BP Magazine 2010 Issue1

BPMAGAZINETHE INTERNATIONAL MAGAZINE OF THE BP GROUP ISSUE 1 2010

PEOPLEPOWERBP Magazine reports from Argentina,where an inclusive management style isbringing new energy to a mature asset.

42 SPOTLIGHT: PAN AMERICAN ENERGY

14 GIANTPOTENTIAL Iraqi partnershipat Rumaila

32 RESTOREDFORTUNES The revivaloccurring at Hull

60 FANTASTICFIESTA Day of the Deadcelebrations

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BP MAGAZINEThe international magazine of the BP Group – ISSUE 1 2010

BP Magazine is published quarterly for external readers around theworld, as well as past and present BP employees. Its content does notnecessarily reflect official company views.

The copyright for photographs and illustrations in BP Magazine is notalways owned by BP. Please contact BP Photographic Services for details.

managing editorBarbara [email protected]

editorLisa [email protected]

distributionCarolyn Copland+44 (0) 20 7496 4340

designPhil Steed – Steed [email protected]

print managementWilliams Lea

image contributorsBP ImageshopCorbisDebut ArtGetty ImagesLance Bell

Welcome. There are few things in life that bringpeople together like football, and this year fans of allnations will descend on South Africa to cheer ontheir team at the 2010 FIFA World Cup™. As a long-term FIFA partner, Castrol will be cheering with theloudest of them, and with kick-off just weeks away,we find out what exactly a lubricants brand has incommon with ‘the beautiful game’. Sticking with thesporting theme, we also catch up with BP’s London2012 team to find out how it is supporting thethemes of the Olympic and Paralympic Games,including one very close to BP’s own heart –‘performing beyond’. This notion of constantlypushing oneself to achieve extraordinaryperformance can be seen all around the company –be it the challenge of helping Iraq grow itsproduction, developing BP’s most northerly offshoreproject in Norway, or breathing new life into amature asset in Argentina. As always I hope youenjoy this edition of BP Magazine.Lisa Davison> Editor

contents / issue 1 2010

© BP p.l.c., 2010

ANDY JAROSZAndy is a freelancewriter whose colourfulworking life hasincluded spells as anoptometrist, a grouptechnical manager anda crisis managementconsultant.

MEHMET BINAYBorn in 1972, Mehmetis a photographer andfilmmaker specialisingin corporate visualstories anddocumentaries.

SAM WILLIAMSSam is part of MagicTorch – a three manillustration collective.Active since 1999, theyspecialise in digitalillustration rangingfrom sci-fi infusedtechnological creations, to more fluid, psychedelicvector images.

contributors>

+ Features

08 In profile BP’s new chairman Carl-Henric Svanbergtalks about efficiency, governance and sailing. By AndrewGowers Photography by Graham Trott

14 Unlocking potential The new partnership that ishelping Iraq boost production at its giant Rumaila field. By Andy Jarosz Photography by Mehmet Binay

20 Soccer star As a key sponsor of the 2010 FIFA WorldCup™, Castrol is applying its technical expertise to footballanalysis. By Ian Valentine Photography by Action Images & Castrol

24 New growth Why BP’s Skarv development ismaking a considerable statement about the company’scommitment to operations in Norway. By Amanda BreenPhotography News on Request & Corbis

32 Industry leader The radical transformation takingplace at BP’s manufacturing plant in Hull, UK. By Jaclyn Clarabut Photography by Stuart Conway

Cover story

42 Two to tango Thirteen years ago, Argentina’sCerro Dragón field was facing long-term decline. But BP’sPan American Energy joint venture has turned the field’sfortunes around, and, today, production is on the rise. By Paula Kolmar Photography by Marc Morrison

50 Going for gold The London 2012 Olympic andParalympic Games are still two years away, but, as anofficial partner, BP is already deeply involved in the build-up. By Amanda Breen Photography Stuart Conway/

Simon Kreitem/Richard Price/ Portraitcollective>Jake Morley

56 In conversation This year’s BP Lecture was givenby the former United Nations Secretary-General KofiAnnan. BP Magazine went along to listen. By Lisa DavisonPhotography by Richard Davies

60 High spirits The British Museum celebrates Mexicanculture, with a Day of the Dead fiesta. By Lisa DavisonPhotography by Richard Davies

+ Regulars

05 For the record A snapshot of BP news and statisticsfrom around the world.

06 Science made simple The technology helping tounlock unconventional gas resources. By Helen CampbellIllustration by Daniel Mackie

39 BP Faces A young, award-winning engineer from Hulltalks about his inspirations. Photography by Graham Trott

40 Viewpoint Meet Castrol’s motorbike riding robot. By Amanda Breen Photography by Richard Price/Illustration by Magic Torch

59 Factfile BP’s top five most prolific hydrocarbon basins

66 Archive A look at BP’s Saltend site in Hull, UK,through the ages. Photography by BP Archive & BP Hull

70 Parting shot An Argentine couple dance the tango.Photography by Marc Morrison

56

14 United approachA new partnership between BP,CNPC and Iraq’s South OilCompany is set to triple productionat the Rumaila field, using avariety of techniques, including thebetter maintenance of numerousflares, as seen in this photograph,so that they stop burning crude oil.

06

UK

US

Pakistan

France

Azerbaijan

Africa

Brazil

For the recordHighlights from around the globe > Spring 2010

the quarter in numbers

360 millionThe number ofadditional barrels of oilthat will be recoveredthrough the new ChiragOil Project

1 millionThe number of peoplewho attended last year’sLondon 2012 OpenWeekend event

124.5MWThe full generatingcapacity of BP’s GoshenNorth wind farm, whichwill be the largest farmin the state of Idaho

$30 millionThe approximateamount BP Pakistan hascommitted to investunder two newpetroleum concessionagreements, which willexplore Digri andSanghar South

BP has announced atransaction that willdeliver a materialexploration position in thedeepwater offshore Brazil,and significantly enhanceits position in core strategic areas.

In a broad-ranging deal,BP will pay Devon Energy

$7 billion in cash for assetsin Brazil, Azerbaijan and theUS deepwater Gulf ofMexico. These includeinterests in 10 explorationblocks in Brazil, includingseven in the prolific Camposbasin; a major portfolio ofdeepwater explorationacreage and prospects in the

Brazil: deepwater exploration

04 Issue 1 2010 BP MAGAZINE

US Gulf of Mexico; and aninterest in the BP-operatedAzeri-Chirag-Gunashli(ACG) development in theCaspian Sea, Azerbaijan.

In addition, BP will sellto Devon Energy a 50%stake in BP’s Kirby oilsandsinterests in Alberta,Canada, for $500 million.

mailboxPicture perfectI have always loved the bold images usedin the design of BP Magazine. Flickingthrough the last issue I was particularlystruck by the picture used with theStorm Chaser feature on Ed Bracken, BP’schief meteorologist. I have a bit of anamateur interest in photography andhave been wondering how you managed to create the picture of Edhanging onto a post while being blownaway in the storm. I do hope you canreveal your secrets!

David Braine, New Zealand

Ed’s reply –We’re glad you like it. We got Edto lie in a skydiving position on a paddedtable holding on to a steel pole. We then useda photo-editing package to cut around theimage, so you can’t see the background(which was just a studio). Then, using thesame software we merged three differentbackgrounds, set the atmosphere bydarkening the image and then added the storm.

Project progress I remember reading an article about theBP Tangguh project in the BP Magazineproject almost 10 years ago, when workhad just started to build the new villageat Tanah Mera, and being fascinated tolearn more about this remote part of theworld and the challenges it presented –both technical and environmental. So, Iwas equally fascinated to read in yourlast issue about how the project hasprogressed, and to see the photographsof the LNG plant and operational facility,which could have been taken anywherein the world – let alone at one of theworld’s least populated regions,thousands of kilometres from so-calledcivilization. Truly frontier locations arefew and far between nowadays, but thisis a great example of how BP iscontinuing to maintain its explorationtraditions.

Stanley Morris, Aberdeen, UK

BP MAGAZINE Issue 1 2010 05

AfricaDownstream saleBP is to sell its marketingbusinesses in Namibia,Malawi, Tanzania, Zambiaand Botswana. It follows astrategic review by BP intoits refining and marketingbusinesses in southernAfrica, which showed thecompany should focus onthose countries that offeredthe greatest synergies withits supply portfolio, whichare Mozambique and South Africa.

Global Board appointments The BP board has appointed Ian Davis andPaul Anderson as non-executive directors. Davishas worked for McKinsey &Company since 1979, and,between 2003 and 2009, hewas chairman andworldwide managingdirector of the firm. He willbe retiring from McKinseyin July 2010. Anderson is anon-executive director ofBAE Systems and SpectraEnergy Corp. Between 1998and 2002, he served as chiefexecutive of BHP, and,subsequently, BHP Billiton.

FranceRetail saleBP has received an offerfrom Delek Europe BV, oneof the largest fuel retailersin Europe, to buy its Frenchretail fuels and conveniencebusiness, including selectedfuels terminals. Theproposed purchase price is$251 million, in cash,subject to working capitaladjustments.

USOlympic partnership BP has joined the USOlympic Committee’s(USOC) family of sponsorsas the official USOC energypartner. BP is a sponsor ofthe 2010 and 2012 USOlympic and Paralympicteams, as well as the 2011US Pan American team.

Global Quarterly resultsBP reported a sharp year-on-year increase in fourth-quarter profits, as itannounced that its oil andgas production increasedby more than 4% in 2009.Meanwhile, the companycontinued its industry-leading 17-year run ofincreasing reserves. Thecompany announced thatunderlying replacementcost profit for the fourthquarter of 2009, before non-operating items and fair

Top 10Business superbrandsin the UK

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Exchange 7. GlaxoSmithKline8. British Airways 9. VISA10. PricewaterhouseCoopers

Source: Superbrands

■ If you have any comments about BP Magazine,then please send them to: [email protected] orBP Magazine, 1 St James’s Square, LondonSW1Y 4PD, UK

value accounting effects,was $4.4 billion – anincrease of 70% on thesame period in 2008.

US/UKUniversity partnersBP has selected theMassachusetts Institute ofTechnology (MIT) and theUniversity of Manchesteras its academic researchpartners to furtherinvestigate materials andcorrosion science andtechnology. This long-termresearch relationship aimsto enhance BP’s operationalintegrity and reliability inits exploration andproduction business. Theinitial investment from BPhas been $2 million, withthe company intending tomatch this for up to afurther four years.

AzerbaijanDevelopment plan The steering committee forthe development of theAzeri, Chirag anddeepwater portion of theGunashli (ACG) fields hassanctioned investment inthe new Chirag Oil Project.

The $6 billiondevelopment plan is thenext major step in theongoing development ofthe ACG field in theAzerbaijan sector of theCaspian Sea, and isdesigned to fill a critical gapin the field infrastructurebetween the existingDeepwater Gunashli andChirag-1 platforms.

➔ science made simple

Unconventional approach

ith the International EnergyAgency forecasting thatdemand for natural gas willincrease by some 42% – to 4.3 trillion cubic metres by

2030 – it’s clear that gas will play anincreasingly important role in meeting theworld’s energy demands. What is also clear,is that an increasing amount of thatdemand will be met through‘unconventional’ sources of gas.

So, what does the term unconventionalmean? Essentially, it is gas that is difficult to

extract due to the low permeability – or theease with which liquid passes through therock – of the reservoir’s geology. Most tightgas reservoirs have been buried very deepwithin the earth and undergone asubsequent period of geological uplift. Thesestructures are more compacted, and haveexperienced more chemical changes overtime than newer structures, that lie closer tothe Earth’s surface. It is these chemicalchanges that affect a rock’s permeability.

Permeability is measured in darcies andmillidarcies, and is dictated by the size of

the capillaries – or holes – in a rock. Inconventional reservoirs, permeability canbe several darcies high. By comparison, theholes, and channels between them, in atight gas reservoir range from 0.1 millidarcyto as low as one microdarcy. Smallercapillaries and channels equals lowerpermeability, which makes for low gas- flow rates.

There are, in fact, several different typesof unconventional gas: ‘tight’ gas, which isfound in very low-permeability sandstonereservoirs; shale gas, located in rocks of

More and more of the world’s gas supplies are coming fromunconventional sources. But what does the term unconventionalmean and why is it so challenging to extract?

W

Report> Helen CampbellIllustration> Daniel Mackie


even lower permeability; and coalbedmethane (CBM), in which gas is adsorbedon the surface of the coal, and held in placeby the pressure of water-filled fracturesfound in the coal.

Over the past decade, BP has become anindustry leader in the extraction ofunconventional gas, with successful fieldsin North America, Algeria and Canada. In2007, it signed an agreement with thegovernment of Oman to help develop itstight gas reservoirs in Block 61, thanks, inlarge part, to the successful development ofits North American assets. Last year, it alsosigned a production-sharing contract withthe government of Indonesia – through itsjoint venture company VICO – to exploreand develop CBM resources in the Sanga-Sanga block in East Kalimantan.

The key to unlocking these challengingreservoirs lies firmly with developments intechnology. Innovative techniques, such ascableless seismic acquisition, haverevolutionized the recording of seismic dataand, along with improved processingmethods, have radically increased theindustry’s understanding of the subsurface.These techniques produce higher-quality

Unconventional stats

➔42%The increase in demand for natural gas by 2030, as forecast by the International Energy Agency

➔millidarciesThe permeability of a tight gas reservoir can range from 0.1 millidarcy to as low as one microdarcy

➔500 billion boeThe minimum estimated amount of global unconventional gas reserves


range of drilling techniques, such asmultiple wells from a single wellpad anddeviated or horizontal drilling. Thesemethods can enable far more cost-effectivedevelopments, and are applied in areaswhere the risk of widely variable reservoirperformance can be managed.

The real breakthrough has come withthe advances in hydraulic fracturestimulation – known in the business asfraccing. Using fraccing techniques, crackscan be created in the rock, hundreds ofmetres long, which are then kept open witha ‘proppant’ (usually a sand or ceramicparticles). As a consequence, the flow areaavailable for gas flow is dramaticallyincreased. Without fraccing,unconventional gas wells would notproduce gas at economic rates.

