Bp_Essay

Tony Hayward:Group Chief Executive: Strategy ( bp plc site homepage.) Over the last two years BP have closed the competitive gap identified in 2007 which has helped restore momentum in the core business. BP’s focus on safe and reliable operations is now strongly imbedded in the business. The company are continuing to build the core capabilities of the workforce and this further compliments the improved performance flowing through the bottom line of the companies strata. As well as delivering a good operational performance over the 2009 periods, BP have delivered, through a significant strategic plan which revised some of their less profitable sectors across the company. On a larger scale, BP performance over he last decade has allowed them to build a portfolio of great quality delivering long sustainability potential equal if not surpassing any in their industry. BP’s strategy has given them the title of an efficient explorer accompanied with a reserved replacement track record amongst the highest in terms of their competition as well as a long lived asset base with a biast to conventional oil. In refining and marketing, the company has less overall exposure to refining than peers. With a highgraded portfolio over the past decade, larger and more advantageous refineries than most other super majors puts the company is a good position for further profit growth in the next decade to come. Looking forward, there is real opportunity to make the new strategy work for investors. While having considerable scope for sector leadership, particularly in costs, capital efficiency and margin quality, the company has reduced expenses through downsizing in 2009, increased profits through further output all the while maintaining a disciplined approach to the environmental effects of profit creation and implemented various schemes in alternative energy, allof which make BP a very invest able venture in the short, medium and long term timeframes. BP Revenue Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, BP the high and low end of the Price to Sales per share ratios are 0.92x and 0.63x respectively. Notice that BP's current Price to Sales per share ratio is 0.75x, which is below its historical average only slightly. So, while not a huge positive for our analysis, we do feel it is worth noting that BP does look a bit undervalued on a Price to Sales basis, all other factors being equal. However, if the Price to Sales ratio drops further, Ockham Research is likely to become more bullish on this stock. BP Cash Earnings Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. BP is below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for BP to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 8.58 and a 5.80 low over the same period. With a historical average Cash Earnings ratio of 7.19, the current Cash Earnings ratio of 6.30 is a positive opportunity for value in the Ockham view. Naturally, we would love to see a deeper value opportunity for BP, but to get there one of two things must occur (or both). Either the stock price must decline further to increase the long term buying opportunity, or the management at BP needs to earn more cash. If either, or both, of these occur, then we could see a significant gap emerge between what investors were willing to pay for in the past, and where BP is trading currently (latest close price of $57.74). BP Dividends When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for BP to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. The estimated annual dividend for BP is $3.36 producing a current dividend yield of 5.82%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from BP against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from BP over previous years was 10.00% while the lowest dividend yield was 2.59%. Management at BP needs to get the current dividend yield above the historical median before we are comfortable from this point of view. www.ockhamresearch.com/Basic-Materials/Energy/.../BP -RTTNews) - British oil giant BP Plc (BP: News ,BP.L: News ), providing a strategy update on Tuesday, announced plans to boost its annual underlying pre-tax profit by more than $3 billion over the next two to three years by further improving efficiency and reducing costs. The company's refining and marketing segment has committed to further improve underlying profitability by over $2 billion, with the remaining $1 billion improvement in profitability being targeted at BP's upstream division. In a statement, group chief executive, Tony Hayward said, "The challenge and the opportunity for us is that while our portfolio ranks amongst the best in the industry, our financial performance has yet fully to reflect this. There is now a real opportunity to make this portfolio work harder for us and we intend to do just that." The company says it has established strong momentum in its core businesses and made progress in reducing costs and improving absolute and relative financial performance. "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," Hayward added BP projects its medium-term annual output for oil and gas production to increase by 1% to 2% per year on average to 2015, at $60 per barrel from a 2008 base, while also anticipating further production growth over the next five years up to 2020. The company also indicated that it would extend the aggressive $4 billion cost-cutting program it has enforced to counter a global slowdown in demand. Meanwhile, the company intends to start up a total of 42 new major projects between 2010 and 2015, with 24 projects reaching final investment decision in the next two years. Over the next five years, the company expects a contribution of about 1.0 million to total production by 2015 though these projects, more than offsetting the decline from