British Petroleum (BP)
British Petroleum is the third largest publicly traded energy company in the world and the fourth largest company overall in terms of revenue. In 2010, BP had revenues of $308 billion and claimed total assets of $272 billion. BP employs over 79,000 people worldwide and is headquartered in London, England but has additional headquarters in Houston, Texas.
HistoryBP can date its history back to 1901 when the Shah of Iran granted William Knox D’Arcy a concession to search for oil. In 1909 the Anglo Persian Oil Company was incorporated as a subsidiary of Burma Oil Company and went on to exploit oil rights in the Middle East. In 1935 the company became known as the Anglo Iranian Oil Company, a name that it retained until 1953.
In 1951, the prime minister of Iran was assassinated and replaced by a nationalist named Mohammed Mossadeq who nationalized oil production under the National Iranian Oil Company. In 1953, the United States CIA organized a coup to remove Mossadeq. As a result of the coup, the National Iranian Oil Company became an international consortium. Profits were split on a 50/50 basis with Iran, but oil reserves were split among the consortium. 40% went to five American companies, 20% to Royal Dutch Shell and Total S.A., and 40% to the AIOC. In 1954, the AIOC became the British Petroleum Company.
In 1998 British Petroleum merged with Amoco to become BP Amoco. The company was formally renamed BP in 2001 and adopted the tagline “Beyond Petroleum.”
Holdings and Industry SegmentBP operates upstream and downstream affiliates and also owns the Castrol brand of automotive lubricants. BP has roughly 18 billion barrels of oil in proven reserves. It produces around 3.8 billion barrels of oil per day.
BP has major holdings in renewable energy including solar, hydrogen biofuel, and wind. The company currently invests of $1 billion per year in renewable energy research.
RevenueBP posted revenue of 308 billion USD in 2010 along with operating losses of 3.7 billion U.S. dollars and net income loss of 3.3 billion USD. These losses are a result of the Deepwater Horizon well explosion that occurred in the summer of 2010. The year prior to the accident, BP posted a profit of $17 billion.
As a result of the 2010 Deepwater Horizon well explosion, BP agreed to set up a $20 billion fund in order to compensate citizens of Gulf States for the damage caused. The monetary size on the fund is neither a ceiling or a floor, leaving BP own to litigation in the future, but also requiring the company to release the entire amount of the fund.
EnvironmentThe Deepwater Horizon accident, which spilled an estimated 35,000 to 60,000 barrels of oil per day into the Gulf of Mexico, was the worst marine oil disaster in history. The oil slick that resulted from the spill covered at least 6500 km² and caused damage to the coasts of Louisiana, Mississippi, Alabama, Texas, and Florida. Though the drilling rig itself was owned and operated by Trasocean Ltd on behalf of the BP, the United States government named BP as the responsible party. BP spent roughly $7 million dollars a day to contain the disaster, which compares favorably to first quarter profits for 2010 which were approximately $61 million per day. In other words, the cost to contain the spill was about 11% of the company’s profit.
In both 2001 and 2005, BP was named by Mother Jones Magazine as one of the 10 worst corporations in the world in terms of environmental damage and human rights violations. In 1991, BP was cited as the most polluting company in the United States based on EPA toxic release data.
In 2007 BP committed $8 billion over 10 years to research into alternative methods of fuel, including a $500,000,000 grant to the University of California Berkeley. BP commits more than any other oil company to “green technologies.” In 2009, BP was nominated for a Greenwash Award, which is sarcastically given to the company that most deliberately exaggerates its environmental credentials.BP solar is a leading producer of solar panels, and has approximately 20% market share in photovoltaic panel production as of 2004. BP is the third largest producer of solar panels in the world. The company was also a founding sponsor of the University of East Anglia’s Climatic Research Unit in 1971 and was a member of the Global Climate Coalition that was established to promote global warming skepticism. It withdrew from the Global Climate Coalition in 1997 citing concern that the science of global warming was compelling and should be taken seriously.