BP plans to sell more refineries
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