BP

BP

Type	Public (LSE: BP) (NYSE: BP)
Founded	1908 (as the Anglo-Persian Oil Company) 1954 (as The British Petroleum Company)
Headquarters	London, England, UK
Area served	Worldwide
Key people	Peter Sutherland (Chairman) Tony Hayward (CEO) Byron Grote (CFO)
Industry	Oil and Natural Gas, Alternative fuel
Products	BP petroleum and derived products BP service stations Air BP Aviation Fuels Castrol motor oil ARCO gas stations am/pm convenience stores Aral service stations
Market cap	US$ 204.78 Billion (2008)
Revenue	▲ US$ 291.438 Billion (2007)
Operating income	▼ US$ 32.352 Billion (2007)
Net income	▲ US$ 20.845 Billion (2007)
Total assets	▲ US$ 236.076 Billion (2007)
Total equity	▲ US$ 93.690 Billion (2007)
Employees	96,200 (2008)[1]
Website	www.bp.com

BP p.l.c., previously known as British Petroleum, is the third largest global energy company, a multinational oil company ("oil major") with headquarters in London. The company is among the largest private sector energy corporations in the world, and one of the six "supermajors" (vertically integrated private sector oil exploration, natural gas, and petroleum product marketing companies).^[2] The Company is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

History

Activity in 1909 - 1979

In May 1901, William Knox D'Arcy was granted a concession by the Shah of Iran to search for oil which he discovered in May 1908.^[3] This was the first commercially significant find in the Middle East. On 14 April 1909, the Anglo-Persian Oil Company (APOC) was incorporated to exploit this.^[3] In 1935, it became the Anglo-Iranian Oil Company (AIOC).^[3]

After World War II, AIOC and the Iranian government initially resisted nationalist pressure to revise AIOC's concession terms still further in Iran's favour. But in March 1951, the pro-western Prime Minister Ali Razmara was assassinated.^[4] The Majlis of Iran (parliament) elected a nationalist, Mohammed Mossadeq, as prime minister. In April, the Majlis nationalized the oil industry by unanimous vote.^[5] The British government contested the nationalization at the International Court of Justice at The Hague, but its complaint was dismissed.^[5]

The British government decided that the only way to regain its control of Iranian oil (which it regarded as a vital national interest), was to remove Mossadegh from office and replace his government with a pro-British prime minister and parliament. Its problem was that it lacked the means to do so without American support. But it was clear the U.S. government would never support a coup d'état designed only to protect Britain's commercial interests. So the British played on America's then paranoia about the Communist threat by producing bogus evidence that Mossadeq was scheming to bring Iran into the Soviet sphere of influence. In early 1953, incoming U.S. President Dwight D. Eisenhower authorized the Central Intelligence Agency (CIA) to overthrow the Iranian government.^[5] The CIA conspiracy, involving the Shah and the Iranian military, became known by its codename, Operation Ajax.^[5]

On 19 August 1953, Mossadeq was forced from office by a CIA-orchestrated military coup.^[5] He was replaced by pro-Western general Fazlollah Zahedi.^[6] The Shah, who had left the country briefly to await the outcome of the coup, returned to Iran. He abolished the democratic Constitution and assumed autocratic powers. The AIOC became the British Petroleum Company in 1954, and resumed operations in Iran and tried to return to its old position.^[5] However "public opinion was so opposed that the new government could not permit it." Instead an international consortium under the nationalized name (National Iranian Oil Company) was created, the Anglo-Iranian Oil Company being just one member and holding 40% of the shares. The consortium agreed to share profits on a 50-50 basis with Iran, "but not to open its books to Iranian auditors or to allow Iranians onto its board of directors."^[7] AIOC, as a part of the Anglo-American coup d'état deal, it was not allowed to monopolize Iranian oil as before. It was limited to a 40% share in a new international consortium. For the rest, 40% went to the five major American companies and 20% went to Royal Dutch Shell and Compagnie Française des Pétroles, now Total S.A..^[8]

BP continued to operate in Iran until the Islamic Revolution in 1979. The new regime of Ayatollah Khomeini confiscated all of BP's assets in Iran without compensation, finally closing BP's 70-year presence in Iran. However, due to its huge investments outside Iran, especially in the North Sea and Alaska, the company's status as an oil major survived its Iranian disaster.^[9]

In 1959 the company expanded beyond the Middle East to Alaska^[10] and in 1965 it was the first company to strike oil in the North Sea.^[11]

In 1978 BP acquired Standard Oil of Ohio or Sohio, a breakoff of the former Standard Oil that had been broken up after anti-trust litigation.^[12]

1980s and 1990s

A British BP Shop Petrol Station.