currently producing fields. Additionally, BP noted that it intends to continue investing in growing a focused portfolio of low-carbon businesses, comprising US onshore wind power, biofuels, solar power and carbon capture and sequestration. The company has already invested $1.3 billion in this portfolio in 2009, and a cumulative total of more than $4 billion since 2006. Earlier in the month, BP posted a profit for the fourth quarter, fueled by oil and gas production growth, besides increasing reserves. Profit was $4.38 billion or 22.64 cents per share, compared to a loss of $3.21 billion or 17.62 cents per share in the year-ago quarter. Earnings per ADS was $1.37, versus a loss of $1.06 in the same quarter of 2008. Profit before taxation was $6.63 billion, compared to a pre-tax loss of $3.91 billion incurred last year. Total quarterly revenues and other income rose to $73.6 billion from the previous year's revenue of $61.1 billion. that it expects production in 2010 to be slightly lower than in 2009, reflecting the absence of a significant hurricane season. This expected level of 2010 production is in line with the guidance given to analysts in BP's strategy update in March last year. Production growth is expected to resume in 2011. Refining margins are projected to remain weak in 2010.In Tuesday's regular trading session, BP is currently trading at $53.66, down $0.32 or 0.59% on a volume of 2.06 million shares. In the past 52-week period, the stock has been trading in a range of $33.70 to $62.38.On the London Stock Exchange, BP.L is trading at 596.40 pence, up 0.40 pence or 0.07% on a volume of 22.04 million shares. In the 52-week period, the stock has been trading in a range of 400.00 to 639.00 pence. by RTT Staff Writer BP is one of the world's largest oil and gas companies in terms of production capacity. In 2008, the company's exploration and production segment produced approximately 3.8 million barrels of oil equivalents(BOE) per day while the company's refining throughput averaged 2.2 million barrels/day.[1] BP expands its production capacity through improved rig equipment and technology as well as expansions into other countries.[2] As of April 2009, BP's operates in 29 countries including Mexico, Russia, Algeria, and many others in the Middle East and Africa.[3] While BP's global reach gives the company an ability to access "untapped" reserves, many of its operations are exposed to political risk in those countries. In particular, BP's Russian operations have faced significantly managerial problems in 2007 and 2008.[4] BP's production and refining operations are exposed to world-wide oil and natural gas prices and consumption.[5] When oil prices dropped during the second half of 2008, BP cuts its overall production of oil and gas.[6] As a result, production in 2008 increased less than 1% when compared to production in 2007.[7] However, production increased to 4 million BOE/day during the first quarter of 2009 after a new production field in the Gulf of Mexico became fully operational. Despite low consumption of oil and natural gas products in late 2008 and early 2009, BP plans to continue its expansions into other countries in 2009.[8] The company believes that world energy demand could be 45% higher by 2030, and its world-wide operations have the potential of giving it an advantage over its competitors.[9] BP has also created a separate business that specializes in alternative, renewable forms of energy known as BP Alternative.[10] Through investments of $2.9 billion from 2005 to 2009, BP Alternative is capable of profiting from the use of renewable energy and reducing BP's reliance on oil and gas.[11] In 2009, both rising oil prices and BP's ability to cut costs during the fourth quarter contributed significantly to the $4.3 billion quarterly profit.[12] During the same quarter in 2008, BP reported losses of $3.34 billion.[13] For the quarter, oil prices increased 12% sequentially. Daily production rose 2.5% sequentially to 4.05 million barrels of oil equivalent. While the rise in oil prices benefited its production segment, rising prices coupled with low sales led to sub par performance in its refining division.[14] In regards to natural gas, prices fell 28% in the fourth quarter 2009.[15] BP's ability to reduce operating costs by 40% over the course of 2009 also contributed to annual and quarterly profits.[16] For 2009, BP reported earnings $16.58 billion, down 22% from 2008. Annual daily production for 2009 increased approximately 4% from 2008 averaging 3.98 mboe/d. Tony Hayward, the CEO of BP, attribute the rise in production to superior production performance from its wells and rigs and the relative low damage to rigs during hurricane season.[17] The refining and marketing unit earned $15 million before interest and taxes, which was much lower than Wall Street expectations of $571 million. For 2009, the average refining margin was $1.49 per barrel compared to $5.20 in 2008.