With global reserves of ‘unconventional’gas estimated at between 500 billion andmore than 1 trillion barrels of oilequivalent, this energy source represents anenormous opportunity to meet the IEA’spredicted growth in energy demand. BP, forits part, has recognized that opportunityand placed unconventional gas at the heartof its exploration and production strategy. ■

images, revealing subtle differences in rockcharacteristics. This, in turn, is helpinggeophysicists to identify the so-called ‘sweetspots’ in the rock – areas of higherpermeability, through which gas will flowmore easily.

With a better understanding of thesubsurface characteristics, BP can apply a


Interview> Andrew Gowers Photography> Graham Trott

In his native Sweden, Carl-Henric Svanberg issomething of a celebrity.But when the former chiefexecutive of the Swedishmobile telephone giantEricsson was announced asBP’s new chairman lastsummer, to the rest of theworld he was an unknownquantity. In his firstinterview, he talksefficiency, governance andsailing, and explains whyhe believes it’s importantto ‘have skin in the game’.

CARL-HENRICSVANBERGAN INTERVIEW WITH BP’S NEW CHAIRMAN

➔ profile


Profile> Carl-Henric Svanberg

For a moment, myinterviewee is distracted from ourconversation as he stares at the screen ofhis mobile phone. Then a glint comes intohis eye and a grin to his lips. “I think I justbought 750,000 BP shares,” he proclaims – avery public down payment of $6.4 millionto express his long-term confidence in thecompany of which he has just becomechairman.

Carl-Henric Svanberg is aware of thenature of the signal he has sent othershareholders and the world at large – agesture both in character and in keepingwith his past.

“When I was asked to run Ericsson aschief executive,” he recalls, “I told thechairman that I had only one condition: Ineeded to buy a big chunk of Ericssonshares. I’m a great believer in having skinin the game, and BP seems like a greatinvestment opportunity.”

Svanberg’s investment, and theexplanation, encapsulate the enthusiasmand commitment he is bringing to his newjob. A tall man with palpable charm, he isvisibly excited about the company andopportunity the board and executive teamhave to take it to a new level ofperformance.

“It is easy to be impressed by BP, andespecially by the people,” he says. “All thepeople you meet are very skilled, verydetermined, committed and loyal to BP. It isso striking.

“And I must say, I am impressed by Tony[Hayward] and his executive team, and theway they have taken on this turnaround.The way and the speed with which theyhave done things is impressive.”

So what does Svanberg bring to thisrole? On the face of it, the energy business

and his previous industry,telecommunications, seem worlds apart.

He says he didn’t have to think too hardabout agreeing to become a candidatewhen contacted last year by thenomination committee.

“My first reaction was, of course, thatanybody who gets the question will betempted to say yes, because if you have aninterest in people and business, largecorporations and the development ofsociety, it is a very attractive job.

“BP has played such a huge role in theworld. Fossil fuels will continue to be themain source of energy for a long time. Andthere is also the search for new forms ofenergy, and the contribution BP is bringingto that.

“And when I thought about mybackground, I realized that there weresimilarities between telecommunicationsand energy – the one is like a body’snervous system; the other is itsbloodstream. The fact is that theseindustries are both playing in a highlypolitical world: regulated, high-tech andvery long term. That made me think thatmaybe it was easier to understand theenvironment after all.”

In any case, says Svanberg, there are anumber of things that hold true for allbusinesses. “First of all, success alwaysdepends on people. Of course, in thisindustry as in any walk of life, you canstrike lucky, but, generally, even when youlook for oil, there is a very high degree ofspecialist knowledge and analysis. So, itreally all comes down to people.

“The degree of success depends on themotivation, inspiration and skill of people,and their confidence. It is very important tohave a very clear picture, so that everybodycan see what the company is for, and whatrole they are playing. From there, you getyour inspiration.

“The other thing I think is critical is, insimple terms: if something is worth doingit is worth doing well. It is important tobuild an efficient and effective companyand to develop operational excellence. Theone that has the most efficient operationwill always be the one that gains marketshare and continuously outperformscompetitors, especially in tougher times,because that is when you really see thecolour of your abilities.

“And if you are striving for excellenceand efficiency, it doesn’t have to involvemaking people work harder and sweat more.It’s usually more a matter of straighteningout workflows and taking away waste in theform of unnecessary work.

“The signs of a more efficientorganization are straighter workflows andhigh transparency. People have the rightcompetencies and the right tools, the rightauthorities and mandates; and they knowhow to deliver information and advice totheir bosses. When all of that happens, itmakes life more fun, so that people in more efficient companies tend to like theirwork more.”

Svanberg is clearly very much a ‘peopleperson’. His emphasis on culture, peopleand processes sounds very similar to thepriorities set by Tony Hayward.

It comes through in the pragmatic wayhe describes his approach to doing business– as distinct, say, from the different normsthat prevail in politics.

“You may sit there at times with trickydecisions, but real business is about makingwin-win solutions. When you meetsomebody, you will not make a contract, adeal or an acquisition of a company withoutit being a good thing for everybody. The wayforward is actually to try to understand theother side, try to find solutions. In thepolitical world, it seems much more brutal,and you are supposed to argue that youropponent is a bad person in all respects.”

“If you have an interestin people and business,large corporations andthe development ofsociety, it is a veryattractive job.”

Svanberg says the work of corporateboards has never been more importantthan it is today. “The consolidationthroughout all industries that happened inthe 1990s has brought about such bigcompanies. And the workload ofmanagement has grown tremendously andthe workload has also grown significantlyon the board. All of which calls for a moreorganized model of corporate governance.And this, of course, includes making surethe company has a well-thought-throughstrategy with which the board iscomfortable. That is what we at BP strive sohard for and why we are sometimesconsidered a role model in governance.Rightly, in my view.”

A model? What does he mean? “Well,there are some companies where I comefrom where governance is not as welldeveloped as it is here. That means that if


The new chairman says his ideasmatured during the eight years he spentbuilding Assa Abloy to the world’s leadinglocks company and his seven years at theEricsson helm.

“I really came to develop my thoughtsand experience at Assa Abloy. There, weacquired 100 companies and we shaped upall of them. We improved profitability bysome 10 percentage points in almost everycompany. We ended up with stronger, morefun companies to work in. Equally, atEricsson, we built world leadership in ourfield and developed better profitabilitythan it had ever had in its 130-year history.”

Svanberg was born in the frozen farnorth of Sweden, and spent the formativeyears of his career at engineering group ABBand security company Securitas. He madehis name from 1994 as a relatively youngCEO of Assa Abloy, a spinoff business from

Securitas, leading the company through adramatic series of acquisitions to globaldominance, before being tapped to headEricsson, a national icon in Sweden that hadfallen on hard times.

He is conscious that with the move toBP, his career has moved into a differentphase: from hard-charging executive tonon-executive chairman. But he seemscompletely comfortable with the switch.

“For me, I really appreciate thistransition and I like trying to be a greatsupport for Tony and the team, andconducting a good board discussion and soon. So far, I haven’t experienced anyfrustration that I can’t get my hands onsomething. I do meet some colleagueselsewhere who are going through the same transition, some of whom saythey find it hard to wind down. I can’t say I find that.”

The new chairman is looking forward to chairing his first AnnualGeneral Meeting (AGM) on 15 April, and expects it to be rather adifferent experience from the AGMs he presided over back home.

At Swedish meetings, shareholders or their proxies have toattend in person to vote rather than lodging votes in advance,resolutions can be presented without support from the board anditems supported by the board can be easily voted down. “So, it isnot given when you go into the shareholders’ meeting what theoutcome of various resolutions will be,” says Svanberg.

By comparison, a UK AGM should be a more predictable affairon the day – but no less important for that.

There are three key items on the agenda:● A new long-term incentive scheme for directors, based more on

absolute goals set by the board and less on peer-groupcomparisons – “good because it means that management has itssuccess in its own hands and it’s not a lottery depending onwhat somebody else does”.

● The proposed introduction of a scrip dividend. This will replacethe current dividend reinvestment plan and will giveshareholders the ability to take dividends in shares or in cash,while giving BP more financial flexibility.

● A resolution on BP’s plans to invest in Canadian oil sands.Though this is a politically sensitive issue, Svanberg takes it inhis stride. “The resolution is well-formulated,” he says. “It’s notsomebody coming in and saying ‘don’t do this and don’t do that’– it’s asking for the board to review and report back to theshareholders on the decision to invest in a specific project. Thatsaid, the board will oppose that resolution. There are soundstrategic reasons for pursuing this project. It plays to BP’stechnological strengths and properly balances the need forenergy security while addressing climate change. The projectwill be evaluated by the management in the same way as allother projects. The concerns raised by shareholders are all dealtwith as part of this process.”

FIRST DUTY OF OFFICEAGM

“I like trying to be a greatsupport for Tony and the team,and conducting a good boarddiscussion and so on.”

»


Profile> Carl-Henric Svanberg

you are a chairman, you come to yourboard meetings and that’s it. Here, the roleis a little more advanced: the chairmaneven does road shows around governanceissues, and so on, with shareholders. Andwith the chairman’s office, there is a clear,separate unit working on the governanceof the company.

“I think we are likely to see more ofthat. I have seen a dozen shareholders, and,basically, all of them come back to the factthat they think it is easier to work with BPthan with many other companies.”

So where does he draw the linebetween the work of the board and of theexecutive team? “The board’s role isbasically twofold. On the one hand, it isabout being part of the joint team with thetop executives, all focused on one thingonly, and that is to create a better BP.

“Then, we have the role we get from theshareholders to control and make sure that,through governance, things are being doneright in the company. Making sure that weare doing the accounting right, that we areputting safety first and that we have reallyunderstood risks.”

Svanberg is clear that this should notmean second-guessing the executives ormicromanaging strategy. “As a board, andespecially as non-executives, we can nevertell the company what the strategy should

“As a company, you need to have theguts to move in the direction you think isright. If you come back to my example ofApple, I actually think that the sharemarket probably would have advised themnot to go into mobile telephony three orfour years ago. And now they areeverybody’s favourite.”

BP’s goal, he says, is what it has alwaysbeen: “to find as much oil and gas as we canto replace the reserves that we use. Andthat, of course, is based on continuing todevelop our technology leadership, as wellas developing and maintaining therelationships with host governments.

“If we then ensure we developoperational excellence in everything we do,we build the strength to deliver attractiveprofits and growth. Using our strengths, weincrease our ability to build positions inemerging energy sources. If we get thisright, I think we are in a good position.

“And I think it all starts with an open,critical, constructive, yet challenging,

“As a board, and especiallyas non-executives, we cannever tell the companywhat the strategy shouldbe. What we can do withthe experience we have isask all the challengingquestions.”

be, because we spend limited time and theexecutives spend their whole lives here.However, what we can do with theexperience we have is to ask all thechallenging questions.

“Have we really thought about this? Dowe have the whole company behind us?Are we taking on too much? Do we havethe relevant experience? By asking thesequestions, we can help management tosharpen their thoughts even more.”

Svanberg sees his first challenge asgrappling with a puzzle about relativestock-market valuations.

“I have mentioned to Tony and theboard a number of times that it fascinatesme to see that a company like Apple has ahigher stock market valuation thanGazprom. How can that be? Gazprom isone of the most asset-rich companies in theworld.

“But it is a fact that people somehowbelieve that Apple has a stronger futureand they have doubts about where these oiland gas companies are going to be in thefuture.”

So, a key job is to seek to allay thosedoubts and to demonstrate the long-termrelevance of companies like BP. And thatinvolves taking a robust view about thetrade-offs between short-term returns andlong-term sustainable revenues.


debate in the boardroom and in themanagement team, where we can talkfreely about these things.”

Svanberg sets particular store by the verylong-term nature of BP’s business. The energybusiness simply has to think in longer timehorizons than other industries, and BP’sboard directors have to see even farther outthan others doing the day-to-day business.

“The higher up you are, the farther outyou think. I would say that in mostcompanies, a management team wouldmaybe try to develop a perspective basedon some idea of where it expects society tobe in 10-20 years, and you would probablymake a five-year strategy.

“In this industry, the perspectives are solong term that there is a need to think,maybe, 20-30 years out. Should we beinvolved in new energy fields? How longare the reserves going to last? And so on.”

To underline the point, he recalls apersonal reality check he experienced soonafter becoming a director of BP lastSeptember.

“The week after I started, we found oilin the Tiber field, and somebody said: ‘Youwill be lucky if you see some oil comingout of there before you finish your job,even if you are here for nine years or more.’That is how long the investment cycles arein our business.”

“Carl-Henric who?” was the reactionfrom most of the British press when BPannounced its new chairman lastsummer.

Never mind that he was the best-known businessman and a celebrity inhis native Sweden – in the UK, he was anunknown quantity. Now, Svanberg isworking hard at getting to know peoplein his new corporate life in London.

And how is he finding Britain? “Well,of course there are cultural nuances. It’simportant to remember that differentpeople talk in their own codes. Inside,however, we are all the same humanbeings, with hopes, worries and dreams.I’m not sure I have yet figured outeverything about the British people andculture.”

But his initial conclusion is thatSweden and the UK are actually not thatdifferent. “Obviously, the relativepopulation sizes are different and inSweden we are less diverse. We areprobably less hierarchical and a bit moreflexible. As a nation, though, we havealways had to export, and a number ofmajor global businesses are based there.In Britain, the political and mediacultures are less deferential.”

But the Swedes watch a lot of BritishTV – he mentions Fawlty Towers as afavourite. And, after all, we go back along way. “I think Sweden and Englandhave a long tradition – tradingrelationships dating back thousands ofyears, some of them quite brutal. In fact,even the Vikings were 90% trade andjust 10% trouble.”

Like his Viking forebears, Svanberg isa keen sailor. He finds it ‘mind-absorbing’: “You have winds, waves,currents, navigation, sails and it takesyour mind off other things.”

Sailing is a hobby he shares with TonyHayward, along with a penchant for theTV series 24. So, when are the chairmanand CEO going racing on the waves?Svanberg smiles, but refuses to be drawn.

And what about those “new energyfields”? Does Svanberg get the feeling thatBP’s interest in alternative energy hascooled in the past couple of years?

