Financial and Operating Information 1999 2003 Petrochemicals

8/4/2019 Financial and Operating Information 1999 2003 Petrochemicals

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74 BP Financial and Operating Information 1999-2003

Petrochemicals76 2003 performance

77 Key indicators78 Financial statistics

79 BPs petrochemicals manufacturing sites

80 Major plant capacities by site

81 Regional capacities by product

81 BPs petrochemicals business


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Petrochemicals

Segment strategy

Focus portfolio on seven core products.

Compete through technical superiority, operational excellence,deep customer relationships and accessing advantaged investmentopportunities.

Build organizational capability to increase margin capture and drivecost efficiencies and improve returns throughout the business cycle.

Segment focus

BP focuses on seven core products purified terephthalic acid (PTA),paraxylene (PX), acetic acid, acrylonitrile, ethylene, high-densitypolyethylene (HDPE) and polypropylene (PP) that enhance theeveryday lives of consumers. Part of BPs customer-facing activity,these core products are eventually used in the manufacture of a widevariety of consumer goods, including plastic drinks bottles, computerhousings, adhesives, inks, rigid packaging, pipes, food packaging andautomobile components, as well as textiles for clothes and carpets.

Our core products have been selected on the basis of growthcharacteristics, proprietary technology, leadership positions andgroup integration value.We have an investment emphasis in three products of the core

of seven, where we have differentially advantaged positions PTA,PX and acetic acid. We also have an investment bias towards thefast-growing markets of Asia.


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2003 performance

Petrochemicals delivered a result of $568 million in 2003,

a greater than threefold increase over 2002. Our production for

the year was a record 27,943 thousand tonnes, compared with26,988 thousand tonnes in 2002. This reflected our capacity

additions and lower turnaround activity. Faced with the most

challenging business environment in recent years, we delivered

10% cash returns.

Overall, chemicals indicator margins were similar to the average

of 1999-2002, up slightly on 2002, but fluctuated throughout the

year. The performance was delivered in the face of high and volatile

feedstock costs, particularly the impact of a strong euro on costs,

and slow growth in demand. The segments result was impacted

by several non-routine items, continuing portfolio reductions and

lower income from SARS-affected businesses in Asia.

Throughout the year, we continued to focus on our core

products. Our operational priorities were safety, margin capture

and driving cost efficiency in a difficult business environment.Overall, 2003 cash fixed costs were reduced compared with

2002, while the business grew. The operations at our sites

continued to be good as utilization improved.

As a result of growth and portfolio management, our seven

core products now account for 70% of our capital employed

in this segment.

Portfolio

We are a major producer of petrochemicals and plastics.

The petrochemicals segment is also responsible for the supply,

marketing and distribution of chemicals products to bulk,

wholesale and retail customers. BP has operations principally in

the US and Europe. We are increasing our activities in the Asia-

Pacific region.

Our production capacity increase in 2003 reflected our Asian

PTA additions, the Veba acquisition and growth, albeit slow, in

market demand. Projects that were under development in 2003

included the final commissioning of the BP Zhuhai Chemical

Company in Guangdong province (our first PTA venture in China),

the start-up of the CAPCO PTA plant in Taiwan, progress on our

Shanghai Ethylene Cracker Complex (SECCO) joint venture near

Shanghai, expansion of the Chocolate Bayou olefins facility on

the US Gulf Coast and new production at world-scale HDPE

joint-venture plants in Cedar Bayou, Texas, and Lillo, Belgium.

Importantly, 2003 also brought a realignment of the

petrochemicals organization. The segment is now structured

around global product lines, while retaining executive leadership

in key regions of the world. This more natural alignment ofbusinesses with strategy is intended to provide greater

organizational focus and operating performance.

In 2003, our strategy to focus our portfolio around seven core

products led to important investment and divestment activities.

We have implemented a number of structural changes that we

believe should significantly enhance our portfolio.

The most significant of these investment activities were

as follows:

We commissioned a new 350-ktepa PTA plant at Zhuhai

(BP 85%) in southern China.

CAPCO (BP 59%), a BP-associated undertaking in Taiwan,

started producing from its new 700-ktepa PTA unit.

We increased the investment in our Korean and Taiwanese

joint ventures. BP acquired an incremental 9% in CAPCO

to obtain a 59% holding, and we increased our ownership

from 35% to 47% in SPC.