Sir Peter Walters was BP's chairman from 1981 to 1990.^[13] This was the era of the Thatcher government's privatisation strategy. The British government sold its entire holding in BP in several tranches between 1979 and 1987.^[14] The sale process was marked by an attempt by the Kuwait Investment Office, the investment arm of the Kuwait government, to acquire control of BP.^[15] This was ultimately blocked by the strong opposition of the British government. In 1987, British Petroleum negotiated the acquisition of Britoil^[16] and those shares of Standard Oil of Ohio (Sohio) through CEO Charlie Spahr not already owned.^[12]

Walters was replaced by Robert Horton in 1989. Horton carried out a major corporate downsizing exercise removing various tiers of management within the BP Head Office.^[17]

Lord Browne of Madingley, who had been on the board as managing director since 1991, was appointed group chief executive in 1995.^[18] Browne was responsible for three major acquisitions; Amoco, ARCO and Burmah-Castrol (see below).

Recent years

British Petroleum merged with Amoco (formerly Standard Oil of Indiana) in December 1998,^[19] becoming BPAmoco until 2000 when it was renamed BP and adopted the tagline "Beyond Petroleum," which remains in use today. It states that BP was never meant to be an abbreviation of its tagline. Most Amoco gas stations in the United States have changed the look and name to the BP brand. In many states, however, BP is selling Amoco branded gasoline, as it was rated the #1 petroleum brand by consumers 16 years in a row (the name of the service station itself is still BP) and Amoco has one of the highest brand loyalty for gasoline in the US with only Chevron and Shell having such high rates as BP/Amoco. In May 2008, however, the Amoco name was mostly phased out in favor of "BP Gasoline with Invigorate", promoting BP's new additive. The highest grade of BP gasoline available in the United States is still called Amoco Ultimate, however. In 2000, British Petroleum acquired Arco (Atlantic Richfield Co.)^[20] and Burmah Castrol plc.^[21]

Chief Scientist of BP, Steven Koonin (top right, with laptop), speaks about the energy scene in the boardroom in 2005.

In April 2004, BP decided to move most of its petrochemical businesses into a separate entity called Innovene within the BP Group. Their intention was to sell the new company possibly via an Initial Public Offering (IPO) in the US, and in fact they filed their IPO plans for Innovene with the New York Stock Exchange on 12 September 2005. However, on 7 October 2005, BP announced that they had agreed to sell Innovene to INEOS, a privately held UK chemical company for the sum of $9 billion, thereby scrapping their plans for the IPO.^[22]

On 23 March 2005, an explosion occurred at BP's Texas City Refinery in Texas City, Texas. It is the third largest refinery in the United States and one of the largest in the world, processing 433,000 barrels (68,800 m³) of crude oil per day and accounting for 3% of that nation's gasoline supply. Over 100 were injured, and 15 were confirmed dead, including employees of the Fluor Corporation as well as BP. BP has since accepted that its mismanagement contributed to the accident. Level indicators failed, leading to overfilling of a heater, and light hydrocarbons spread throughout the area. An unidentified ignition source set off the explosion. ^[23]

In 2005, BP announced it would be leaving the Colorado market.^[24] Many locations were rebranded as Conoco.^[25]

According to some private BP-branded gasoline center operators in the Metro Atlanta area, BP plans to leave the Southern market in the next few years. All corporate-owned BP stations, typically known as "BP Connect" will be sold to local jobbers.^[26]

In March 2006, a leak in one of BP's pipelines on the North Slope of Alaska caused a spill of oil onto the tundra, leading BP to commit to replace over 16 miles (26 km) of federally regulated Oil Transit Lines (OTLs). As of the end of 2007, one half of the pipeline had been replaced and all 16 miles (26 km) of pipeline are now tested regularly. ^[27]

BP has recently looked to grow its oil exploration activities in frontier areas like the former Soviet Union for its future reserves.^[28] In Russia, BP owns 50% of TNK-BP with the other half owned by three Russian billionaires. TNK-BP accounts for a fifth of BP's global reserves, a quarter of BP's production, and nearly a tenth of its global profits.^[29]

