Establishment Of A Dominant Market Position


BP has a strong market position. BP is one of the top most oil companies of the world. It has one of the biggest share of market capitalization and reserves. The company is the largest producer of oil, the second largest producer of gas and the largest overall producer of hydrocarbons in the UK. BP is the largest producer of oil and gas in North America.

BP has a big hold on International market share in the purified terephthalic acid (PTA) and acetic

markets with a major manufacturing presence in Asia, particularly China. Moreover, the biggest supplier of feuls for the aviation business is BP Air, supplying aviation fuel to the airline, military, and general aviation sectors. It supplies customers in approximately 64 countries and has annual marketing sales of more than 25 billion litres. It has relationships with many of the major commercial airlines.

BP plays a big role in Marine Lubricants supplying lubricants to most of the marine industries. Its strength in such big areas gives power to invest in researches to cover grounds in areas that are not being explored yet.

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Last year, BP announced that they had succeeded in reducing the greenhouse gas (GHG) emissions by 10% from 1990 levels, and that the company were setting a new target to manage the future impact of there emissions at or below 2001 levels until 2012. In 2002, this was achieved through a combination of energy efficiency and venting and flaring projects which have contributed to sustainable reductions and which have more than offset emissions growth from new facilities and increased utilization of existing facilities.

Some of the things BP are doing to reduce greenhouse gases:

Controlling there greenhouse gas emissions;

Engaging in research and policy on climate change;

Promoting flexible market instruments to ensure reductions of greenhouse gases are met cost-effectively;

Growing renewable businesses such as BP Solar

The strength of the new company will be judged not just by its financial results, but also by the way in which the company conduct business - by the aspirations BP set and the manner in which it is engage everyone with whom they come in contact.

Wide Geographic Presence :

BP's downstream activities include refining and marketing of oil and natural gas and related products.

BP partially owned the 16 refineries worldwide.

22,400 retails sites under different names including AMOCO, BP, ARCO & ARAL.

11500 branded Retail Sites in US.

Among the 10 European countries there is a retail network of 2,500 convenience retail sites.

BP has a presence in 80 countries.

According to Fiscal year 2009 BP largest market was only US with 35.1% in comparison to the rest of the countries accounted for 64.9%.

Source : Data monitor Plc


Oil spill in the Gulf of Mexico

BP has now has the weakness in pursuing new ventures due to the incident of April 2010, where 11 people killed in the exploration of Transocean's rig sank the oil spill if the Gulf of Mexico ,the gas spill cost $ 20 billion for the clean up and recovery. The Schedule of payment started with the initial payment of $3 billion. The auctions for the non-strategic assets started to raise funds.

Therefore, the hazards and risks could have a material adverse effect on the company's business operations, financial condition, and cash flows.

Explosion in the Texas refinery

isomerization unit of BP Product's in the Texas city had an explosion 15 died and majority injured in march 2005. The company had a criminal plea agreement with US Department of Justice (DOJ) due to explosion, BP Product's fined $50 million fine and was sentenced to three years' probation.

BP Products filed a petition under the 2005 Settlement Agreement with the Occupational Safety and Health Act (OSHA). That agreement resolved citations issued , but was denied and faced the civil penalty fine of a total$87.4 million in October 2009

Violation of tax laws in Turkey

The Turkish Finance Ministry levied a tax fine of $275 million on BP in March 2009 for cross-border

duty-free petrol sales between 2006 and 2008. BP is one of the largest energy companies in Turkey,

The company also operates Turkey's second-biggest chain of petrol stations. The tax fine was related

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to BP's operations by its dealer, Bilnam, which transported petrol over the Turkish border to Greece

and Bulgaria through duty-free refuelling areas for trucks used for exports.

Turkey imposes a tax on trucks entering the country with more than 145.3 gallons of fuel. The

authorities claimed that the retailer broke a legal limit on the amount of duty-free fuel it can sell to

vehicles travelling outside of the country at filling stations on the Greek and Bulgarian borders.

In addition to huge penalties, such violation of laws could affect BP's business operations in the

country with tightened surveillance.



