NrgEdge Editor

Sharing content and articles for users
Last Updated: March 2, 2017
1 view
Business Trends
image

  • Cash flow growing materially:
  • Upstream $13-14 billion pre-tax free cash flow in 2021
  • Downstream $9-10 billion pre-tax free cash flow in 2021 

  • Continuing discipline in capital and costs: 
  • Financial frame maintained to 2021, organic capital spending $15-17 billion a year, gearing 20-30%

  • Rising production from new Upstream major projects:
  • 6 projects began production in 2016; 7 projects to come online in 2017; 9 projects now under construction expected onstream 2018-21 
  • Upstream production expected to grow by average of 5% a year from 2016 to 2021

  • Cash balance point for BP expected to fall to around $35-40/barrel in 2021

BP today updates the financial community on details of its strategy and, in particular, medium-term plans for the next five years, based on oil prices similar to where they are today. Following a presentation today in London, BP management teams will this week travel to London, Edinburgh, New York, Dallas, Houston, Paris and Frankfurt to update investors.

Over the past six years BP has delivered around $75 billion of divestments, focused investment to build a distinctive and balanced portfolio, and improved safety, reliability and underlying performance. Group chief executive Bob Dudley and his management team are now setting out plans to 2021, demonstrating how BP plans to deliver growth throughout its businesses over the next five years.

Bob Dudley said: “In six years we have fundamentally reshaped and built a very different BP. We are now stronger and more focused - fully competitive and fit for a fast-changing future. 

“We have proven financial discipline, clear plans in action and have built a distinctive portfolio which gives us a strong platform for growth, now and into the future. Striking a balance between short and long-term value, our recent acquisitions and agreements have strengthened this even further. 

“We can see growth ahead right across the Group. While always maintaining our discipline on costs and capital, BP is now getting back to growth – today, over the medium term and over the very long term.”

Over the next five years BP expects both of its major operating segments to deliver material growth in operating cash flows while the Group maintains its existing financial frame. In the Upstream, growth is expected to come from a continuing series of major higher-margin project start-ups, while the Downstream expects to deliver strong marketing-led growth, both underpinned by BP’s continued focus on safe and reliable operations, increasing efficiency, simplification and modernisation.

Production ramping up from new Upstream projects is expected to deliver a material improvement in BP’s operating cash flow through the second half of 2017.  

BP intends to maintain its existing financial frame throughout the five years to 2021, with organic capital expenditure kept within a range of $15-17 billion a year and the target band for gearing remaining at 20-30%.

Brian Gilvary, BP chief financial officer, said: “Last year we delivered our targeted $7 billion reduction in cash costs a year early, and capital spending was $8.6 billion lower than its peak in 2013 – without damaging our growth pipeline. We will continue that tight focus on costs and capital discipline and seek further improvements throughout the Group. 

“We expect this combination of continued cost discipline with the growing cash flow from our core businesses - and the recent portfolio additions - will steadily drive down the cash balance point of the business. Over the next five years we expect this to fall to around $35-40 a barrel for the Group overall.”

Volume and margin growth throughout BP’s businesses are expected to increase returns over the next five years. Assuming a stable price environment and portfolio, BP now expects return on average capital employed (ROACE) for the Group to recover steadily over the next few years and to be over 10% by 2021.

Upstream

Over the past five years BP’s Upstream segment has begun production from 24 major projects, including six in 2016.  Seven projects are expected online during 2017 - making it one of the largest years for commissioning new projects in BP’s history. These projects are on average ahead of schedule and below budget. A further nine projects that are expected to start up through 2018-2021 are already under construction. 

The projects coming on line in 2016 and 2017 are on track to deliver 500,000 barrels of oil equivalent a day (boe/d) new production capacity by the end of this year.  

The new Upstream projects remain on track to deliver 800,000 boe/d of new production by 2020, as previously guided. On average, the new projects are also expected to have operating cash margins 35% higher than the average of BP’s Upstream portfolio in 2015.

More than 200,000 boe/d of production is expected by the end of the decade from the recent additions to BP’s portfolio – primarily from the ADCO onshore concession. 

This strong pipeline means that BP is now confident that Upstream production will grow from 2016 by an average of 5% a year out to 2021. BP Group production, including BP’s share of production from Rosneft, is expected to be around 4 million boe/d by 2021.

With capital investment kept steady and increasingly efficient operations and modernisation driving costs lower, BP now estimates that this growth will enable the Upstream segment to generate $13-14 billion of pre-tax free cash flow by 2021, at oil prices around $55 a barrel.