[18] Source::: wiki invest History BP is, according to Hoovers business information, "the world's third largest integrated oil concern, behind Exxon Mobil and Royal Dutch Shell. The company, which was formed in 1998 from the merger of British Petroleum and Amoco, grew by buying Atlantic Richfield Company. ... BP is the largest oil and gas producer in the US ... "[2] BP and the apartheid regime See BP and the apartheid regime case study. BP has also been criticised over the last eight years for its role in Colombia and its funding and close working relationship with the military. [3] [4] Writing in PR Watch, British journalist Andy Rowell reported that in 1998, Oxfam held an Interagency "Seminar on Corporate Campaigning" to evaluate its ongoing dialogue with BP/Amoco (as it was then known). "Eighteen months after beginning the dialogue, Oxfam leaders realized that they really did not know what they were doing and wondered if they were being taken for a ride by the oil company. The Oxfam Seminar was held to see if a consensus existed between NGOs as to whether they should sit down and dialogue with corporations," he wrote. [5] Rowell recounted that after he described 'dialogue' as the new tactic coroporations were using to counter activist groups. It was an argument, he wrote, that was challenged by Sir Geoffrey Chandler, an ex-senior Shell executive and then head of the Amnesty Business Unit. In response Rowell asked for a show of hands of those in the audience who had heard of Burson-Marsteller. "Fewer than half the hands went up. Most of the people in the room, which included more than 100 of the UK's leading environmental, development and human rights activists, had never heard of BP/Amoco's PR firm, and of course they had no idea what it was up to," he wrote. BP's rebranding as "green"  BP ad in Home Power magazine, Issue 103, Oct - Nov 2004 Browne, who had managed the company's Alaska division for many years, became group chief executive in 1995. The following year, to the surprise of many environmentalists and oil industry analysts, BP resigned from the Global Climate Coalition, which ridiculed the science pointing to human induced climate change and sought to undermine the Kyoto treaty negotiations. "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," Browne said. Subsequently the company moved to adopt internal greenhouse gas emission reduction targets. In late July 2000 BP launched a massive $200 million public relations and advertising campaign, introducing the company with a new slogan - 'Beyond Petroleum' - and a green and yellow sun as its logo. The campaign was handled by Ogilvy & Mather Worldwide, one of the major advertising companies that also owns a slew of PR companies. [6] Around the world the company took out full-page colour advertisements in major magazines. Ogilvy and British Petroleum later won the PRWeek 2001 "Campaign of the Year" award in the 'product brand development'. [7] One of the advertisements run in the International Herald Tribune in November 2000 stated "Beyond... - means being a global leader in producing the cleanest burning fossil fuel. Natural Gas; means being the first company to introduce cleaner burning fuels to many of the world's most polluted cities; means being the largest producer of solar energy in the world; means starting a journey that will take a world's expectations of energy beyond what anyone can see today." [8] In a column for CorpWatch, researcher Kenny Bruno dissected the advertisement. "BP's re-branding as the "Beyond Petroleum" company is perhaps the ultimate co-optation of environmentalists' language and message. Even apart from the twisting of language, BP's suggestion that producing more natural gas is somehow akin to global leadership is preposterous. Make that Beyond Preposterous," he wrote. While noting that BP was indeed the largest producer of solar energy, Bruno pointed out that was achieved by spending $45 million in 1999 to buy Solarex which was dwarfed by the $26.5 billion it spent to buy ARCO to expand its oil portfolio. As for the claim that BP was starting a journey that would reshape public energy expectations, Bruno was scathing: "Pretentious stuff for a company serving mainly oil and gas, with just a sliver of solar on the side. Make that Beyond Pretentious." [9] The re-branding - undertaken in the wake of major controversies in Europe over Shell's role in Nigeria and its ill-fated attempt to dump the disused Brent Spar oil platform in the ocean - was aimed at differentiating BP from its rivals. Associate creative director with Ogilvy on the campaign, Michael Kaye, told the New York Times the campaign was aiming to communicate "BP can be a friend -- listening to consumers, speaking in a human voice." [10] One of BP's PR advisers was Peter Sandman. [11] While its is unknown whether he specifically advised BP on their rebranding project, non-the-less described it at an Australian mining industry conference as an example of a company adopting the persona of being a "reformed sinner". Sandman told his audience that this "works quite well if you can sell it. . . . 'Reformed sinner,' by the way, is what John Brown of BP has successfully done for his organization. It is arguably what Shell has done with respect to Brent Spar. Those are two huge oil companies that have done a very good job of saying to themselves, 'Everyone thinks we are bad guys. . . . We can't just start out announcing we are good guys, so what we have to announce is we have finally realised we were bad guys and we are going to be better.' . . . It makes it much easier for critics and the public to buy into the image of the industry as good guys after you have spent awhile in purgatory." [12] With raised expectations about corporate behaviour - and especially oil companies - BP's move not only sought to distance itself from its more notorious European counterparts but the brasher American oil companies - such as Exxon - which was fiercely opposing moves to curb greenhouse gas emissions. Group vice president for marketing for BP, Anna Catalano, told the New York Times that BP is "the company that goes beyond what you expect from an oil company -- frank, open, honest and unapologetic." BP also sought to cultivate 'moderate' environmental groups in a series of 'partnerships' with groups like the National Wildlife Federation. [13] (See the BP and the National Wildlife Federation case study). However, the trap for companies such as BP is that big-spending promotional campaigns often raise expectations that the organisation is incapable of meeting. Where corporate PR is often adept at explaining away