that we
have at this meeting.
It is important though that all
shareholders have an opportunity to have a view on how the Company is run and their
vote at this meeting therefore needs to be counted.
With the current focus on
governance, practices such as this will become ever more prevalent.
In 2008, following feedback
from shareholders, often given at this meeting, we weighted returns towards
dividends in preference to buybacks. Dividends paid were consequently increased by
30%.
We know how important dividends
are to shareholders and the most recent quarterly dividend just paid on March
9
th
was held at 14 cents a
share, or 9.818 pence. In the future, our aim will be to continue to strike the
balance
that is
right
for shareholders between
investing for the future, providing current returns via the dividend, and ensuring
an appropriate and prudent level of gearing.
Our view is that the right
current balance is both to continue paying the dividend and to maintain investment
to grow the firm - and to use the capacity of our balance sheet while the industry
cost structure adjusts.
Our success in 2008 was, I
believe, a reflection of the period of critical self-examination which the group
has undergone in the last few years. The resulting strategy, devised by Tony
Hayward and his team, has put BP in a strong position, not least because we have
been ahead of the game in addressing costs.
And that issue of costs
remains a major focus for the
coming period
.
That strategy is backed 100% by
the board, through our corporate governance framework. The framework has been
tested in both good times and bad and is based on an enduring set of principles,
including clarity of roles, separation of powers, independence and ensuring we have
the right skills around the board table.
Earlier this month, Bob Dudley
joined the board and he is standing for election for the first time today.
As
I am sure virtually all
of
you know, Bob was previously
chief executive of TNK-BP and the transformation of that business over the last six
years is a tribute to his hard work and resolution.
T
imes were
not always easy for
him
in
Russia
and we are delighted to have
him on the board.
His arrival is the first of a
number of changes to the board which will take place in the course of this year as
continue to refresh its composition. I want to reassure you that we are responding
to recent events by increasing the momentum of this process.
Sir Tom McKillop has decided
not to seek re-election and to stand down from the board.
Tom's contribution to BP
was
absolutely
outstanding, particularly
through his membership of several important committees of the board, notably the
SEEAC, which has oversight of the extremely sensitive areas of safety and the
environment.
I know I reflect the views of
the whole board when I say h
e was a truly excellent
Director.
The board has asked me to stand
for re-election this year even though, after 12 years as chairman, I was intending
not to do so. This is not through any personal ambition on my own part, but
because
some
more time has been required to
complete our search for a successor. Let me reassure you that
our
search is now well
advanced
. There was a
hiccough
,
and therefore this
will
now definitely, absolutely,
conclusively
be my last AGM.
Throughout my time as chairman
it has been my privilege to work with truly outstanding board members, and without
exception, very talented executives.
As Chairman I have worked with
John Browne and with Tony.
Both have made a real
difference to BP.
They
are both people
of
the highest
calibre.
It
has
been a privilege to work
with them.
I have enjoyed it
immensely.
I would like to thank them all
for their efforts and to reassure you, our shareholders, that the new board members
we appoint in coming months will also be of the highest calibre, suited to the
complex needs of a large international company like BP.
Tony Hayward, BP Group Chief
Executive
Thank you Peter. Ladies and
gentlemen; good morning.
It is more than the usual
privilege to address this meeting today. As Peter has already said, this is a
special moment in the history of the company - this year is our 100th anniversary -
100 years since the company was formed.
Not surprisingly, we've been
reflecting a little on our history.
I believe it's of great value
to look at world events over the past 100 years and learn from them. And one thing
stands out:
whilst today's challenges are
very real, we have overcome far worse situations.
BP has been, and remains, an
organisation operating at the frontiers of the energy industry. Our technology and
capability allow us to take on challenges that others cannot - or choose not - to
confront, securing access to new resources now as in the past -
from
Iran
100 years ago to the
Canadian arctic today.
But operating at the frontiers
is not without risks as we have tragically experienced again this month. Yesterday,
I attended the very moving memorial service in
Aberdeen
for the victims of the
helicopter crash. That tragedy is a sharp reminder that even today, we cannot take
safety for granted and our thoughts and prayers are with the families and friends
of those who died.
Over the last
decade,
BP has
assembled an excellent
portfolio of assets - our job is to realise their full potential in the face of
today's uncertain environment.
It is not by chance that BP has
thrived for so long. The ingenuity of our people has led to our success - and that
gives me great confidence
with which
to face the
future.
A year ago, I addressed you for
the first time as the CEO of BP. At the time, we faced a real competitive challenge
and we needed to up our game.