“I don’t think that’s the case. I thinkwhat happened before the present team isthat we went quite far in the way we werebroadcasting our ideas. We were obviouslyvery general and we seem to have put betsin many directions. I think what hashappened now is that we have prioritized.”

He thinks of this area as a natural partof the business balance between sowing forthe future and reaping from the past.

“Any company will have futurebusiness opportunities where it is puttingin seed money, and it will be harvesting onthe other side. We cannot live from justharvesting. At the same time, we have tomake sure that what we do somehow has arelevance to our skills and abilities. Itseems to me that biofuels is a logical areafor us to invest in.”

So, how does he see BP and the industryin 10 years’ time, when he may be comingto the end of his term as chairman?

“It is a fact that the world is going totriple its gross domestic product [GDP] by2050 – that is one of the few things weknow – and that the world is looking atdoubling energy output for a tripling ofGDP. That means this is most definitely agrowth industry. How many industries cansay that whatever we do today will doublein the next 40 years?”

“If you go forward another 10 years, Iwould be surprised if we hadn’t continuedto replace our reserves in the way we haveto date. Of course, we know that there is anend to the fossil fuel story somewhere.However, I don’t think we will find in 10years that we have come dramaticallycloser to that. Just look at what’s happenedin gas in the US in the past couple of years!

“I also think that the world will havematured in the energy and climate debateand we probably will have seen theintroduction of some form of pricemechanism for carbon, which means thatthere will be further incentives to developalternative energy.

“Hopefully, BP will have continued togrow its role and be seen as one of thecompanies that continues to prosper as anacknowledged leader in existing and newfields of energy.”

That brings us right back to thequestion of demonstrating BP’s long-termrelevance, which is at the heart ofSvanberg’s mission. To hear him spell outthe fundamentals, that should not be animpossible challenge. ■

THE UNKNOWN QUANTITY


➔ ex ploration + production Business report> Iraq

Iraq’s South Oil Company (SOC) has workedhard over the past 30 years to establishRumaila as one of the world’s greatest

oilfields. But years of conflict and sanctionshave taken their toll on the industry, with

under-investment leading to a range ofchallenges. A new partnership between BP,

China National Petroleum Corporation andSOC is set to change all that, breathing new

life into this supergiant.


Report> Andy JaroszPhotography> Mehmet Binay

IRAQAWAKENING A SLEEPING GIANT

Future potential: Rumaila is currently thefourth largest oilfield in the world. BP and itspartners plan to almost triple its production

levels in the next few years, using BP’sexperience from other giant fields, integrated

development planning and world-classtechnology. One benefit will be to better

maintain the numerous flares, as shown in thispicture, so that they stop burning crude oil.


When BP signed a technicalservice contract with the Iraqi governmentin November 2009 to develop the Rumailaoilfield, the company embarked on a projectwith considerable scale and challenge.Rumaila holds reserves of some 17 billionbarrels, and is already the fourth largestoilfield in the world, currently producingaround 1 million barrels per day under theoperatorship of Iraq’s South Oil Company(SOC). In partnership with China NationalPetroleum Corporation (CNPC) and SOC,the contract commits the BP-led consortiumto almost triple production, to 2.85 millionbarrels per day, making it the second largestoilfield in the world.

Iraq’s recent troubled history is wellknown, and almost 30 years’ of conflict andsanctions have had a detrimental impacton the development of the country’s oilindustry. Indeed, considering the obstacles

that those working in Rumaila haveencountered during the past few years, it isremarkable that they have maintainedsuch production levels.

As the first international oil major in 35years to work in Iraq, BP, and in particularthe Rumaila team, has shown adetermination to succeed that goes farbeyond the achievement of oil productiontargets. “It’s exciting to be here for manyreasons,” says Gary Jones, general managerfor Rumaila and vice president ofoperations. “It is an opportunity to help Iraqrebuild itself. Basra is in a pretty tough stateright now, yet you talk to the Iraqis and youfind that Basra used to be a really nice place.”

The people of Basra place greatimportance on the success of Rumaila, headds: “They see us as the people who aregoing to bring the investment, which willallow them to realize the revenue, whichwill allow them to rebuild their city andget back to where they feel they should be.”

The initial target of increased production(IPT) is 10%, and under the terms of thecontract, it is only when this increase isachieved that BP/CNPC will start recoveringproject costs. According to Randy Pruitt,wells manager for the project, this will beachieved using a number of methods. “Oneof the levers we have is drilling new wells,”he says. “That is probably a slower way, butit is something we are going to have to doanyway. Another way is wellwork –working over existing wells to make themperform better. The other method is theinstallation of electrical submersible pumps,and a steady power supply. The electricitygoes off all of the time here, which is notgood for a pump. It does not make for longpump life.”

With many years of experience indeveloping some of the world’s ‘supergiant’oilfields, BP is able to take its skills andknowledge from operations in otherlocations and transfer them into Rumaila.“After 30 years of doing this in differentplaces, there is a whole bag of tricks you canuse,” says Pruitt. “Each field has to be treatedin its own right. Rumaila is so huge, so youjust want to start by guiding it. It is runningand there are a lot of people doing things, soyou say, ‘What do I like that I want to keepdoing? What do I want to do more of? Whatdo I want to hold back on a little bit?’”

The focus on innovation is somethingthat many people highlight whencomparing BP projects to other operations. »

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Successful outcome: the people ofBasra place great importance on the

success of Rumaila, seeing it as anopportunity to generate new

revenue to rebuild the city.

Business report> Iraq


“They see us as the peoplewho are going to bring theinvestment, which willallow them to realize therevenue, which will allowthem to rebuild their cityand get back to where theyfeel they should be.”Gary Jones

Jones describes the perception of riskduring his time in Russia: “We had peoplewho were very talented, but who had donethings a certain way and were worriedabout the consequences of taking risks, orgoing outside their comfort zone. In BP, inthe appropriate circumstances, weencourage challenge and innovation toachieve exceptional performance, as longas the potential risks and consequences arewell understood and articulated.”

Pruitt agrees, explaining how thiscontrasting style has been managed inRumaila. “Our culture takes a little morerisk, and maybe, therefore, reaps somemore benefit. So, it is about trying to workwith the Iraqis on that. We ask ‘have youthought about this?’ or ‘can you try this?’And they say, ‘Well, would you try that?’‘Yes I would’, I say to them. That way theyknow they have got somebody to pointback to and say ‘He told us to do that.’ I amreally quite okay with that.”

One of the greatest assets already inplace in Iraq is the existing local workforce.Gil Beuhler, IPT project manager and vicepresident resources for Iraq, has been veryimpressed by the Iraqi team with whom hehas been working. He held a jointworkshop onsite involving staff from BP,CNPC and SOC, which was very well

received. “It’s exciting,” says Beuhler. “TheIraqi staff are very experienced, good atwhat they do and they want to worktogether for the benefit of Iraq.”

Charlene Chuang, vice president ofpartner relations, is one of the BP interfacesin the partnership with CNPC. Chuang’sfluency in the Chinese language,understanding of Chinese culture, and her29 years in BP’s upstream business bringadvantage to this cultural partnership. Shedescribes how the key to success for thisventure – the first of its kind in scale andmodel – is in building trust. “All partiescome with their own experiences and waysof doing things, which makes this projectinteresting and groundbreaking.”

Intensive discussions are in developmentto maximize full use of skills andexperiences from all three companies tocreate an optimal organizational structure.Teams are also working on procurementprocesses and procedures to benefitpartnerships, and assure compliance withapplicable international laws. “Truth is,”continues Chuang, “in building such animmense and multi-faceted internationalventure, a strong, visionary leap of faith isthe basis for any conflict resolution.”

BP is the lead partner in the partnershipwith CNPC, but all those involved are keen

Did you know?

● With reserves of some 17 billion barrels, Rumaila isthe world’s fourth largestoilfield

● BP’s contract has a 20-yearlifetime, and will aim toincrease plateau productionto 2.85 million barrels perday in the second half of thenext decade.

● BP has a long history withRumaila dating back to itsdiscovery in 1953 and, morerecently, has providedtechnical assistance in thefield since 2005 as part of athree-year memorandum ofunderstanding.

“Three core themes run through BP’s successes inthese projects and we will apply these in Rumaila:brownfield redevelopment, integrated developmentplanning and the use of world-class technology.”Gil Beuhler

to stress that the success of the Rumailaoperation is about taking the best of BP andworking with the other partners to createthe best environment for Iraq. “We all havea lot to learn from each other and believethat the Rumaila Field OperatingOrganisation will be distinctive through itsability to harness the experiences and skillsof its diverse parts, and to be the numberone operator in Iraq,” says Jones.

There have already been importantsuccesses. Budgets have been agreed for2010, a critical step in setting activities toreach the 10% IPT. As Beuhler explains,“this has enabled us to align ourselvesaround the activity set. We know what weneed to do to achieve our objectives for thisyear. Now we need to work together todeliver.” In mid-February tenders wereannounced to drill 56 new wells, crucial toboosting production levels.

Beuhler is upbeat about the Rumailaproject and points to BP’s track record ofdeveloping similar supergiant fields suchas Prudhoe Bay, US and Samotlor, Russia.“Three core themes run through BP’ssuccesses in these projects and we willapply these in Rumaila: brownfieldredevelopment, integrated developmentplanning and the use of world classtechnology.” He is particularly positiveabout the potential for BP to make adifference in Iraq. “There is a lot of work todo here, but the desire among the Iraqis toimprove their country is really exciting.You feel you’re doing something special,and at an incredible scale.” ■



In partnership: all the partners inthe Rumaila deal acknowledge

that they can learn a lot from eachother in order to become thenumber one operator in Iraq.

Business report> Iraq


➔ C a s tro l Sponsorship> FIFA World Cup™

A PASSIONATE

BRANDIt’s just a matter of weeks before the world goes footballmad, with the start of the 2010 FIFA World Cup™tournament. As a long-term partner, Castrol’s brandwill be seen by billions. But as BP Magazine finds out,it’s already at the heart of the action, applying itsexpertise in technology and data analysis to football,providing fans with an unique insight into theperformance of their favourite players.

Report> Ian ValentinePh

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Sponsorship> FIFA World Cup™


When the opening goalis netted in the final ofthe FIFA World Cup™in Johannesburg on 11 July 2010, the

deliriously happy team will huddle tocelebrate in a corner of the pitch. Itscolourful supporters in the crowd will beclutching each other in jubilation, whilebillions of viewers worldwide will react intheir own distinct way. As the camera pansback to capture these famous shots,registering the joy and despair of theplayers, the logo of a famous lubricantscompany will be illuminated, for all to see,in the background. Which begs an obviousquestion. Why would a lubricantscompany advertise at a football match,even if it is the sport’s gala event?

When Castrol announced its long-termsponsorship deal with FIFA, the organizingbody of the international footballingtournament, eyebrows were bound to beraised. Why deviate from the well-navigated track of motor racing onto a lessclearly lit path? The answer, according tothe team managing the project, is equallyobvious. The four-yearly event is too stronga brand to ignore. Second only to theOlympics for coverage, the knock-outtournament attracts 26 billion viewersworldwide. But, more importantly, it allowsCastrol to apply its expertise in technologyand data analysis to football, providing fanswith unique insights into the performanceof players and teams.

Signing the partnership with FIFAmeans Castrol has become an integralplayer at both the forthcoming tournament

Castrol’s sponsorship programmemanager Paul Goodmaker explains that theattraction of the Rankings is that it has noscope for emotion or opinion. “There is noway of fiddling the figures,” he says. “Ourdata partner Opta records every scrap ofaction, which is then fed into Castrol’s ownmathematical algorithms to calculate aperformance score for every player in everymatch. For example, a free kick given awayin the middle of the pitch will penalize theculprit less than a free kick just outside thebox. Football is such a subjective andemotional sport, so our goal is to offerobjective analysis that will give supportersan added insight. The fans don’t have toagree with it, but it will create scope fordiscussion, which we welcome. Visitors toour site will also be able to gauge whichplayers are peaking during the tournament,and which teams are the most likely toprogress. But, sadly, we cannot predict theactual results!”

Polly Flinn, vice president of globalmarketing, believes the link betweenCastrol and football is already being forged.“Our expertise in technology and dataanalysis, which produced Castrol EDGE,the world’s best synthetic motor oil, hasbeen applied to football, to analyze theperformance of the world’s best players,”she says. “Castrol is able to provide uniqueinsights into football performance thatallow us to engage and connect withfootball fans.”

Flinn stresses that this partnership dealsits neatly alongside Castrol’s ongoingsupport of motorsports. “In motorsports,Castrol has a strong legacy and creates a

in South Africa, and the subsequentextravaganza in Brazil in 2014. Aside fromthe exposure at the tournaments, coupledwith television and online advertising, thecompany expects to bond with footballfans, through features such as its uniqueCastrol Rankings system. The first trulyobjective football rankings system, itdetermines the best players in Europe’s topfive leagues. Using analysis and technologythat measures every pass, tackle, mistakeand success, the 2,000 top footballers areranked every month, according to theirrecent performances. In the run-up to thetournament, this sophisticated data willallow fans to predict which teams andplayers are likely to shine in South Africa.

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For Ronaldo himself, the arrival of theRankings has given another incentive forhim to prove his talent, especially as itcharts the performance for the full 90minutes of a football match. Players whodrift in and out of a match will find theirscore dropping. “The Castrol Rankings isthe one that every player wants to top,”says the footballer. “If you can be numberone, there can be no arguments, as it isbased on fact, not opinion. That’s why I’maiming for the number one spot – to proveI’m the best.”

Fans will be invited to ‘ChallengeRonaldo’ in a test of skills in a unique eventin central Madrid, in May. The luckywinners will enjoy the opportunity ofpitting their wits against one of the world’spremier sports stars.

An ‘Ultimate Performer’ generator willalso allow visitors to build their perfectfootballer during the build-up – they’ll findit on the Castrol football website. “He mighthave Puyol’s heading ability, Cristiano’sthighs, Rooney’s heart, Beckham’s right footand Messi’s vision,” explains globalmarketing communications manager Vicky Kipling. “They’re going to look quitegrotesque, but it should be good fun!”