infringements or accidents to human error or failed equipment, considered corporate policy which is at odds with public expectations is harder to explain away. BP's corporate re-branding was subject to sceptical review amongst activists and some maintream media. In Fortune magazine, Cait Murphy, cuttingly wrote of BP's billboards touting its involvement in renewable energy "here's a novel advertising strategy--pitch your least important product and ignore your most important one ... If the world's second-largest oil company is beyond petroleum, Fortune is beyond words," she wrote. [14] BP's regional president, Bob Malone, told Murphy "the oil business has a negative reputation ... We are trying to say that there are different kinds of oil companies." "As for being 'beyond petroleum'... Malone concedes that BP is decades away. Somehow that didn't make the billboard," she wrote. Pressure groups accuse BP of splashing out more on advertising its environmental friendliness than on environmental actions. [15] BP launches new greenwashing initiative (see The Times, 24 December, 2004), while simultaneously calling for a big increase in CO2 levels (500ppm-550ppm): "Based on current scientific opinion, we believe that it’s realistic to promote actions designed to stabilize carbon dioxide concentrations at around 500-550 ppm..." BP Online In March 2007, the Australian reported that "Internal documents have revealed that BP successfully lobbied against tighter environmental controls by regulators in Texas, saving $US150 million in monitoring and equipment upgrades before the 2005 fatal refinery explosion." [16] The green gloss fades While BP's rebranding program may have reassured some of its critics, others remained unpersuaded. At its annual general meeting in April 2001, BP was challenged about its interests in projects spanning from Tibet, the Sudan and the Arctic National Wildlife Refuge. A resolution urging BP to disinvest from its shareholding in Beijing-controlled PetroChina - which plans an oil pipeline through Tibet - was opposed by the company, gaining support from only 5% of shares voted at the meeting. Speaking in support of the resolution, Stephen Kretzmann, from the International Campaign for Tibet, suggested that BP's slogan "Beyond Petroleum" should be changed to "Beijing's Partners" or "Backing Persecution". According to a report in The Guardian, he accused BP of "utilising every arcane and legalistic tool to stifle debate on the matter". BP's chairman, Peter Sutherland, dismissed the concerns. "Disinvesting from PetroChina means, in reality, departing from China, which would be a mistake, and would be wrong," he told shareholders. [17] Another resolution proposing that the company do more about climate change was also opposed by the board and defeated, gaining support from 7.5% of proxy voters. Sutherland told the meeting "there have been calls for BP to phase out the sale of fossil fuels. We cannot accept this, and there's no point pretending we can." While as part of its rebranding program the company has touted its 'ethics' policies, one shareholder activist attending the meeting challenged the directors to nominate a country which the company had decided to avoid because of human rights abuses. "After a long pause its chief executive, Sir John Browne, said it would be 'uncivil and inappropriate' to mention any no-go nations," The Guardian reported. BP's business ethics were also challenged when in June 2001 the London newspaper, The Sunday Times, revealed that both BP and Shell acknowledged that they hired a private intelligence company with close ties to the British spy agency, MI6, to collect information on campaigns by Greenpeace and the Body Shop. The newspaper revealed that German-born Manfred Schlickenrieder was hired by Hakluyt, a private intelligence agency, to report on Greenpeace campaigns against oil developments in the north Atlantic. Schlickenrieder posed as a film maker working on films sympathetic to activist groups. According to The Sunday Times, the former deputy chairman of BP, Sir Peter Cazalet, helped to establish Hakluyt and former chairman of Shell, Sir Peter Holmes, is president of its foundation. In May 1997 the head of Hakluyt, Mike Reynolds, asked Schlickenrieder whether Greenpeace was planning to shield its financial assets from court orders in the event of it being sued by an oil company. Two months later, Greenpeace occupied the BP oil rig, the Stena Dee, in the Atlantic. BP sued Greenpeace for £1.4 million in damages and succeeded in gaining an injunction freezing the group's bank accounts while the occupation lasted. After police evicted Greenpeace campaigners from the rig BP dropped its legal action and the freeze on the bank accounts was lifted. [18] "BP countered the campaign in an unusually fast and smart way," Greenpeace Germany spokesperson Stefan Krug told the German daily Die Tageszeitung. As Eveline Lubbers noted in PR Watch, "since BP knew what was coming in advance, it was never taken by surprise." [19] In other areas though, BP has made some concessions to public pressure. In early 2002 the company Chairman, Lord Browne, announced that it will no longer make donations to political parties anywhere in the world. In a speech to the Royal Institute of International Affairs, Browne, said "we have to remember that however large our turnover might be, we still have no democratic legitimacy anywhere in the world … We've decided, as a global policy, that from now on we will make no political contributions from corporate funds anywhere in the world". [20] However, BP will continue to participate in industry lobbying campaigns and the funding of think-tanks. "We will engage in the policy debate, stating our views and encouraging the development of ideas - but we won't fund