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

In Refining and Marketing, our world-class fuels, lubricants and petrochemicalsbusinesses are shifting the balance of their activity towards higher growthmarkets, including China and India. We are moving forward with our plans to sellaround half of our refining capacity in the US, and we have made good progresson the modernization of the Whiting refinery. Looking ahead, we expect ourdownstream operations to be a material contributor to the cash flow we anticipateover the next few years.These strengths are supported by our long-standing track record indeveloping and applying leading technology, and the deep and enduringrelationships we form. We were disappointed that our exploration plans withRosneft did not progress, but we remain committed to our TNK-BP investmentin Russia, which continues to be successful.Business review: Group overviewA well-balanced businessAs the BP Energy Outlook 2030 shows, the world is now in a long wavelengthtransition to a lower-carbon energy mix. For BP, that means helping to meetcurrent demand through the supply of oil and gas – including unconventionalresources – while developing a number of the lower-carbon options needed atscale tomorrow.During 2011, we invested a further $1.6 billion in our Alternative Energybusiness, which takes total investment since 2005 to $6.6 billion. We have agrowing biofuels business in Brazil and we added 401MW a of wind generationcapacity during the year, with interests in more than 1,000 wind turbines nowturning across the US. In contrast, solar has evolved into a low-margin commoditymarket, and in 2011 we began winding down our remaining solar operations aswe prepare to exit the business.Looking aheadBP is meeting its commitments and moving forward with increasing momentum.2012 will be a year of milestone delivery, with financial momentum building in2013 and 2014. In 2012, you can expect high-margin production coming back onstream, major project start-ups and new exploration wells, further progress onour divestment programme, continued improvement in downstream financialperformance and completion of payments into the Deepwater Horizon Oil SpillTrust fund.The company has a strong leadership team and non-executive directorswho provide rigorous oversight – challenging and supporting executives ascircumstances dictate. I want to thank BP’s employees for their resilience. Theywere again tested hard this year. The character of BP’s people was evidentwherever we operate, not least in Egypt and Libya, where our teams evacuatedcolleagues and their families safely during the upheavals in the region.I thank investors for their continued patience through a tough time. One byone, we are addressing the uncertainties facing our company. The days aheadmay bring further challenges, but we are in a much stronger position than thistime last year. There is a great deal more to do, but we are building a stronger,safer BP that can play an important role in the world for many years to come.Bob DudleyGroup Chief Executive6 March 2012aOn a gross joint-venture basis (which includes 100% of the capacity of equity-accounted entitieswhere BP has partial ownership). Including BP’s share of joint ventures on a net basis, the capacityadded was 274MW.BP Annual Report and Form 20-F 2011 17