BP plans to sell more re­finer­ies

New Straits Times - - Business -

LON­DON: BP plans to sell more re­finer­ies with­out in­vest­ing in new plants de­spite grow­ing oil pro­duc­tion and will fo­cus on mod­ernising ex­ist­ing op­er­a­tions while ex­pand­ing its net­work of fill­ing sta­tions to gen­er­ate US$3 bil­lion (RM13.26 bil­lion) in ad­di­tional cash.

The group’s head of re­fin­ing said even though BP’s out­put was set to spike in the next five years as new fields be­come op­er­a­tional, its at­ti­tude to re­fin­ing re­mained more cau­tious.

“Are we go­ing to in­vest in more green field re­fin­ing in BP? Prob­a­bly not,” said Tu­fan Ergin­bil­gic, who has worked in re­fin­ing since 1990.

Re­fin­ing of crude oil into fu­els such as petrol, diesel and jet fuel has for years been the in­dus­try’s prob­lem child, hav­ing to grap­ple with weak and volatile profit mar­gins as well as com­pe­ti­tion from mod­ern re­finer­ies built in China, In­dia and the Mid­dle East.

The prob­lems are com­pounded by the prospect of more en­ergy-ef­fi­cient cars, air­craft and heat­ing, tighter marine fuel stan­dards, the rise of elec­tric ve­hi­cles and slow­ing con­sump­tion growth.

A push to mod­ernise and stream­line BP’s re­fin­ing, trad­ing and mar­ket­ing — known as down­stream ac­tiv­i­ties — gen­er­ated US$5.6 bil­lion in free cash flow last year, up 25 per cent from 2014, de­spite re­fin­ing mar­gins at 12-year lows, said Ergin­bil­gic.

Ergin­bil­gic, who be­came down­stream chief in 2014, said he was aim­ing for a US$3 bil­lion in­crease in free cash flow by 2021.

“We will sell one or two as­sets, mak­ing very good money to­day be­cause the tide went up for these as­sets,” he said. Reuters

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