BP 2010 Annual Report Download - page 59

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Businessreview
Business review
thousandbarrelsperday
Marketingsalesbyrenedproduct 2010 2009 2008
Aviationfuel 546 495 501
Gasolines  1,326 1,444 1,500
Middledistillates 1,012 1,012 1,055
Fueloil  391 418 460
Otherproducts 170 191 195
Totalmarketingsales 3,445 3,560 3,711
Marketingvolumeswere3,445mb/d,slightlylowerthan2009,principally
reectingthedisposalofourretailbusinessesinGreeceandFrance.
Our2010operationalperformancewasstrong,withSolomonrening
availabilityat95.0%fortheyearandreningthroughputsupby139mb/dfor
theyear.Ourreningutilizationwaswellaboveindustryaverages.Inthe
internationalbusinesses,thepetrochemicalsbusinesswasabletocapturethe
benetofthedemandrecovery,andachieverecordvolumes.
Prioryears’comparativenancialinformation
Thereplacementcostprotbeforeinterestandtaxfortheyearended
31December2009of$743millionincludedanetchargefornon-operating
itemsof$2,603million.Themostsignicant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FVCrelatingtoour2000
ARCOacquisition.Thisresultedfromourannualreviewofgoodwillas
requiredunderIFRSandreectedtheprevailingweakreningenvironment
that,togetherwithareviewoffuturemarginexpectationsintheFVC,ledto
areductionintheexpectedfuturecashows.Thedecreaseinprotwas
alsodrivenbytheverysignicantlyweakerenvironment,whererening
marginsfellbyalmost40%.Thiswaspartlyoffsetbysignicantlystronger
operationalperformanceintheFVCs,with93.6%Solomonrening
availability,lowercostsandimprovedperformanceintheinternational
businesses.Inaddition,fairvalueaccountingeffectshadanunfavourable
impactof$261millionrelativetomanagement’smeasureofperformance.
Thereplacementcostprotbeforeinterestandtaxfortheyear
ended31December2008was$4,176millionandincludedanetcreditfor
non-operatingitemsof$347million.Themostsignicantnon-operating
itemswerenetgainsondisposal(primarilyinrespectofthegain
recognizedonthecontributionoftheToledorenery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.
Comparedwith2008,our2009performancewasdrivenbythehigh
levelofnon-operatingitemsdescribedaboveandasignicantlyweaker
environmentthanin2008,wherereningmarginsfellbyalmost40%.
Thiswaspartlyoffsetbysignicantlystrongeroperationalperformancein
thefuelsvaluechains,with93.6%reningavailability,aswellaslower
costsandimprovedperformanceintheinternationalbusinesses.
Outlook
In2011,theoveralleconomicenvironmentisexpectedtocontinueto
recover,albeitatarelativelyslowpaceglobally.Thereningmarkermargin
(RMM)in2011isexpectedtoremaininarangemorereectiveofpre-2004
levelsandourforwardplansarecurrentlybasedonaRMMrangeof
$8-12perbarrel.
Ourprioritiesin2011remainconsistentwiththosein2010andwe
intendtobuildonthemomentumwehaveestablishedaroundimproving
nancialperformanceandoperations.Wewillcontinuetofocuson
deliveringsafe,reliableandcompliantoperations,improvingthe
performanceofourintegratedFVCs,inparticularintheUS,anddriving
furthercostefcienciesacrossallourbusinesses.Weintendtoincrease
slightlyourinvestmentlevelsin2011versus2010,focusedonkeysafety
andoperationalintegritypriorities,maintainingourqualitymanufacturing
andmarketingportfolio,strengtheningourUSEastofRockiesFVC
businessthroughtheWhitingrenerymodernizationprojectandcontinuing
togrowouradvantagedpetrochemicalsbusinessinChina.
Weexpectthenumberandcostofreneryturnaroundsin2011and
2012tobehigherthanin2010.
AsexplainedinOurstrategyonpage55,ourUSreningcapacityis
expectedtohalvewhenwecompletethedisposalofourTexasCity
reneryandthesouthernpartofourWestCoastFVC.
ThefollowingtablesummarizestheBPgroup’sinterestsinreneriesandaveragedailycrudedistillationcapacitiesat31December2010.
 thousandbarrelsperday
         Crudedistillationcapacitiesa
        Groupinterestb  BP
   Renery Fuelsvaluechain % Total share
Europe
Germany Bayernoil Rhine 22.5% 215 48
   Gelsenkirchenc Rhine 50.0% 265 132
   Karlsruhe Rhine 12.0% 324 39
   Lingenc Rhine 100.0% 93 93
   Schwedt Rhine 18.8% 237 45
Netherlands Rotterdamc Rhine 100.0% 377 377
Spain  Castellónc Iberia 100.0% 110 110
TotalEurope    1,621 844
US
California Carsonc USWestCoast 100.0% 266 266
Washington CherryPointc USWestCoast 100.0% 234 234
Indiana Whitingc USMid-West 100.0% 405 405
Ohio  Toledoc USMid-West 50.0% 160 80
Texas  TexasCityc – 100.0% 475 475
TotalUS    1,540 1,460
Rest of World
Australia Bulwerc ANZ 100.0% 102 102
   Kwinanac ANZ 100.0% 143 143
NewZealand Whangerei ANZ 23.7% 118 28
SouthAfrica Durban SouthernAfrica 50.0% 180 90
TotalRestofWorld    543 363
Total     3,704 2,667
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a
Crudedistillationcapacityisgrossratedcapacity,whichisdenedasthehighestaveragesustainedunitrateforaconsecutive30-dayperiod.
b
BPshareofequity,whichisnotnecessarilythesameasBPshareofprocessingentitlements.
cIndicatesreneriesoperatedbyBP.
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BPAnnualReportandForm20-F2010 57