BP 2012 Annual Report Download - page 13

The new agreement will provide us with an 18.5% share in Rosneft and $12.3 billion of cash,
including a dividend of $0.7 billion received from TNK-BP in December 2012. Combined with
our existing 1.25% shareholding, we will own 19.75% of Rosneft. We expect the transaction
to be completed in the first half of 2013. Through it, we will maintain a strong position in the
world’s largest oil and gas producing country. And we will be a major investor in a company
transforming its asset base, management processes and corporate governance.
We will use our experience in large acquisitions and mergers to support Rosneft as it
assimilates TNK-BP’s assets. We can also contribute technical skills in areas from
exploration and enhanced oil recovery to integrating downstream businesses and
international developments. We have confidence in the Russian business environment
and we look forward to playing a valued role in the country’s future.
We are enhancing safety and risk management
Our employees have been working systematically to enhance safety and risk management.
We have changed how we are organized, bringing greater clarity and consistency across the
company. In the Gulf of Mexico and elsewhere, we are holding our operations to standards
that in many cases go beyond regulatory requirements. And we have turned lessons
learned from the 2010 accident into new oil spill response plans and technologies, which
we are adopting within BP and sharing with others. I take encouragement from our 19%
reduction in loss of primary containment this past year, continuing a multi-year trend.
2012 saw the appointment of Carl Sandlin, who will oversee the implementation of the
recommendations of the Bly Report, BP’s internal accident investigation. In addition,
following our agreement with the US government to resolve all federal criminal claims, we
have agreed to take additional actions designed to further enhance the safety of drilling
operations in the Gulf. Two independent monitors will be appointed to review and provide
recommendations, one regarding process safety for deepwater drilling in the Gulf and the
other BP’s code of conduct. An independent auditor will review and report on BP’s
implementation of key terms of the agreement.
We are building a distinctive platform for growth
In shaping our portfolio, we are prioritizing shareholder value. Scale remains important,
but we are focused on driving forward our financial performance rather than simply
growing production volumes. Operating cash flow and replacement cost profit will take
precedence over barrels of production. We are increasing investment in the areas with
the greatest potential to generate strong and reliable growth in operating cash flow, from
exploration and deepwater operations to giant fields and gas value chains. In the
Downstream, we have a portfolio of world-class businesses that are positioned to
deliver material and growing free cash flows.b
There is plenty for us to explore. During the year we gained new access in six countries.
Since 2010 we have accessed around 400,000 square kilometres of new acreage. That
is roughly the size of California and more than double the exploration acreage gained
from 2000 to 2009.
We continue to have an important presence in many of the world’s largest economies
and in fast-developing countries too. BP’s global footprint and prudent financial approach
are important given the potential for turbulence in the world, including further economic
and political upheaval. We are well placed to respond to unsettled conditions if and when
they appear.
Looking ahead
While facing uncertainties and navigating through testing times, BP emerged from 2012
a somewhat smaller, but stronger company. As we move forward, you will see us keep
working to focus, standardize and improve what we do and how we do it. We are
building a platform for growth that should serve us well for many years to come.
I want to end by paying tribute to everyone here at BP. This has been another truly
demanding year, and our employees have dedicated themselves to their jobs in a way
that I find humbling. I am proud of the talent and the terrific spirit of determination to
improve that is found within BP. Over the next 12 months and beyond, we will continue
our work to enhance safety, earn back trust and create value.
Bob Dudley
Group Chief Executive
6 March 2013
The new US-based High-Performance
Computing centre, which is currently
under construction, will enable BP scientists to
complete an imaging project in one day –
whereas it would have taken four years nearly
a decade ago.
$19 billion
Dividends received by BP from TNK-BP
since 2003.
a Downstream underlying profit is not a recognized GAAP
measure. See page 27 for the equivalent measure on an IFRS
basis, which is replacement cost profit before interest and tax.
See Certain definitions on page 98 for further information on
underlying profit.
b See footnote e on page 21 for a definition of free cash flow.
Business review: Group overview
BP Annual Report and Form 20-F 2012 11
Business review: Group overview