With the global reach of the internet,the Castrol Rankings is already providing a

feeling of nostalgia among fans,” she says.“We are proud of that heritage, but we alsowant to market ourselves as a modernbrand, so we took the bold step of enteringa new arena. We have committed ourselvesto football for the long term, and I expect itto join motorsports as part of our brandDNA. People will think to themselves, ‘well,hang on, if a company like Castrol knowsthis much about football, how much moredoes it know about motor oil?’”

Alongside the Rankings and tournamentexposure, Castrol aims to identify itselfwith football fans through its globalambassador Cristiano Ronaldo, who iscurrently lying second in the Rankings,below Argentine Lionel Messi. As the faceof Castrol, Ronaldo is leading thecommunications campaign for itspremium oil brands, Castrol EDGE andCastrol Power 1, as well as supporting theCastrol Professional product range.

The Real Madrid midfielder will featurein a series of high-profile commercials,which will dazzle viewers, according to DesJohnson, global brand director. “In terms ofeffectiveness, these ads promise to bephenomenal. He was a very professional,hard-working young man, a real joy towork with. The returns on our investmentare simply outstanding, especially withRonaldo onboard. His energy, motivationand determination are a perfect fit withCastrol in demonstrating what it takes todeliver winning performances. He is headand shoulders above other footballingicons on the global stage, such as LionelMessi and Kaká, according to our marketresearch. He is the new David Beckham.”

“A high proportion of the tournament viewers arelikewise a target audience for Castrol, as they includeyoung to middle-aged men in growth markets such asSouth America, Russia and the Far East.” Des Johnson

portal for football fans to discuss thefindings or defend their favourite country,club and players. The debates continue onFacebook and Twitter, allowing peoplefrom the Far East to exchange views on aplayer with a stranger from South America.The launch of the Rankings has beenwildly popular in Mexico, where more than30 media organizations, including most ofthe leading sports networks in the country,attended the function in Mexico City.Mexican fans are especially passionateabout supporting their team and will beprominent in South Africa, with many ofthem spending a large percentage of theirincome to be part of the excitement.

“A high proportion of the tournamentviewers are likewise a target audience forCastrol, as they include young to middle-aged men in growth markets such as SouthAmerica, Russia and the Far East,” addsJohnson. “Many of these viewers will alsobe supporters of motorsports. Lookingforward, this is a partnership that will runand run.”

By the time 11 July arrives, and that firstgoal of the match is scored, nobody will besurprised to see the logo of a lubricantscompany flashing in the background.Castrol will already be part of the FIFAfurniture. ■


➔ exploration + production

Norway: Skarv development

Norway’s long, dramatic coastline has inextricably linked itspeople to the sea for centuries, with shipbuilding and fishing lying

at its industrial heart. Since the discovery of oil and gas in the1960s, that link has continued to help the nation prosper. And with

development well underway on its new Skarv project, Norway’smaritime heritage is also helping BP realize new growth.

Seafaring nation: waters offshoreNorway hold a wealth of natural

resources, including oil and gas. BPis developing its first completely

greenfield project here in theNorwegian Sea since 2001.


Report> Amanda BreenPhotography> News on Request/Corbis


People from this land made their mark onhistory with their seafaring exploits;Vikings built longships – broad, flat-bottomed hulls – to explore rivers, shallowcoastal waters and ride the oceans to distantlands. Those early voyagers used the term‘Norvegr’ to describe the shipping routealong the country’s west coast. Meaning‘the way to the north’, it is from this wordthat the nation takes its name, as ifunderlining the importance of this stretchof water.

From fishing to shipbuilding, maritimeindustries have long been at the heart ofthe country’s economy, and with thediscovery of oil and gas reserves inNorwegian waters in the late 1960s, the seaoffered yet another opportunity for thecommunity to prosper.

Today, the coastal city of Stavanger, withits white-washed clapboard houses facingout towards the pretty harbour, may notseem the obvious candidate as Norway’senergy capital, but its decade-old Norsk

Oljemuseum (Norwegian PetroleumMuseum) on the waterfront gives a clue tothe city’s status. With its architecturedesigned to reflect the Norwegian bedrock,the coastal landscape and offshore oil andgas installations, the museum clearlysignals its function.

With the Oljemuseum in prime location,Stavanger is not just examining the historyof oil production in Norwegian waters, butalso looking to its future. With oil and gasreserves generating almost a quarter of thenation’s gross domestic product in 2008,that future is clearly significant.

For BP Norge, with its headquarters justoutside Stavanger, the outlook is alsoexciting. Development of the company’sfirst completely greenfield project since itsTambar field came onstream in 2001 is nowwell underway. Located some 50 kilometres(30 miles) south of the Arctic Circle andaround 220 kilometres (135 miles) west ofthe Norwegian coast, Skarv is a gas and oilreservoir, discovered by BP in 1998.

The field’s development marks a newera of growth for BP in Norway, as RebeccaWiles, the company’s head of country,explains: “With the redevelopment of ourValhall field and the new Skarv project,we’re investing hugely in the business andgrowing our production here in Norway.

“This effectively represents atransformation for BP Norge, after someasset consolidation between 2003 and2005. Looking forward, our strategy here isto continue to build our track record as asafe and reliable operator, while growingour resource base and production throughthe application of innovative technology;and investing to extend the life of moremature fields and bring our new projects,the Valhall redevelopment and Skarvdevelopment, online.”

Sanctioned by the NorwegianParliament in December 2007, theproject is making steady progress – on

budget and on schedule, with a very goodsafety record – to meet its start-up date nextyear. While a complex subsea system takesshape 300 to 450 metres (980 to 1,475 feet)below the waves offshore Norway, theworld’s largest-ever harshwater floatingproduction, storage and offloading vessel(FPSO) is nearing completion in SouthKorea. Other key pieces of equipment arebeing designed and built at locations acrossEurope and Asia, making the Skarv projecta truly global endeavour.

“All major design work is complete, andwe are very much in the mainstream ofconstruction,” says Pat McHugh, Skarvproject director. “One of the challenges for

Norway’s rugged coastline, including that ofits fjords, bays and some 50,000 outlyingislands, harbours a staggering statistic: thefull length measures farther than thedistance around our entire planet. Those

estimated 83,000 kilometres (51,570 miles) inherently bindthe nation to the water lapping its shores. Little wonderthen that, through the ages, the sea has played a centralrole for Norwegian livelihood and culture.

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New investment: BP's Skarv developmentis now well underway; subsea activity has

included pipe laying (left) and theinstallation of drilling templates. The

Nordland coastal town of Sandnessjøen(centre) is home to BP's supply base for its

offshore operations.

»

the management team and me iscoordinating the effort, which is physicallyspread from our project headquarters inOslo, to the UK and other parts of Europe,and then into Singapore and Korea. Bearingin mind all the time zones and culturaldifferences, I would put communication asour top priority to ensure we achieve ourultimate objective.”

That target is the production of gas andoil from Skarv commencing in the latterhalf of 2011. Thought to be the mostnortherly of BP’s offshore developments, itwill comprise a subsea system of 16 wellson five templates, at a distance rangingfrom three to 14 kilometres (two to ninemiles) away from the FPSO. An 80-kilometre(50-mile) spur line will carry gas toNorway’s existing Aasgard pipeline, whileshuttle tankers will collect oil from thefrom the 875,000 barrel-capacity vesselevery 10 days.

Operators working in Norwegian watersare required to meet particularly highstandards of design to comply withregulation. Taking these into account,alongside BP’s own safety priorities, theFPSO has been designed with a mooringsystem unlike any other, McHugh explains.

“The hull’s structure, the turret, alongwith the 15 mooring lines anchored to theseabed, are designed to resist threecombined eventualities: a total loss of FPSOpower and use of positioning thrusters, with100-year storm conditions, when the hull isnot in its optimal position with respect tothe prevailing weather conditions.

“The structural integrity of the FPSOand its mooring lines are designed to be

maintained in all those circumstances.That is an unusual demand and what wehave, therefore, is the highest-strengthmooring system ever installed.”

The commissioned vessel will set saillater this year from South Korea on its 90-day journey via the Cape of Good Hope.Expected to arrive in Norwegian waters inearly 2011, some final touches will becompleted inshore, before the FPSO istowed to site, anchored and the waitingsubsea elements hooked up. Minimizingthe work schedule in the final monthsbefore start-up means that subseainstallation is already well underway.

Under the waves, Skarv provides aseries of challenges for BP: thoseinclude the fishing-scarred seabed

and the need to protect subsea equipmentfrom fishing vessel activity. With theexception of ‘rock dumping’ activities tolevel out the undulating seabed, offshorework is virtually impossible during theharsh winters between October and April.But huge seas and high winds are liable todisrupt a work schedule at other times ofyear, too.

“There is no protection from the longAtlantic swells out there, when the worst ofthe weather passes through,” says GrahameChristian, marine installation coordinator.“The conditions are potentially wild, butthe latest technology enables us to feedpast weather patterns into our planningprocess, so we’re able to gauge a realisticassessment of likely down-time.”

Timing is crucial for a project that is setto come onstream less than four years after

parliamentary approval. Remaining onschedule also relies on the many suppliersto whom BP has awarded contracts forSkarv. Materials and equipment have beensupplied from at least 20 countries, withroughly half of the contracts awarded toNorwegian-based companies.

Creating a positive local impact in thearea closest to the offshore project has beena priority for BP, as well as the Norwegiangovernment. As such, BP Norge hasimplemented an inclusive contract strategyfor maintenance and modifications atSkarv. Rather than enter into one largecontract with a single supplier, the aim isto divide the whole, allowing smaller localcompanies the opportunity to compete forwork in the formal tender process.

“What we’ve done is pay attention tothe region where we’ll operate in Nordlandcounty. There, we’re trying to support smalland medium-sized companies to enter theoil industry,” says Kjell Magne Madsen,procurement and supply manager. “Forexample, a company in Sandnessjøen, thesmall town that is home to our supply base,is sourcing the 1.5 million tonnes ofcrushed rock to level the seabed, andanother local company has built thesuction anchors. This has been a greatsuccess, as businesses there have shownthey are competitive in some areas.”



At a glance – Skarv

Discovery: 1998Production start: 2011Drilling began: January 2010Wells required: 17 (including one exploration well)Length of wells: 5,000 metres (16,400 feet)Design life: 25 years


Massive endeavour: Skarv's floatingproduction, storage and offloading vessel

(FPSO) is the largest of its kind for harshwaterconditions. It is under construction in SouthKorea and the commissioned vessel will set

sail later this year on its 90-day journey toNorwegian waters.



Local ties: as the first gas and oildevelopment to base its operationsin Nordland county, Skarvrepresents a milestone for the localcommunity. BP Norge has hostedevents (below) in Sandnessjøen andthe wider area to inform residentsabout its offshore work.

“All eyes are on Skarv, as people look to see thatwe bring the project online safely and efficientlyand, equally, that we fulfil expectations aroundour investment in the Nordland area.”Rebecca Wiles

The president of Nordland CountyGovernment, Odd Eriksen, agrees and isoptimistic about the growth of localbusinesses in future, as Skarv hasrepresented a milestone for the area. “Thisis the first gas and oilfield to have its baselocated in Nordland, and it’s been veryimportant for companies here to have theopportunity to easily enter intodiscussions with the operator. Thesolution BP has embarked upon will becrucial to the development of othersuppliers in the area.”

Alongside efforts to help localbusinesses grow, BP Norge alsosupports education initiatives in

Nordland to promote the long-termsustainability of the region’s industries. Thecompany has established partnershipprogrammes at schools in four of theregion’s towns; aimed at 10th gradestudents (14-15-year-olds), which focus onpromoting science subjects and advise onpotential career paths.

“The idea here is to create competenciesand build knowledge on a local level,”explains Olav Fjellsaa, director of externalrelations and communications for BPNorge, “not necessarily so that BP can laterhire these students, but rather so they canenter into the local workforce and becomepart of the economy that will work with BP

throughout Skarv’s operating phase, overthe next 25 years.”

Implementing a cohesive developmentstrategy in the area has required BP to workclosely with central and local governments.It is hoped these efforts will set an example

“Taking the pulse of the local community” is how Jan-OddvarSørnes, vice dean and associate professor at Bodø GraduateSchool of Business, describes his work examining the so-called‘ripple’ effect of BP’s operations in the Nordland area. Togetherwith a small team of fellow professors and graduate students, heis conducting a three-year socio-economic impact assessment ofthe Skarv development.

Now in its second year, the BP-commissioned study is gatheringstatistical data, as well as qualitative information, on the changesbrought about by this offshore project.

“First and foremost, we’ve focused on the expectations of thelocal community and their opinions about the value of BP’sinvolvement to date,” explains Sørnes. “It’s still early in thedevelopment phase; some contracts have been awarded locally, butthere are plenty that remain up for grabs.

“It may be a cultural characteristic of Norway, but people arevery focused on winners and losers. For the municipality ofAlstahaug, where the supply base is located, the people are proudand pleased that local businesses and local government haveworked together and been proactive in order to succeed.

Statistical information only tells a small part of the story. “Thefindings that have impressed us the most are the qualitative ones,”he says. “Prior to BP’s presence, other companies had tried toestablish operations here. Many people we interviewed had been

part of that process 20 yearsago and what we heard is thatthe manner in which BP isparticipating in stakeholderdialogue is setting thestandard.

As the county with themost industrial activity innorthern Norway, Nordlandalso provides a positiveexample to its neighbours.“There’s great potential for the inland municipalities,” adds Sørnes,“so another focus for the study is the formation of industrialclusters. We’re looking at how small companies can join forces tobid for contracts and how BP is working with local suppliers to helpthem develop their businesses.”

The research team publishes its findings in an annual report,which is made available online. For the High North Centre ofBusiness, at Bodø Graduate School of Business, working inpartnership with BP also brings advantages. “From our point ofview, establishing this close relationship with industry brings greatvalue and allows us to offer wonderful opportunities to ourstudents. That’s perhaps the best value we can gain from suchcollaboration.”

COMMUNITY SPIRIT

Supply chain: local businesses haveproved competitive in winningcontracts to supply equipment, such assuction anchors, for the Skarv project.

