BP shrugs off global shortfall fears

Tony Hayward, chief executive of BP, brushed off worries about the world's dwindling oil supplies yesterday by predicting that the company will be able to pump more than 4 million barrels per day through 2020, even if the oil giant doesn't make any new discoveries.

Speaking at the company's annual strategy briefing, Mr Hayward said based on an assumed base price of around $60 per barrel BP could sustain daily production of at least 4 million barrels, "with no new discoveries or access to new opportunities". The bullish outlook sits in stark contrast to the cautious forecasts of Jeroen van der Veer, his opposite number at Royal Dutch Shell, who says production will fall over the next few years and warned that the world would soon reach the peak of "easy oil".

BP said its replacement ratio, the measure of how much production is replaced by new discoveries, was 117 per cent last year.

The City loves a recovery story, and Mr Hayward played to the crowd yesterday. Since taking over 10 months ago, he has instituted a wide-ranging restructuring programming that will eliminate 5,000 jobs.

The company revealed fresh details of the plan, which will cut the number of units in its downstream business from 40 to 15, while its current network of 80 business service centres will be reduced to one.

Mr Hayward also hinted that he could sell a stake in the company's recently consolidated alternative energy business. Mr Hayward said the unit comprising its portfolio, wind, solar and biofuel businesses is worth between $5bn (£2.5bn) and $7bn and that, "we will be looking at how best we can realise that growing value for our shareholders".

BP estimated that it lost up to $4bn a year relative to rivals on its struggling refining and marketing business. The company said that as those operations came back to full strength and the effect of lay-offs filtered through, it would be able to close that gap.