BP Solvay Polyethylene North America (BP 49%) and its

joint venture partners started a new 317 ktepa High Density

Polyethylene (HDPE) plant (BP 25%) at Cedar Bayou, Texas,

and shut down BP Solvay Polyethylene North Americas

118-ktepa of smaller and less efficient capacity at Deer

Park, Texas.

BP Solvay Polyethylene Europe (BP 50%) commenced

full-scale production from the newly constructed HDPE plant

at Lillo, Belgium.

SECCO (BP 50%) is on schedule to start up in early 2005.

In early 2004, construction of the 900-ktepa ethylene cracking

complex was approximately 50% complete.

The most significant divestments during the year were

as follows:

We sold our share in AG International Chemicals Company

(BP 50%), a joint venture with Mitsubishi Gas Chemical

Company in Japan.

We exited the ethylene vinyl acetate copolymers (EVA)

business at Kln, Germany.

We successfully divested PT Peni (BP 75%), a BP polyethylene

joint venture, in Indonesia.


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Petrochemicals

Key indicators1999 2000 2001 2002 2003

Profit and product margins

Pro forma resulta

$ billion 0.43 0.55 (0.17) 0.17 0.57Chemicals Indicator Marginb $/te 114 126 109 104 113

Return on sales

BP % 4.6 4.9 (1.5) 1.3 3.5

Range of six competitors with major petrochemicals interests Maximum % 12.7 11.1 7.0 7.6 9.0

Minimum % 2.9 0.3 (5.7) (0.4) (1.3

Plant/site reliability and productivity

Plant reliabilityd % 95.6 93.9 95.6 96.3 96.0

Site reliabilitye % 95.0 94.0 93.0 95.0 95.0

Productivity tonnes/manufacturing manpower 1,490 1,605 1,790 1,890 1,950

a Replacement cost profit after exceptional items, adjusted for acquisition amortization.b The Chemicals Indicator Margin (CIM) is a weighted average of externally based product margins. It is based on market data collected by Nexant (formerly Chem Systems) in

their quarterly market analyses, then weighted based on BPs product portfolio. While it does not cover our entire portfolio, it includes a broad range of products. Among theproducts and businesses covered in the CIM are the olefins and derivatives, the aromatics and derivatives, linear alpha-olefins (LAOs), acetic acid, vinyl acetate monomer andnitriles. Not included are fabrics and fibres, plastic fabrications, poly alpha-olefins (PAOs), anhydrides, engineering polymers and carbon fibres, speciality intermediates, and theremaining parts of the solvents and acetyls businesses.

c Provisional. The data for the year is based on 11 months of actual, and one month of provisional data.d Plant reliability measures production lost for unplanned internal operational and equipment causes.e Site reliability measures production lost for unplanned internal operational and equipment causes and production lost for intrasite and utilities reasons.


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Financial statistics


$ million

Reported Pro forma result

1999 2000 2001 2002 2003 1999 2000 2001 2002 2003

Replacement cost profit

by geographical area

UK (240) (69) (305) (265) (325) (240) (69) (305) (265) (325)

Rest of Europe 70 284 178 324 476 70 284 178 324 476

USA 502 529 (86) 75 205 502 529 (86) 75 205

Rest of World 97 (196) 44 31 212 97 (196) 44 31 212

429 548 (169) 165 568 429 548 (169) 165 568

Return on average capital employed 4% 5% (1)% 1% 4% 4% 5% (1)% 1% 4%

Operating capital employed


UK 2,395 2,989 2,976 2,957 2,907

Rest of Europe 1,913 1,990 2,421 3,340 3,850

USA 4,307 4,470 4,601 4,783 4,478

Rest of World 1,433 1,559 1,998 1,456 2,249

10,048 11,008 11,996 12,536 13,484

Turnover 9,392 11,247 11,515 13,064 16,075

Capital expenditure and acquisitions


UK 447 620 205 112 116

Rest of Europe 238 112 917 173 137

USA 294 349 460 262 291

Rest of World 236 504 344 276 231

1,215 1,585 1,926 823 775

Employee numbers at year end 18,700 17,600 21,950 17,900a 15,950

a Includes 2,400 Burmah Castrol Chemicals employees (2001: 4,150).

thousand tonnes

a

1999 2000 2001 2002 2003

Production by geographical area

UK 3,737 3,137 3,126 3,221 3,186

Rest of Europe 5,993 6,713 7,925 10,526 10,958

USA 9,917 9,874 8,943 10,201 10,068

Rest of World 2,206 2,341 2,722 3,040 3,731

21,853 22,065 22,716 26,988 27,943

a Tonnes = metric tons (2,204.6 lb).


