BP Annual Report and Form 20-F 2011 - Company Reporting

Group chief executive’s letterIn detailFor more on thestrategic priorities setout in the 10-point plan,see Our strategy.Pages 37-41• We plan to use around half of the increased cash flow for investment and half forother uses including increased distributions to shareholders.• And finally, you will be able to measure balance sheet strength.The plan makes a greater priority of creating value for the shareholder, rather thansimply increasing production volume. We will sell assets earlier in their lifecyclefollowing discovery if we spot opportunities to reinvest in higher growth areas. Weare also being selective in where we invest along the supply chain. For example,we are selling certain mature fields that hold more value for others, and we areselling a number of refining and marketing assets that do not match our aspirations.I want to say a little more about the areas of strength at the heart ofour strategy.Exploration is our lifeblood. We had a record year for new access in2011, gaining 55 exploration licences in nine countries. This opened up around315,000km 2 for exploration. We intend to more than double explorationinvestment over the next three years.In deep water, we are confident in our ability to design, engineer and operatelarge installations safely. 2012 will be a busy year for us in the deepwater regionsof Angola, Brazil and the Gulf of Mexico.Left New investmentannounced in 2011 mayextend production at theClair field of the UK NorthSea to 2050.Right February 2011saw BP announce apartnership with RelianceIndustries spanning thegas value chain in India,from exploration tomarketing.In giant fields, work with our partners has increased output at Iraq’sRumaila field by more than 10%. BP was the first supermajor to exceed itsproduction target in Iraq. During the year we also announced we will be investingapproximately $14 billion – with our partners – in the UK North Sea.Natural gas is set to be the fastest-growing fossil fuel globally to 2030.Here, we are forging new partnerships, such as the strategic alliance created in2011 with Reliance Industries in India. We continue to have a significant focuson developing unconventional resources around the world. Taking technologyand skills developed in North America, we are working with the governments ofOman and Algeria to develop their large tight gas reservoirs, and we also continueto work in Indonesia to develop their onshore coalbed methane fields.We also have exceptional expertise in building supply chains. For example,we move gas from 6,000 metres below the Shah Deniz field in Azerbaijan tomarkets in Western Europe, 3,000 kilometres away.16 BP Annual Report and Form 20-F 2011