BP 2010 Annual Report Download - page 63


Businessreview
Business review
technologydevelopmentandsupport,aswellasprovidingworld-class
trainingforcustomersanddistributors.
• D uring2010,theLPGbusinessfurthersimplieditsportfolio.InChina,
theLPGbusinessdecidedtofocusitsin-countryoperationsoncore
marketingactivitiesandsolditsinterestintheChinaZhuhaicavern
complex.ThiscompletestheexitfromallmajorChinaLPGimport
facilities.InEurope,BPsolditsLPGbusinessesinSpainandDenmark.
• T heBPYPCAcetylsCompany(Nanjing)Limited(BYACO)jointventure
betweenBPandYangziPetrochemicalCo.Ltd(asubsidiaryofSinopec)
successfullycommencedcommercialproductionatits548,000tonnes
perannum(ktepa)aceticacidplantinthefourthquarterof2010.
• Thepetrochemicalsbusinessstartedadebottleneckprojecttoadda
further200ktepaPTAcapacityattheBPZhuhaiChemicalCompany
LimitedsiteinGuangdongprovince(China),whichisscheduledfor
completionintherstquarterof2012.Thisadditionalcapacityemploys
BP’slatestproprietarytechnologyandwillbringthesite’stotalPTA
capacityto1,750ktepa,continuingourgrowthinChina.
• During2010,BPsoldits15%interestinEthyleneMalaysiaSdnBhd
(EMSB)andits60%interestinPolyethyleneMalaysiaSdnBhd
(PEMSB)toPetronas.
Otherbusinessesandcorporate
OtherbusinessesandcorporatecomprisestheAlternativeEnergy
business,Shipping,thegroup’saluminiumbusiness,Treasury(which
includesinterestincomeonthegroup’scashandcashequivalents),and
corporateactivitiesworldwide.
Thereplacementcostlossbeforeinterestandtaxfortheyear
ended31December2010was$1,516million,comparedwith$2,322
millionforthepreviousyear.2010includedanetchargefornon-operating
itemsof$200million.(See page 25 for further information on non-
operating items.)Theprimaryadditionalfactorsaffecting2010’sresult
comparedwiththatof2009wereimprovedbusinessperformance,more
favourableforeignexchangeeffectsandcostefciencies.
Thereplacementcostlossbeforeinterestandtaxfortheyear
ended31December2009includedanetchargefornon-operatingitemsof
$489million.
Thereplacementcostlossbeforeinterestandtaxfortheyear
ended31December2008includedanetchargefornon-operatingitemsof
$633million.
Theprimaryadditionalfactorsreectedin2009’sresultcompared
withthatof2008wereaweakermarginenvironmentforShippingandour
BPSolarbusinessandadverseforeignexchangeeffects.
Key statistics
 $million
2010 2009 2008
Salesandotheroperatingrevenuesa3,328 2,843 4,634
Replacementcostprot(loss)before
 interestandtaxb(1,516) (2,322) (1,223)
Capitalexpenditureandacquisitions 1,234 1,299 1,839
aIncludessalesbetweenbusinesses.
bIncludesprotafterinterestandtaxofequity-accountedentities.
Alternative Energy
AlternativeEnergycomprisesBP’slow-carbonbusinessesandfuture
growthoptionsoutsideoilandgas,whichwebelievehavethepotentialto
beamaterialsourceoflow-carbonenergyandarealignedwithBP’score
capabilities.Thesearebiofuels,windandsolar,alongwithdemonstration
projectsandtechnologydevelopmentincarboncaptureandstorage(CCS).
Ourmarket
Itiswellacceptedthatamorediversemixofenergywillberequiredto
meetfuturedemand.BP’sownestimatessuggestthatglobalprimary
energydemandwillincreasebyaround40%between2010and2030.
Supportedbygovernmentpolicies,windpowerhasgrownrapidlyinmany
countriesandisnowgrowinggloballyatanannualrateof30%a,while
installedsolarphotovoltaiccapacityispredictedtoincreasefrom15GWin
2008to410GWin2035bandbetween2010and2030,biofuelsare
expectedtocontribute30%oftheglobalgrowthinsupplyofliquidfuelsc.
Ourperformance
AlternativeEnergycontinuestomakeprogressagainstitscommitmentto
invest$8billionby2015.Ourinvestmentsince2005ismorethan
$5billiond.Ourwindbusinesshasadded125MWofgrosscapacityduring
2010,withthecommercialstart-upoftheGoshenNorthwindfarm.Inour
solarbusiness,weachievedsalesof325MWandsignedseveralstrategic
supplydeals(see Solar on page 62).Ourbiofuelsbusinessacquiredthe
lignocellulosicassetsfromVereniumCorporationInc.for$98million.In
April,wecompletedthesaleofour35%interestinK-Power,agas-red
powerassetinGwangyang,SouthKorea,toSKHoldingsCo.Ltdfor
$316million.
Global WindEnergyCouncil–Annex Stats 2009.
World Energy Outlook 2010©OECD/IEA2010,page306.
BP Energy Outlook 2030.
Themajorityofcostshavebeencapitalized,somewereexpensedunderIFRS.
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b
c
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BPAnnualReportandForm20-F2010 61