any political activity or any political party," he said. In response to a question, Browne said that over the long term donations to political parties were not effective. While BP had staked out a public position of being a supporter of the Kyoto protocol to control greenhouse gas emissions - unlike the major American oil companies - Greenpeace New Zealand discovered in May 2002 that it continued to participate in a New Zealand coalition lobbying the government not to ratify the convention. Greenpeace wrote to both BP and its counterpart Shell - which had also stated it supported Kyoto - demanding it withdraw from the New Zealand Climate Change Pan Industry Group (CCPIG). "BP and Shell's hypocrisy is difficult to understand. Both these companies need to set the record straight in New Zealand. They need to withdraw from the Pan Industry Group and clearly state their positions on climate change," wrote Greenpeace campaigner, Robbie Kelman. The following day BP claimed that they had not participated in the coalition. It was a claim Greenpeace rejected pointing to a February 2002 report produced on behalf of the Climate Change Pan Industry Group (CCPIG) which listed as one of its members the Greenhouse Policy Coalition (GPC) of which BP is a member. The Chair of the GPC itself had also written an opinion column for a New Zealand newspaper titled 'Nothing to gain from Kyoto Protocol" "BP cannot remain silent any longer. The company must make a clear public statement on its stance on climate change, renounce the anti- Kyoto CCPIG and guarantee the Greenhouse Policy Coalition (GPC) is not associated with the CCPIG, or it should remove itself from the GPC," Kelman said. BP is also a member of trade associations that have been pressing to weaken corporate governance standards. In 2002, the Organisation for International Investment (OFFI) - of which BP is a member - mounted a lobbying campaign to gain exemptions from US corporate law reforms initiated after the Enron and WorldCom collapses. In a letter to the US Securities and Exchange Commission, OFFI complained that the Sarbanes-Oxley Act reforms represented "an unfair, unnecessary and highly intrusive interference with the home country standards applicable to foreign private issuers".[21]. The letter from the OFFI objected to the provisions banning companies making personal loans to executives and requiring executives to repay profits if the accounts were incorrect. By 2003, BP's ever-expanding list of environmental and occupational health and safety problems had depleted what credibility it had gained with advertising glitz. One of the largest ethical investment funds, Henderson Global Investors, announced it was bailing out of holding shares in the company. "We have been talking to BP about this for seven or eight months but we have come to the conclusion that we are unable to invest in the company for these ethical funds," Rob Lake, head of corporate governance told The Independent. [22] The disparity between the companies reassuring rhetoric and reality has come to light elsewhere too. In March 2003, a Californian air quality regulatory agency sued BP for $319 million over what it alleged were thousands of violations of emissions standards at its Carson oil refinery in the port of Los Angeles. [23] The alleged violations came to light when the South Coast Air Quality Management District became suspicious after Atlantic Richfield (ARCO) - which became a BP subsidiary in 2000 - did not report any violations and, according to a Reuters report, "virtually no repairs to the tanks between 1999 and 2002". (Under a self-regulatory system ARCO was requiring to inspect its own operations and report any violations to the regulatory authorities). According to the lawsuit, attempts by public officials to investigate the Carson plant were blocked by ARCO until a judge ordered the company give them immediate access to the tanks. The company claimed that the inspectors were barred because they were not trained to use the breathing equipment required by the company's safety protocols and they were unwilling to undergo the four-hour training course. At the 2003 annual general meeting, BP faced criticism over the role in Iraq. While the "Carnival Against Oil Wars" protested against the war in Iraq outside the meeting, Sutherland was inside seeking to reassure shareholders. "The oil industry has considerable expertise, which we expect to take part in the rebuilding of Iraq," Sutherland said. According to Reuters he also stressed that BP would only get involved in Iraq if there was a legitimate government chosen by the Iraqi people. [24] In June 2005, The Independent reported that BP "has been privately lobbying in Washington to block legislation to introduce a mandatory curb on greenhouse gases in the U.S." BP had come out in opposition to two separate proposals to include mandatory emissions cuts in the national energy bill - one by Senator Jeff Bingaman on carbon dioxide limits and one by Senators John McCain and Joe Lieberman on greenhouse gas cuts. "Instead, BP said it supported a third alternative from Chuck Hagel, a Nebraska Republican, which requires companies only to try to cut emissions with the promise of tax breaks." [25] In response, Environmental Defense's Peter Goldmark said BP's lobbying "is completely at odds with its record and its public statements." Clean Air Watch called BP guilty of "greenwashing on epic proportions." [26] In August 2007, Advertising Age reported that BP had received "a permit from the state of Indiana to dump more toxic discharges from its Whiting, Ind., refinery into Lake Michigan." The permit, "which allows BP to dump 54% more ammonia and 35% more suspended solids" in the Great Lake, has "enraged" Chicago officials and "raised the specter of