Downstream

BP’s Downstream segment has delivered $3 billion sustainable reductions in cash costs since 2014 – halving the refining margin needed for the segment to deliver a pre-tax return of 15%. 

In its refining and petrochemicals manufacturing businesses, BP expects the Downstream to deliver further performance improvements by continuing to focus on efficiency and operational performance, improving both competitiveness and resilience to the price and margin environment. Underlying earnings from the manufacturing businesses in 2021 are expected to be $2.5 billion higher than in 2014.

BP also expects significant earnings growth from its Downstream marketing businesses, with underlying earnings in 2021 more than $3 billion higher than in 2014. In lubricants, growth is expected to come from increasing the sales mix of premium lubricants, exposure to growth markets and BP and Castrol’s differentiated offers, brands and technologies.  In BP’s fuels marketing activities, particularly retail, growth is expected to come through premium fuels, differentiated convenience partnerships – such as the recent agreement with Woolworths in Australia - and access to growth markets. 

Combined with the ongoing focus on simplification and efficiency throughout the segment, BP believes this growth will enable the Downstream to deliver $9-10 billion of pre-tax free cash flow by 2021, with returns of around 20% in 2021.

New business models

Beyond the next five years, BP’s strategy also aims to ensure that the company continues to meet the energy demands of a changing world.

BP’s Alternative Energy business – comprising US Wind and Brazilian biofuels – is already the largest operated renewables business among oil and gas peer companies and BP is further optimising and improving efficiency to deliver incremental growth. In Wind BP is upgrading some of its existing turbines and, in biofuels, has debottlenecked manufacturing sites to increase production.

BP is also exploring new business models and technologies which may potentially develop into options for material businesses in the future, with investment into venturing in areas such as low-carbon, digital and mobility to incubate and grow options for the future.

Notes to editors

  • The presentation to the financial community can be seen via www.bp.com/investors
  • The December 2016 agreement with Woolworths in Australia is subject to regulatory approval

Further information

BP press office, London: +44 (0)20 7496 4076, [email protected]

Cautionary statement

In order to utilize the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995 (the ‘PSLRA’), BP is providing the following cautionary statement. This press release contains certain forward-looking statements concerning expectations that Upstream and Downstream pre-tax cash flow will reach $13-14 billion (at an oil price of $55 per barrel) and $9-10 billion, respectively in 2021; plans and expectations to maintain organic capital spending at $15-16 billion per year and gearing between 20% and 30%; plans and expectations to start up 7 projects 2017 and 9 projects between 2018 and 2021; expectations to reach an oil price cash balance point at around $35-40 per barrel over the next five years; expectations that return on average capital employed will exceed 10% in 2021; expectations that Upstream growth will come from higher-margin project start-ups and Downstream growth will come from marketing; expectations that production ramp-up from new Upstream projects will deliver improvement in operating cash flow through the second half of 2017; expectations that Upstream projects coming on line in 2016 and 2017 will add approximately 500 thousand barrels per day of new oil equivalent production in 2017 and 800 thousand barrels per day of new oil equivalent production by 2020; expectations that new Upstream projects will average approximately 35% better margins than the 2015 portfolio; expectations that Upstream additions will add more than 200 thousand barrels per day of oil equivalent production by the end of the decade primarily from the ADCO onshore concession and Zohr in Egypt; expectations that Upstream production will grow at an average of 5% per year to 2021; expectations that BP Group production will be 4 million boe/d by 2021; expectations that underlying earnings from the Downstream manufacturing businesses in 2021 will be $2.5 billion higher than in 2014; expectations that underlying earnings of BP’s Downstream marketing business will be $3 billion higher in 2021 than in 2014; expectations that the Downstream lubricants business will grow due to product mix and differentiated offers, brands and technologies; and expectations that the Downstream fuels business will grow due to sales of premium fuels, convenience partnerships such as the agreement with Woolworths in Australia and access to growth markets. Actual results may differ from those expressed in such statements, depending on a variety of factors including changes in public expectations and other changes to business conditions; the timing, quantum and nature of divestments; the receipt of relevant third-party and/or regulatory approvals; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational problems; regulatory or legal actions; economic and financial conditions generally or in various countries and regions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; exchange rate fluctuations; development and use of new technology; the success or otherwise of partnering; the actions of competitors, trading partners and others; natural disasters and adverse weather conditions; wars and acts of terrorism, cyber-attacks or sabotage; and other factors discussed under “Principal risks and uncertainties” in our Stock Exchange Announcement for the period ended 30 June 2016 and under "Risk factors" in our Annual Report and Form 20-F 2015.

