BP CEO - Company May Sell Part Or All Of "Green" Business Unit - LA Times

[hatrack]

LONDON -- Oil giant BP's chief executive hinted Wednesday that the company might offload part or all of its "green" business unit, reversing a central part of its previous strategy as he seeks to turn the company around. Tony Hayward, giving his first annual presentation to analysts since taking over from former CEO John Browne in May, also said BP could be producing about 4.3 million barrels of oil equivalent a day by 2012.

BP intends to expand its alternative energy business "predominantly for its equity value," Hayward said. The green unit, much prized by Browne, is worth $5 billion to $7 billion, based on market valuations for similar companies, Hayward said. "As we go forward we will be looking at how best we can realize that growing value for our shareholders," he said. Selling all or part of the business would drop a key plank of Browne's strategy, the re-branding of the former British Petroleum under the Beyond Petroleum slogan.

BP's advertising has focused heavily on the firm's green investments, but environmental campaigners have long said it was little more than a marketing gimmick.

Hayward said the company was making good progress with a restructuring plan aimed at improving BP's dismal operational performance after a turbulent year in which it was fined millions of dollars for environmental crimes and fraud.

EDIT

http://www.latimes.com/business/printedition/la-fi-bp28feb28,1,2790699.story

[DainBramaged]

1. What a typical scumbag

It's money that they love.

[GodlessBiker]

2. Note to self: Scream "fuckers" when I see any more of those green BP ads on TV.

[GliderGuider]

3. Why do I keep seeing this movie in my head?

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=115&topic_id=134618&mesg_id=134758

It's sometime late last summer at BP headquarters. The camera follows a really intense VP of Strategic Planning as he leaves an all-day "Beyond Petroleum" presentation session stuffed with executives, scientists, engineers and economists. Head bowed, deep in thought, he walks slowly down the hall and turns into a washroom. He sets his binder of briefing notes and Powerpoint printouts carefully beside the sink. He straightens up, sticks his hands in his pockets and stares at himself in the mirror for a long time. Finally he lets out a deep sigh and says quietly to himself, "Fuck. It's not going to work."

He picks up his binder, straightens his tie, and goes to Tony Hayward's office. He tells Hayward, "I just got out of the meeting. The message is clear - renewable energy isn't going to cut it in the time we have left. If we pursue green energy, we'll just be throwing good money after bad. It would probably just kill the company faster, and our shareholders would tar and feather us. Our only hope as a company is to stick to our knitting and maximize the return from our petroleum business. If you want my resignation, you can have it."

New - Closing shot: A modern office building with lots of solar panels on the roof and a "Beyond Petroleum" sign by the front door. The camera dollies back to gradually reveal an empty, weed-infested parking lot and a huge "For Sale" billboard...

[hunter]

4. It sure would be nice if this was all part of a grand conspiracy to raise oil prices.

But nobody, absolutely nobody is betting that way.

The game is being played as if it is soon to end. The only strategy left is to keep people at the table until the bitter end.

[OKIsItJustMe]

5. BP to step up a gear with green energy business

http://www.ft.com/cms/s/0/a8b4f0ca-e5a0-11dc-9334-0000779fd2ac.html

BP to step up a gear with green energy business

By Ed Crooks in London

Published: February 28 2008 02:00 | Last updated: February 28 2008 02:00

...

BP said that did not mean selling the businesses, which are focused on solar and wind power, but could involve selling stakes, joint ventures and partnerships.

BP was criticised for adopting the "beyond petroleum" slogan under Lord Browne, its previous chief executive, and there was speculation Mr Hayward would abandon it.

He has retained it, however, and stepped up the rate of investment in renewables and other alternative low-carbon energies.

...

He added that while investors might see renewables as separate from BP's traditional core business in oil and gas, not everyone drew that distinction. "When you talk to the prime minister in Egypt, he wants to talk about BP's alternative energy business as well as LNG ," he said. BP calculates that, based on market valuations, its "cleaner" power portfolio, which includes some gas-fired stations, is worth $5bn-$7bn.

...

[OKIsItJustMe]

6. Let's see what the horse has to say...

http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/IC_strategy_presentations_february_2008_script.pdf

...

We expect Alternative Energy to form a major component of the Group’s corporate renewal agenda, as the demand for clean energy grows, motivated by policy and public demand. Why is an oil and gas company doing this? It’s quite simple: alternative energy is expected to be a major part of the global energy mix in the future and energy is BP’s business. Our portfolio of businesses is both good for today and creates material opportunities for the future.

...

Our investment in BP Solar is expected to double in 2008 allowing us to capture the growth in the solar market. We expect to grow by more than 60% between now and 2012 and aim to position BP Solar as a global top three player.

...

Moving now to our wind business, in 2006 we had two operating wind farms in the Netherlands, with just 32MW of installed capacity. By the end of 2007 we had 372MW of installed gross capacity, in total enough to power at least 100,000 households. This includes the commercial operation of Cedar Creek in Colorado, one of the biggest wind farms in the US.

So far we have invested $825 million in Wind since the launch of Alternative Energy, with a further $600 million planned for 2008. We expect to grow at more than 80% per annum between now and 2010, well in excess of market. This growth is underpinned by our US onshore development portfolio of almost 15GW. This portfolio is one of the largest of all major US players. Development is underpinned by turbine coverage through 2008 and into 2009.

...

[hunter]

7. Oh my. That sounds like they ARE selling it.

Runs Great! Very Low Mileage! We don't even know why we are selling it! Drop on by and make an offer!

[OKIsItJustMe]

8. No... they seem to be justifying not selling it, even though it's not a big money maker

Check this:
http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/IC_strategy_presentations_february_2008_script.pdf

...

For us, being successful in this space means being business-like. We will manage the portfolio as a corporate venturing entity and we will use equity value as our primary performance measure. Alternative Energy will have a separate advisory board and a distinct financial framework. I believe this is what it will take to be successful.

...

In other words, “we won't use profits to measure our performance, just equity value" (as if it was a venture capital investment.)

[hunter]

9. It sure sounds to me like they are packaging it.

They are not ready to cast off their pretty little greenwashing department quite yet, but they'd like to know how much the thing might be worth.

[OKIsItJustMe]

10. Time will tell

Unless there's a definite statement saying that they're selling, I think we're just seeing the echo chamber at work here.

[AdHocSolver]

11. How does an oil company "giant" lose money when other oil companies are making billions in profits?

The original article says:

(snip)
*********
Hayward said the company was making good progress with a restructuring plan aimed at improving BP's dismal operational performance after a turbulent year in which it was fined millions of dollars for environmental crimes and fraud.

BP has begun cost-cutting and restructuring, including shedding 5,000 jobs, as it seeks to close the gap with rivals like Royal Dutch Shell and Exxon Mobil Corp. caused by poor performance in BP's refining and marketing business.
*********

They are touting how "green" they are at the same time they are being fined millions of dollars for "environmental crimes and fraud". That sounds about right. Turn your "weakness" into a "strength". Why would anyone believe that company's glowing report about itself after it was cited for fraud? Sounds like business as usual.