BP chief focuses on future as oil giant posts loss

BP's new chief executive shifted focus at the oil giant to the "future rather than the legacy of the past" today as it revealed the Gulf of Mexico oil spill saw the company sink to its first loss in nearly 20 years.

Bob Dudley unveiled a raft of strategic moves at the embattled firm, including a return to dividend payments of seven cents a share, increased spending on exploration and the proposed sale of two key US refineries.



The developments came as BP posted a loss of 4.9 billion US dollars (£3.1 billion) in the year to December 31, compared with profits of 13.9 billion US dollars (£8.7 billion) in 2009, after the financial impact of the fatal Deepwater Horizon explosion was deducted.



BP once again upped its estimate of the cost of the disaster to 40.9 billion US dollars (£25.5 billion) after it took an additional 1.04 billion US dollars (£647.8 million) hit in the fourth quarter.



But the company's decision to resume dividend payments is a signal that the firm is recovering and will be welcomed by pension holders and investors given the stock previously accounted for an estimated one in every six pension pounds. BP said the payment will grow over time, in line with the "improving circumstances of the company".



The disposals in North America - including a plant in Texas City, which was the site of a fatal fire and explosion in 2005 - will halve refining capacity in the US and signal a shift away from the country, where its credibility is tarnished.



Speaking at BP's head office in London, Mr Dudley said resuming the dividend, halving US refining capacity and investing in exploration were all part of a push to give BP shareholders greater value.



In a sign that BP was trying to move on from the events of 2010, he said: "It's about choices for the future rather than the legacy of the past."



Though he added: "We remain deeply sorry for what happened and its effects on the families and communities involved. Nothing can restore the loss of those 11 men."



Mr Dudley said plans to reshape its downstream business - the oil and gas operations which take place after the production phase - would involve concentrating on growth in developing and emerging markets.



As well as the Texas City plant, the firm also plans to sell its refinery at Carson, near Los Angeles, California.



Discussing the disposals, Mr Dudley said: "We remain solidly committed to doing business in the US."



But explaining part of the reasoning behind the move to sell the two refineries, Mr Dudley said the plants' current financial performance did not meet its financial goals and failed its "strategic hurdles".



Texas City was the site of another BP disaster six years ago, when a fire and explosion killed 15 workers and injured more than 170 others. BP has paid more than 100 million US dollars (£62 million) in fines since the incident.



The decision follows a series of upstream asset disposals in the wake of the Gulf of Mexico disaster. BP has managed to claw back around 20 billion US dollars (£12.6 billion) 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 30 billion US dollars (£18 billion).



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% lower than the same period in 2009.



But BP said in 2010 it obtained licences to access basins in Brazil, the South China Sea, Indonesia, Azerbaijan and in 2011 Australia and Angola and would boost its capital expenditure on exploration.



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.



But BP has appeared to scrap its production targets, which were previously a key feature of its annual reports.



Commenting on this shift in focus, Mr Dudley said: "We've been careful not to put out a production target. We want to create value and not volume. It's in the best interests of shareholders."



BP reported lower-than-expected profits of 4.4 billion US dollars (£2.7 billion) in the fourth quarter. Analysts had forecast around 5 billion US dollars (£3.1 billion) for the period.



The firm said it had benefited from higher oil prices in 2010, which were pushing 90 US dollars a barrel around the year-end.



BP shares dropped 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 485p.



BP lauded its recent £10 billion deal with Russian oil giant Rosneft to form an Arctic exploration alliance.



However, it 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.



Pressed over the implications of the dispute with TNK-BP over its deal with Rosneft, Mr Dudley remained defiant and repeatedly asserted that the two parties "have good relations".



The company also continues to assert that its partners in the Gulf of Mexico - which include Transocean and Halliburton - would be pressed to take the brunt of the 40 billion US dollars hit from the disaster. So far, BP has billed its partners six billion US dollars (£3.7 billion).



BP last reported an annual loss in 1992, when low oil prices, recession and strategic errors saw chief executive Bob Horton lose his job. The firm lost £458 million that year.

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
PROMOTED VIDEO
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Sport
Arsenal signing Calum Chambers
sportGunners complete £16m transfer of Southampton youngster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on