SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended 11 October 2007
BP p.l.c.
(Translation of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No |X|
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October 11, 2007
BP SETS OUT ITS AGENDA TO CLOSE
PERFORMANCE GAP WITH RIVALS
BP today reiterated its determination to improve performance by simplifying how
the company is structured and run, ensuring that resources are increasingly
shifted to the front line with operating managers freed from corporate
bureaucracy and the burden of unnecessary overheads.
Setting out his forward agenda for the cultural change he signalled to the
financial markets in the summer, chief executive Tony Hayward said that while
the process would yield some medium term cost reductions, the major benefit
would be the revenue boost expected from greatly improved operational efficiency
over the longer term.
In a worldwide message to staff issued in London today, Hayward said BP will in
future comprise only two business segments, Exploration & Production and
Refining & Marketing. The current third segment, Gas, Power & Renewables, would
be incorporated mainly into the other two. A separate division, Alternative
Energy, will handle BP's low carbon business and future growth options outside
oil and gas.
The two segments will be made up of a series of strategic performance units.
These will become BP's main operating entities, each effectively a profit
centre, with closely-defined remits and rigorous business objectives.
Corporate infrastructure will be rigorously reviewed with some previously
centralised functions slimmed down and redeployed into the business segments. In
parts of BP up to four layers of management will be shed. Greater
standardisation of process, including safety, has already been introduced and
will be applied consistently across the group.
The moves follow a six-month review of the group's operational performance which
identified wide-ranging duplication, overlap and excessive organisational
complexity.
Addressing what he described as his 'three priorities', safety, people and
performance, Hayward said the company was making good progress on safety. The
focus on people would be to ensure the company deployed the 'right skills in the
right places' and allowed staff to exercise professional judgement without
'unnecessary interference'.
As to performance, Hayward said: "It is clear that BP's overall strategy remains
robust. We have great positions in many of the major hydrocarbon basins of the
world as well as in the markets of key economies and we are preparing for the
longer term by building a new, low-carbon energy business.
"Our problem is not about the strategy itself but about our execution of it.
BP's performance has materially lagged our peer group in the last three years.
It has been poor because we are not consistent and our organisation has grown
too complex. At the root of all this is a need to change our behaviours."
Hayward said the bulk of the competitive shortfall represented revenues lost
from impaired US refining capacity and delays to new production in the Gulf of
Mexico. The remainder arose from BP's higher cost base relative to its rivals.
"We expect the revenue gap to narrow as major new production comes on stream in
the fourth quarter and refinery throughputs rise at Texas City and Whiting over
the coming months," he said.
"The changes we are setting out today will reduce our unacceptably high overhead
costs. But it is their effect on operational efficiency over the longer term
that I believe will ultimately yield the most significant benefits."
Hayward said some of the changes were already under way; the others would be
introduced with immediate effect. He said redundancies would be inevitable in
some parts of the company but stressed that front-line operations would continue
to be strengthened. He did not anticipate major disposals but would not rule out
small-scale asset sales.
"What we are doing represents a fundamental shift in how BP works," Hayward
said. "Managers will be listening more acutely, particularly to front-line
staff. We will make sure individuals are fully accountable for things they
control. We will respect professionalism and excellence as key to the success of
our businesses - something we have not always done. Continuous improvement is
what will drive performance, as opposed to short-term, unsustainable
initiatives."
- ENDS -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BP p.l.c.
(Registrant)
Dated: 11 October 2007 /s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary