BP PLC — Management Reports 2007

Oct 11, 2007

News Details

Ad-hoc | 11 October 2007 14:59

BP p.l.c.: BP SETS OUT ITS AGENDA TO CLOSE PERFORMANCE GAP WITH RIVALS

BP p.l.c. / Miscellaneous

Release of an Ad hoc announcement according to § 15 WpHG, transmitted by
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The issuer is solely responsible for the content of this announcement.

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BP SETS OUT ITS AGENDA TO CLOSE PERFORMANCE GAP WITH RIVALS

BP today reiterated its determination to improve performance by simplifying
how the company is structured and run, ensuring that resources are
increasingly shifted to the front line with operating managers freed from
corporate bureaucracy and the burden of unnecessary overheads.

Setting out his forward agenda for the cultural change he signalled to the
financial markets in the summer, chief executive Tony Hayward said that
while the process would yield some medium term cost reductions, the major
benefit would be the revenue boost expected from greatly improved
operational efficiency over the longer term.

In a worldwide message to staff issued in London today, Hayward said BP
will in future comprise only two business segments, Exploration &
Production and Refining & Marketing. The current third segment, Gas, Power
& Renewables, would be incorporated mainly into the other two. A separate
division, Alternative Energy, will handle BP’s low carbon business and
future growth options outside oil and gas.

The two segments will be made up of a series of strategic performance
units. These will become BP’s main operating entities, each effectively a
profit centre, with closely-defined remits and rigorous business
objectives.

Corporate infrastructure will be rigorously reviewed with some previously
centralised functions slimmed down and redeployed into the business
segments. In parts of BP up to four layers of management will be shed.
Greater standardisation of process, including safety, has already been
introduced and will be applied consistently across the group.

The moves follow a six-month review of the group’s operational performance
which identified wide-ranging duplication, overlap and excessive
organisational complexity.

Addressing what he described as his ‘three priorities’, safety, people and
performance, Hayward said the company was making good progress on safety.
The focus on people would be to ensure the company deployed the ‘right
skills in the right places’ and allowed staff to exercise professional
judgement without ‘unnecessary interference’.

As to performance, Hayward said: 'It is clear that BP’s overall strategy
remains robust. We have great positions in many of the major hydrocarbon
basins of the world as well as in the markets of key economies and we are
preparing for the longer term by building a new, low-carbon energy
business.

'Our problem is not about the strategy itself but about our execution of
it. BP’s performance has materially lagged our peer group in the last three
years. It has been poor because we are not consistent and our organisation
has grown too complex. At the root of all this is a need to change our
behaviours.'

Hayward said the bulk of the competitive shortfall represented revenues
lost from impaired US refining capacity and delays to new production in the
Gulf of Mexico. The remainder arose from BP’s higher cost base relative to
its rivals.

'We expect the revenue gap to narrow as major new production comes on
stream in the fourth quarter and refinery throughputs rise at Texas City
and Whiting over the coming months,' he said.

'The changes we are setting out today will reduce our unacceptably high
overhead costs. But it is their effect on operational efficiency over the
longer term that I believe will ultimately yield the most significant
benefits.'

Hayward said some of the changes were already under way; the others would
be introduced with immediate effect. He said redundancies would be
inevitable in some parts of the company but stressed that front-line
operations would continue to be strengthened. He did not anticipate major
disposals but would not rule out small-scale asset sales.

'What we are doing represents a fundamental shift in how BP works,' Hayward
said. 'Managers will be listening more acutely, particularly to front-line
staff. We will make sure individuals are fully accountable for things they
control. We will respect professionalism and excellence as key to the
success of our businesses – something we have not always done. Continuous
improvement is what will drive performance, as opposed to short-term,
unsustainable initiatives.'
11.10.2007 Financial News transmitted by DGAP

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Language: English
Issuer: BP p.l.c.
1 St James's Square
SW1Y 4PD London
Großbritannien
Phone: +44 (0) 207-496-4000
Fax: +44 (0) 207-496-4570
E-mail: ir@bp.com
Internet: www.bp.com
ISIN: GB0007980591
WKN: 850517
Listed: Freiverkehr in Berlin, Stuttgart, München, Hamburg,
Düsseldorf; Open Market in Frankfurt; Foreign Exchange(s) SWX

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