Q4 2021 BP PLC Earnings Call

And so I'll hand over to Bernard to introduce and cover the full year highlights and then tomorrow, who will take you through our fourth quarter results.

Then, we'll turn to strategy and Burnett of Murray will update you on the progress and financial frame.

And then following that will make sure we've got plenty of time for the questions, which I'm sure you'll all have.

Before we begin as usual I'd like to draw your attention to the cautionary statement, which is included in the presentation slide deck. During today's presentation, we will make forward looking statements, including those that refer to our estimates plans targets aims unexpected <unk> app.

Actual results and outcomes could differ materially due to these factors.

As noted in our cautionary statement as well as in our UK and SEC filings.

Please refer to those filings, which are available on our website for more details on that note over to you burn it.

Great well.

Craig.

Good morning to everyone joining us on the phone and on the web and of course I'm also delighted that we're able to host a small audience here in person.

James This morning, and that includes my leadership team.

With the exception of Anya, who will join us on the first of March.

Which we're all very excited about I have to say, we do have walking here walking setup for a moment walking runs our gas and low carbon business in the meantime until Anya arise I also want to introduce and is doing a brilliant job by the way I want to introduce two new members of the team.

Leon Leon Russell, who takes over from.

David Eitan, who is leaving the company after 40 years, and Dominic and Mecca, whereas the Mecca Mecca.

Who takes over from Dominic Emory, who is also leaving the company after close to 40 years and all of those.

<unk> take effect on March the first.

And for those of you who are on the on the web you can see the team on the slide here Murray I think that's a very smartly photograph with you, but shouldnt smile, a CFO that's full on smile that one.

The last time, we held an in person event.

It was two years ago.

And actually I was just remarking. This morning. This is actually my first time doing a results call in person and my new.

Rules, so it's amazing.

Our time has passed and it's hopefully a sign of progress and a sign of confidence in the future.

And I promise it won't take as long as we did at BP week. So we will come back to that later now in the two years since laying out our ambition for new ambition, we've been through obviously a period of significant change and at the same time the world around us has changed as well COVID-19 volatility in the energy Mark.

And of course, the accelerating energy transition.

With this backdrop it felt like it would be a good time to pause just for a moment and reflect on the journey, so far and the BP that we see today is a company that has successfully we would argue completed a period of significant change one that sees clear and compelling growth.

<unk> presented by the transition and one that is 100% focused on delivering the plan that we have laid out and what you know by now we call performing while transforming and before we get started we love a video or two we're going to show a short video just to share some of the highlights with you so over.

The video.

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[music], it's not just because society wants us to do this and needs us to do this.

Our employees want us to do it and indeed, our shareholders debate that becomes bp's, new purpose to be a net zero company by 2050 or sooner from IOC to IEC.

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So I think it's pretty cool and my language to see what we've delivered and it's the team around me Peter has delivered it and to think.

That was done virtually most of it in during a pandemic is I think it's extraordinary and I hope. It gives you a little confidence some confidence in our ability to get stuff done so let's get into that in a bit more detail starting with our full year results for 2021, we delivered underlying replacement cost profit.

Of $12 8 billion, we delivered operating cash flow of $23 6 billion, including a working capital build of $5 3 billion and we delivered return on average capital employed of 13, 3% the highest level for a decade.

In addition, we delivered our target of $2 5 billion of cash cost savings on a run rate basis relative to 2019 ahead of schedule. Six months ahead, we reduced our net debt by over 8 billion seven quarters in a row of net debt reduction we raised our dividend per ordinary share in the second quarter by 4%.

<unk> the $1 5 billion share buyback that we've announced today, we will have delivered share buybacks from 2021 surplus cash flow totaling $4, one 5 billion.

Next to our progress in transforming BP.

Since we announced the strategy to become an integrated energy company, we've been building momentum across each of our three strategic focus areas and Brazilian hydrocarbons. We started up 11 major projects since the start of 2020, thereby delivering our 2016 target. Some of you will remember I was told.

About this would Gordon in Baku actually in 2016, our target then was to bring on 900000 barrels a day of new high margin production.

And convenience and mobility, we've grown margin share from convenience and electrification by 4% since 2019, demonstrating the strength of our customer offers and increase the number of EV charge points to over 13000 across the UK Europe , India and China.

Finally in low carbon energy, we have entered offshore wind with a pipeline of five two gigawatts net to BP today. Following the recent Scott wind at least option award, we built our renewables pipeline, which at the end of 2021 stood at 23 Gigawatts net a four fold increase since the end of <unk>.

<unk> and we've made exciting progress in hydrogen having grown our hopper are between seven and $1 three MTA.

Progress like this as well as the pace at which the world is moving leads us to believe that we can accelerate our plans in some areas and reinforces our confidence in delivering our 2025 targets, but before we get into the detail around that.

And Murray, who is jumping at the base over there to go through our fourth quarter results Maria over to you alright. Thanks. Thanks, Brian Good morning, everyone nice to see all of you in person finally.