This press release contains references to non-proved resources and production outlooks based on non-proved resources that the SEC's rules prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262. This form is available on our website at www.bp.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or by logging on to their website at www.sec.gov

3
0 0

Something interesting to share?
Join NrgEdge and create your own NrgBuzz today

Latest NrgBuzz

New PNG Government Reviews Past Oil Agreements

A lot of complications arise when a government changes. Particularly if the new government comes in on a mandate to reverse alleged deficiencies and corruption of previous governments. This is amplified when significant natural resources are involved. It has happened in the past – when Iran nationalised its oil industry by kicking out BP – and it could happen again in the future – in Guyana where the promise of oil riches in the hands of foreign firms has already caused grumbles. And it is also happening right now in Papua New Guinea, as the new government led by Prime Minister James Marape took aim at the Papua LNG deal.

Negotiated by the previous government of Peter O’Neill, the state’s new position that is the current gas deal is ‘disadvantageous’ to country. A complex set of manoeuvres – accusing O’Neill of multiple levels of corruption – led to a proposed vote of no confidence and an eventual resignation. With the departure of O’Neill, public opinion on the Papua LNG project (as well as the PNG LNG project) switched from being viewed as a boon to the economy to one of unequal terms that would not compensate the nation fairly for its resources.

So, despite a previous assurance in early August that the new government of Papua New Guinea would stand by the previous gas deal agreed with the Papua LNG stakeholders in April, Marape sent a team led by the Minister of Petroleum Kerenga Kua to Singapore to renegotiate with the project’s lead operator Total.

As the meeting was announced, suggestions pointed to a hardline position by Papua New Guinea… that they could ‘walk away from a new deal’ if the new terms were not acceptable. In a statement, Kua stated that the negotiations could ‘work out well or even disastrously’. From Total’s part, CEO Patrick Pouyanne said in July that he expected the government to respect the gas deal while Oil Search stated that it was seeking ‘further clarity on the state’s position’. The gas deal covers framework of the Papua LNG project, which was scheduled to enter FEED phase this year with FID expected in 2020, drawing gas from the giant onshore Elk-Antelope fields ahead of planned first LNG by 2024. So, the stakes are high.

With both sides locked into their positions, reports from Singapore suggested that the negotiations broke down into a ‘Mexican standoff’. No grand new deal was announced, and it can therefore be inferred that no progress was made. There is a possibility that PNG could abandon the deal altogether and seek new partners under more favourable terms, but to do so would be a colossal waste of time, given that Papua LNG is nearing a decade in development. Total and ExxonMobil have already raised the possibility of legal moves if the deal is aborted, with compensation running into billions – billions that the PNG government will not have unless the Papua LNG project goes ahead.

But the implications of the deal or no-deal are even wider. The PNG state has already stated that it will look at the planned expansion of the PNG LNG project (led by ExxonMobil and Santos) next, which draws from the P’nyang field. Renegotiation of the current gas deals in PNG may have populist appeal but have serious implications – alienating two of the largest oil and gas supermajors and two of PNG’s largest foreign investors could lead to a monetary gap and a mood of distrust that PNG may be unable to ever fill. Hardline positions are a good starting position, but eventual moderation is required to ever strike a deal.

Papua LNG Factsheet:

  • Ownership: Total (31.1%), ExxonMobil (28.3%), Oil Search (17.7%), state (22.5%)
  • Feed: Elk-Antelope onshore fields,
  • Capacity: 5.4 million tons per annum
  • Structure: 2 trains of 2.7 mtpa capacity each
August, 22 2019
This Week in Petroleum: 2018 OPEC net oil export revenues highest since 2013, but likely to decline

The U.S. Energy Information Administration (EIA) estimates that members of the Organization of the Petroleum Exporting Countries (OPEC) earned almost $711 billion in net oil export revenues in 2018 (Figure 1). The estimate is up 29% from 2017, but about 40% lower than the record high of almost $1,200 billion in 2012. The 2018 earnings increase is mainly a result of higher crude oil prices. The Brent spot price rose from an annual average of $54 per barrel (b) in 2017 to $71/b in 2018. However, EIA forecasts annual OPEC net oil export revenues will decline to $593 billion in 2019 and to $556 billion in 2020. Decreasing OPEC revenues are primarily a result of decreasing production among a number of OPEC producers.