consumer boycotts." Chicago's chief environmental officer remarked, "We'd like to have [BP] live up to their advertising." [27] AdAge called BP's move "the cardinal sin of touting an environmentally conscious image in marketing -- the central focus of BP's advertising for the past several years -- and failing to live up to the message." A company spokesman said BP had "started advertising in regional newspapers ... to clear up misconceptions about the issue." [28] BP later pledged it wouldn't increase its dumping into Lake Michigan. The pressure on the company was such that "Bob Malone, chairman of BP America, flew to Chicago to deliver the news personally to Mayor Richard Daley, one of several politicians who said the company's initial plans were unacceptable to the public," reported the Chicago Tribune. [29] In late 2007, BP decided "to invest in the world's dirtiest oil production in Canada's tar sands," reported The Guardian. BP's investment in "the Alberta tar sands, which are said to be five times more energy-intensive to extract compared to traditional oil," prompted Greenpeace Canada to accuse the company of "the biggest environmental crime in history." [1] BP's former chief executive, John Browne "had said BP would not follow Shell into tar sands as he established an alternative energy division and pledged to take the group 'beyond petroleum.' The new boss, Tony Hayward, has pointed the corporate supertanker in a new direction although his public relations minders insist BP remains committed to exploring the potential of renewables," concluded The Guardian. [1] Despite this pledge, BP Solar has recently cut over six hundred of jobs from its manufacturing division, in what it claims is a "cost-saving move." [30] BP's campaign to exploit protected areas While BP was been spending big on its "Beyond Petroleum" advertising campaign to position itself as an environmentally responsible company, it also publicly backed moves by the Bush government to open up the Arctic National Wildlife Refuge in Alaska to oil drilling. BP, also continues to explore for oil in environmentally sensitive areas such as the Atlantic Frontier, the foothills of the Andes and Alaska. [31] It has also been attempting to woo environmental groups and the International Union for the Conservation of Nature into relaxing guidelines for the World's protected areas and World Heritage Area that sattes that mining and oil developments are incompatible in four of the five classes of protected areas. See BP's campaign to exploit protected areas case study. In 1996 BP was accused of human rights violations in Colombia. Its Casanare oil field has oil reserves valued at approximately $US 40 billion. The Colombian government has a poor human rights record, and both the police and army are held responsible for serious abuses of human rights including extrajudicial killings, forced disappearances, torture and beatings. [32] In January 2003, U.S. law courts ordered BP to allow federal inspectors unrestricted access to its Alaskan operations to verify compliance with environmental, health and safety laws. This was a modification of a five-year probation imposed on BP in 2000 after the company admitted it had illegally dumped hazardous waste from the Endicott Island oil field between 1993 and 1995. [33] BP and West Papua In recent years BP has been developing its massive Tangguh gas project at Bintuni Bay in West Papua. BP has been at pains to proclaim its intentions to avoid the mistakes of other major resource projects in West Papua - most notably the Freeport mine - by developing community support for the project. While spending money on community development projects and extensive consultation programmes is nothing new, BP's most notable difference is its stated intention of keeping the notorious Indonesian military at arms length rather than on the payroll, as occurs at Freeport. [34] However, as with proclamations of environmental credentials, major greenfields resource projects in Melanesia often struggle to meet raised expectations. [35] In March 2003, BP was warned by a panel of experts led by the US senator, George Mitchell, that it could trigger human rights abuses if it proceeded with a $US 2 billion gas scheme in Indonesia.Concern centred on the role of the Indonesian military which would be brought in to guard the Tangguh LNG facilities to be built in the Papua region. [36] BP and Colombia BP Exploration Company Colombia (BPXC) is the British-based company’s Colombian company. Their operations are based in the province of Casanare, in eastern Colombia, with headquarters in Bogotá. Cusiana and Cupiagua make up most of Colombia’s oil field. BP has two major processing installations built these two locations and a network of flow lines was put into place to connect the wells with the facilities. Crude oil is exported via an 871km pipeline that stretches from Casanare to the Caribbean port of Coveñas. At BP’s sites, they have drilled over 125 wells in rugged terrain and complex geology to depths of over 15,000 feet. The production from these field peaked in 1999 when they averaged 434,000 barrels of oil a day. BPXC employs 480 people and 98.5% of them are native Colombians. BPXC is partners with Ecopetrol, Colombia’s state oil firm. [37] April 2002: BP and the Casanare Project, ColombiaOne of the most sensitive issues for BP was its involvement in Colombia, where it was accused of collaborating with brutal local security forces. BP produces 40% of the Colombia’s oil from their plants in Cusiana and Cupiaga.BP has built voluntary principles into their contracts with private security providers and says that they have trying to ensure that they are properly implemented. BP claims to have encouraged and supported the government’s initiatives to strengthen