On July 19, 2006, BP announced that it would close the last 12 out of 57 oil wells in Alaska, mostly in Prudhoe Bay, that had been leaking. The wells were leaking insulating agent called Arctic pack, consisting of crude oil and diesel fuel, between the wells and ice.^[30]

On 12 January 2007, it was announced that Lord Browne would retire at the end of July 2007.^[31] The new Chief Executive will be the current head of exploration and production, Tony Hayward. It had been expected that Lord Browne would retire in February 2008 when he reached the age of 60, the standard retirement age at BP. Browne resigned abruptly from BP on 1 May 2007, following the lifting of a legal injunction preventing Associated Newspapers from publishing details about his private life. Hayward succeeded Browne with immediate effect.^[32]

Financial data

Source :'OpesC'

Corporate controversies

August 2006 Prudhoe Bay Shutdown

Solar panel made by BP Solar

In August, 2006, BP shut down oil operations in Prudhoe Bay, Alaska, due to corrosion in pipelines leading up to the Alaska Pipeline. BP had spilled over one million litres of oil in Alaska's North Slope.^[33] This corrosion is caused by sediment collecting in the bottom of the pipe, protecting corrosive bacteria from chemicals sent through the pipeline to fight this bacteria. There are estimates that about 5,000 barrels (790 m³) of oil were released from the pipeline. To date 1,513 barrels (240.5 m³) of liquids, about 5,200 cubic yards (4,000 m³) of soiled snow and 328 cubic yards (251 m³) of soiled gravel have been recovered. After approval from the DOT, only the eastern portion of the field was shut down, resulting in a reduction of 200,000 barrels per day (32,000 m³/d) until work began to bring the eastern field to full production on October 2, 2006.^[34] In May 2007, the company announced another partial field shutdown owing to leaks of water at a separation plant. Their action was interpreted as another example of fallout from a decision to cut maintenance of the pipeline and associated facilities. ^[35]

October 2007 Prudhoe Bay spill

On 16 October 2007 Alaska Department of Environmental Conservation officials reported a toxic spill of methanol at the Prudhoe Bay oil field managed by BP PLC. Nearly 2,000 gallons of mostly methanol, mixed with some crude oil and water, spilled onto a frozen tundra pond as well as a gravel pad from a pipeline. Methanol, which is poisonous to plants and animals, is used to clear ice from the insides of the Arctic-based pipelines.^[36]

November 2008 BP Supports USA over UK

BP has dumped its plans to build out wind farms and other renewable projects in Britain for projects in the United States. The US government incentives for clean energy projects provide convenient tax shelter for oil and gas revenues, something BP is looking for with an estimated $8 billion earmarked for the initiative. Lower economies of scale made the UK wind sector far less attractive than that of the US.

Environmental record

In 2005 BP was considering testing carbon sequestration in one of its North Sea oil fields, by pumping carbon dioxide into them (and thereby also increasing yields).^[37] In 2004, BP began marketing low-sulfur diesel fuel for industrial use. BP intends to create a network of hydrogen fueling stations in the state of California. BP Solar is a leading producer of solar panels since its purchase of Lucas Energy Systems in 1980 and Solarex (as part of its acquisition of Amoco) in 2000. BP Solar had a 20% world market share in photovoltaic panels in 2004 when it had a capacity to produce 90 MW/year of panels. It has over 30 years experience operating in over 160 countries with manufacturing facilities in the U.S., Spain, India and Australia and has more than 2000 employees worldwide.

BP was named by Mother Jones Magazine as one of the "ten worst corporations" in both 2001 and 2005 based on its environmental and human rights records.^[38][39] In 1991 BP was cited as the most polluting company in the US based on EPA toxic release data. Since branding itself an environmentally sound corporation in 1997, BP has been charged with burning polluted gases at its Ohio refinery (for which it was fined $1.7 million), and in July 2000 BP paid a $10 million fine to the EPA for its management of its US refineries.^[40] According to PIRG research, between January 1997 and March 1998, BP was responsible for 104 oil spills.^[41] BP patented the Dracone Barge to aid in oil spill clean-ups across the world. ^[42]

BP/Amoco was a member of the Global Climate Coalition an industry organization established to promote global warming skepticism but withdrew in 1997, saying "the time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate change is conclusively proven, but when the possibility cannot be discounted and is taken seriously by the society of which we are part. We in BP have reached that point.".^[43]

In March 2002 Lord Browne of Madingley declared in a speech that global warming was real and that urgent action was needed, saying that "Companies composed of highly skilled and trained people can't live in denial of mounting evidence gathered by hundreds of the most reputable scientists in the world."^[44]