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Petrochemicals

Ethylene

Purified Terephthalic Acid (PTA)

Paraxylene (PX)

High Density Polyethylene (HDPE)

Polypropylene

Acetic acid

Acrylonitrile

Other

Manufacturing complex

(Ethylene & derivatives)

37

12

32 1

45

6

7

8

10 9

11

38

1316

14

15

20

21

22 23

24

25

26

27

28

1918

17

29

30

3132

33

35

36

34

39

The seven core products within our portfolio are:

Purified Terephthalic Acid (PTA) PTA is important as a raw material

for the manufacture of polyester used in textiles, fibres and films.

BP is the worlds largest producer of PTA.

Paraxylene (PX) PX is feedstock for the production of PTA and

is manufactured from mixed xylene streams acquired from BP

refineries and third party producers. We are currently the worlds

largest producer of PX.

Ethylene We produce and market the basic petrochemical building

blocks, known as olefins, that are used primarily as raw material

for other chemical products. These olefins are derived from the

steam cracking of liquid and gaseous hydrocarbons.

PolypropylenePolypropylene is used for moulded products, fibresand films. We are the second largest producer of polypropylene in

the world.

High Density Polyethylene (HDPE) Polyethylene is used for packaging,

pipes and containers.

Acrylonitrile BP is the worlds largest producer and marketer

of acrylonitrile, which is used in textiles and plastics for the

automobile and consumer goods industries.

Acetic Acid We are a major manufacturer and supplier of acetic

acid, a versatile chemical used in a variety of products such as

foodstuffs, textiles, paints, dyes and pharmaceuticals. Acetic acid

is also used in the production of PTA.

USA1 Lima, Ohio

2 Whiting, Indiana

3 Joliet, Illinois

4 Cooper River,

South Carolina

5 Decatur, N Alabama

6 Pasadena, Texas

7 Texas City, Texas

8 Deer Park, Texas

9 Chocolate Bayou,

Texas

10 Green Lake, Texas

11 Cedar Bayou, Texas

12 Carson,

LA, California

UK13 Grangemouth

14 Hull

15 Baglan Bay

Rest of Europe

16 Trelleborg, Sweden

17 Geel, Belgium

18 Feluy, Belgium

19 Lillo, Belgium

20 Wingles, France

21 Sarralbe, France

22 Lavra, France

23 Rosignano, Italy

24 Kln, Germany

25 Gelsenkirchen,

Germany

26 Mnchmnster,

Germany

27 Marl, Germany

28 Mlheim, Germany

Rest of World29 Ulsan, South Kore

30 Chongqing, China

31 Zhuhai, China

32 Kaohsiung, Taiwa

33 Taichung, Taiwan

34 Kerith, Malaysia

35 Kuantan, Malaysi

36 Merak, Indonesia

37 Joffre, Canada

38 Sao Paulo, Brazil

39 Shanghai, China

BPs petrochemicals manufacturing sites


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BP share of capacityGeographical at end 2003area Site Product thousand tonnes a year

UK Baglan Bay isopropanol 106

Grangemouth ethylene 1,075

propylene 420

butadiene 80

benzene 252

HDPE 165 (50% of EJV)a

LLDPE 307

polypropylene 270ethanol 339

other 22

Hull acetic acid 781

acetic anhydride 150

vinyl acetate 274

ethyl acetate 226

acetone 71

other 93

Rest of Europe

Belgium Feluy LAO 330

PAO 76

Geel PTA 1,027

polypropylene 509

paraxylene 482PIA 135

Lillo HDPE 262 (50% of EJV)a

polypropylene 130

France Lavra ethylene 372 (50% of Naphtachimie)

propylene 270 (50% of Naphtachimie)

butadiene 70 (50% of Naphtachimie)

benzene 117 (50% of Naphtachimie)