the judicial system and the rule of law by supporting a “house of justice and peace” which is currently under construction in the area. [38] Personnel Linda Bartman is BP's marketing communications director, with responsibility for "for 360 communications plans directed to consumers, in addition to b-to-b [business-to-business] and b-to-c [business-to-consumer] strategy for promoting the BP brand to 10,500 retail sites." Bartman launched BP's first lifestyle campaign, "Younger for Longer," in 2008. The campaign used "older" athletes to promote BP's "Invigorate" gas additive. "It's about creating relevance for the consumer," Bartman explained. "More than that, it's about explaining the [product] experience, when consumers already incorporate it into a routine and [later] don't think about it." [2] Board of Directors From the company's website: [39] Tony Hayward, CEO Tony Hayward began his career with BP in 1982. He's played technical and commercial roles in BP Exploration in the U.K., France, and China and Colombia, and, in September 1995, became President of BP Venezuela. In August 1997, he returned to London as Director of BP Exploration. Hayward became Group Vice President of BP Amoco Exploration and Production as well as a member of the group’s Upstream Executive Committee in 1999. He was appointed Group Treasurer in 2000. He became Chief Executive, Exploration and Production, in January 2003. Hayward is also a nonexecutive director at Corus Group and a member of the Citibank Advisory Board. In 2005, he was appointed a Companion of the Chartered Management Inst. in the U.K. for his achievements in leadership in the energy industry. Peter D. Sutherland, Chairman Peter D. Sutherland KCMG serves as Managing Director of Goldman Sachs International. Mr. Sutherland served as Director General of GATT and Group Secretary and General Counsel of World Trade Organization from 1993 to 1995. He is a former Attorney General of Ireland and also served as European Commissioner from 1985 to 1989, responsible for competition policy. He serves as Chairman of British Petroleum, BP Amoco PLC and United Kingdom. He has also been a Independent Non Executive Director of National Westminster Bank PLC and its subsidiary, Royal Bank of Scotland Group PLC, since January 2001. He serves as a Non-Executive Director of Foundation of the World Economic Forum. He serves as a Director of Goldman Sachs International and Member of International Advisory Board and Joint Advisory Council of Allianz AG. He served as a Director of LM Ericsson Telephone Co (formerly, Ericsson LM Telephone Co.) since 1996, Ericsson SPA since 1996 and Investor AB since 1995. He served as a Member of International Advisory Board of CNOOC Ltd. since March 20, 2003. George David, Director George David was appointed as a non-executive director of BP on 11 February 2008. Mr David began his career in The Boston Consulting Group before joining the Otis Elevator Company in 1975. He held various roles in Otis and later in United Technologies Corporation (UTC), following Otis’s merger with UTC in 1977. Mr David is vice-chairman of the Peterson Institute for International Economics and was previously a non-executive director of Citigroup. Errol B. Davis, Jr, Director Errol B. Davis is Chancellor of the University System of Georgia. Davis, who took office on February 6, 2006, had served as chairman of the board of Alliant Energy Corporation -- an energy holding company with $8.3 billion in total assets and annual operating revenues of $3 billion -- since 2000. Davis retired from his dual roles as president and CEO in July 2005, and retained the chairman’s post until his move to the University System. Douglas J Flint, Director Douglas Flint is Group Finance Director of HSBC Holdings plc and a Director of HSBC Bank Malaysia Berhad. He is a non executive director of BP plc. In June 2006 he was honoured with a CBE (Commander Of The British Empire) by Her Majesty the Queen in recognition of his services to the finance industry. Mr Flint was Chairman of the Financial Reporting Council’s review of the Turnbull Guidance on Internal Control between 2004-2005 and served on the Accounting Standards Board and the Advisory Council of the International Accounting Standards Board from 2001-2004. Dr. DeAnne Julius, Director DeAnne Julius began her career as a project economist with the World Bank in Washington. From 1986 until 1997, she held a succession of posts, including chief economist at British Airways and Royal Dutch Shell Group. From 1997 to 2001, she was an independent member of the Monetary Policy Committee of the Bank of England. She is chairman of the Royal Institute of International Affairs and a non-executive director of Lloyds TSB Group PLC, Roche Holdings SA and Serco Group plc. Sir Tom McKillop, Director Sir Tom McKillop was appointed a non-executive director of BP in 2004. Following the demerger of Zeneca Group PLC from ICI PLC, in 1994 he became chief executive officer of Zeneca Pharmaceuticals and, in 1996, he was appointed to the board of Zeneca Group PLC as an executive director. Sir Tom was chief executive of AstraZeneca PLC from the merger of Astra AB and Zeneca Group PLC in 1999 until 2005. Sir Tom is chairman of The Royal Bank of Scotland Group plc and was a non-executive director of Lloyds TSB Group PLC until 2004. Sir Tom was knighted in 2002. Political contributions The BP political action committee (PAC) gave $219,500 to federal candidates in the 05/06 election cycle - 34% to Democrats, 65% to Republicans. [3] Lobbying and Political Contributions BP is one of the largest energy company contributors to both Republican and Democratic candidates for Congress. These contributions total $122,300 to the 110th US Congress (as of the third quarter), the largest of which has been to Rep. Mary Landrieu (D-LA). Rep. Landrieu, for her part, has been supportive of the oil industry on energy, war and climate bills.