Figure 1. OPEC net oil export revenues

EIA estimates net oil export revenues based on oil production—including crude oil, condensate, and natural gas plant liquids—and total petroleum consumption estimates, as well as crude oil prices forecast in the August 2019 Short-Term Energy Outlook (STEO). EIA’s net oil export revenues estimate assumes that exports are sold at prevailing spot prices and adjusts the prices for benchmark crude oils forecast in STEO (Brent, West Texas Intermediate, and the average imported refiner crude oil acquisition cost) with historical price differentials among spot prices for the different OPEC crude oil types. For countries that export several different varieties of oil, EIA assumes that the proportion of total net oil exports represented by each variety is the same as the proportion of the total domestic production represented by that variety. For example, if Arab Medium represents 20% of total oil production in Saudi Arabia, the estimate assumes that Arab Medium also represents 20% of total net oil exports from Saudi Arabia.

Although OPEC net export earnings include estimated Iranian revenues, they are not adjusted for possible price discounts that trade press reports indicatedIran may have offered its customers after the United States announced its withdrawal from the Joint Comprehensive Plan of Action in May 2018. The United States reinstated sanctions targeting Iranian oil exports in November 2018. Similarly, EIA does not adjust for Venezuelan crude oil exports to China or India for volumes that are sent for debt repayments to China and Russian energy company Rosneft, respectively, and thus do not generate cash revenue for Venezuela.

If the $711 billion in net oil export revenues by all of OPEC is divided by total population of its member countries and adjusted for inflation, then per capita net oil export revenues across OPEC totaled $1,416 in 2018, up 26% from 2017 (Figure 2). The increase in per capita revenues likely benefited member countries that rely heavily on oil sales to import goods, fund social programs, and otherwise support public services.

Figure 2. OPEC real net and per capita oil export revenues

In addition to benefiting from higher prices, some OPEC member countries have increased export revenues by reducing domestic consumption and consequently exporting more. For example, Saudi Arabia has significantly reduced the amount of crude oil burned for power generation. Limiting crude oil burn allowed Saudi Arabia to export more crude oil and to maximize revenues.

Others have been able to charge higher premiums based on the quality of their crude oil streams. As the global slate of crude oil has changed with more light crude oil production (with higher API gravity), OPEC members have benefited from a narrowing price discount for their heavy crude oils, which are typically priced lower than lighter crude oils because of quality differences. Smaller discounts for OPEC members’ heavier crude streams contributed to higher spot prices for the OPEC crude oil basket price, which incorporates spot prices for the major crude oil streams from all OPEC members (Figure 3).

Figure 3. Gasoline crack spreads (250-day moving average)

Despite the increase in annual average crude oil prices in 2018, OPEC revenues fell during the second half of 2018, mainly because of lower production and export volumes from Iran and Venezuela (Figure 4). EIA estimates that OPEC total petroleum liquids production decreased slightly in 2018 when increased production in Saudi Arabia, Iraq, and Libya could not offset significant declines in Iranian and Venezuelan production. Combined crude oil production in Iran and Venezuela fell by almost 800,000 barrels per day (b/d), or 14%, in 2018 and again by over 1.0 million b/d in the first seven months of 2019. Although Iranian net oil export revenues increased by 18% from 2017 to 2018, a year-to-date comparison indicates a significant decrease in revenues in 2019 (Figure 4). EIA estimates that from January to July 2018, Iran received about $40 billion in export revenues, compared with an estimated $17 billion from January to July 2019. Further decreases in OPEC members’ production beyond current EIA assumptions would further reduce EIA’s OPEC revenue estimates for 2019 and 2020.

Figure 4. Number of days Singapore had the highest and lowest gasoline crack spread among global refining centers

U.S. average regular gasoline and diesel prices fall

The U.S. average regular gasoline retail price fell nearly 3 cents from the previous week to $2.60 per gallon on August 19, 22 cents lower than the same time last year. The Gulf Coast price fell nearly 6 cents to $2.27 per gallon, the East Coast price fell nearly 4 cents to $2.52 per gallon, the West Coast and Rocky Mountain prices each fell nearly 2 cents to $3.24 per gallon and $2.67 per gallon, respectively, and the Midwest price fell nearly 1 cent, remaining at $2.52 per gallon.

The U.S. average diesel fuel price fell nearly 2 cents to $2.99 per gallon on August 19, 21 cents lower than a year ago. The Midwest price fell over 2 cents to $2.90 per gallon, the West Coast and East Coast prices each fell nearly 2 cents to $3.56 per gallon and $3.02 per gallon, respectively, the Gulf Coast price fell more than 1 cent to $2.75 per gallon, and the Rocky Mountain price fell less than 1 cent, remaining at $2.94 per gallon.

