BP 2012 Annual Report Download - page 77

Business review: BP in more depth
Business review: BP in more depth
BP Annual Report and Form 20-F 2012
75
thousand barrels per day
Refinery throughputsa2012 2011 2010
US 1,310 1,277 1,350
Europe 751 771 775
Rest of World 293 304 301
Total 2,354 2,352 2,426
Refinery capacity utilization
Crude distillation capacity
at 31 Decemberb2,681 2,679 2,667
Refinery utilizationc88% 88% 91%
US 89% 87% 93%
Europe 89% 91% 91%
Rest of World 80% 84% 84%
a Refinery throughputs reflect crude oil and other feedstock volumes.
b Crude distillation capacity is gross rated capacity, which is defined as the highest average
sustained unit rate for a consecutive 30-day period.
c Refinery utilization is throughput (thousands of barrels/day) divided by crude distillation capacity,
expressed as a percentage.
Overall refinery throughputs were at a similar level to 2011, notwithstanding
the planned outage of the largest of the crude units at our Whiting refinery
in the fourth quarter.
The lubricants business delivered an underlying replacement cost profit
before interest and tax of $1,285 million for the year, compared with
$1,250 million in 2011, reflecting continued robust performance despite
challenging levels of demand. This is the fifth consecutive year in which
the lubricants business has delivered more than $1 billion of underlying
replacement cost profit.
The petrochemical business delivered an underlying replacement cost
profit before interest and tax of $166 million for the year, compared with
$1,120 million in 2011, reflecting weakness in margins for BP’s mix of
products compared with last year resulting from recent capacity additions
in Asia and lower demand growth than in 2011. Our petrochemicals
production was lower than 2011 at 14,727 thousand tonnes compared
with 14,866 in 2011 as a result of decisions to reduce production for
commercial reasons.
2012 was the highest ever underlying replacement cost profit delivery in
the Downstream segment reflecting the fourth consecutive year of
underlying replacement cost profit growth. In March 2010 we outlined an
opportunity to deliver an additional $2 billion of performance improvement
by 2012 relative to a 2009 base-line.a However, despite better operational
reliability and high utilization rates that allowed us to capture more of the
available margin, and improvements in our cost efficiency, we were
unable to fully deliver this level of improvement principally due to a
significant reduction in the supply and trading contribution in 2012
compared with a particularly strong performance in 2009.
a This performance improvement measure was based on comparing Downstream’s underlying
replacement cost profit before interest and tax for 2009 with that of 2012, after adjusting for the
impact of changes in the refining margin and petrochemicals environment (including energy
costs), foreign exchange impacts and price-lag effects for crude and product purchases. This
adjusted measure of underlying replacement cost profit before interest and tax is non-GAAP.
We believe the measure is useful to investors because it is one that is viewed and tracked by
management as an important indicator of segment performance.
Sales and other operating revenues in 2012 were $346 billion, a similar
level to the $344 billion in 2011, and higher than the $267 billion in 2010.
This increase reflects higher prices almost offset by lower volumes and
foreign exchange losses.
$ million
2012 2011 2010
Sale of crude oil through spot
and term contracts 56,383 57,055 44,290
Marketing, spot and term sales
of refined products 275,920 273,940 209,221
Other sales and operating
revenues 14,188 13,121 13,240
Sales and other operating
revenuesa346,491 344,116 266,751
a Includes sales between businesses.
The following table sets out oil sales volumes by type for the past three
years. Marketing sales volumes were 3,213mb/d, slightly lower than 2011,
principally reflecting reduced demand in some OECD markets and
simplification of our portfolio.
thousand barrels per day
Refined product volumes 2012 2011 2010
Marketing salesa3,213 3,311 3,445
Trading/supply salesb2,444 2,465 2,482
Total refined product sales 5,657 5,776 5,927
Crude oilc1,518 1,532 1,658
Total oil sales 7,175 7,308 7,585
a Marketing sales include sales to service stations, end-consumers, bulk buyers and jobbers
(i.e. third parties who own networks of a number of service stations and small resellers).
b Trading/supply sales are sales to large unbranded resellers and other oil companies.
c Crude oil sales relate to transactions executed by our integrated supply and trading function,
primarily for optimizing crude oil supplies to our refineries and in other trading. Seventy-three
thousand barrels per day relate to revenues reported by Upstream.
Prior years’ comparative financial information
Replacement cost profit before interest and tax for the year ended
31 December 2011 was $5,474 million, compared with $5,555 million for
the previous year. The 2011 results included a net loss for non-operating
items of $602 million, compared with a net gain of $630 million in 2010.
The non-operating items in 2011 mainly related to impairment charges
relating to our disposal programme, partially offset by gains on disposal
(see page 37 for further information on non-operating items). In addition,
fair value accounting effects had a favourable impact of $63 million,
compared with a favourable impact of $42 million in 2010 (see page 37
for further information on fair value accounting effects).
In the fuels business, we were able to capture the benefits available in
2011 from BP’s location advantage in accessing WTI-based crude grades.
Compared with 2010, the result also benefited from a higher refining
margin environment and a stronger supply and trading contribution. These
benefits were partly offset by a significantly higher level of turnarounds in
2011 than 2010 and negative impacts from increased relative sweet crude
prices in Europe and Australia and the weather-related power outages in
the second quarter.
Performance in our lubricants business in 2011 was impacted by
significant base oil price increases and weaker demand. These impacts
were partly offset by supply-chain efficiencies and our ability to recover
the increased cost of goods in the market.
In our petrochemicals business, compared with 2010, the 2011 result
was negatively impacted by weakening market conditions as the year
progressed as additional Asian capacity came onstream during the year
at a time of weaker demand. This was somewhat offset by the strength
in aromatics margins and volumes in the first half of the year.
The replacement cost profit before interest and tax for the year ended
31 December 2010 of $5,555 million included a net gain for non-operating
items of $630 million, mainly relating to gains on disposal, partly offset
by restructuring charges. In addition, fair value accounting effects
had a favourable impact of $42 million relative to management’s measure
of performance. The primary additional factors contributing to the
increase in replacement cost profit before interest and tax compared
with 2009 were improved operational performance in the fuels value
chains (FVCs), continued strong operational performance in lubricants
and petrochemicals, and further cost efficiencies, as well as a more
favourable refining environment. Against very good operational delivery,
the results were impacted by a significantly lower contribution from
supply and trading compared with 2009.
Our businesses
Fuels
The fuels businesses is made up of seven regionally based FVCs, a
number of regionally focused fuels marketing businesses, a global aviation
fuels marketing business and our global oil supply and trading activities.
These fuels businesses sell refined petroleum products including
gasoline, diesel, aviation fuel and LPG.
Fuels value chains
The FVCs seek to optimize the activities of our assets across the supply
chain: crude delivery to the refineries; manufacture of high-quality fuels;