“The manner inwhich BP isparticipating instakeholder dialogueis setting thestandard.”Jan-Oddvar Sørnes


for future offshore developments.“Nordland County Governmentappreciates the very open and directdialogue we’ve achieved with BPmanagement,” says Eriksen. “This hasbecome a model for other petroleumcompanies active on the Nordland shelf.”

With a quarter of Norway’s mainlandcoastline found within Nordland county,its inhabitants “expect to see jobs on themainland from the activity that takes placeoffshore,” he adds. As the first internationaloil company basing its supply operationsin this part of Norway, the focus istherefore very much on BP to deliver – onboth the business front and on itscommunity agenda.

“All eyes are on Skarv,” admits Wiles, “aspeople look to see that we bring the projectonline safely and efficiently and, equally,that we fulfil expectations around ourinvestment in the Nordland area.”

For BP in Norway, bringing a newdevelopment online for the first time in adecade makes a considerable statementabout the company’s commitment tooperations in this resource-rich area ofnorthern Europe. Given the potentialwealth of untapped hydrocarbon resourcesin the Norwegian Sea, it would also seemthat this nation’s future will be as closelytied to its offshore waters as during anytime in its proud history. ■


High expectations: a processtechnician looks out over thesite from the MEA column onthe A5 syngas plant.


Report> Jaclyn ClarabutPhotography> Stuart Conway

➔ refining + m arketingBusiness report> UK

IN ITFORTHE

LONGHULL

It’s a new era for Hull. The cityhas thrown off the shackles of itsstereotyped ‘grim up north’reputation and now bursts withpride and confidence, thanks tostriking new buildings, such asThe Deep aquarium, a vibrantwaterfront and a Premier Leaguefootball team. You could say allHull is breaking loose. BP’sSaltend site lies to the east of thecity, but has been on the samejourney, with the firm’s UKmanufacturing site going fromnear closure to cutting edge in adecade. BP Magazine hears thestory behind the transformation.


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The economic and physical change isshown in the city’s skyline, which is nowvirtually unrecognizable thanks to newbuildings such as the $300 million St Stephen’s shopping and leisure complexand the futuristic aquarium, The Deep.

BP’s manufacturing plant in Saltend hasachieved the same kind of radicaltransformation. It has gone from a ‘dyingsite’ to one that is looking firmly to thefuture. It has become a centre for BP’salternative fuels development andproduction through two exciting jointventures. Where once Hull’s time seemedto be past, it is now set for a cutting-edgefuture, leading the biofuels industry.

It’s a far cry from the start of the century,when it looked like BP would sell the site,along with almost 100 years of BP’s history.“For a long time, there was a general feelingof, it’s not a matter of if the site will be sold,

The Yorkshire coastal city ofHull used to hit theheadlines for all the wrongreasons. It was labelled the‘worst city in Britain’ by aBritish property televisionprogramme, and won theunwanted accolade ofBritain’s obesity capital in2005. But five years on, amulti-million dollarmakeover has invigoratedthe city, bringing in newbusinesses and leaving PhilSpencer, the presenter of theaforementioned propertyshow, eating humble pie,while declaring that ‘Hull ishot property.’

Water world: Hull’s new aquariumknown as The Deep (left), andprocess technicians at BP’s A5syngas plant facing (right).

“In the past eight years,we’ve been shuttingdown, demolishing andselling off. This year,we’re investing andgrowing the business.”Frédéric Baudry

AREAENLARGED

LONDON

Birmingham

Manchester Hull

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Belfast

Plymouth

Edinburgh

Newcastleupon Tyne

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Cardiff

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Business report> Hull



Business report> Hull

but when,” says Graeme Stewart BP’s plantmanager. “But now, we’re at a completelydifferent place.”

Frédéric Baudry, vice president of BP’sEuropean Petrochemicals business, agrees:“In the past eight years, we’ve been shuttingdown, demolishing and selling off. This year,we’re investing and growing the business.”

And, adds David Richards, managingdirector of Vivergo Fuels – the joint venturebetween BP Biofuels, British Sugar andDuPont: “The joint venture partners havemade a significant investment at theSaltend site, and our world-scalebioethanol plant will reach mechanicalcompletion by the end of this year.”

Today, Saltend is a site revived. Multipleconstruction works are underway, withcranes, steam and new pipes glistening inthe winter sun. But it took tough decisionsto transform Saltend’s performance andbring the 370-acre-site back to life.

BP is a world leader in the acetic acidbusiness – known as Acetyls – and theSaltend site produces the most in Europe.Acetic acid is one of the world’s mostimportant chemicals and, in its simplestform, is used in jars of pickled onions.Around 500,000 tonnes of acetic acid are

produced in Hull each year (enough to fill1.9 billion jars of pickled onions) and soldto BP’s customers, who use it to makeeveryday products, such as plastic bottles,paints and pharmaceuticals.

In 2006, a strategy was developed to putthis business back at the heart of BP’s globalAcetyls operations. From the four aceticacid plants on site, the two unprofitable oldtechnology acetic acid plants wereflattened, leaving the two remaining plantsthat use BP’s own world-class newtechnology (see panel, left) to make aceticacid. The demise of the old plants madespace on the site to attract more businessesand provide BP with a renewed revenuestream as a landlord of a chemicalsbusiness park.

At the same time, BP sold its ethylacetate (EtAc) and vinyl acetatemonomer (VAM) plants to major

chemical company INEOS, in order tofocus on the Acetyls business. “The oldacetic acid plants were outdatedtechnology, whereas the technology we’vegot in our newer plants was developedhere and is world leading, and that’s wherewe wanted to be,” says Stewart. “So, we

The Hull Research and TechnologyCentre (HRTC) is on the verge ofdeveloping a new method of makingacetic acid, which will once againrevolutionize production of thechemical that is found in everythingfrom paint to paracetamol.

It was groundbreaking technology,developed at the Saltend site, which haskept BP ahead of its worldwidecompetitors for more than 10 years.Engineers and technologists developedBP’s Cativa process to make acetic acid inthe 1990s and that method is still themost cost-effective technology usedtoday.

The method for producing acetic acidfrom methanol and carbon monoxide isnow used across the world in majoracetic acid plants in Malaysia and China.

“The technology has beenfundamental to giving BP’s Acetylsbusiness a substantial market share,which is about 25% at the moment,” saystechnology vice president Sue Davison.

But the HRTC is determined to keepahead of the competition by developinga next-generation technology to produceacetic acid, which it hopes to have readyfor commercialization by 2015.

The HRTC is also expanding itsbuildings and its scope to house BP’sConversion Technology Centre, which islooking at clean/green energy andchemicals sources.

The team at the centre not onlysupports the global Acetyls business,providing research and technologyexpertise to the 10 different centresacross the globe, from Texas, US, toChongqing in China, it is alsosupporting the new biofueldevelopments on the site and provides amajor draw for the analytical support itgives to other businesses on BP’schemicals park.

“We have great capability here inHull developed over a lot of years,” saysDavison. “Cativa is a great example ofwhat has come out of here over theyears. We’ve helped attract morebusinesses to this location because of theskills that we have here. I think that’sgood for BP and it’s great for the people.”

HULL’S CENTRE OF EXCELLENCE

Local neighbours: the AssociatedBritish Ports jetty, with BP productlines (below), and process technicianChristian Lees at work in Saltend’ssimulator suite (opposite).


backed technology and we backed thebusiness where we thought we could makethe most return.”

The changes have helped boost theprofits on the site. Nard Roodenrijs, theEuropean Acetyls commercial director,adds: “Hull is one of the few locations inEurope where there’s chemical activitywhich is reinvesting and sustaining itself,which means we’re ensuring a really viablefuture from what seemed an ever-decliningspiral. There’s a lot happening here.European Acetyls is doing well.”

The transfer of the commercial salesteam from 370 kilometres (230 miles) awayin Sunbury to the plant itself has also had apositive impact. The Hull team is proudthat acetic acid is made and sold in thesame place, and of its great track record inserving customers.

There are now seven businesses on thesite, all of which have something to offereach other. The Saltend CogenerationCompany, owned by International Power,provides the site with electricity and steam.Air Products is also next to the site. Itprovides industrial gases to site customersand even has a place in people’s homeswith the medical devices it supplies to

“We’re here for everyone’s mutual benefit,recognizing that we want to make moneythrough the provision of utilities andservices and making sure the people onsiteget cost-effective, efficient and reliableservices and utilities.” Chris Bowlas

patients with chronic conditions, such asasthma. Oxygen, natural gas and steam areused to make BP’s acetic acid, some ofwhich is then used by INEOS to make EtAcand VAM. The VAM is used by NipponGohsei, which operates the largest ethylenevinyl alcohol (EVOH) plant in the worldfrom Hull. The waste products fromNippon Goshei are then recycled by BP tomake acid in a fully- integrated operation.

“We’re here for everyone’s mutualbenefit, recognizing that we want to makemoney through the provision of utilitiesand services and making sure the peopleonsite get cost-effective, efficient andreliable services and utilities,” says thechemicals park manager, Chris Bowlas.“This is the key part of our vision andbusiness model.”

Vivergo Fuels saw the appeal of thefacilities on the Saltend site. “Wedecided to build our first biofuels

plant in the UK at the Saltend site becauseit provided the perfect fit for ouroperational strategy,” says Richards. “Wehave the utilities and a jetty here withaccess to Antwerp. The area is also goodbecause there’s lots of spare wheat locally,

which can be used to make biofuels.”The Saltend site is also the home to a

cutting-edge technology research anddemonstration facility run by KingstonResearch Ltd (KRL). KRL, a joint venturebetween BP and DuPont, will accelerate thedevelopment and commercialization ofadvanced biofuel technology, includingbiobutanol – a more effective biofuel thanethanol. The Vivergo Fuels ethanol plantcould be retrofitted to produce biobutanolonce the technology has been proven.

Lord Mandelson, state secretary forbusiness, innovation and skills, visited thesite last year, saying of KRL’s work: “Thiswill place the UK at the forefront of next-generation biofuel development. Newindustries, such as low-carbon andrenewable technologies, have hugepotential for driving growth. This isprecisely the type of investment project weneed to attract in order for these industriesto thrive in the UK.”

“It’s a living site with a whole host ofinvestments and the skyline is completelychanging,” says Bowlas. “You go and standin the local village and you can seebuildings here and cranes there – there’s somuch to see.” »


One of those new buildings underconstruction is a $45 million carbonmonoxide reformer that will sit at the heartof the site, and will be up and running atthe end of this year. In return for itsinvestment, BP will see production costsreduced and reliability of supply boosted.“The more reliable you are, the morecompetitive you are,” says Stewart.

Baudry adds: “At the bottom of a globalrecession, our business performance givesus an incredible amount of confidence forthe future. We have given a steady streamof returns back to BP over the past threeyears. We have security of supply and cost-effective utilities, and we have anincredibly flexible workforce.

“I won’t say it’s been painless, but in myview, everyone is up for the challenge. Theyrecognize that BP is a company they want towork for and that having BP in Hull isincredibly important for the city. And there’san incredible amount of pride in making thesite a success, such that we can offer growthopportunities to new partners.”

Saltend’s successful transformation wasdone with the same core values used to liftthe Hull City football team. The ‘Tigers’were facing extinction at the beginning ofthe century, after hitting tough times. Butthe team has found success, going from the

Football League fourth division to PremierLeague in just four seasons, while stillretaining its fundamental players, such ashometown boy Nick Barmby and IanAshbee, who captained the team throughevery division.

Back at Saltend, the investment intraining programmes has boostedthe confidence and performance of

the workers on the site, Stewart believes.He points to the number of control roomsimulators, which give trainees a chance tosee how they would react in an emergency.“I believe our control room operators aremore confident and competent as a result.”

That confidence has had a major impacton safety. “We’re extremely proud of oursafety and operations audit, where weshowed that we’re in the top-five operatingsites, in terms of safety,” he continues. “We

know how to run plants and people feelsafe coming here with all our procedures inplace, because, in reality, it can be ahazardous industry that we work in.”

This year, the team is focused ondelivering a major turnaround programmeand the 15-year inspection of the ammoniatank – a major component in fertilizer.During that time, the workforce will grow from 350 to around 1,500 people onsite.

The future looks very bright for Saltend,and if you ever get a chance to see the siteby night, it’s said by local children that itresembles a fairy princess’s castle. It’s thatkind of enthusiasm and wide-eyedoptimism that has helped drive thetransformation. “The site is brilliant. I stillget really excited by it,” says Bowlas. “If Idrive past it at night, the view from theflyover is magic, it gives me real pride.” ■

Business report> Hull Fairy castle: when the Saltendsite is lit up at night, local

children refer to it as a fairyprincess castle.

“At the bottom of a global recession, our businessperformance gives us an incredible amount ofconfidence for the future. We have given a steadystream of returns back to BP over the past three years.”Frédéric Baudry

Matthew Bates / instrument/electrical engineerIt’s always nice to earn formal recognition for a job well done, but it’s quite rare to meet someone so modest abouttheir achievements. Matthew Bates is one such rarity. A graduate instrument/electrical engineer at BP Hull, he wasawarded ‘Outstanding Young Achiever in Education and Business’ in recognition of his journey from apprenticeshipto first-class honours degree at the Hull Business Awards in 2009. It is the fifth accolade he has won over the pasteight years. “Two other people made the finals and I felt bad that I had won,” he says. “I felt like I had already had mymoment. One is enough to give you a boost, although it is nice to keep being recognized.” Matthew joined BP’sQuartz apprenticeship programme shortly after being medically discharged from the army in 2001. Described by hisformer line manager as ‘an inspiration’, Matthew is full of praise for those who have helped him along the way: “I amreally grateful to the training coordinators, supervisors, engineers and managers who have made, and continue tomake, time for me. I have some fantastic mentors who have been selfless and pushed me on.” ■

AN INSPIRED CHOICE

Photography> Graham Trott BP Faces


Viewpoint> Castrol technology


There is no sign of the usual motorbiking hallmarks – the leathers or the helmet. But, then again,this is a rider for whom normal rules do not apply.

