BP plans to slash £1bn off costs as profits fall

Despite a decline in profits, BP plans to continually invest in technology, as well as new methods of exploration, production, refining and manufacturing.


Lower oil prices have deflated the efficiency achievements of oil giant BP, which today reported that its half-year profits for 2009 were down by 57 per cent to $5.5 billion.

Last July BP announced that its Forward Agenda of efficiencies, which includes a drive to standardise its IT platforms had achieved significant savings as high oil prices and pre-credit crunch market buoyancy drove BP profits skywards.

Breaking the half-year into quarters, BP was able to report that the second quarter profit witnessed an improvement of 30 per cent compared to the first quarter of 2009. The British oil producer also reported that its daily production has risen four per cent in the last three months to June, 2009.

On the 29th July 2008 BP reported half-year profits of $8.6bn. At the time chief executive Tony Hayward told investors the Forward Agenda he had put in place on his arrival in 2007 was on track to achieve significant savings for the company and that they were reflected in last year’s results.

Today Hayward said BP has achieved $2bn in savings, ahead of its 2009 target and will take another $1bn in costs out of the company this year. The company is already reducing its headcount by around 5,000 this year, but said today that no further cuts are planned.

BP told CIO UK last year in its entry for the CIO 100 that its ‘field of the future’ bespoke management system was a real advantage to the company allowing it to optimise production processes and increase the amount of oil it extracts from its oil fields. In today’s trading statement BP told its investors that continued investment in IT was critical to the organisation.

“Our performance could be impeded if competitors developed or acquired intellectual property rights to technology that we required or if our innovation lagged the industry,” it said. BP said it had to continually invest in technology, as well as new methods of exploration, production, refining and manufacturing.

In recent weeks BP has signed a five year deal with network services providers HughesNet, which will see HughesNet provide the management of network and broadband services to 16,000 BP petrol stations across Europe.

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