BP reports its first annual loss in nearly 20 years after the Gulf of Mexico oil spill. But as Siobhan Kennedy reports, the disaster has not stopped BP renewing its focus on deep sea exploration.
BP recorded a full-year loss of £3.1bn in the year to December 31, compared with profits of £8.7bn in 2009, after the financial impact of the fatal Deepwater Horizon explosion was deducted.
But chief executive Bob Dudley said it would resume its quarterly dividend payment at 4p a share.
The company also revealed plans to sell two refineries in North America – including the company’s plant in Texas City, which was the site of a fatal fire and explosion in 2005.
BP said it plans to grow the dividend level over time, in line with the “improving circumstances of the company”.
BP shares dropped 1 per cent after the results were released but, having fallen from a high of 655p in April to a low of 303p in June, they have steadily climbed back to around 480p.
The company also unveiled plans to reshape its downstream business – the oil and gas operations which take place after the production phase – by concentrating on growth in developing and emerging markets.
As part of the strategy, the company said it would sell two refineries in Texas City, in Texas, and Carson, in California, in the US.
The plant in Texas City was the site of another disaster in 2005, when a fire and explosion killed 15 workers and injured more than 170 others. BP has paid more than £62m in fines since the incident.
The decision follows a series of upstream – exploration and production – asset disposals in the wake of the Gulf of Mexico disaster.
BP is still all about oil
BP's press conference today wasn't short on numbers. Walking into the company's headquarters in London, we were handed at least four press releases and a beefy presentation, all laden with them, writes Channel 4 News Business Correspondent Siobhan Kennedy.
The size of the annual loss ($3.9 billion) the dividend (7 cents a share) and the size of reserves set aside for the Gulf of Mexico ($41 billion). The $30 billion worth of divestments. I could go on. But my point is this. If you cast all the minutiae to one side, one thing was clear. BP is still all about oil. The BP of today still looks and feels like the BP of yesterday.
You might think that given what happened less than a year ago in the Mexican Gulf that BP's new chief executive, Bob Dudley, would take some time to do some serious naval gazing. And to conclude, two massive accidents later, one the worst oil spill in history, that it's time to refocus the group and de-emphasise oil. Much like David Cameron's decision to insist on reducing the British economy's dependence on financial services - when deep oil exploration and BP's safety record have proved so risky – so prone to boom and big bust – isn't it time to rebalance?
Yet if anything, the decision seems not only to focus on oil, but to increase BP's exposure. Mr Dudley outlined a string of new exploration sites in (believe it or not) the Gulf of Mexico, Brazil, the South China Sea and Australia. The accompanying map looked nothing short of deep sea world domination.
I asked Mr Dudley if he thought such a gungho focus on oil was appropriate, especially since BP is still clearing up the mess - financial and environmental - in the Mexican Gulf. And here's what he said:
"So, that's a very thoughtful question. As a company after the events of the Gulf of Mexico spill, BP has a choice of stepping back and saying actually we lose our confidence in being able to operate with these technologies. We don't think that would be the right thing. We think it would be irresponsible of us not to take the lessons inside the company and change the company to its core, and then take these lessons around the world and help change the global oil and gas industry. That is actually part of the way we think about it."
In other words, so fatal was BP's error that it feels duty bound to put it right and then travel the world telling others: "do as I say, don't do as I do.
If Mr Dudley is determined to stay on his full-speed ahead trajectory, he'd better hope BP doesn't do as it did ever again.
BP has managed to claw back around £12.6bn by selling interests in Argentina, North America, Egypt, Venezuela, Vietnam and Colombia. It said it was on track to meet its target of up to £18bn.
BP said the ongoing divestment programme, as well as ongoing restrictions in the Gulf of Mexico, would hit its production levels and expects to produce some 3.4 million barrels of oil and gas a day in 2011.
In the fourth quarter, BP said it averaged around 3.67 million barrels of oil and gas a day – 9 per cent lower than the same period in 2009.
But BP said that in 2010 it obtained licences to access basins in Brazil, the South China Sea, Indonesia, Azerbaijan and in 2011 Australia and Angola.
It added that in the next six years it plans to start up a total of 32 new projects, expected to contribute an extra one million barrels a day by the end of 2016.
BP lauded its recent £10 billion deal with Russian oil giant Rosneft to form an Arctic exploration alliance.
Analysts expect the Russian deal will help the company recoup some of the losses incurred from asset disposals.
However, BP is embroiled in a legal tussle with shareholders at TNK-BP, another Russian joint venture, who argue that the new deal breaches its shareholder agreement. The dispute will be taken to court in London today.