We set out a plan to deliver
safe and reliable operations, to restore revenues and to reduce the complexity and
cost structure of BP.
We've done exactly
that.
Today, I believe that we are
well positioned to face the current economic environment and to turn it into an
opportunity that, going forward, will set us apart from our
competition.
But let me start with an
overview of last year.
2008 was a record year for BP.
Replacement cost profit reached $25.6 billion - up 39% on 2007. Net cash from
operating activities was $38 billion, up over 50% on the previous year. Dividends
paid per share rose by 30%, to 55 ¢/share, versus 2007.
With our operations restored,
we benefited from record high oil prices that more than compensated for the fall in
the global average refining margin to $6.50 per barrel, down from almost $10 per
barrel in 2007.
Based on the past year's
results, I am glad to say that BP has restored its competitive performance - and
that is no mean achievement when you
think about the
year
that has just
passed.
Over the last two years, our
focus has been on realising the full potential of our asset base.
Our number one priority of safe
and reliable operations has been vital to the underpinning of our restored
competitive performance.
The number of major incidents
involving process safety has continued to decrease and our personal accident and
injury track record continues to improve. The tragic helicopter accident in
the
North Sea
is a graphic reminder of
the inherent risks in this business - a persistent focus on safe and reliable
operations will remain our first priority.
In E&P, we successfully
grew production in line with guidance, the only one of the majors to do so.
Underlying production, excluding the effects of high oil prices on our entitlements
under production-sharing contracts, was up 5 per cent.
We started up nine major
projects and made good progress on controlling costs. We achieved more than 100%
reported reserve replacement for the 15th consecutive year and also delivered
resource replacement of more than 200 per cent - a performance that puts us among
the very best.
In R&M, despite a tough
environment, we made good progress in closing half of the competitive performance
gap. We rebuilt full economic capability at both the
Texas City
and Whiting refineries,
the Fuels Value Chains were fully established and we made significant progress in
simplifying our marketing footprint. Our International Businesses delivered a very
strong performance despite the world economic slowdown.
At a corporate level, we began
to reduce the complexity and cost base of our overheads.
By the end of 2008, we had
reduced our organisation by around 3000 people, and are on track to exceed our
original target of 5000 by the middle of 2009. We have also eliminated nearly 20
per cent of the senior positions.
Overall, we have made good
progress and the operational momentum is feeding through to the bottom
line.
Set against our main
competitors, we have strong financial momentum.
An underlying increase in net
income of 39% is well ahead of all of our competitors - and the operational cash
flow even more so.
Our goal now is to maintain
this momentum as we face the challenge of the current economic climate and lower
oil prices.
Of course it is not only about
today's results.
It is also about the
foundations for future growth and 2008 was, in that respect, a year with real
strategic momentum.
With 13 new field discoveries -
the most significant of which are shown on this map - exploration had one of its
most successful years in the past decade.
This included discoveries in
the Gulf of Mexico,
Angola
,
Algeria
,
Egypt
and the North Sea - we
also completed the
Libya
deal - which serves to
highlight the strength and breadth of our exploration
portfolio.
We achieved significant new
access - to both undeveloped resources and new exploration acreage, particularly
in
North America
. We were the successful bidder
on three exploration
licen
c
es
totalling
6,000 square kilometres
in the arctic Canadian Offshore Continental Shelf. This is a particularly exciting
prospect for the future, potentially containing some 20% of the world's yet to find
hydrocarbons.
In the middle of last year we
extended our footprint in North America Gas through two deals
with
Chesapeake
.
Strategically, this gives us a
material position in three top-tier shale basins and creates a balanced portfolio
of conventional gas, tight gas, coalbed methane and now shale gas, in the world's
biggest natural gas market.
We have a world class resource
base and our improving track record for executing projects gives us real confidence
for the future.
Last year we said we expected
to grow production to 2012, and that we could maintain it out to 2020 from existing
projects.
The picture is quietly and
steadily improving.
We now expect to grow
production between 1 and 2% out to 2013 based on existing projects and have the
potential to continue the growth out to 2020.
Linking now to our downstream
business, we concluded the oil sands deal with Husky. A key aspect of the deal was
to create an integrated position, with high-quality upstream resources linked to an
upgraded
US
refinery, allowing BP to
capture the full value chain.
We have just begun the upgrade
of the Whiting refinery. Re-positioning Whiting towards heavy crude oil means it
can take full advantage of Canadian differentials and the light-heavy spread - and
will shift the yield of the refinery to higher value products.
