BP 2009 Annual Report Download - page 59

BP Annual Report and Accounts 2009
Business review
Business review
Business review
Sales and other operating revenues are explained in more detail below.
$ million
2009 2008 2007
Sale of crude oil through spot and term contracts 35,625 54,901 43,004
Marketing, spot and term sales of refined products 166,088 248,561 194,979
Other sales and operating revenues 11,337 16,577 12,238
213,050 320,039 250,221
thousand barrels per day
Sale of crude oil through spot and term contracts 1,824 1,689 1,885
Marketing, spot and term sales of refined products 5,887 5,698 5,624
Sales and other operating revenues for 2009 were $213 billion, compared
with $320 billion in 2008 and $250 billion in 2007. The decrease in 2009
compared with 2008 primarily reflected a decrease in prices. The increase
in 2008 compared with 2007 primarily reflected an increase in revenues
from marketing, spot and term sales of refined products, mainly driven by
higher prices. Additionally, revenues from sales of crude oil through spot
and term contracts increased as a result of higher prices, partly offset by
lower volumes.
The replacement cost profit before interest and tax for the year
ended 31 December 2009 was $743 million. This included a net charge
for non-operating items of $2,603 million (see page 58). The most
significant non-operating items were restructuring charges and a
$1.6 billion one-off, non-cash, loss to impair all the segment’s goodwill in
the US West Coast fuels value chain relating to our 2000 ARCO
acquisition. In addition, fair value accounting effects had an unfavourable
impact of $261 million relative to management’s measure of
performance (see page 59).
The replacement cost profit before interest and tax for the year
ended 31 December 2008 was $4,176 million. This included a net credit
for non-operating items of $347 million (see page 58). The most
significant non-operating items were net gains on disposal (primarily in
respect of the gain recognized on the contribution of the Toledo refinery
to a joint venture with Husky Energy Inc.) partly offset by restructuring
charges. In addition, fair value accounting effects had a favourable impact
of $511 million relative to management’s measure of performance (see
page 59).
The replacement cost profit before interest and tax for the year
ended 31 December 2007 was $2,621 million. This included a net charge
for non-operating items of $952 million (see page 58). The most
significant non-operating items were net disposal gains (primarily related
to the sale of BP’s Coryton refinery in the UK, its interest in the West
Texas pipeline system in the US and its interest in the Samsung
Petrochemical Company in South Korea), net impairment charges
(primarily related to the sale of the majority of our US convenience retail
business, a write-down of certain assets at our Hull site in the UK and a
write-down of our retail assets in Mexico) and a charge related to the
March 2005 Texas City refinery incident. In addition, fair value accounting
effects had an unfavourable impact of $357 million relative to
management’s measure of performance (see page 59).
During 2009, our performance was also driven by the significantly
weaker environment, where refining margins fell by almost 40%. This
was partly offset by significantly stronger operational performance in the
fuels value chains, with 93.6% refining availability; lower costs and
improved performance in the international businesses.
During 2008, significant performance improvements in both our fuels
value chains and international businesses mitigated cost inflation and, to
a large extent, the much weaker environment. The main sources of
improvement were from restoring the revenues of our refining
operations; improved supply and trading performance; improved
marketing performance, particularly from the international businesses,
and reduced costs. The cost reductions were driven by the simplification
of our business structure through the establishment of fuels value chains
and a reduction in our geographical footprint, as well as by strong cost
management. The most significant environmental factor was the weaker
refining environment compared with 2007, particularly due to lower
refining margins in the US and the adverse impact in the second half of
2008 of prior-month pricing of domestic pipeline barrels for our US
refining system, but there were also adverse foreign exchange effects.
Refining throughputs in 2009 were 2,287mb/d, 132mb/d higher
than in 2008. Refining availability was 93.6%, 4.8 percentage points
higher than in 2008, the increase being driven primarily by the restoration
of availability at our Texas City refinery. Marketing volumes at 3,560mb/d
were around 4.1% lower than in 2008.
Other businesses and corporate
$ million
2009 2008 2007
Sales and other operating revenuesa2,843 4,634 3,698
Replacement cost profit (loss) before
interest and taxb(2,322) (1,223) (1,209)
aIncludes sales between businesses.
bIncludes profit after interest and tax of equity-accounted entities.
Other businesses and corporate comprises the Alternative Energy
business, Shipping, the group’s aluminium asset, Treasury (which
includes interest income on the group’s cash, cash equivalents), and
corporate activities worldwide.
The replacement cost loss before interest and tax for the year
ended 31 December 2009 was $2,322 million and included a net charge
for non-operating items of $489 million (see page 58).
The primary additional factors affecting 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.
The replacement cost loss before interest and tax for the year
ended 31 December 2008 was $1,223 million and included a net charge
for non-operating items of $633 million (see page 58).
The replacement cost loss before interest and tax for the year
ended 31 December 2007 was $1,209 million and included a net charge
for non-operating items of $262 million (see page 58).
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