British Petroleum changed its name to BP in 2000, and introduced a new corporate slogan: “Beyond Petroleum.” It replaced its “Green Shield” logo with the helios symbol, a green and yellow sunflower pattern similar to the emblem of the Green Party of Canada. These changes were intended to highlight the company’s interest in alternative and environmentally friendly fuels. When, in July 2006, BP admitted, only after journalists became aware of the spill, that it was facing criminal charges for allowing 270,000 gallons of crude oil to spread into the Alaskan tundra, critics pointed to the relative lack of press coverage about the spill as evidence that BP had successfully "greenwashed" its image while maintaining environmentally unsound practices.^[45][46]

Texas City Refinery disaster

Main article: Texas City Refinery (BP)

One of BP's largest refineries in the USA exploded in 2005 causing 15 deaths. The fall-out from the accident continues to cloud BP's corporate image because of the mismanagement at the plant. There have been several investigations of the disaster, the most recent being that from the U.S. Chemical Safety and Hazard Investigation Board. It was preceded by the Baker report and BP's own internal investigation.^[47]

A large column filled with gasoline overflowed to form a vapor cloud, which ignited. The explosion caused all the casualties and substantial damage to the rest of the plant. The incident came as the culmination of a series of less serious accidents at the refinery, and the engineering problems were not addressed by the management. Maintenance and safety at the plant had been cut as a cost-saving measure, the responsibility ultimately resting with executives in London.^[47]

Corporate Challenges

However, BP's image has been tarnished somewhat by its involvement with the controversial Baku-Tbilisi-Ceyhan pipeline, criticized for human rights abuses, environmental and safety concerns.^[48]

BP has also been criticized for the increase in fuel prices in the UK. On 25 April 2005 Lord Browne stated in an interview with the BBC that he fully expected petrol prices to stay above £1 per litre.^[49]

In July 2006, a group of Colombian farmers won a multi million pound settlement from BP after the British oil and gas company was accused of benefiting from a regime of terror carried out by Colombian government paramilitaries to protect a 450-mile (720 km) pipeline. ^[50]

BP "Helios" fueling station in Los Angeles

As of 11 February 2007 BP announced that they would spend $8 billion over ten years to research alternative methods of fuel, including natural gas, hydrogen, solar, and wind. A $500 million grant to the University of California, Berkeley, Lawrence Berkeley National Laboratory, and the University of Illinois at Urbana-Champaign, to create an "Energy Biosciences Institute"^[51] has recently come under attack, over concerns about the global impacts of the research and privatization of public universities.^[52]

In March 2007, BP unveiled its Helios fuel station on Olympic Boulevard in Los Angeles.^[53] The station has radical architecture for a fuel station, and is a "living lab" for green technologies.^[54] However, although there are solar panels on the roof, as of July 2007 they are not yet operational.^[55]

BP Canada has been asked by leading environmental organizations to stop its proposed "Mist Mountain" Coalbed Methane Project in the Southern Rocky Mountains of British Columbia. The proposed 500 km² project is directly adjacent to the Waterton-Glacier International Peace Park.^[56]

Contributions to political campaigns

According to the Center for Responsive Politics, BP is the United States' hundredth largest donor to political campaigns, having contributed more than US$5 million since 1990, 72% and 28% of which went to Republican and Democratic recipients, respectively. BP has lobbied to gain exemptions from U.S. corporate law reforms.^[57] Additionally, BP paid the Podesta Group, a Washington, D.C.-based lobbying firm, $160,000 in the first half of 2007 to manage its congressional and government relations.^[58]

In February 2002 BP's chief executive, Lord Browne of Madingley, renounced the practice of corporate campaign contributions, noting: "That's why we've decided, as a global policy, that from now on we will make no political contributions from corporate funds anywhere in the world."^[59]

BP retail brands

BP gasoline station in Zanesville, Ohio using previous BP prototype.

ampm

Main article: ampm

ampm is a convenience store chain with branches located in several U.S. states including Arizona, California, Nevada, Oregon, Washington, recently in Illinois, Indiana, Georgia and Florida, and in several countries worldwide such as Japan. In the western US, the stores are usually attached to an ARCO gas station; elsewhere, the stores are attached to BP gas stations. BP Connect stations in the US are transitioning to the ampm brand.

