BP has outlined plans to further boost efficiency and reduce costs with the aim of improving its annual underlying pre-tax profitability by more than $3bn over the next two to three years.
The company also extended its medium-term oil and gas production outlook, projecting that annual output would rise by 1-2% a year on average to 2015, at $60 per barrel from a 2008 base, and expressing increased confidence in further production growth out to 2020.
Group chief Executive Tony Hayward said the company had established strong momentum in its core businesses and had made great progress in reducing costs and improving absolute and relative financial performance in the past two years.
However, Mr Hayward said there were more opportunities to improve operating and cost efficiency right across the company, from refineries and marketing operations in the downstream to procurement, drilling and project management in the upstream.
BP’s refining and marketing segment has committed to further improve underlying profitability by over $2bn over the next two to three years, and to ensure that refining operations can be profitable even in depressed conditions.
In exploration and production, a significant organizational restructuring is underway to centralize project management, improve cost efficiency and inject greater consistency into operations, the company said.
In particular a Centralised Developments Organisation is being established to manage all major projects in the portfolio. These developments are expected to enhance capital efficiency and improve returns in the coming years.
On the upstream, Mr Hayward said BP’s medium-term growth focused on three areas of expertise: deep-water production, global gas including unconventional gas, and managing some of the world’s giant oilfields.
In the next two years 24 new projects will reach final investment decision. BP intends to start up a total of 42 new projects between 2010 and 2015, expected to contribute about 1 million to total production by 2015, more than offseting the decline from currently producing fields.
In addition to setting out BP’s downstream and upstream plans, Hayward reaffirmed the company’s commitment to investing in growing a focused portfolio of low-carbon businesses, comprising US onshore wind power, biofuels, solar power and carbon capture and sequestration. BP invested $1.3bn in this portfolio in 2009 and a cumulative total of more than $4bn since 2006.