.. ve our performance by building on the track record and the highest achievements of each company. BP Amoco will aspire to deliver excellent performance in every part of our business and to be in touch with the reality of the world in which they are operating. They want to build relationships on the basis of mutual advantage the needs of those who do business with them, and the needs of each community in which they operate. They aim to conduct their operations without accidents, no harm to people and no damage to the environment. They apply their skills, technology, and know-how to the search for creative and constructive solutions.
Their business policies are universal. Their commitment is to use these policies to raise their own standards. BP Amocos goal is to play a leading role in meeting these needs from oil, gas, solar power and petrochemicals without damaging the environment. Innovation will be the hallmark of the way they work with people, technology, assets, and relationships. BP Amoco believe that their activities should generate economic benefits and opportunities and their conduct should be a source of positive influence. Their business policies focus on five areas ethical conduct; employees; relationships; health, safety and environment; control and finance.
They are committed to respect the rule of law, develop employment practices, create mutual advantage in all relationships, demonstrate respect for the natural environment, and manage their financial performance. They expect that everybody who works for BP Amoco to take responsibility for living up to these commitments. Their measures of success are the extend to which they meet those commitments, the long-term value they create for their shareholders, the pride of their employees in their accomplishments, the satisfaction of their customers and all those with whom BP Amoco do business, and the way communities judge their activities. BP AMOCO CHEMICALS BP Amocos main activities are exploration and production of crude oil and natural gas; refining, marketing, supply and transportation; solar power and manufacturing and marketing of petrochemicals. BP Amoco Chemicals manufactures and markets wide ranges of petrochemicals, intermediates, plastics, and specialities.
Each year they sell more than 25 million of petrochemicals, specialities and fabricated products worldwide, creating an annual turnover of $9,691 million in 1998. They operate large-scale manufacturing plants in the United States, the United Kingdom, Belgium, France, Germany, Malaysia, and Brazil. Thirteen joint-venture businesses in seven countries give a powerful platform for growth in Asia, including China, Singapore, South Korea and Malaysia. BP Amoco Chemicals holds leading positions in seven core products acetic acid, acrylonitrile, aromatics, purified terephthalic acid (PTA), alpha-olefins, purified isophthalic acid (PIA) and polypropylene. Some of their products are used internally as the raw materials for other downstream chemicals, others are sold to customers for use in application as diverse as pharmaceuticals, cosmetics, detergents, packaging, wire and cable insulation, lubricants, textiles, agriculture and agrochemicals, electrical and electronic components, automotive parts, aerospace and aviation and in the building and construction industry.
One of the main factors in their success has been in developing and applying advanced technology to their manufacturing processes and BP Amoco Chemicals owns a number of proprietary technologies. Among these is Innovene, a gas phase manufacturing process for polyethylene. They also have leading-edge technology for the manufacture of polypropylene. Other includes Cativa, an iridium-based catalyst for acetic acid, naphthalene dicarboxylate (NDC), a chemical that makes polyesters stronger and more heat-resistant, and their acrylonitrile process, which is used in 95 percent of the worlds acrylonitrile manufacturing capacity. On February 17, 2000, BP Amoco Chemicals announced that they are studying options to debottleneck production at their purified terephthalic acid (PTA) plant at Cooper River, South Carolina.
BP Amoco is studying options for a new world-scale, 700,000 metric tonne PTA unit that could be brought on-stream by the end of 2003. (Northern Light, 2000) Everybody who works for BP Amoco Chemicals is responsible for getting health, safety, and the environment right. Good health, safety, and the environment performance and the health, safety and security of everyone who works for BP Amoco are critical to the success of their business. They are committed to respecting the rule of law, conducting their business with integrity, and showing respect for human dignity and the rights of the individual wherever they do business. They are also committed to respect the natural environment and work towards their goals without no accidents, no harm to people and no damage to the environment. FINANCIAL HIGHLIGHTS January – June 1999 1998 Replacement cost profit before exceptional items ($m) 1,903 2,358 Replacement cost profit after exceptional items ($m) 880 2,420 Historical cost profit after exceptional items ($m) 1,459 1,632 Earnings per ordinary share on replacement cost profit before exceptional items (cents) 20 25 Dividends per ordinary share (cents) first quarter second quarter 10.010.0 9.510.0 Dividends per ordinary share (pence) first quarter second quarter 6.16.2 5.86.0 Dividends per ADS (cents) first quarter second quarter 60.060.0 57.060.0 Capital expenditure ($m) 3,263 5,065 In the 1998 Annual Report co-chairmen of BP Amoco described the merger of BP and Amoco as a “groundbreaking deal for the oil industry.” A strong second-quarter of 1999 result as merger cost savings began to come through produced replacement cost profits for the half of $2,128 million, before exceptional items and after adjusting for special charges of $225 million.
These profits were about 12 percent down on a year ago. Net debt increased to $15,1 billion. The ratio of net debt to net debit plus equity was 26%. The exploration and production business generated $2,435 million of replacement cost operating profit for the half year after adjusting for special charges. This represented an improvement of 10% on the first half of 1998, despite lower oil prices, and reflected several factors higher oil and gas production, lower costs stemming from savings and the benefits resulting from post-merger rationalization.
Replacement cost operating profit for the half year was $956 after adjusting for special charges down 31% on the same period in 1998. At $474 million, replacement cost operating profit after adjusting for special charges was 29% lower than same period in 1998. Chemicals production was 8% up on the first half of 1998 as sales improved. LOOKING TO THE FUTURE On July 15, 1999, BP Amoco announced new targets. They will lop $4 billion of its annual costs, sell assets of $10 billion and boost capital spending to a total of $26 billion over the three years to the end of 2001.
According to Sir John, BP Amoco will continue to improve efficiency and intend to high-grade the portfolio with $10 billion of disposals. They plan to invest for growth and to maintain their gearing within a band of around 25% to 30% and to maintain our dividend policy of paying out 50% of underlying mid-cycle earnings. BP Amoco will continue to plan on the basis of a low oil price, driving down supply cost to ensure the groups robustness at $11 a barrel. Capital spending this year should be around $7 billion and disposals $2 billion. Some $2.2 billion of the cost-reduction targets is expected to come from the upstream business, $1.4 billion from refining and marketing and $400 million from petrochemicals. After the $10 billion of divestments, the group expects to see gas production growing by 5% a year, and oil production by 8% a year.
CONCLUSION BP Amoco is proud to be part of an organization that does much to improve the quality of life of people everywhere. They believe that their business should be both competitively successful and a force for good. They seek to conduct their business in a manner that is distinctive, responsible and forward-looking. BP Amoco strives to be a good citizen. This is reflected in their active support for the people and communities where they operate.
“A good business should be both successful and a force for good.”.