BP 2007 Annual Report Download - page 34

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Our convenience retail strategy continues to focus on BP’s advantaged
positions in major cities and growth markets and upgrading our retail
offers, while driving operational efficiencies through portfolio optimization
including, where appropriate, a transition to franchising. The convenience
offer comprises sales of convenience items to customers from
advantaged locations in metropolitan areas, while our fuels offer is
deployed at locations in all our markets, in many cases without the
convenience offer. We execute our convenience offer through a quality
branded store format in each of our key markets. Examples include the
BP Connect offer in Europe, the UK partnership with Marks & Spencer
Simply Food at selected locations, the am/pm offer in the US and the
Aral offer in Germany. At 31 December 2007, our convenience store
network consisted of more than 960 BP Connect stores worldwide, and
around 1,000 am/pm stores in the US and 1,500 Aral stores in Germany.
In line with BP’s intent to simplify the group’s operations and improve
performance, as well as to position the business for future growth by
directly accessing the franchisees’ entrepreneurial experience and local
knowledge, BP has announced that it will sell all of its company-owned
and company-operated convenience sites in the US. The majority of sites
will be sold to franchisees, with the remaining sites to dealers and large
distributors (jobbers). The sale of the sites is expected to be completed
by the end of 2009. The sites will continue to market BP-branded fuels in
the eastern US and ARCO-branded fuels in the western US. The
franchise agreement has a term of 20 years and requires sites to be
supplied with BP- or ARCO-branded fuels for the term of the contract.
Aviation fuels
Air BP is one of the world’s largest aviation businesses, supplying
aviation fuel to the airline, military and general aviation sectors. It supplies
customers in approximately 80 countries, has annual marketing sales of
27.4 billion litres (more than 470mb/d) and has relationships with many of
the major commercial airlines. Air BP’s strategic aim is to strengthen its
position in its main existing markets (Europe/US/Middle East), while
creating opportunities in emerging economies such as China, where it is
the largest foreign investor in the industry.
Marine fuels
The marine fuels business focuses on the distribution and resale of
refined fuels to the shipping industry across the world. The business has
a strong presence in the marine fuels sector. It has offices in 12
countries and operates in more than 150 ports.
Bitumen
The bitumen business focuses on the distribution and sale of bitumen
products for road construction and maintenance. It has a strong presence
in the US and in Europe and is exploring opportunities in developing
economies, where new infrastructure is being built. It markets bitumen
products in seven countries and product sales in 2007 were
approximately 45mb/d.
LPG
The LPG business sells bulk, bottled, automotive and wholesale LPG
products to a wide range of customers in 14 countries. During the past
few years, our LPG business has consolidated its position in established
markets and pursued opportunities in new and emerging markets. BP is
one of the leading importers of LPG into the Chinese market, where we
continued to grow our retail LPG business. LPG product sales in 2007
were approximately 72mb/d.
Lubricants
We manufacture and market lubricants products and also supply related
products and services to business customers and end-consumers in
more than 60 countries directly and to the rest of the world through local
distributors. Our business is concentrated on the higher-margin sectors
of automotive lubricants, especially in the consumer sector, and also has
a strong presence in the marine and industrial business markets.
Customer focus, distinctive brands and superior technology remain the
cornerstones of our long-term strategy. BP markets primarily through its
major brands, Castrol and BP, as well as Aral in specific markets. The
Castrol brand is recognized worldwide and we believe it provides us with
a significant competitive advantage. In the automotive lubricants
segment, we supply lubricants, other products and related business
services to intermediate customers such as retailers and workshops,
who in turn serve end-consumers such as car, motorcycle and leisure-
craft owners in the mature markets of western Europe and North
America and also in the fast growing markets of the developing world
such as Russia, China, India, the Middle East, South America and Africa.
BP’s marine lubricants business, operating under the BP and Castrol
brands, is a market leader with capability to supply in about 1,200 ports.
BP also supplies lubricants to the power generation, offshore oil and
aviation industries. BP’s industrial lubricants business supplies lubricants
and value-adding services to the transportation, automotive and metal
sectors.
Aromatics & Acetyls
The Aromatics & Acetyls business manufactures and markets three main
products lines: PTA, PX and acetic acid. PTA is a raw material for the
manufacture of polyesters used in textiles, plastic bottles, fibres and
films. PX is feedstock for the production of PTA. Acetic acid is a versatile
intermediate chemical used in a variety of products such as paints,
adhesives and solvents. It is also used in the production of PTA. In
addition to these three main products, we are involved in a number of
other petrochemicals products, namely Dimethyl 2, 6 Naphthalene
dicarboxylate (NDC), which is used for optical film and specialized
packaging, and acetic anhydride, ethyl acetate and vinyl acetate
monomer (VAM), which are used in cellulose acetate, paints, adhesives
and solvents. Our Aromatics & Acetyls strategy is to invest to maintain
and grow our advantaged manufacturing positions globally, with an
emphasis on growth in Asia, particularly in China. We are also investing in
maintaining and developing our technology leadership position to deliver
both operating and capital cost advantages.