Meet Castrol’s SMC2000 robot rider, nicknamed ‘Flossie’. Developed by Stähle GmbH, as a toolto help test the performance of Castrol’s synthetic oils. This high-tech computer-controlled robothas proved invaluable for differentiation tests at BP’s fuels and lubricants UK Technology Centreat Pangbourne, UK, home to Castrol’s motorcycle research and development facility.

The SMC2000 can be fitted onto any bike or scooter for testing on Castrol’s chassisdynamometer, a rolling road that measures a vehicle’s output. The robot plays a key role in demonstrating the core performance benefits of Castrol’s four-strokemotorcycle product range, such as increased power or increased acceleration.

With its human-like drive style and high levels of repeatability, the SMC2000 is equipped witha self-learning mode and is able to learn the subtle changes in clutch feel, throttle response andgear change pattern. As the ultimate precision rider, it will perform the same gear change or sameacceleration time after time. This ability to reproduce identical inputs enables Castrol to repeatperformance tests without variation, thus ensuring reliability of data for oil-to-oil evaluations.

There are other benefits, too, of turning to a robot rider for testing. The robot operatesflawlessly for long periods of time in extremes of temperature and has no objections to the noiseof the bike in the testing chamber, as its engine roars at speeds up to 16,000 revolutions perminute. Neither tiredness nor saddle sore pose a problem for ‘Flossie’ and, most importantly, therobot is a safe rider. ■REPORT: AMANDA BREEN

Easy rider


PHOTOGRAPHY: RICHARD PRICE / ILLUSTRATION: MAGIC TORCH


➔ exploration + production Country report> Argentina

Natural habitat: the flightlessGreater Rhea is the largestliving American bird and can befound in eastern parts of SouthAmerica. Here is one picturedin PAE’s Cerro Dragón field.


Report> Paula KolmarPhotography> Marc Morrison

A NEW LEASE

OF LIFEIt may come as a surprise to learn that Argentina

has been producing oil and gas for almost acentury. But with steady investment, newtechnology and an inclusive approach to

tackling the challenges of a mature field, BP’sArgentine joint venture – Pan American Energy

– is not only boosting existing production, butalso accessing previously untapped resources.

Argentina> Country profile


kmkm 400400200200ARGENTINA

BRAZILBOLIVIA

PARAGUAY

URUGUAY

CHILE

GSJMARINA

CHILE

SANTA CRUZPROVINCE

CHUBUTPROVINCE

CERRODRAGON

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KOLUELKAIKE

BUENOSAIRES

BahiaBlanca

Rio Gallegos

Mendoza

Corrientes

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GOLFOSAN

JORGE

Buenos Aires, the ‘Paris’ of South Americaand capital of Argentina, sits on awaterway far to the north and provides anextraordinary contrast to the harshenvironment of Patagonia. Host to a richmixture of European influences, BuenosAires is where the flamboyant, seductivetango was born and thrives today in streetcafés and hotels alike.

Tango is also used to describe the essenceand balance of Argentina: push and pull,ebb and flow, cold and hot, tundra andforest, rich and poor, colourful andcolourless. This contrast with balance,where opposites attract in everythingimaginable, is perhaps most evident in theold-yet-new wells of Cerro Dragón, theprime acreage of Pan American Energy(PAE), a joint venture 60% owned by BP and40% by Argentina’s Bridas Corporation,with headquarters in Buenos Aires.

Cerro Dragón is an oilfield that capturesthe imagination: an ageing dragon quietlyslipping out of memory, brought back tolife by a powerful potion, a mixture of

Vital statistics:

Name: Argentina Area: 2,780,400 square kilometres (1,073,518 square miles)Population: 40,913,584Life expectancy: 76.56 yearsCapital city: Buenos AiresClimate: mostly temperate; arid insoutheast; sub-antarctic in southwestLanguage(s): Spanish (official), Italian,English, German, FrenchReligion(s): nominally Roman Catholic 92%(less than 20% practising) Currency: Argentine peso Major industries: food processing, motorvehicles, consumer durables, textiles,chemicals and petrochemicals, printing,metallurgy, steel

modern ideas and belief. More robust andvigorous than ever in its 50 years ofproduction, it is preparing for a long,sustainable future. Thirteen years ago, in1997, Cerro Dragón was a mature oilfield,using decades-old equipment, lifting oil at adeclining rate, long past peak production,when it helped meet the energy demandsof Argentina. Today, production is on agrowth curve, as are proven reserves, andthe future looks unstoppable.

Covering 1 million acres in theprovinces of Chubut and Santa Cruz, thetundra-like terrain of Cerro Dragón isremote and unique. As the existing wellsmatured, energy companies turned to otherareas of production. Interest in revivingCerro Dragón came to pass in 1997, whenPAE was created to introduce newtechnology, fresh ideas and freedom to trycreative solutions on old problems.

PAE’s pursuit of Cerro Dragón’suntapped potential has grown to producealmost 150,000 barrels of oil equivalent perday (boed). “We are proud of these »

Fierce winds whip across the treeless hills and desolate flatlands of Argentina’s oil andgas region in Patagonia. Surrounded by the South Atlantic Ocean, the frozen Antarctic,majestic Andes Mountains and the bewitching city of Buenos Aires, the oil-rich GolfoSan Jorge (GSJ) basin offers up black gold – but does not yield it easily. For those boldenough to tackle the challenges of reviving oil and gas fields producing since a welldrilled for water in the early 20th century first lifted oil, the rewards are vast.


Colourful life: a young boy admires asoldier in the Plaza San Martin (left); a

worker at the Cerro Dragón field (below),and the latest recruit stands guard at the

Cerro Dragón drilling rig (bottom left).

Did you know?

● Argentina means ‘land of silver’● It is the second largest country in South

America and eighth largest in the world● The gaucho is the equivalent of the US cowboy ● Measuring 6,960 metres (22,830 feet) in height,

Mount Aconcagua is Argentina’s and SouthAmerica’s highest point

● Cerro Dragón is one of the largest shallow oiland gas fields clustered in southern Argentina.


important numbers,” says Felipe Bayón,chief executive officer of PAE. “They reflecta doubling of production and reserves overthe past 10 years.”

“Many factors are critical to success, butthe key,” says Alberto Gil, chief operatingofficer, “is the management style of thecompany. People are encouraged to createsolutions for finding and developing newresources.” Encouraging people to learnabout and use new technologies, such as3D seismic assessments, well completiontechnology and common processes formanaging waterfloods, is breathing newlife into Cerro Dragón and Argentina’senergy sector.

“Encouraging input and ideas fromPAE’s employees made the difference.Without that, the investment in newtechnology would not have been enough tomake Cerro Dragón what it has become in2010,” says Bayón.

Today, 7,000-8,000 people work atCerro Dragón daily, at all levels ofoilfield development, from new

exploration and drilling projects, toproduction operations and expansion ofsupporting infrastructure. By adding anaverage of 200 new wells per year, andinvesting hundreds of millions of dollars in2009 and 2010 in waterflood andinfrastructure projects, PAE anticipatesgrowing production far into the future.

The company has entered into anagreement with the provincialgovernments to extend its rights to developCerro Dragón in the Chubut and SantaCruz provinces through to 2027, with anoption to extend out to 2047. This hasstimulated investment, including apromising effort in the shallow waters ofoffshore GSJ, where PAE holds a 2 million-acre exploration concession.

Overall, PAE plans to invest $800 millionin 2010, following $700 million spent in2009. Regarding offshore investment, ChrisWilliams, vice president for resource atPAE, says that, “initial seismic analysisappears to indicate viable potential fordevelopment. The area is still underassessment, but the effort reflects PAE’songoing commitment to finding newhydrocarbons in this rich basin.”

Producing since 1958, Cerro Dragón isan old field. Until PAE began updating theequipment for lifting oil and finding newresources, production was low andadditional caches were impossible tolocate. “Pumping stations at each well werepowered by internal combustion engines,lifting around one-fifth of the capacity ofCerro Dragón’s new electricity-powered

“Many factors are critical to success,but the key is the management style ofthe company. People are encouraged to

create solutions for finding anddeveloping new resources.”

Alberto Gil

»

Tango magic: a professional dancecompany presents tango demonstrations

in a section of Buenos Aires called La Boca(opposite). Cerro Dragón is so big that PAE

provides many of its own emergencyservices. Here, firefighters practicetechniques at the training facility.


facilities,” says Federico Caldora, GSJoperations manager. “Today’s assessmenttechnology enables us to go beyondreviving the field and enter new reservoirs.

“What we accomplish now inproduction and proven reserves paints anew face on the old field. Existingproducing wells run at a very high rate ofefficiency. Re-entry into old wells usingnew waterflooding methods we developed,captures previously unreachable oil. Newwells are tapping into reservoirs unknownbefore high-tech seismic studies.” Old,refreshed, new: tango in Cerro Dragón iscreating a new balance.

Production was tremendously enhancedwith the decision to produce gas from theTres Picos gas field, located beneath CerroDragón. “On the surface, we have built agrassroots infrastructure for productionand transportation of Tres Picos’s gas, whilesubsurface teams vigorously explore, usingnew information only possible with today’stechnology,” says Rodrigo Dalle Flore, GSJproduction leader.

“In earlier days, it was believed thatthere weren’t the gas reserves to justifybuilding an entire production business,”says Caldora. “The decision to develop thegas field has opened vast economicopportunities.”

Management seeks ideas fromemployees about where to find the reservesand how to access and transport theproduct. This method has motivated

people, says Flore. “The focus on teamworkand shared decision-making brings newenergy to planning, drilling, completionsand production.”

Investments have paid off. Tres Picos,after only nine years, is one of the largestgas-producing fields in Argentina. Itaccounts for around 5% of the country’s100 million cubic metres of daily gasproduction. Exploration is ongoing, neverstopping and PAE’s production numberschange with every new gas well.

“To capture an accurate value at TresPicos and Cerro Dragón is like taking aphotograph of flowing water. By the timethe picture is in hand, the content nolonger reflects reality,” notes Bayon.

Electrification came to Cerro Dragónin 2001. Replacing the internalcombustion engines at PAE’s 1,700

wells with electric ones required 84megawatts (MW) of power. At this point,the company made the commitment tobecome a self-supplier of electricity.

Converting to electrical pumpingequipment was a major step towards liftingoil at a higher rate and in a moreenvironmentally-friendly manner.

“In fact, it was a watershed event for thehydrocarbon industry in Argentina,” saysBayon. “Automation followed electricalconversion and put Cerro Dragón at theforefront of Argentina’s hydrocarbontechnological development.”

History: Spanish and Portuguese sailorscame to Argentina in the early 1500s,displacing the Inca Dynasty. Since then, thecountry has swung between democraticgovernments trying to modernize thecountry to unhealthy feudal systems.During the past 100 years, Spanish andItalian immigrants flooded the country,giving it a distinctly European flavour. Themid-1900s saw the rise and fall of Juan Perón,and Eva (the famous Evita) followed bymilitary dictatorships (junta). More than 25 years of democracy have passed since thelast junta fell.

Trade: Argentina benefits from richnatural resources, an export-orientedagricultural sector, and a diversifiedindustrial base. Soybeans, livestock, grapes,wine, oil and natural gas are among the topresources in consumption and export.Recent years have seen Argentina developits vineyards and wineries: Malbec is ahighly-valued wine among exportedproducts. Its main trade partners are Brazil,China and the US.

People: Heavily influenced by Europeanarchitecture and culture, Argentines takepride in their heritage. Globally recognizedas the home of the tango, the country,particularly its capital Buenos Aires, feels itsblended rhythms most in the music andlyrics. Patagonia, with its desolate beauty ofglaciers and penguins, colourless landscapedotted with goats and rigs, is another face ofArgentina. Still richly European, but naturedictates the expression of passion, not thegiant cities of Italian influence.


Rich blend: From left to right, a gauchoperforming their traditional dance calledEl gato; at work in the compressionstation in the Cerro Dragón field; thetomb of Carlos Gardel, Argentina’s mostfamous tango singer; and inside one ofthe schools that PAE supports.


Turbo-generators are connected to anintegrated electric assembly withgeneration, transmission and distributioncapability boosting efficiency of the powersystem.

Growing its current number of 2,500wells by 200 per year is logisticallycomplex. The integrated electric systemenables automation. “PAE monitors andcontrols production in Cerro Dragón fromremote operation centres and integratestailor-made systems. The result is PAE’sown version of ‘the field of the future’ and astep change in operational efficiency,making Cerro Dragón the most technicallyadvanced oil and gas operation inArgentina,” says Caldora.

“Going to self-sufficient electricitygeneration multiplied production capacity,enabled automated well management, andreduced emissions dramatically,” Gilemphasizes.

Not just alive, but thriving and growing,like a well-nourished flower in a dry land,Cerro Dragón has the vitality necessary tocontinue redefining its future, whilemaking huge strides in moving Argentina’senergy industry forward.

Comodoro Rivadavia is a benefactor ofthe advancements of Cerro Dragón. Thepopulation has just about doubled to260,000 in a few short years, withemployment opportunities for newengineers as well as well-trainedtechnicians. As any community expands,

however, so must the availability forhealthcare and education, along with thesmall and medium-sized businesses thatsupport the city – from banks, hospitalsand schools to entertainment, shops andconstruction. PAE is very active in this area,focusing on health, education, work,environment and local development.

Originally a port town, ComodoroRivadavia was named in honour ofshipping minister Martín

Rivadavia, a proponent of the developmentof southern Argentina. It has beenprosperous since 1907, when a drillingcrew searching for water struck oil at adepth of 540 metres (1,800 feet). It sits onthe inlet of the GSJ of the Atlantic Ocean,with pebbled beaches and Argentinefishing boats dotting the marine-richwaters, and is a vital part of Argentina’s oiland gas development. Many of the peopleworking at Cerro Dragón live inComodoro, most of the new employees andcontractors are educated at the localuniversity, and some of the suppliers forthe oil and gas wells are based there.

“We identify the needs of the region andstructure programmes, which we developjointly with local organizations that havethe know-how and awareness of localregulatory authorities,” says MonicaGaillard, coordinator of the company’scorporate social responsibilityprogrammes. “This strategy has allowed

PAE to provide ongoing support for thecommunity to achieve changes andimprove the quality of life.”