And finally, in Biofuels, we
started production from our joint venture in
Brazil
. This is the largest single
investment in Brazilian biofuels by an international oil company. Despite the
economic downturn, we believe that a disciplined approach to Alternative Energy
continues to offer good opportunities.
So, not only have we closed our
competitive performance gap, we are
very
well positioned for the
future.
Of course, we are facing the
immediate challenge of the current economic climate and lower oil
prices.
In line with the increase in
oil price - illustrated by the green line on this chart - we have seen a steady
increase in costs. Since 2004, when the oil price was at a comparable level to
today, our cost base has increased by about 50%.
At BP, we started our drive to
counter cost inflation some 18 months ago and managed to halt that inflationary
trend in 2008 despite the continued rise in oil prices for most of the
year.
The challenge for the industry
now is to bring this cost base down - and to do this fast, to align with the new
market conditions.
We've been working with our
suppliers to improve efficiency by finding better ways to execute activity - with
one important caveat- safe and reliable operations come first whatever cost
efficiency measures we undertake. And we continue to advance the safety and
reliability of our operations through implementing our Operating Management System
- something that is fundamental to creating a culture of continuous improvement
within BP.
Our aim in 2009 is to begin to
roll back the inflationary trend by driving deflation into our
business.
Over the last few months, we
have already seen sharp drops in the price of steel and petrochemicals. Our
approach will be a proactive one. Based on the actions we took in 2008, and the
deflation we can already see entering our supply chain, we expect our costs to fall
by around $2 billion in 2009.
So, in this volatile
environment, we've kept a steady focus on what we said we would do.
Our goal is clear; to continue
to invest for long term growth while retaining our focus on safe and reliable
operations, paying the dividend and driving deflation into our cost
base.
At BP we have a mantra - "every
dollar counts, every seat counts" and we intend to follow it through. We have
strong momentum on cost and operations - production is expected to continue to grow
and refining availability is expected to be materially higher in 2009 than in 2008
- these underlying business improvements are expected to add to our cash flows in
2009.
We have a strong balance sheet
and based on our current plans, we expect cash inflows and outflows in 2009 to
balance at an oil price of around $60 per barrel.
That break-even point should
continue to fall as we realize the benefits of our operational momentum and our
action on costs.
Compared to some competitors,
we are less exposed to high cost assets. Our continued focus on technology is vital
to support increased production and reduced costs.
We remain confident in our
ability to strike the right balance for our shareholders between continued
investment for long-term growth, delivering returns today via the dividend and
prudent management of our gearing level.
So despite the current
environment, I believe we are in a good position and there is plenty to be
optimistic about.
No doubt 2009 will be a
challenging year. But one that we'll meet head on and turn to our
advantage.
Our strategy is an enduring
one.
We're delivering upstream
growth, and production is expected to grow again this year.
In the downstream, the
turnaround is underway. Operational momentum has been restored and we expect to see
the benefit of this in 2009.
Costs are expected to fall
further and we expect underlying revenues to continue to grow.
At BP, the future has not been
cancelled. We have been here for 100 years and our resolve is as strong as ever. I
am confident that BP can face the next 100 years with pride and a renewed sense of
purpose.
So, in reviewing the year just
gone, I think about BP as a company that has one hundred years behind it and very
many more ahead of it.
I'm proud of the progress we've
made and I'm proud of the people in BP who have made it possible. Their skill and
dedication has been exemplary in tough times and I would like to thank everyone who
has worked so hard.
I'd also like to extend my
personal thanks to Peter.
Not only has he been the
longest serving chairman in BP's history, but his involvement with the company goes
back almost 20 years.
Peter was first a
director
of BP
in 1990 and has brought many
things to BP, including of course his unparalleled geopolitical expertise. He left
us for a few years to be the first chairman of the World Trade Organisation where
he played the critical role in implementing the agreements which underpin today's
global free trade. He then returned to BP and become the chairman in
1997.
Peter has overseen one of the
most dynamic periods in the company's development, including the transformational
mergers with Amoco, Arco and Burmah Castrol. He's worked alongside four chief
executives. From a personal perspective, Peter has been a tremendous coach and
supporter over the last few years during what was not always the easiest of
times.
He will step down before next
year's AGM and will go with enormous thanks and respect from right across BP - we
will all miss him
enormously
.
2008 has been a good year at
the end of a fascinating century.
I hope that, today, I have
given you a sense of the progress we are making and the confidence with which we
are facing the future.
BP Press Office, 00 44 (0)207
496 4076
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BP p.l.c.
(Registrant)
Dated: 16 April, 2009
/s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary