British Petroleum: The Global Oil Giant

Abstract

BP, or, British Petroleum as the world knows it, is one of the giants in the oil industry. Initially known as the Anglo-Iranian oil company, BP took on the name of British Petroleum in 1954. Apart from selling fuel and lubricants for transportation, BP also provides petrochemicals and energy in the form of heat and light. Its scope of operation involves exploration and production of oil and natural gas, and also refining, producing, supplying, trading and marketing fuels.

BP operates across six continents: Africa, Asia, Australasia, Europe, North America and South America. BP has exploration and production activities in most of these continents. Apart from producing and selling fuel and lubricants, it also has chemical plants in a few nations. It is the leader of liquefied Natural Gas in China. BP Solar is the leader in installing solar panels in Australia. BP's global headquarters is located in London, and hence financial, legal, trading and other mainstream operations happen here. BP also has a center for Alternative Energy business in Houston.
This oil giant employs over 80,000 people across the world. Its sales and operating revenue stood at $297,107 million in 2010. Its proven oil reserves as of December 31, 2010 were at 18, 071 million barrels of oil equivalent.

BP also has a powerful retail presence in over 80 countries across the world. It sells high quality fuel, lubricants, Liquefied Petroleum Gas, Liquefied Natural Gas, installs solar panels, harnesses wind energy, and has forecourts that sell food and drinks, noteworthy feats accomplished through its 24,100 service stations around the world.

Being one of the powerful oil companies, BP has several opportunities it can work on, in order to remain a giant for posterity. The rising demand for petrochemicals and refined products in China, U.S investments pouring in for alternative sources of energy, and the increase in demand for natural gas in North America are some of the opportunities that BP can cash in on.
However lucrative the opportunities be, a company like BP cannot afford to focus only on the opportunities, and overlook the threat looming over its head. Depletion of resources in the North Sea, increasingly stringent environmental regulations, controversies, criticisms, instability in oil producing regions, site accidents, etc. are some of the threats that the company faces. If BP America is convicted in the Gulf of Mexico incident, it also faces the threat of debarment.

These threats are nothing compared to the breakneck competition that BP faces from companies such as Chevron Corporation, Royal Dutch Shell, Conoco Phillips, Totals S.A, and Exxon Mobil, who keep outperforming BP from time to time. BP's strategy of regaining the top seat involves simplification, but this strategy is not difficult for its competitors to master. Some of the other companies that compete with BP are Marathon Oil, Petron-Canada, BG Group, Repsol YPF, etc.
However, the threats and the competition have not stopped BP from supplying high quality fuel. They introduced a fuel with 'Invigorate' formula in 2008, considered one its biggest product launches. This fuel cleans the automobile engine better, reduces emissions and increases fuel efficiency. BP UK has displayed its uniqueness by tying up with Marks and Spencer to provide food and drinks to the motorists stopping over at the company service stations. BP's brands include Castrol, Wild Bean Cafe, Arco, Amoco and ampm.
BP plans to invest in alternate sources of energy, in order to meet the growing energy demands of the world, estimated to increase by 49% by the year 2030. Hence, it has set up an Alternate Energy business center at Houston, America, and is working towards developing low-carbon energy solutions like natural gas, harnessing wind power, solar energy and hydrogen power.
Despite having massive plans for the future, BP's future looks a little bleak at the moment. The Deepwater Horizon accident that killed 11 people and injured 17 others is under investigation. The company has also recorded losses in the first quarter of 2011 due to this incident. The company's stocks plummeted by 40%, and the company's value came down by $50 million.

The new CEO ,Bob Dudley, has promised to change the situation for the better, but the threat of debarment if convicted, and the peril of losing billions in revenue generated by the company activities in the US, is something that cannot be taken lightly.

- Will BP be able to withstand the test of time, and emerge from it unscathed?
- Will BP be able to do justice to the thousands of shareholders, who have invested their money and trust in it?