BP 2012 Annual Report Download - page 12

Dear fellow shareholder
BP made important progress in 2012. We achieved a series of strategic milestones and
remained on course with our plans to 2014 and beyond. We made great strides forward
in Russia and the US. We continued to enhance risk management. We focused on our areas of
greatest strength. And we sold assets to capture value, simplify the business and reduce risk.
Before I say more about our activities and plans, I would like to reflect, with great sadness, on the
terrible events that took place at the In Amenas joint venture facility in Algeria in January 2013. Our
thoughts are with the families and friends of those who lost their lives in the attack. We are working
with government agencies and others to determine what can be learned from this shocking incident.
Coming back to our work over the past few years, people may not be fully aware of the
enormous scale of the change we have made. By the end of 2012 we had announced
asset sales of $38 billion, essentially reaching our target a year early. Since the divestment
programme began, we have sold around half our upstream installations and pipelines, and
one-third of our wells – while retaining roughly 90% of our proved reserves base and
production. Meanwhile, we are gaining new exploration access, rolling out high value
projects and upgrading assets.
Our Downstream segment has had an excellent year with strong operational performance
and record underlying profits.a We made good progress on the modernization programme of
our Whiting refinery and reached agreement on the divestment of two major refineries in the
US, completing the sale of our Texas City refinery in February 2013.
There is more to do and there will always be new challenges to face, but we are steadily
acting to build a stronger, safer BP.
We are addressing uncertainty in the US
In 2012 we resolved federal criminal charges with the Department of Justice and securities
claims with the SEC. We continue to work with the Environmental Protection Agency to
resolve suspension and debarment issues.
We have consistently said we are willing to settle all outstanding claims on reasonable
terms, but we are also prepared to defend the company and its actions in court. We will do
what is in the best interests of our shareholders. I recognize that ongoing proceedings
prolong uncertainty, so we will endeavour to update you as events unfold.
Back in 2010 we said that we would help restore the environment and economy of the
Gulf. We are holding true to that promise. In 2012 we made our final payment into the
$20-billion Trust fund, from which $9.5 billion has been distributed to date. We supported
environmental research and provided funds for the local tourism industry. Having grown up
in the Gulf, I am heartened that the tourists are back, beaches are busy and the fishing is
good. To date, BP has made total payments directly related to the accident and oil spill of
$32.8 billion. We will continue to meet our commitments in the region.
We are repositioning BP in Russia
In 2012 we agreed to sell our 50% shareholding in TNK-BP to Rosneft. TNK-BP proved to be
an outstanding investment, generating substantial value for BP. From an initial commitment
of around $8 billion, it has returned some $19 billion of dividends to us. But the time had
come to move on.
Carl-Henric Svanberg and Bob Dudley with Igor
Sechin, President of Rosneft, on the day the BP
board approved the transaction.
Group chief executive’s letter
We are building a platform
for growth that should
serve us well for many
years to come.
Bob Dudley
Business review: Group overview
BP Annual Report and Form 20-F 2012
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