BP’s Big Profits
The BP group has worldwide oil production interests totaling 1,931 thousand barrels of oil a day (tbd). The main centres are the North Sea producing 580 tbd, Alaska which yields 288 tbd and other parts of the USA which together produce 456 tbd, including expanding production in the Gulf of Mexico. BP’s sales as well as production are strongly oriented towards the USA, where the company receives 45% of its sales income – 40% of sales are in Europe and 15% in the rest of the world. BP is a global operator.
The company has enjoyed bumper profits for the last two years. Thanks to high oil prices, 2000 was a record year for BP, it made the biggest profits ever of a British company. Oil prices fell by 15% in 2001, so results for last year presented at this AGM were never going to surpass BP’s own record profits. Nonetheless the profits from this global enterprise remain fabulous. BP’s Annual Report notes a profit result of $13.18 billion for year 2001, that is £9.2 billion, which means that the company has been clearing profits of just over £1 million an hour, every hour. Of this $4.935 billion was paid out in shareholder dividends, an increase over 2000. The rate of profit remains exceptionally high, with a return of 19% on average capital employed.
Although BP has over 350,000 shareholders, share ownership is highly concentrated with just 903 shareholders each holding over a million shares, that is nearly 94% of the total share capital. The Prudential holds at least 1.2 million preference shares, while the Co-operative Insurance Society Limited holds over 3 million preference shares.
It is not only BP’s shareholders who have been doing nicely. The company’s top executives are very well paid indeed. Peter Sutherland, BP’s part time chairman who is also a director of Goldman Sachs, enjoyed a 75% remuneration increase from £160,000 to £280,000 in 2001. But BP’s Chief Executive, Lord John Browne, caps even that with a salary package of over £3 million plus shares worth a further estimated £6 million.
BP’s Big Porkies
"In Colombia, where we are a major oil producer, we have been closely involved with local people and local authorities in Casanare to ensure that the wealth generated by our production furthers the area’s economic and social development. These efforts include promoting a more open relationship with the security forces in this area of violent conflict. Our own security and success are inextricably linked with those of the community. Experience over more than a decade in Casanare has taught us that improving the well-being of local communities must go hand in hand with the development of any project." Annual Report for 2001
Environment Regulator Assassinated
At the beginning of 1998 Carlos Vargas Suarez took office as head of Corporinoquia the environmental regulator responsible for the Orinoco River basin, which covers the oil producing areas to the south and east of the Andes.
A judicial process had already been under way investigating the impact of Triton, Total and BP flaring off gas. Eliodoro Torres the farmer who sold BP a part of the land to set up its Central Production Facility had complained to the company that burning off the gas was causing problems to the flora and fauna in the surrounding area. For example, his cattle were not breeding because of the apparent continual daylight. Eliodoro had written to BP complaining against the company’s aggressive attitude, stating that if anything should happen to him, the company would be responsible. He and his nephew were assassinated later that year. Eliodoro’s widow continued with the case against the oil companies. Her son was assassinated next. When the Cundinamarca court decided against the complainants, the magistrate would not even allow Eliodoro’s widow to give evidence.
Meanwhile Carlos Vargas Suarez was taking his responsibilities seriously, which is both honourable and highly risky for a public official in Colombia. In August 1998 he convened a public hearing at which a series of criticisms were made concerning the negative environmental impact of BP’s operations.
Carlos Vargas was assassinated on 2nd December 1998, before he had completed one year in office.