BP has some major strength round the globe . In present year BP announced the acquisition in brazil Azerbaijan, and Mexico, including the 10 blocks in brazil, 7 in the prolific Campos basin. IT will gain a high portfolio with interests in some 240 leases in Gulf of Mexico. Kaskida will give BP a 100% interest in the project with the 30% addition of Devons interests , with including the four oil fields of ZIA, , Magnolia, Merganser, and Nansen.

Oil and gas exploration projects

BP aims to increase its port folio in the worlds prolific hydrocarbon basins. In 2009 there were several discoveries

February 2009, seventeenth oil discovery Block 31 in Angola.

May 2009, BP announced the 'Oberon' oil discovery in Block 31, offshore Angola. The production in dorado began in same month .

September 2009 BP announced a giant oil discovery at its Tiber Prospect in the deepwater US Gulf of Mexico,

October 2009 Production started in the major projects with the announcement of natural gal from the Savonette field, offshore Trinidad.

Investments in the alternative energy business

In alternative energy, the company is focusing on investments in the areas of wind and solar power.In wind business, BP has added 279 MW of capacity including the construction of two wind farms in the US, Fowler Ridge II in Indiana and Titan I in South Dakota. This has increased the total capacity in commercial operation to 711 MW (1,237 MW gross) at the end of FY2009.

In solar business, BP completed the restructuring of its manufacturing facilities. The company has entered into various agreements in FY2009 to develop its solar business further. A joint venture between solar and solar edge was announced In May 2009

in Koethen,Saxony-Anhalt ) pv installation of 46 megawatt peak (MWp was built in. Around 210,000 crystalline photovoltaic modules with an output of 220 watt peak each would be supplied by BP Solar and installed by RGE Energy.

The companies bio fuels business is investing in advanced technologies. It has its first joint-venture ethanol refinery in Brazil and another joint-venture facility is under construction in the UK. In 2009, BP's Bio fuels business extended its reach and capability through joint ventures with Dupont (to develop, produce, and market next-generation bio fuels from bio butanol), Verenium (two 50:50 joint ventures accelerating the development and commercialization of bio fuels from lignocellulosic feedstocks),and Martek Biosciences (developing technology to convert sugars into diesel). Therefore, BP's investments in its alternative energy business will help it in diversifying its product offerings, thereby increasing its revenue growth. It would also help the company in enhancing its environment-friendly image.


Saturation of resources in the North Sea

The operations in the North Sea is highly perspective , the reserves are getting saturated with the maturity and it now became a key challenge for the company in comparison to the newest exploration activity

Instability in some oil Producing regions

Among the production within 30 countries there are countries which are now prone to political instable i.e. Africa the Middle East, and South America. Even being familiar with the environment in these countries failed it to anticipate some events as some of the geo-political risk are outside its control

Environmental regulations

The company laws and regulations that govern the discharge of pollutants and disposal of wastes. With rising awareness of the effect that the environment has on human health, regulatory standards have been continuously improved in recent years.

In 2005, Kyoto agreement to reduce annual greenhouse gas emission by 5.2%

In 2007, European Union Strategic objective to reduce CO2 emission by 20% , with the increase in 20% (binding target)of renewable energy with the reduction in demand by 20% (non-binding target)

Risks related to exploration and production activities

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In April 2010, 11 people killed in the exploration of Transocean's rig sank the oil spill if the Gulf of Mexico ,the gas spill cost $ 20 billion for the clean up and recovery. The Schedule of payment started with the initial payment of $3 billion. The auctions for the non-strategic assets started to raise funds.

Therefore, the hazards and risks could have a material adverse effect on the company's business operations, financial condition, and cash flows.

Threat of a takeover

The oil spill Bp is now facing the threats of take over , August 2010 claimed $400 million during the 16 weeks to cover the funds for the oil spill . Due to the failure to cap the leak in deep-sea it's now loosing the investors confidence , eroded the market capital by $ 100 billion as a result it became a target for take over for the companies like Exxon Mobil and Chevron