BP 2010 Annual Report Download - page 60

Businessreview
Fuels value chains
WehavesixregionallyorganizedintegratedFVCs(see map on page 15),
eachofwhichoptimizestheactivitiesofourassetsacrossthesupply
chain–fromcrudedeliverytothereneries;manufactureofhigh-quality
fuels;pipelineandterminalinfrastructureandmarketingandsalesto
ourcustomers.
InadditiontotheFVCs,theTexasCityreneryisoperatedasa
standalone,predominantlymerchant,reningbusinessthatalsosupports
ourmarketingoperationsontheeastandGulfcoastsoftheUS.
AsexplainedinOurstrategyonpage55,weintendtodivestthe
TexasCityrenerycomplexandexitthesouthernpartofourUSWest
CoastFVCbusiness,includingtheCarsonrenery,bytheendof2012.
Wealsohaveanumberofregionallyfocusedfuelsmarketing
businessesthatarenotintegratedintoarenery,coveringtheUK,Turkey,
Chinaandourremainingbusiness-to-businessfuelsmarketingactivities
inFrance.
Wecurrentlyownorhaveasharein16reneries,which
producerenedfuelproductsthatwethensupplytoretailandcommercial
customers.
Ourreningfocusistomaintainandimproveourcompetitive
positionthroughsustainable,safe,reliable,compliantandefcient
operationsofthereningsystemanddisciplinedinvestmentfor
integritymanagement,toachievecompetitivelyadvantagedconguration
andgrowth.
ForBP,thestrategicadvantageofareneryrelatestoitslocation,
integration,scaleandcongurationtoproducefuelsfromlower-cost
feedstocksinlinewiththedemandoftheregion.Strategicinvestments
inourreneriesarefocusedonsecuringthesafetyandreliabilityofour
assetswhileimprovingourcompetitiveposition.Inaddition,wecontinue
toinvesttodevelopthecapabilitytoproducethecleanerfuelsthatmeet
therequirementsofourcustomersandtheircommunities.
Thefollowingtableoutlinesbyregionthevolumeofcrudeoiland
feedstockprocessedbyBPforitsownaccountandforthirdparties.
CorrespondingBPrenerycapacityutilizationdataissummarizedbelow.
thousandbarrelsperday
Renerythroughputsa2010 2009 2008
US    1,350 1,238 1,121
Europe  775 755 739
RestofWorld 301 294 295
Total   2,426 2,287 2,155
Renerycapacityutilization
Crudedistillationcapacityat
 31Decemberb2,667 2,666 2,678
Reneryutilizationc91% 86% 81%
 US  93% 85% 77%
 Europe 91% 89% 87%
 RestofWorld 84% 83% 80%
aRenerythroughputsreectcrudeoilandotherfeedstockvolumes.
bCrudedistillationcapacityisgrossratedcapacity,whichisdenedasthehighestaveragesustained
unitrateforaconsecutive30-dayperiod.
cR
eneryutilizationisannualthroughputdividedbycrudedistillationcapacity,expressedasa
percentage.Themeasurewasredenedin2009tobemoreconsistentwithindustrystandards.
Renerythroughputsincreasedby139mb/din2010relativeto2009,driven
principallybyhigheravailability,particularlyatTexasCityandWhiting.
Inadditiontorenedpetroleumproductswealsoblendandmarket
biofuels.Biogasoline(bioethanol)andbiodiesel(hydrogenatedvegetable
oilsandfattyacidmethylesters)continuetogrowinvolume,primarilyin
EuropeandtheUS,asregulatoryrequirementsdemandheavierblending
levels.Ourresponseistocontinuetodevelopblendcapabilities,andto
workwithregulators,biofuelssupplychainsandotherstakeholdersto
improvethesustainabilityofthebiofuelsthatweblendandsupply.
OurfuelsstrategyfocusesonoptimizingtheintegratedvalueofeachFVC
thatisresponsibleforthedeliveryofgroundfuelstothemarket.Wedo
thisbyco-ordinatingourmarketing,reningandtradingactivitiesto
maximizesynergiesacrossthewholevaluechain.Ourprioritiesareto
operateanadvantagedinfrastructureandlogisticsnetwork(whichincludes
pipelines,storageterminalsandroadorrailtankers),driveexcellencein
operatingandtransactionalprocesses,anddelivercompellingcustomer
offersinthevariousmarketsinwhichweoperate.Thefuelsbusiness
marketsacomprehensiverangeofrenedoilproductsprimarilyfocusedon
thegroundfuelssector.