[40] Contributions like this from fossil fuel companies to members of Congress are often seen as a political barrier to pursuing clean energy. More information on oil industry contributions to Congress can be found at FollowtheOilMoney.org, created by the nonpartisan, nonprofit organization Oil Change International. The company spent $3,650,000 for lobbying in 2006. BP used several lobbying firms but most lobbying was done with its in-house lobbyists. [4] Corporate Accountability May 2008: Oil Firms to Pay $423 million to settle water lawsuit.BP, along with other oil companies, is going to pay to settle lawsuit brought by hundreds of public water suppliers. [5] November 17, 2003: Crude PoliticsBP has been honourable in its intentions, says Terry Macalister, but the day-to-day operation is proving far more difficult. [41] Labor March 2005: “Pumping Poverty- Britain’s Department for International Development and the Oil Industry”The author discusses the problems with BP’s Ocensa pipeline, especially the fact that is protected by a designated army that is financed through a $1 per barrel “war tax”. [42] April 2004: Looking at the Principles Behind the Practices: BP Operations in Casanare Department, ColombiaThis report synthesizes recurring observations into five thematic principles of operation: 1. being part of the community is fundamental to successful operation in conflict contexts; 2. political and economic leverage should go beyond mitigating negative impacts; 3. “win-win” options is key for both the company and the local communities; 4. sustainable living conditions for when the company leaves, must be created early in operations; 5. stakeholder focused management systems are the key to the business’ success. [43] Human Rights January 22, 2007: UN Delegate of Companies and Human Rights visits the Colombian Petroleum Zone.John Ruggie, the UN representative, visited to observe the formation of militaries on fundamental guaranteed matters. Ruggie, visited the Center for Instruction and Training of the 16th Colombian Army Brigade, in Yopal the capital of Casanare. [44] July 22, 2006: BP Pays out Millions to Colombian FarmersA group of Colombian farmers has won a multimillion pound settlement from BP after the oil and gas company was accused of benefiting from a regime of terror carried out by the Colombian government paramilitaries to protect their 800km pipeline. The plaintiffs claim that they and their family members, who worked on the 52 farms affected by the development, were forced to live in destitution in the surrounding towns. They also allege hat BP benefited from the harassment and intimidation by the Colombian paramilitaries that were employed by the government to guard the pipeline.The out of court settlement requires BP to set up a trust fund to pay the compensation and to pay for workshops to help the farmers cope with environmental management, business development and other support requested by the plaintiffs.“A joint statement, issued by BP Exploration Company (Colombia) Limited and the British lawyers acting for the farmers, said: ‘The Colombian farmers group are pleased to say that after a mediation process which took place in Bogotá in June 2006 at the joint initiative of the parties, an amicable settlement of the dispute in relation to the Ocensa pipeline has been reached, with no admissions of liability.’” [45] July 17, 2006: BP Reaches Agreement with Colombian FarmersFarmers had threaten to pursuit a lawsuit in England against BP, reflecting the trend among communities affected by oil developments to take disputes to western oil companies’ country of origin where the media attention is greater. Part of the agreement, is that BP will establish an “Environmental and Social Improvement Trust Fund.” [46] April 20, 2004: Colombia, A Laboratory of War: Repression and Violence in AraucaThe author discusses many of the problems within the area of Arauca and includes the problems of BP’s presence there. [47] Environment Colombia June 30, 2007 Witnesses from Colombia’s social movements join together for a campaign to spread the word on how human rights and the environment are affected by oil corporations’ thirst for profits. BP operates Colombia’s second most productive oilfields and in 2006 they reaped profits of $347 million dollars. However, BP’s workers cannot organize a trade union and the surrounding environment has been ruined and communities live under the current reign of paramilitary terror. [48] Tar Sands Production, Transporting, and Refining BP is the newest entrant to the Canadian tar sands. On December 5, 2007, BP announced that it was moving into the Canadian tar sands by acquiring a half-share in the Sunrise field in Alberta operated by Husky Energy. At the same time Husky acquired a half share in BP's Toledo oil refinery in Ohio. "BP's move into oil sands is an opportunity to build a strategic, material position and the huge potential of Sunrise is the ideal entry point for BP into Canadian oil sands," said Tony Hayward, BP's group chief executive. "In addition this deal will help guarantee a supply of advanced transportation fuels to major North American markets from Toledo which is a flexible and advantaged site."[49] According to BP’s website, “the Sunrise oil sands field is expected to be sanctioned in 2008 with first production of bitumen in 2012, building to 200,000 barrels of oil a day (bpd) by the end of the next decade with a 40 year production plateau. Sunrise is located in the Athabasca oil sands in northeast Alberta. The bitumen will be piped to Hardisty, Alberta, from where it will be transported via existing pipeline networks for refining.