Name of the Company: BP (British Petroleum)
Business Sector: Oil and Gas
Operating Geography: United Kingdom, Europe, Global
About the Company: BP is an oil and gas company whose headquarters are located in London, UK. It was erstwhile known as British Petroleum. It is a multinational company and is a “supermajor” amongst the world’s gas and oil companies. The company currently operates in 72 countries worldwide and has an employee count of around 74,500 as per 2016 records.
Revenue: US$183.0 billion (2016)
Competitive Analysis of british petroleum
|1. Strong Operational Performance|
2. Usage of developed technology
3. Global Presence
|1. Oil Spills
2. Near-miss accidents
|1. Potential growth through new projects|
2. Growing demand for energy
|1. Responsible for global emissions
2. Cyber security a concern
1. Strong Operational Performance: British Petroleum is working towards positioning itself for the new oil price scenario. There is tight focus on costs, efficiency and discipline in capital spending. According to the recent data of Second Quarter of 2017, BP has delivered strong operational performance. The Second-quarter operating cash flow was $4.9 billion. There has been rise in production from in the new Upstream projects and marketing growth in the Downstream projects.
2. Usage of developed technology: BP is continuously growing its own technology through constant developments. Focus is on managing safety and operational risk, capturing business value and competitively differentiating itself from others. BP and its subsidiaries have more than 3,800 granted patents and pending applications throughout the world. In 2016, BP invested $400 million in research and development.
1. Oil Spills: Oil spills are a major concern of almost all the oil and gas companies. BP had faced the same situation in the UK during the Torrey Canyon disaster. The ripples from the spill are still felt now even after 50 years. The prevention mechanism is not strong enough which creates such situations at some time or the other.
2. Near-miss accidents: Data shows that there have been about two near-miss accidents that could have been deadly. One of them was at BP’s oil refinery in Whiting, Indiana in 2014. Failure to record data properly led to about $258 million in lost production. Another one was at BP’s chemical plant in Hull, UK. Here, equipment was not operated in the correct manner which led to damages amounting to $35-45 million. Another failure was when critical blueprints went missing during the crucial operational activities.
1. Potential growth through new projects: Gas projects in Australia and Trinidad are two of the seven major projects that BP expects in 2017. There has been continuous investment in newer projects. After the projects are complete, it is sure to bring in more growth to the company. Juniper project, Persephone project are few of the ones that are already under process. The expectation is that this year’s projects will help deliver key share of 800,000 barrels equivalent a day production from new projects that the company expects by the end of the decade.
2. Growing demand for energy: Affordable energy is necessary for economic welfare. Energy is important as it is beneficial in many forms to different set of individuals and firms. Everyday objects like plastics, fabrics, etc. are derived from oil. It is estimated that the demand for energy will rise by around 30% between 2015 and 2035. There is more focus on energy efficiency and sustainable energy usage.
|1. Suspected ties with UK government|
2. Gulf states supply deal
|1. Offshore investment boost needed
2. More utilization of North Sea assets
|1. Social risk|
2. Contribution of value to society
|1. Advancement in Seismic imaging technology
2. Detecting signs of early warning
|1. Greenhouse gases policy and regulation|
2. Gulf of Mexico oil spill
|1. Crucial role in enabling a lower carbon future
2. Renewable energy operated business in the oil and gas sector
1. Suspected ties with UK government: There have been revelations that BP has been influencing government policy in UK which in not in line with the UK government’s commitments towards reduction in carbon emission level. Data shows that about 7% of UK’s annual income of pension fund came from BP at the time of Rosneft signing venture. It is said that the British Government and BP have mutual interests since the first British involvement in the exploitation of commercial oil in the Gulf region for over 100 years ago.
2. Gulf states supply deal: In the recent downfall of the oil prices, it is difficult for all the oil and gas companies to operate in the market. Gulf states have assured that they would balance the market. They prepared a deal to extend output cuts even after the previous deadline of June.
1. Offshore investment boost needed: $6 billion worth of mergers and acquisitions have happened in the UK Continental Shelf in 2017’s first half. So, the Oil & Gas UK is expecting to get an investment boost. There is need for further improvement in the operational and capital efficiency of the segment. Renewed interest would help open up various new opportunities in the current market conditions.
2. More utilization of North Sea assets: BP is now trying to extract more from the North Sea. In the early months of 2017, there has been a dip in profits. Information from the analysts shows that the underlying profits of $1.5 billion in the first quarter of 2017 is expected to reach a figure of $500 million due to severe oil price crash. The new North Sea volumes of BP will come from an area that is west of Shetland Islands.
1. Social risk: BP is looking to do exploratory drilling in the coast of South Australia. But it is being opposed by the locals of the area as they are worried about the outcome of the operation on the ocean and threat to their lives. It is the same region where earlier an explosion had occurred in 2010 leading to death of 11 people and brought about chaos in the local region. It is not uncommon of the people to having opposed the operations of BP on the same coastline this time. They are worried about the plans BP has for that particular region. The changing global climate is also a point of concern. And with this, the government is also worried about the consumption of fossil fuels by the big players.
2. Contribution of value to society: Through its business activities, BP has been making contributions to the society as a whole in some terms. There have been efforts through social investments to support communities’ efforts in terms of increasing their incomes and improving their standard of living. In 2016, BP contributed $61.1 million in social investment.
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Woodside Petroleum SWOT and PESTLE analysis has been conducted by P Goutam Prasad Rao and reviewed by senior analysts from Barakaat Consulting.