BP has a portfolio of 45 major upstream projects that it wants to focus on to 2020, company CEO Bob Dudley said Thursday, following the company's unprecedented $38 billion asset sell-off program in the wake of the Macondo oil spill in 2010.
Dudley, speaking to shareholders at the company's annual general meeting in London, said the company would focus particularly on four areas: the Gulf of Mexico; Angola; Azerbaijan; and the North Sea.
"We expect around half our operating cash to come from those four places. There are then a further eight locations around the world where we are also well-established, including the Middle East, the Asia-Pacific region and Trinidad," Dudley said.
He said the projects to be started up in the next five years will have average unit operating cash margins roughly twice the 2011 average.
"We expect to see operating cash flow reach around $30 to $31 billion in 2014, meeting the objective of achieving more than 50% growth on 2011 on a like-for-like basis," he said.
DIVESTMENT TARGET
Dudley said that BP reached its $38 billion target for divestments a year ahead of schedule.
It set the target following the April 2010 blowout at BP's Macondo well in the Gulf of Mexico, which killed 11 workers and set off the largest marine oil spill in US history -- an estimated 4.9 million barrels of oil.
In terms of production, the company over the last two years has shed 500,000 b/d of oil equivalent or 16% of its 2010 production as part of its asset disposal program.
BP said that of the divestments made since April 2010, the company has sold around half its upstream installations and pipelines, and one-third of our wells -- but only around 10% of our proved reserves.
"This has significantly increased the quality of the upstream portfolio while reducing its age and complexity -- and the risks which come with that," Dudley said.
He said BP also had a "very promising" portfolio of exploration leases.
"Since 2010, we have been awarded many new licenses that cover a combined area roughly twice the size of the UK -- a vast area to explore. We have secured more exploration acreage in the last two years than in the nine years before that," he said.
RUSSIAN VENTURE
Dudley also pointed to its new presence in Russia having struggled in recent years because of management disputes at its TNK-BP joint venture.
Having sold its 50% stake in TNK-BP earlier this year to Rosneft, it now has a 20% stake in Russia's biggest oil company.
"Many of you may be asking why BP is continuing to invest in Russia," Dudley said.
In response to his own question, Dudley pointed to three factors: that BP had proved it could work well there through TNK-BP; that Russia has the world's largest reserves and is the largest producer of oil and gas combined; and the potential of Rosneft as a company.
"With the addition of TNK-BP, Rosneft now has a huge portfolio of oil fields, gas fields, refineries and retail networks," Dudley said.
"[Russia] has over four times the combined proved oil and gas reserves of the US. The scope for growth is massive," he said.
"I believe we have turned a problem in Russia into an opportunity."