HDPE 143 (50% of EJV)a

polypropylene 147

ethylene oxide 222

other 459

Sarralbe HDPE 105 (50% of EJV)a

polypropylene 266Wingles polystyrene 187

expanded polystyrene 93

Germany BP Kln ethylene 1,095

propylene 610

butadiene 267

benzene 372

aromatics 366

LDPE 364

LLDPE 228

propylene oxide 206

ethylene oxide 291

acrylonitrile 300

other 417

Gelsenkirchen ethylene 650

propylene 378

benzene 137

butadiene 223

other 73

Marl styrene 362

polystyrene 188

expanded polystyrene 79

Mnchmnster ethylene 163

propylene 100

benzene 43

Mlheim other 95


Major plant capacities by siteBP share of capacity

Geographical at end 2003area Site Product thousand tonnes a year

Italy Rosignano HDPE 108 (50% of EJV)a

Sweden Trelleborg polystyrene 86

USA Lima acrylonitrile 199

acetonitrile 10

other 97

Cedar Bayou HDPE 78 (49% of AJV)b

Chocolate Bayou ethylene 1,506

propylene 418

polypropylene 709

Carson polypropylene 242

Cooper River PTA 1,331

Decatur PTA 1,150

paraxylene 1,098

NDC 31

Deer Park HDPE 412 (49% of AJV)b

polypropylene 420

Green Lake acrylonitrile 454

acetonitrile 14

other 174

Joliet PIA 140

MAN 51

TMA 71

Pasadena LAO 562

PAO 76

Texas City styrene 531

propylene 321

acetic acid 491c

acrylonitrile 115c

paraxylene 1,222

metaxylene 126

Whiting PIB 92

Rest of World

Brazil So Paulo PTA 141 (49% of Rhodiaco)

Canada Joffre LAO 246

China Chongqing acetic acid 160 (51% of YARACO)d

Zhuhai PTA 406

Shanghai (under construction) (50% of SECCO)k

Indonesia Merak PTA 216 (50% of PT Ami)

Korea Ulsan PTA 718 (47% of SPC)e

VAM 55 (34% of ASACCO)f

acetic acid 230 (51% of SS-BP)g

Malaysia Kertih HDPE 184 (60% of PEMSB)h

ethylene 64 (15% of EMSB)i

acetic acid 536

Kuantan PTA 677

Taiwan Kaohsiung PTA 789 (59% of CAPCO)jTaichung PTA 416 (59% of CAPCO)j

Fabrication business

Fabrics and fibres 270

Total 34,483

a BP Solvay Polyethylene Europe.b BP Solvay Polyethylene North America.c Sterling Chemicals plant, the output of which is marketed by BP.d Yangtze River Acetyls Company.e Samsung Petrochemicals Company Ltd.f Asian Acetyls Company Ltd.g Samsung BP Chemicals Ltd.h Polyethylene Malaysia Sdn. Bhd.i Ethylene Malaysia Sdn. Bhd.j China American Petrochemical Company Ltd.k Shanghai Ethylene Cracker Complex.


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Petrochemicals

thousand tonnes a yea

BP sharof capacit

at endRest of Rest of 2003

Product UK Europe USA World Tota

PTA 1,027 2,481 3,363 6,871

PX 482 2,320 2,802

Ethylene and related co-products 1,575 4,198 2,246 64 8,083

Polypropylene 270 1,052 1,371 2,693HDPE 165 618 490 184 1,457

Acrylonitrile/Acetonitrile 300 792 1,092

Acetic acid 781 491 926 2,198

Other 1,839 4,926 2,221 301 9,287

Total 4,630 12,603 12,412 4,838 34,483

Regional capacities by product

Acetic acidVinyl acetate

Acetate esters

Isopropanol

Linear alpha-olefins

Poly alpha-olefins

Ethylene oxide

Ethylene glycol

Ethanol

Ethyl esters

Acetic anhydride

Paraxylene

Metaxylene

Benzene

Styrene

Ethylene

Polypropylene

Acrylonitrile

Polybutenes

Propylene

Butylenes

Natural gas

Olefins

Refinery products

e.g. naphtha

Purified

terephthalic acid

Purified

isophthalic acid

High density

polyethylene

Other ethylene

derivatives

Low/linear

low density

polyethylene

Alpha-olefins

Ethane

Propane LPGs

Butane

NGLs

Photographic processing,

pharmaceuticals, agricultural products

Emulsion paints, adhesives

Solvents, coatings

Pharmaceuticals

Typical end-usesHydrocarbon links Products

Fibres, containers, films

Fibres, containers, coatings

Packaging, insulation

Packaging, pipes, containers

Packaging, pipes, containers

Plastics and detergents

Lubricants

Brake fluid, antifreeze, polyester fibres

Perfume, methylated spirit

Solvents for inks, paints

Moulding for casings, furniture, toys

Textiles, fibres, plastics

Lube oil additives,

power cable insulation

Solvents in synthetic lacquers,

cosmetics, paints

Core products

Polystyrene

BPs petrochemicals business

Documents

Financial and Operating Information 1999 2003 Petrochemicals