Room for improvement

2 March 2010 By Fiona Maharg-Bravo

Companies don’t usually say their financial performance has been subpar. But the UK oil and gas major wants to show there is a big gap that it will close. The $3 bln of cost cuts should be manageable. The greater challenge for BP is to boost its long term growth profile.

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BP, the UK oil and gas producer, said additional cost cuts and improved efficiency could increase annual profit by $3 billion over the next two to three years. Savings would come from cutting costs in its refining division and by the creation of a new unit to manage development of all major new exploration and production projects.

"The challenge and the opportunity for us is that while our portfolio ranks among the best in the industry, our financial performance has yet to reflect this," said Chief Executive Tony Hayward in a statement released ahead of BP's annual strategy presentation to investors. "Whichever way you look at it there are significant opportunities for improvement and in every case firm plans are in place to close these gaps."

BP aims to increase average oil and gas output at a 12 percent annual rate between 2008 and 2015, excluding any incremental production from Iraq.

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BP aims to increase average oil and gas output at a 12 percent annual rate between 2008 and 2015, excluding any incremental production from Iraq.

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