Thegroundfuelsbusinesssuppliesfuelandrelatedconvenience
servicestoretailconsumersthroughcompany-ownedandfranchisedretail
sites,aswellasotherchannels,includingwholesalersandjobbers.Italso
suppliescommercialcustomerswithinthetransportandindustrialsectors.
OurretailnetworkislargelyconcentratedinEuropeandtheUS,but
alsohasestablishedoperationsinAustralasia,aswellassouthernand
easternAfrica.WehavedevelopednetworksinChinaintwoseparatejoint
ventures,onewithPetrochinaandtheotherwithChinaPetroleumand
ChemicalCorporation(Sinopec).
At31December2010,BP’sworldwidenetworkconsistedofsome
22,100sites,primarilybrandedBP,ARCOandAral.During2010wesold
around400sitesinFrancetoDelekEuropeB.V.Thesewillcontinuetobe
operatedundertheBPbrandthroughabrandlicensingagreement.
Ourretailconvenienceoperationsofferconsumersarangeoffood,
drinkandotherconsumablesandservicesonthefuelforecourtina
convenientandinnovativemanner.Theconvenienceofferincludesbrands
suchasampm,WildBeanCaféandPetitBistro.
IntheUS,ourampmbrandisoperatedasaconvenienceretail
franchisemodel.OverallintheUS,bytheendof2010therewere11,300
brandedretailsites,ofwhich1,100werebrandedampm,comparedwith
11,500and1,200respectivelyatthebeginningof2010.
InEurope,wehadapproximately8,400brandedretailsitesatthe
endof2010.Wearealsooneofthelargestforecourtconvenienceretailers,
withabout1,600convenienceretailsitesinninecountries.Wearegrowing
ourfood-on-the-goandfreshgroceryservicesthroughBP-ownedbrands
andpartnershipswithleadingretailerssuchasMarks&Spencer.
Inaddition,attheendof2010,wehadapproximately2,400brandedretail
sitesoutsideEuropeandtheUSincountriessuchasAustralia,New
ZealandandSouthAfrica.
ThetablebelowoutlinesthenumberofBP-brandedretailsites
byregion.
NumberofretailsitesoperatedunderaBPbrand
Retailsitesab 2010 2009 2008
US    11,300 11,500 11,700
Europe  8,400 8,600 8,600
RestofWorld 2,400 2,300 2,300
Total   22,100 22,400 22,600
aT henumberofretailsitesincludessitesnotoperatedbyBPbutinsteadoperatedbydealers,
jobbers,franchiseesorbrandlicenseesthatoperateunderaBPbrand.Thesemaymovetoorfrom
theBPbrandastheirfuelsupplyorbrandlicenceagreementsexpireandarerenegotiatedinthe
normalcourseofbusiness.RetailsitesareprimarilybrandedBP,ARCOandAral.
b
Excludesourinterestinequity-accountedentitieswhicharedual-branded.
Thegrouphasalong-establishedintegratedsupplyandtradingfunction
responsiblefordeliveringvalueacrosstheoverallcrudeandoilproducts
supplychain.ThisstructureenablestheoptimizationofBP’sFVCsto
maintainasingleinterfacewiththeoiltradingmarketsandtooperatewith
asinglesetoftradingcomplianceprocesses,systemsandcontrols.The
businesshastradingofcesinEurope,theUSandAsiatoenablethe
functiontomaintainapresenceintheregionallyconnectedglobalmarkets.
Theoilsupplyandtradingfunctionhasoperatedthroughaperiodof
challengingtradingconditionsin2010duetolowerpricevolatility,tighter
productandsweetvssourcrudeoilspreads,andreducedcontango(i.e.
spotvsfutureprice)opportunities.Theweakertradingenvironmentisa
resultofOPECcrudesupplyavailability,reningandstoragesparecapacity.
Thesupplyandtradingfunctionsupportedthegroupthroughaperiodof
uncertaintyinthecreditmarketsconcerningBP’snancialposition
followingtheGulfofMexicooilspill.
58BPAnnualReportandForm20-F2010