Propane/propylene inventories rise

U.S. propane/propylene stocks increased by 4.0 million barrels last week to 90.5 million barrels as of August 16, 2019, 10.2 million barrels (12.7%) greater than the five-year (2014-18) average inventory levels for this same time of year. Gulf Coast, East Coast, Midwest, and Rocky Mountain/West Coast inventories increased by 2.0 million barrels, 1.0 million barrels, 0.7 million barrels, and 0.4 million barrels, respectively. Propylene non-fuel-use inventories represented 4.4% of total propane/propylene inventories.

August, 22 2019
The Australian 590 Student Guardian Visa Process In A Nutshell

Student guardian visa subclass 590 allows you to stay in Australia as a guardian or custodian or relative of an overseas student who is pursuing an education course in Australia. With 590 student guardian visa, You can stay with your child to take care of him/her in Australia until the course complete. Your child age must below then 18th years old before applying for a student guardian visa 590. If you're a relative then you can stay with the child by submitting written permission of a child’s caretakers like a guardian or grandparents. If your child is older then eighteen years then to apply for visa subclass 590 you need to show that you have special emergency circumstances. You can apply for a 590 student guardian visa outside from Australia and acquire enrollment in alternative courses up to three months with a 590 visa. You will be authorized to take care more then one child if you have. You can do the other study or coach just for 3 months with this Student Guardian Visa Subclass 590

Step By Step Process About 590 Visa

1.Before Applying for Visa

Meet Eligibility Criteria

    • You must be a parent or grandparents or relative of a non-Australian child who is below 18th of age.

    • If you want to apply from inside of Australia then you need to hold a substantive visa except for domestic worker, temporary work visa, transit visa, visitor visa, etc.

    • If your another child who is below 18th and not coming to Australia with you then you need to give evidence that you have made welfare arrangement for the child.

    • You have to account for your all healthcare expenses so make sure that medical insurance can only reduce your expenses.

    • Your past immigration history must be credible like you must not have any visa cancellation history.

    • Your intention should be genuine at the time of applying for student guardian visa 590 and it should be not against Australian culture and policies.

    • If your family members are also applying with you then they also need to meet health policies of the Australian government

    • Only a parent or grandparents or custodian or step parents of an overseas student visa 500 holder can apply for this student guardian visa subclass 590.

    • If parents are not present due to any reason for looking after the visa subclass 500 holder student then any relative can apply for this 590 student guardian visa. 

    • You must be a guardian of an international student who must be below 18th of age except for exceptional circumstances.

    • You have to give assurance to immigration authorities that you will be able to provide welfare.

    • Your age must be above 21 years old before going to apply for a student guardian visa 590.

    • You have to pay back any type of debt to the Australian government if you have.

    • If you have another child aged 6 years old then you can bring him/her to Australia but if your child if older then 6           years then you need to show emergency condition to bring him/her to Australia.

  Collect Documents

    •Provide character certificate and other national identities.

    •Submit bank documents and salary slips to prove that you will be enough capable to give welfare to the student.

    •Provide guardianship documents to prove your credibility to that child.

    •Translate your non-English documents into English.

    •Submit legal student guardianship form.

    •Provide dependent under 6 documents if you bring your child who is under 6 years of age.

2. Processing Time And Cost Of This Visa

Visa subclass 590 cost starts from AUD 560. This visa 590 may proceed in 2 to 4 months. But in case you forget to submit any documents then you processing time of visa can be increased. Your visa application processing time can be increased if you provide incomplete information.

3. Apply For The Visa

You need to apply online for the 590 student guardian visa 6 weeks before the student’s course starts. At the time applying for the visa, you have to prove that you are genuine and legal applicant by submitting legal documents. If you submit illegal information to immigration authorities then they have the authority to cancel your visa application immediately. You and your relative which is listed in visa application will not able to get a visa for the next 10 years in case of any fraud by you. You should contact an experienced Immigration Agent Adelaide.

4. Conditions After You Have Applied For The Visa

    • You are not allowed to do any type of work in Australia.

    • You can study only for 3 months.

    • With visa subclass 590 you can’t apply for another visa

    • At the time of leaving Australia, you must have brought the student to your country.

    • If you have another child who is below 6th years of age then you can bring him/her to Australia.

Get The Direction To Migration Agent Adelaide - ISA Migrations and Education Consultants.



August, 21 2019