Long-term change starts with educationat all stages of life. “Students are thebackbone of the educational programme,”says Gaillard. “Students from familieswithout resources often choose to leavehigh school before graduating, thuspreventing them entry into any Argentineuniversity and the cycle of povertycontinues. During 2008-09, PAE helped 160students complete their high schooleducation.”

The benefit to the community is greaternumbers advancing into universityeducation, where the company grantsscholarships to aid college students.Currently, 63 young people are supportedby PAE scholarships, with an emphasis onengineering.

Building school infrastructure forexpanded high school studies andtechnical schools also falls into PAE’s valueassessment. One such location in a poverty-and crime-ridden area of ComodoroRivadavia recently held its first classes in anewly-built section, sponsored by PAE. Theschool is particularly important because ofits founder, Padre Juan Corti. Born in Italyin 1925, he came to Argentina in 1948 toconclude his studies and begin his work tohelp a suburb of Comodoro educate andinspire its youth. He is there today, proud ofthe new structure that will open the doorof education to many who are in desperateneed of improvement. Padre Corti startedon a mission more than 50 years ago, whenCerro Dragón was brand new, and, sincethen, more than 50,000 young people havestudied at the five schools he founded inthe city.

Growing together, thriving in the face ofadversity, redefining a healthy, productivesustainable future in Argentina, CerroDragón, PAE and the GSJ region are makinga future where every participant has theopportunity to prosper – just like an olddragon revived brings colour to a desolatelandscape. ■


➔ BP sponsorship London 2012 Olympic & Paralympic Games


Report> Amanda BreenPhotography> Stuart Conway/Simon Kreitem/Richard Price/

Portraitcollective>Jake Morley

THEMAGICTOUCHWith Beijing and Vancouver all over, the next stop onthe Olympic and Paralympic circuit is London. It maynot be for another two years, but plenty of work isalready underway to ensure that the magic of theGames touches as many people as possible. As anofficial partner, BP is playing its part to make certainthat London 2012 will be a Games to remember.

Golden memories: teenage BritishParalympic champion Eleanor

Simmonds (left) shows off her twogold medals at a Heroes Parade in

London in 2008. Right, double Olympicgold medallist Dame Kelly Holmes

has set up a Trust to help youngpeople reach their full potential.


With fewer than850 days to go until the Games of the XXXOlympiad open in London in July 2012,plans are on track to deliver whatorganizers hope will be a memorablesummer in the British capital for everyoneinvolved. While construction of newvenues and infrastructure gathers pace inthe city, people, communities andorganizations across the country aregetting involved in the preparations.Indeed, for many, the Games are alreadycoming to life.

As an official partner of London 2012, BPis lending its full support and offering itsexpertise to the London OrganisingCommittee of the Olympic and ParalympicGames (LOCOG). One of the largestpartnership projects to which BP has put itsname, the Games represent an unrivalledopportunity for the company to project itsbrand on a global stage, as well as engagewith employees, new and existingcustomers and partners.

the Games, a premier partner of the CulturalOlympiad, as well as a sustainability partner,is at the forefront of that plan.”

Together with the Games’s officialautomotive partner, BMW, BP will deliver arange of mobility solutions for the Games.In addition to supplying advanced fuel andlubricants for more than 4,000 officialvehicles, BP will offset the carbonemissions through its targetneutralprogramme.

London is the first summer host city toembed sustainability into its planning fromthe start, with the aim of creating positive,lasting change for the UK once the Gamesare over. The desire to build a significantlegacy has been a driving force fororganizers, and BP has embraced the conceptthrough its role as a sustainability partner.

Shared values lie at the heart of thispartnership for BP. Both the Olympics andParalympics symbolize the mobilization ofhuman energy to achieve outstandingperformance – that same concept has beencentral to the company’s long history.

“A theme that comes through veryclearly to us as we start to develop ourLondon 2012 programmes is the notion of‘performing beyond’,” explains MikeSharrock, BP’s partnership director forLondon 2012. “It’s a fundamental ideawithin the Olympic and Paralympicmovement; athletes work continually toimprove and to achieve extraordinaryperformance, really pushing theboundaries of their field. And that is at thevery core of BP’s agenda – we have beenoperating at the frontier and making adifference for the past century.”

Becoming part of the Olympic andParalympic family has presented an array ofopportunities for BP to pursue, but it hasbeen crucial to position its partnershipactivities wisely, in areas that make sense forthe Group. “This is a unique opportunity forus,” Sharrock continues, “and we haveconsidered our supporting role deeply. Werecognize the importance of creating atangible and credible plan for BP, and ourposition as the official oil and gas partner of

Trading places: students takepart in BP’s Enterprise TradingGame, which has been adaptedto centre on the values thatunderpin the Olympic andParalympic Games.

“Athletes work continuallyto improve and achieveextraordinary performance,really pushing theboundaries of their field.And that is at the very coreof BP’s agenda – we havebeen operating at thefrontier for the pastcentury.”Mike Sharrock

BP sponsorship


the value of creativity and why cultureinspires and excites audiences of all ages,”says Ruth Mackenzie, LOCOG director ofculture. “With its outstanding record ofsupport for many of the UK’s world-classinstitutions, such as Tate and the BritishMuseum, BP has vast experience in bringingart and culture to life in this country.”

A major part of the Cultural Olympiad isthe London 2012 Open Weekend.Supported by BP, this annual UK-widecelebration marks the countdown to theGames, with community arts, culture andsporting organizations invited toparticipate. In 2009, there were more than750 events, where the public took to stagesand playing fields across the UK to getinvolved and try something new.

“What I find inspiring about the OpenWeekend is that it’s about people who startout with a great idea,” Mackenziecontinues. “Last year, my favourite eventsincluded a dance display in Bradford,Yorkshire, involving 2,012 participants andhip hop Shakespeare workshops onLondon’s South Bank. So far, more than 1 million people have taken part, but thisyear, we’re asking people to beat theirpersonal best, with a theme of ‘challenge’.”

Sportsmen and women who rise to thechallenge, in their chosen sport, at theGames in 2012 will no doubt inspire thenext generation to strive for excellence. Inorder to harness the power of the Olympicsand Paralympics, LOCOG has createdprogrammes and initiatives especially forchildren and young people. Again, this isan area where BP recognized a clear link,with its long-established UK educationalprogramme.

The company’s support for world-classscience and technology teaching, togetherwith leadership and enterprise skills, made

it a natural choice to team up with theGames’s official education programme, GetSet, according to Nick Fuller, head ofeducation for LOCOG. “We were incrediblykeen to join forces with BP on education,which we’ve always known would be acentral feature for London 2012,” he says.

“Our vision is to inspire young people,not just in the UK, but around the world.When Pierre de Coubertin revived theGames in the late 19th century, heidentified education as an essential part ofthe modern Olympics, due to the positivevalues he believed sport inculcated inyoung people.”

“We see a key role in delivering part ofthat legacy,” says Sharrock. “In terms ofmobility, that’s about using the Games toinfluence behaviours and, throughtargetneutral, encouraging the millions ofspectators who are travelling to events tothink differently about their choices and toinvite them to consider more sustainablesolutions.”

The London 2012 partnership provides ashowcase for the Group to demonstratehow it makes a difference, in its traditionalfields of business and beyond. UK retailsites will reflect the build-up to the Gameswith special promotions and marketingcampaigns that will allow BP to connectwith customers and communities.Meanwhile, BP’s wider support for theGames concentrates on areas where thecompany already has a strong track record.With its long-standing and extensive arts,cultural and education programmes,signing up as a premier partner of theCultural Olympiad was an obvious step,according to Sharrock.

“It’s such a natural fit and we’ve beenable to work with LOCOG to help bringalive the idea that the Games is about morethan just a few weeks of elite sport; that it’salso a four-year celebration of art andculture across the UK and BP’s role is tosupport LOCOG so that millions of peoplecan get involved.”

When the Olympics were last held inLondon in 1948, culture was givenprominent status – medals were evenawarded in five artistic categories, includingpainting and sculpture, for works inspiredby sport-related themes. More than 60 yearslater, organizers are putting this elementback into the heartbeat of the Games.

“It’s hugely important for us to have apartner like BP, a company that understands

An inspiration: Lord Coe at an internal BP launchof the Young Leaders Programme (above). Onehundred BP staff will act as coaches to youngdisadvantaged people. Top left, members of thepublic take part in a hip hop Shakespeare sessionduring the 2009 Open Weekend.

“It’s hugely important forus to have a partner likeBP. With its outstandingrecord of support formany of the UK’s world-class institutions, such asTate and the BritishMuseum, BP has vastexperience in bringing artand culture to life.”Ruth Mackenzie

»


Why did the Trust choose tosupport this programme? We saw it as a natural fit with the work ofmy charity. We use elite sports performers,many of whom are Olympians andParalympians, to inspire young people tofulfil their potential in sport and in life.Making the most of the athletes’experience to support the young leaderson this programme seemed a great way ofbringing the magic of London 2012 to life.

What is the Trust’s role indelivering the programme?We have been contracted by BP, alongwith v, to act as a delivery partner. We’llproject manage the programme and, in thefirst instance, this has meant liaising withlocal authorities across the UK to recruitthe young people who will benefit fromthe programme. We’ll also be providingelite sports performers to work with theyoung people as athlete mentors. Verysoon, we’ll be recruiting these roles andwe expect the competition to be fierce.

In your experience, howsignificant can the guidance of rolemodels be in young people’s lives? I think everyone, at different points intheir life, needs a mentor. For many youngpeople, it’s someone to look up to andbelieve in, or someone to believe in them.I have seen this over the past six yearswith my On Camp With KellyProgramme, through which I mentor 45elite junior international middle distancerunners. I have no doubt that many ofthem probably would not be where theyare now, just on the verge of breakingthrough into senior competition, if theyhadn’t had some help with the variouschallenges a young athlete faces.

It was seeing the impact a goodmentoring process can have on a youngperson’s life that made me want to set upmy charity, so that more young people canbenefit from support.

Who have been the role modelsthat have made an impact on your life?As a young athlete, I looked up to Seb Coe.It was after watching him win gold at theLos Angeles Games in 1984 that I wantedto be an Olympic champion. Twenty yearslater, I realized that dream, not once buttwice, when I won the 800 metres and1,500 metres in Athens.

So, Seb was a strong influence, but,obviously, I didn’t get the chance to bementored by him, unlike young peopletoday who have such an opportunitythrough the Trust. One of my real mentorswas my coach, who always seemed to beable to say the right things to spur me onand stay motivated, even when thingswere not going well.

With fewer than 850 days to go now until the Games open inLondon, from your work withyoung people, how engaged doyou sense they are with ourforthcoming Olympics? Certainly all of the young people I meetare excited about the Games and whatthey will bring. But I think programmeslike Young Leaders will really help inmaintaining this excitement and ensuringit spreads right across the UK, not just inLondon and the south.

We often hear about the ‘magic’ ofthe Games; what do you think willbe special in London?I think our Games will offer something foreveryone. As well as the sporting eventsand the atmosphere created by the passionof performances in stadiums and at venues,our diverse culture should shine throughwith art, music and dance acts putting ondisplays around the country. I reallybelieve that when July 2012 comes,wherever you are, you’ll feel thatsomething special is happening, inspiringfuture generations for many years to come.

The 2012 Young Leaders Programme is a partnershipbetween LOCOG, BP, v – the national youngvolunteers service – and the Dame Kelly HolmesLegacy Trust. Here, the double Olympic championexplains why her charity got involved.

➔ To find out more about the Dame Kelly Holmes Legacy Trust, visit: www.dkhlegacytrust.org

LEADING BY EXAMPLE

With this in mind, LOCOG launched itseducation programme early. “We felt it wasan incredibly effective way of taking themagic of 2012 out to the nation andregions,” Fuller adds. Today, more than halfof the country’s schools and colleges areregistered with the programme, and manyhave made use of the BP Enterprise TradingGame, a resource that brings the oil businessto life, and which has been adapted to centreon the values that underpin the Olympicand Paralympic Games.

Created by BP’s educational consultancy,EdComs, the simulation game not onlydevelops core disciplines, such asmathematics, it promotes teamwork andproblem-solving skills. As Rob Kitson,director of live resources for EdComs, puts it:“Students love it, as the game is unlikenormal classroom activities. They assumedifferent roles in the team and makedecisions on whether to buy or sell oil, basedon a series of news bulletins. The team withthe most money at the end wins.”

BP’s Enterprise Trading Game hasalready been experienced by hundreds ofchildren. Another London 2012 project


BP sponsorship

designed to energize the youngergeneration is the Young LeadersProgramme. In the bid to become the 2012host city, London made the commitment tosupport 100 disadvantaged young peopleon an intensive personal developmentjourney, which culminates in them playinga significant role in the Games.

Launched earlier this year, theprogramme sees BP team up with v – thenational young volunteers service – theDame Kelly Holmes Legacy Trust andLOCOG to develop the participants’leadership and communication skillsthrough training and projects that helptheir local communities. The young peoplewill be supported by a number of high-profile athletes and 100 BP employees fromfour UK sites.

According to Dame Kelly Holmes,Britain’s double Olympic athleticschampion, the programme is very special.“I hope the journey the young people goon, the people they meet, the challengesthey face, will help them realize their ownabilities and make it a life-changingexperience. That phrase can be over-used,

but I think this programme genuinely hasthe opportunity to do that,” she says.

Back in BP, employees will enjoy anumber of opportunities to get involved aswell, including the Young LeadersProgramme and volunteering during theGames. Meanwhile, the company’sassociation expanded earlier this year, as itjoined the US Olympic Committee’s familyof sponsors as the official energy partner,and is supporting the 2012 US Olympic andParalympic teams. As a first step, BP will bethe presenting partner at an event inWashington DC when the teams visit theWhite House to celebrate their success inthe recent Vancouver Winter Games.

For both young and old, no matter whatthe nationality, the Olympic andParalympic Games are often a source ofinspiration, as people around the planetcome together to share their appreciationof outstanding human performance.Through its partnership role, BP, its staffand customers will find themselvesincreasingly at the centre of the action, asthe greatest sporting event on Earth headstowards London. ■

“I think everyone, atdifferent points in theirlife, needs a mentor. Formany young people, it’ssomeone to look up toand believe in, orsomeone to believe in them.”Dame Kelly Holmes

New tricks: Lord Coe tries hishand at ballet at the 2009 OpenWeekend (above) and Dame KellyHolmes is interviewed by ayoung journalist at the officiallaunch of the Young LeadersProgramme (top).


