BP – an international company

"In the modern world social progress rests on economic development. This, in turn, depends on energy"1. In an industry notable for efficiency and advanced technology, the British Petroleum (BP) group stands out as a complete provider of energy and petrochemicals. BP owes its origin to one man, William Knox D'Arcy, who, shortly after the turn of the century, invested time, money and labour in the belief that worthwhile deposits of oil could be found in Persia (now known as Iran). BP p. l. c. is the holding company of one of the world's largest petroleum and petrochemicals groups with headquartered in London- United Kingdom.

Their main activities are exploration and production of crude oil and natural gas; refining, marketing, supply and transportation; manufacturing and marketing of petrochemicals. They also have a growing activity in gas and power and in solar power generation. The BP of today is an international company, having operations in 100 countries on six continents.

BP has well-established operations in Europe, North and South America, Australasia and Africa. It supports all its businesses with high quality research and technology. Their sales revenues, market value, petrochemical facilities and oil and gas reserves make BP one of the three largest integrated energy companies in the world. As an important of this company, on this assignment, the BP Company and its business environment will be carefully investigated.


The near environment is the immediate market or industry in which the firm operates 2 so that the gas and oil markets and industries that the company competes in will be highly considered. "BP itself has changed enormously in the last five years, and is now a new company. It incorporates the heritages of the various enterprises that have come together to establish a base from which they can compete and grow in the global energy market. That growth will bring more change".

Their marketing business has grown to around 22 billion cf per day they currently enjoy top tier positions in both the North Americans and UK markets. THE MARKET AND INDUSTRY: The oil and gas industry is fiercely competitive except in those areas where there are state-owned or state controlled monopolies. Over the last few years BP has grown, organically and through mergers and combinations, and is now one of the largest companies in the oil and gas industry. For the purpose of the Assignment, I am going to look at oil and gas markets and industries.

* Gas: Natural gas is the fastest growing among the major segments of the energy market, winning share from coal in power generation and domestic fuel markets on grounds of cost-effectiveness and lower pollution levels. BP's gas business markets gas, power and NGL4 products. It finds markets for the large gas resources that the company have in Alaska, Indonesia, Trinidad and other areas and develops the means to deliver gas a to access these markets The company markets are growing faster than most other parts of the energy business.

Natural gas is growing at about 3% per annum – clear evidence of the continuing shift towards lower carbon fuels. LNG5 is set to enjoy strong volume growth, forecast to be as much as 10% per annual. NLG's are increasing at some 4% reflecting growing worldwide gas production. With global demand for NLG's, both as a chemicals feedstock and as a clean fuel expected to grow in excess of 3% per year, the BP Company expects this business will offer the potential for further growth. 6

Moreover, the company also market their own and third party gas supplies directly to businesses in all of the Triad regions7 as North America and Europe and Asian (Japan represents) with total gas sales volumes in 2002 of 21. 6 billion cubic feet of gas a day, an increase of 15% over 2001. For example: In the United States, BP is the second largest marketer of gasoline, with about 17,150 service stations nationwide. East of the Rocky Mountains BP p. l. c are among the top three marketers for branded retail sales.

They are not only the leading supplier of premium gasoline in America but also have the greatest volume of gas reserves in the United States. In addition to that, in South America the company are the largest international gas investor in Argentina, Colombia, Trinidad & Tobago and Venezuela * Oil There is no practical substitute for oil for some uses. It remains by far the most efficient for many others, so oil is by far the largest component of energy supply, maintaining a 40% market share, despite often being more expensive on an energy-equivalent basis than natural gas.

Oil prices have rebounded strongly from the lows of around $10 seen in late 1998 and early 1999 and have averaged more than $25 per barrel for the last three years (2000-2002)8. Prices were relatively weak in the wake of the 11 September 2001 terrorist attacks, but trended upwards over the course of 2002 on the back of OPEC9 production restraint and supply disruptions involving Iraq and Venezuela. OPEC production restraint has been the key to this price strength since global oil demand growth has been exceptionally weak and Non-OPEC oil production growth strong during this period.

As the effect of the oil prices, BP Company was not an exception and the company had the influence upon the oil production and consumption. However, BP Company still produced a quantity of oil all over the world, as the map10 of oil consumption per capita below will be shown: From the map, North America, Middle East are these places where more than 3 tonnes per capital of oil is consumed while in Asia Pacific only less than 0. 75 tonnes per capita of oil is sold. There are thousands of companies involved in different sectors of the oil business in various sections around the globe.

In practice there is sufficient competition in each of BP's main markets to satisfy economic theorists, although the world energy market remains distorted by government actions. As those results above, the oil and gas industry operates in markets and industries that are increasingly open and competitive. The world's markets are becoming more open, deregulated and competitive, increasing the demand for lower-cost energy. THE FAR ENVIRONMENT Besides the near environment of BP Company, the far environment that is the macro business environment will be examined.