BP 2008 Annual Report Download - page 38

BP Annual Report and Accounts 2008
Performance review
Other businesses and corporate
Other businesses and corporate comprizes Treasury (which includes
interest income on the group’s cash and cash equivalents) and corporate
activities worldwide, the group’s aluminium asset, the Alternative Energy
business and Shipping.
Comparative information presented in the table below has been
restated, where appropriate, to reflect the resegmentation, following
transfers of businesses between segments, that was effective from
1 January 2008. See page 16 for more details.
Key statistics
$ million
2008 2007 2006
Total revenuesa 5,040 3,972 3,703
Profit (loss) before interest and tax
from continuing operationsb (1,258) (1,233) (779)
Total assets 19,079 20,595 16,315
Capital expenditure and acquisitions 1,839 939 852
aIncludes sales between businesses.
bIncludes profit after interest and tax of equity-accounted entities.
Treasury
Treasury co-ordinates the management of the group’s major financial
assets and liabilities. From locations in the UK, the US and the Asia
Pacific region, it provides the link between BP and the international
financial markets and makes available a range of financial services to
the group, including supporting the financing of BP’s projects around
the world.
Insurance
The group generally restricts its purchase of insurance to situations
where this is required for legal or contractual reasons. This is because
external insurance is not considered an economic means of financing
losses for the group. Losses are therefore borne as they arise, rather
than being spread over time through insurance premiums with attendant
transaction costs. This position is reviewed periodically.
Aluminium
Our aluminium business is a non-integrated producer and marketer of
rolled aluminium products, headquartered in Louisville, Kentucky, US.
Production facilities are located in Logan County, Kentucky, and are jointly
owned with Novelis. The primary activity of our aluminium business is
the supply of aluminium coil to the beverage can business, which it
manufactures primarily from recycled aluminium.
Alternative Energy
BP invested $1.4 billion in our Alternative Energy business during 2008,
bringing the total investment in this business to $2.9 billion since its
launch in 2005. We expect to fulfil our original 2005 commitment to
invest a total of $8 billion over 10 years. In 2008, we prioritized four
areas with significant long-term growth potential – wind, solar, biofuels
and carbon capture and storage (CCS). We have also developed a fifth
area – gas-fired power – that offers synergies with other BP operations.
We have concentrated our 2008 investment in these areas.
2008 2007 2006
Wind – net rated capacity
as at year-end (megawatts)a 432 172 43
Solar – cell production capacity
as at year-end (megawatts)b 213 228 201
Net wind capacity is the sum of the rated capacities of the assets/turbines that have entered into
commercial operation, including BP’s share of equity-accounted entities. The equivalent capacities
on a gross-JV basis (which includes 100% of the capacity of equity-accounted entities where BP
has partial ownership) were 785MW in 2008, 373MW in 2007 and 43MW in 2006.
Solar capacity is the theoretical cell production capacity per annum of in-house
manufacturing facilities.
Wind
Since the launch of Alternative Energy we have substantially grown our
wind portfolio, increasing from 32 megawatts (MW) in operation to
432MW (785MW gross) at the end of 2008. In total, we have more than
500MW (1,000MW gross) of installed capacity. This increase in capacity
was led by the US with installations at Cedar Creek, Silver Star, Sherbino
and Edom Hills.
To accelerate our growth in the US wind energy market, we
acquired two fully integrated wind power development companies –
Greenlight Energy Inc. and Orion Energy LLC, during 2006. To secure
the continuing availability of turbines we have signed agreements with
Nordex (Germany) and GE (the US) for a combined 900MW to be
delivered during the next two years. This is in addition to a five-year wind
turbine contract we previously signed with Clipper Windpower Inc.
in 2006.
We also operate wind farms in the Netherlands and in
Maharashtra, India.
Solar
We continued to implement BP Solar’s strategy to invest in lower cost
manufacturing and technology to enable energy sourced from our
products to compete with conventional electricity. Our global business
model spans the entire solar ‘value chain’ – from the acquisition of
silicon as a raw material, the production of wafers and cells to the
creation of solar panels that are then sold and distributed as solar
systems on the roofs of residential homes, large commercial buildings
and on vacant land.
Today, BP Solar’s main production facilities are located in
Maryland (US), Madrid (Spain), Xi’an (China) and Bangalore (India).
During 2008, due to increasingly competitive market conditions, BP
Solar announced plans to refocus operations at larger scale plants to
achieve lower-cost manufacturing. This resulted in the start of an
intensive programme of operational efficiency improvement in the
remaining BP Solar plants and plans to close our manufacturing plant in
Australia. During 2008, BP Solar signed contracts with a select set of
third-party strategic partners in Asia who specialize in the production of
low-cost, high-quality wafers, cells and modules.
During 2008, BP Solar achieved sales of 162MW, an increase of
41% from 115MW in 2007. The slight decrease in solar production
capacity was due to fire damage in a section of our manufacturing plant
in India.
a
b
Performance review
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