Report> Lisa Davison Photography> Richard Davies

KOFIANNAN

AN AUDIENCE WITH

➔ BP Lectu re

It’s not every day that you get to sit in the same roomas a Nobel Peace Prize winner. And yet, an audienceof BP employees and distinguished guests tookadvantage of this rare opportunity in February 2010,when former United Nations Secretary-General Kofi Annan gave this year’s BP Lecture.

Held in the BP Lecture Theatre, in the British Museum,London, the BP Lecture Series was created a decade ago, as away of celebrating BP’s partnership with the museum. Overthe years, speakers have included former South Africanpresident Nelson Mandela and the eminent British scientistSir John Sulston. Each lecture takes a view on the subject of‘world civilizations’.

Like Mandela, the BP Lecture Series’ inaugural speaker,Annan took globalization as his subject matter, and called onthe world’s nations to have the confidence to embracediversity in order to harness its full benefits. “The challenge Iwant to address tonight is how we celebrate and harness thisdiversity for good, while preventing differences hardeninginto entrenched and bitter divides,” he said.

He highlighted the positive effects that globalization canhave, using London as an example: “When the Olympics arestaged in London in two years’ time,” he said, “competitorsfrom every nation will find fellow countrymen and womenliving here to cheer them on. This very diversity is whatmakes London such a dynamic, exciting and successfulcommunity.” »


BP Lecture

But, he continued, while the world hasgrown smaller, it can make the divides – the“inequalities of wealth, influence andopportunity between genders, races andreligions – all the more obvious and painful.”

While conflicts between countries havebecome less common, tension withinsocieties and between cultures has becomemore prominent, Annan noted, saying: “Weseem to be in danger of creating an age ofmutual distrust, fear and protectionism.”

However, he urged that nations worktogether to overcome resentments andestablish relations of trust betweencommunities by promoting “dialogue,respect, tolerance and understanding”.

It is this desire for dialogue that led toAnnan and the United Nations (UN) jointlywinning the Nobel Peace Prize in 2001 “fortheir work for a better organized and morepeaceful world”. Appointed as the seventhUN Secretary-General in 1997, Annan wenton to serve two terms in office, until 2006.During his tenure, he oversaw acomprehensive programme of reform, aimedat revitalizing the UN, and was a constantadvocate of human rights, overseeing thecreation of two new intergovernmentalbodies – the Peacebuilding Commission andthe Human Rights Council. He also played acentral role in the creation of the GlobalFund to fight AIDS, tuberculosis and malaria,and his Global Compact initiative, of whichBP is a member, has become the world’slargest effort to promote corporate socialresponsibility.

Today, he heads up the Kofi AnnanFoundation and continues to use hisexperience to mediate and resolve conflict.In 2008, he led the African Union Panel ofEminent African Personalities to help finda peaceful resolution to the post-electionviolence in Kenya.

Unsurprisingly, therefore, responsibilitywas a key theme in Annan’s lecture:“Globalization will not bring peace orprosperity unless we all share fairly in itsbenefits, and to regain legitimacy, theglobal economy must be guided by anethical framework that addresses the grossinequalities in our world and meets thebasic needs and aspirations of peopleeverywhere.”

Education is the lynchpin to thesuccessful elimination of theseinequalities, said Annan, highlighting theparticular importance of eliminatingdiscrimination against girls and women.

He called on political leaders to raiseawareness, on faith leaders to be ready toemphasize the common values betweenreligions, and on business leaders to ensurethat enterprise creates opportunity, not justfor economic growth but also for socialcohesion. And, he said, “freedom ofexpression must be cherished, whileworking with the media to prevent it frombeing used to spread hatred, inflicthumiliation or incite violence.”

Annan also spoke of the importance ofuniversal values and how they obligeindividuals to show the same respect andsensitivity for people of other communitiesas they would expect to receive themselves.“Universal values do not mean an end to

diversity,” he said, “their function is not toeliminate differences, but to help us managethem so we all benefit. The overwhelmingmajority of people share the same decentvalues and ambitions for their families andcommunities. They want to live in peace,reject extremism and violence and supportcultural and religious diversity.”

At the end of his lecture, Annan oncemore invoked the series’ inaugural speaker,declaring that “if we need encouragement,we need look no farther than theachievements of the individual whodelivered the first BP Lecture.”

Released from prison 20 years ago, into asociety Annan described as “seeminglyirreversibly split by the evil of apartheid”,Nelson Mandela went on to become SouthAfrican president and to ensure that the“explosion of violence” that many hadconsidered inevitable at the time of hisrelease did not happen.

“He is a man who understands the valueof dialogue and tolerance, of respecting ourdifferences, but celebrating what we holdin common,” said Annan. “Thanks to hisextraordinary leadership, vision andcourage – and a yearning for peace amongall the people of South Africa – this terriblefate has been avoided. If we can find in ourhearts the same qualities, we too can bridgethe divides in our world.” ■

» “Globalization will not bring peace or prosperityunless we all share fairly in its benefits, and toregain legitimacy, the global economy must beguided by an ethical framework that addresses thegross inequalities in our world and meets the basicneeds and aspirations of people everywhere.”Kofi Annan

Top 5 mostprolific basins

Factfile

TNK-BPBP’s share of productionfrom its 50/50 jointventure with Alfa-Access-Renova totalssome 940,000 barrels ofoil equivalent per dayfrom Russia. Formed in2003, TNK-BP hasa diversified upstreamand downstreamportfolio in Russia andUkraine, whichincludes productionfrom the giantSamotlor field (above).The company alsooperates a retailnetwork ofapproximately 1,400 filling stations in Russiaand Ukraine.

North AmericaonshoreBP’s North America Gasand Alaska businessestogether producearound 680,000 barrelsof oil equivalent everyday. BP operates 15oilfields on Alaska’sNorth Slope, includingPrudhoe Bay, which wasdiscovered in 1968 andis the largest oilfield inNorth America.Meanwhile, BP hasbecome the numberone producer of naturalgas in the US, supplyingaround 4% of total USconsumption.

North Africa,Middle East & Caspian This combined areaproduces around570,000 barrels of oilequivalent every dayfor BP. The companyhas been in Azerbaijansince 1992 and hasbecome the largestforeign investor in thecountry. BP’s roots lie inthe Middle East region,with its very first oildiscovery in Persia,back in 1908, and in the past five years, it has forged newpartnerships within theregion, including withOman, Libya andJordan.

Trinidad and TobagoThe Caribbean islandstate adds 460,000barrels of oil equivalentper day to BP’sportfolio, almost all ofwhich is gas. BP hasoperated in Trinidadand Tobago for almost50 years and hasbecome the largestenergy company andlargest foreign investor.BP operates 16 offshoreplatforms and holds anaverage workinginterest of 39% in theAtlantic LNG facility,which operates fourliquefied natural gastrains.

Gulf of MexicoThe US Gulf of Mexicoaccounts for around440,000 barrels of oilequivalent of BP’s dailyproduction.Developments intechnology have helpedBP push out into ever-deeper parts of the Gulfand in 2009, it drilledits deepest well – Tiber.BP is the top explorer inthe Gulf, having foundmore than 30% of allthe large fields in thepast decade and hasproduction from morethan 20 fields.

1 3 5


For more than a century, BP has worked atthe frontiers of the industry and todayholds leadership positions in some of theworld’s most prolific hydrocarbon basins.

Source: BP’s 2010 Strategy Presentation

➔ a r t s + c u l t u r e Mexican celebrations> Day of the Dead


In November 2009, the British Museum played host to avery special event – a celebration of El Día de los Muertos, orDay of the Dead. Celebrated by Mexicans around the worldon 2 November, it is a day when souls are honoured withbeautifully decorated altars, laden with favourite foods andbeverages, as well as memorabilia, of the departed. These

altars are said to guide spirits back to Earth for a brief visit with those they leftbehind. Supported by BP, the event was part of a season of exhibitions and eventsheld at the museum to celebrate Mexican culture. The day attracted a staggering31,000 visitors. So many, in fact, that the museum gates had to be closed severaltimes throughout the day. BP Magazine went along to capture the spectacle.

CELEBRATING


Report> Lisa Davison Photography> Richard Davies

LIFE&DEATH“It was wonderful to see how the daywas enjoyed by visitors, and to see thecommitment from so manycontributors to the event – performers,dancers, musicians, speakers, face-painters and so on – to ensuring a goodtime was had by all. A huge amount ofeffort goes into these family days, butthe positive comments on the day, andfeedback afterwards, show theenormous impact they have.”

Joanna Mackle, director of publicengagement at the British Museum


Mexican celebrations> Day of the Dead

“The Day of the Dead celebrations at the British Museum were hugely successful,with visitors of all age groups coming together to remember ancestors and enjoythe carnival atmosphere. My highlight was the fantastic parade through the GreatCourt, but across the museum it was terrific to see visitors engaging with thecollections and thinking about the way different cultures approach death and theafterlife. I am very grateful to BP for enabling us to host such a fabulous day.”

Neil MacGregor, director of the British Museum


Mexican celebrations> Day of the Dead “The festival organized around El Día de losMuertos at the British Museum captivated thehearts and minds of more than 31,000 people,who enjoyed one of the most originalMexican traditions.”

Ignacio Durán, minister for Cultural Affairs,Mexican Embassy to the UK


“The focus on Mexico over several months at the British Museum – includingthe Day of the Dead – helped bring an understanding of Mexico, its culture,history & traditions to many hundreds of thousands of people. The Day of theDead has deep respect for death, but it is also a sign of respect for what comesbefore death: life. It is a celebration of Mexicans’ belief in living life to the fullest.It is that passion for life that contributes to making Mexico such an attractivecountry from a cultural perspective, but also from a business perspective.

“Goldman Sachs, for example, has estimated that, by 2040, Mexico will be thefifth largest economy in the world. In 2008 alone, UK companies invested alittle more than $7 billion, making the UK the third-largest investor in Mexicolast year. And since 2000, UK-Mexico trade has increased by more than 120%.The British Chamber of Commerce in Mexico has also been a key player inthe growth of bilateral trade and investment relationships. Chambermembership has grown more than 25% over the past four years; anotherindicator of what is happening.

“BP has invested in the dynamic and passionate Mexican economy for thepast 50 years – early-on, through our Castrol brand, and, more recently,through a number of other activities, including trading in various types of oiland gas, refined products, lubricants and aluminium. We see new investmentopportunities as Mexico’s economy evolves, and recent reforms point to manypossibilities. We see our future as a true long-term partner, investing in agrowing economy, creating jobs, investing socially and sustainably, not just inbusiness.”

Chris Sladen, country head, BP Mexico, and president of the British Chamber ofCommerce in Mexico

Photography BP Archive & BP Hull

TO HULLAND BACK

ARCHIVE

BP has had a presence in Hull since 1967, although its links goback much further thanks to its association with the DistillersCompany, which was located at the Saltend site since 1925. BP Magazine opens up the archive on a great British site.



Opposite: one of the oldest items inBP’s archive, this is an indenture ofco-partnership for 10 years, for thepurchase of a gunpowder factory andmachines at Faversham, Kent, andChilworth, Surrey dated 29 September1793. It now sits in BP’s archive afterthe Distillers Company sold its assetsto BP in 1965. Below: a German aerialmap of the Hull area during theSecond World War.


ARCHIVE

Top: Saltend’s fire station, pictured in the early 1960s.Left: The Distillers Company was formed in 1877 and in1925 acquired a small refinery in Hull, which went onto become Saltend. The plant began production in 1929and became a large supplier of chemicals, most notablyacetone and acetic acid. This is a 1930s spirit safes,used in the distillation process. Above: a fermentingshed in the 1960s.

Left: Queen Elizabeth II is shown around theSaltend control room during a visit to the BP siteduring the 1970s. Top: aerial shot of the site in1924, one year before the Distillers Companymoved in. Above: BP eventually took overalmost all of the Distillers Company’s chemicaland plastics interests in 1967, making it thesecond largest British chemical company afterICI. Here, construction work takes place at theBP site in 1980.



Photographer Marc Morrison captures this young-at-heart couple, as theydance the tango in San Telmo. This is the capital city of Buenos Aires’s oldest‘barrio’ – or district. Every Sunday, an artisan outdoor market is held andvisitors are encouraged to show off their moves. In 2009, tango was declared apart of the world’s ‘intangible cultural heritage’, by UNESCO, alongside 76other ‘experiences’. Other entries include the Chinese dragon boat festival,Holy Week processions in Popayán, Colombia, and France’s Aubusson tapestry.

Parting shot Photography> Marc Morrison

Dance partners

BP Magazine was printed using vegetable based printinginks and low alcohol damping on press. The paper was

manufactured using 50% de-inked post consumer wastefibre and 50% virgin fibre pulp sourced from well managed

forests at a mill accredited for EMAS, ISO14001 and FSC.

BP p.l.c Chertsey Road

Sunbury-on-Thames Middlesex TW16 7LN

United Kingdomweb: www.bp.com/bpmagazine

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The next edition of BP Magazine will be out in June 2010.

PerformingbeyondIn 2012, London will host the Olympic and Paralympic Games and BP will play a leading role throughout.

As the official oil & gas partner and a sustainability partner, BP will help provide a zero carbon mobility solution for over 4,000 official vehicles, including the use of the most advanced fuels and lubricants. As a premier partner of the London 2012 Cultural Olympiad, and through our young leaders and education programmes, we will involve and create a legacy for millions of people. As a tier one partner, BP will also offer a range of opportunities for many employees to get involved.

The Olympic and Paralympic Games stand for the mobilisation of human energy to achieve outstanding performance. This is also at the heart of BP’s own agenda. Our partnership will allow us to celebrate this and demonstrate how BP is a company that operates at the frontier, makes a difference and performs beyond.

BPM

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ISSUE 1 2010

Artwork to appearon white spine.

BP Magazine 2010 Issue1

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Transcript of BP Magazine 2010 Issue1