ARCO

ARCO is BP's retail brand on the US West Coast in the seven Western States of California, Oregon, Washington, Nevada, Idaho, Arizona, and Utah. BP acquired ARCO (formerly the AtlanticRichfieldCompany) in 1998. ARCO is a popular "cash only" retailer, selling products refined from Alaska North Slope crude at plants at Cherry Point (WA), Los Angeles (CA) and at other contract locations on the West Coast.

BP Travel Centre

BP Travel Centres are large scale destination sites which on top of offering the same features of a BP Connect site with fuel and a Wild Bean Cafe, also feature major food-retail tennants such as McDonalds, KFC, Nando's and recently Krispy Kreme Doughnuts, with a large seating capacity foodcourt. There are also facilities for long-haul truck drivers including lounge, showers and washing machines all in the same building. There are 4 travel centres located in South East Queensland, Australia. Two on the Pacific Highway (Coomera and Stapylton) and two on the Bruce Highway (Caboolture). A fifth travel centre was opened in 2007 at Chinderah in northern New South Wales.

BP Connect

BP Connect is BP's flagship retail brand name with BP Connect Service stations being operated around the UK, Europe, USA, Australia, New Zealand, Federation of Bosnia and Herzegovina and other parts of the world. BP Connect sites feature the Wild Bean Cafe which offers cafe style coffee made by the staff and a selection of hot food as well as freshly baked muffins and sandwiches. The food offered in Wild Bean Cafe varies from each site. BP Connect sites usually offer table and chair seating and often an Internet kiosk. In the US, the BP Connect concept is gradually being transitioned to the ampm brand and concept.

BP Express

BP Express was the flagship BP brand prior to the introduction of BP Connect in 2000. There are still some BP Express sites operating around the world but most have been either upgraded to Connect or changed to an alternative brand. BP Express offers a bakery service but doesn't have the selection of food offered in the Wild Bean Cafe and usually coffee is only available through a self service machine.

BP Shop

A BP Petrol prices sign outside a BP Shop garage in the United Kingdom (prices in UK pence per litre).

BP Shop is commonly used on smaller sites mainly independently owned sites. Products vary in each BP Shop but usually a selection of convenience store style food and automotive products.

BP 2go

BP 2go is a franchise brand used for independently operated sites in New Zealand and is currently being rolled out throughout Australia (Although not all BP 2go stores are franchises in Australia). BP 2go sites mainly operate in towns and outer suburbs in New Zealand. BP 2go offers similar bakery food to BP Connect but in a pre-packaged form. Some BP Express sites around New Zealand and Australia that were considered too small to be upgraded to BP Connect were given the option to change to BP 2go others were downgraded to BP Shop. Staff at some BP 2go sites wear a different style of uniform to the rest of the BP branded sites, however in company owned and operated 2go sites in Australia the same uniform is worn across all sites.

Air BP and BP Shipping

Air BP is the aviation fuel arm, BP Marine the marine fuels and lubricants arm and BP Shipping is the Shipping arm within the BP group

Advertisement

The recent BP advertising campaign has been criticized by many as a superficial and stereotypical representation of the common man. Often the ads showcase a series of "man-on-the-street" type questionnaires in which obviously paid actors answer certain questions pertaining to BP. However, the music composed by BP for the purpose of the ads has been praised and lauded.

Bibliography

• The history of the British Petroleum Company
  • Vol. I:R.W.Ferrier, The Developing Years 1901-1932, Cambridge University Press, 1982
  • Vol. II: James H. Bamberg, The Anglo-Iranian Years, 1928-1954, Cambridge University Press, 1994
  • Vol. III: James H. Bamberg, British Petroleum and Global Oil, 1951-1975: The Challenge of Nationalism, Cambridge University Press, 2000

For the early history of BP in Iran and Iraq see

Karl E. Meyer and Shareen Brysac. Kingmakers: the Invention of the Modern Middle East. W.W. Norton (2008)ISBN 978-0-393-06199-4

See also

• 2006 Alaskan oil spill
• Oil fields operated by BP
• Shell-Mex and BP
• Shilling Guides, a series of guide booklets on the counties of Great Britain
• BP Solar

Notes

External links

• BP Company Website
• BP Youtube Channel
• BP's Corporate History
• BP Solar
• BP Whiting Refinery Information
• Company Details
• BP Accident Investigation Report
• Baker Panel Report
• Herald Tribune report on sudden resignation of Lord Browne
• Statistical Review of World Energy