As usual I'll start with the macro environment.

During the fourth quarter, Brent rose by 8% to average $80 per barrel its highest level in seven years to date in 2020 to Brent has moved above $90 when supply disruptions easing concerns around omicron and the expectation of continued declines in inventories.

Looking ahead, we expect supply and demand to move back towards balanced through 2022. However.

With lower levels of spare capacity.

This volatility is likely.

Turning to gas during the quarter seasonal demand saw Henry hub rise by 10% to an average of $4 70.

International prices rose sharply with MVP and J cam around 90% higher than in the third quarter. This was caused by low inventory levels and concerns about the availability of supply during the winter months.

With ongoing geopolitical uncertainty and low storage levels, we see the potential for continued price volatility.

Turning to refining industry margins remained broadly flat compared to the third quarter and we expect them to remain at similar levels. During the first quarter local margins may and are being impacted by lockdowns.

Moving to our results in the fourth quarter, we reported an underlying replacement cost profit of $4 1 billion.

Compared to $3 3 billion last quarter compared to the third quarter.

And gas and low carbon energy. The result benefited from higher gas realizations and higher production due to major project ramp up.

After an exceptional first nine months it was an average quarter for gas marketing and trading.

And oil production and operations. The result reflects higher liquids and gas realizations. This includes the benefit of very strong MBP prices. The result, also reflects higher production, including a recovery in the Gulf of Mexico from the impact of Hurricane Ida.

And then customer and products. The products result was impacted by significantly lower oil trading results and higher energy costs. The customer's result reflects resilient retail and convenience performance, despite seasonality and COVID-19 impacts and Castrol volumes were higher although results continued to be impacted by higher base oil prices and additive shortages.

For the fourth quarter BP has announced a dividend of $5 46 per ordinary share payable in the first quarter.

Turning to cash flow operating cash flow was $6 1 billion in the fourth quarter. This included a working capital build of $2 2 billion capital expenditure was $3 6 billion for the fourth quarter and disposal proceeds for $2 3 billion.

This includes $1 5 billion related to the sale of our Alaska business to <unk> in 2020.

With proceeds of $7 6 billion received during 2021, we've received $12 8 billion of proceeds against the target of $25 billion by 2025.

Strong cash flow generation enabled us to deliver surplus cash flow of $3 billion in the quarter and $6 3 billion for the full year. This underpinned a further reduction in net debt and supports our continued share buybacks during the quarter net debt fell for the seventh consecutive quarter to reach 36 billion at year end, a share buyback of $1 75 to one.

And it was executed this included the $1 5 billion announced with third quarter results and $475 million to complete the program announced with second quarter results.

And we intend to execute a further $1 5 billion share buyback prior to announcing first quarter 2020 to resolve.

Okay.

Now, let me summarize the progress made during 2021 against our frame.

We have a clear set of priorities first our resilient dividend.

We announced a 4% increase in the dividend per share with second quarter of 2021 results.

Second a strong investment grade credit rating during 2021, we achieved our $35 billion net debt target around a year earlier than expected and reduced net debt by over $8 billion.

Third disciplined investment allocation 2021 capital expenditure was $12 8 billion, including an organics in line with guidance of around $13 billion.

And fourth share buybacks for the year, we announced for one 5 billion of buybacks from surplus cash flow that takes us to total announced shareholder distributions of $8 4 billion for the year.

Around the level of the annual dividend distributions in 2019.

I'll update you on our 2022 plan shortly but for now back to Bernard.

Okay.

Thanks Marie.

Now I'm going to speak for about half an hour.

To go through a strategy update.

So just getting you.

Situated in your seats.

Before handing back to Murray.

He will cover the financial frame for about five six minutes and then I'll close and then we'll move to Q&A. So.

So let me turn to our strategic progress and we now have two years believe it or not under our belt and we've made progress on our 2025 targets and we are increasingly confident.

Not just in those targets, but in the opportunities presented by the energy transition.

And before we get into the detail, let me remind you of that strategy, which I would add remains unchanged.

It is importantly, a three part strategy part one is resilient hydrocarbons part two is convenience and mobility part three is low carbon energy.

Embedded across these is our sustainability framework.

Sets out our aims for getting to net zero, improving people's lives and caring for our planet.

And binding it altogether.

Integration harnessing our collective capabilities as the energy system transitions to help more and more customers get the clean reliable and affordable energy that they want and in doing so create value for our shareholders.

And we sum all of this up as BP transforming from an international oil company to an integrated energy company.

And I would say I think.

We have already made significant progress on this transformation.

It's important to set this in context, so if we look back year one we.

We set out a new direction, new purpose, a new ambition, a new strategy, a new financial framework, the new sustainability framework and a new leadership team.

That's done.

Now done.

<unk> 2021 was about change.

The largest restructuring in our company's history. So that we are organized to deliver.

That is now done completed with all of this now behind us the decks are clear.

Year, three and every year from now on is focused on one thing and one thing only delivery.

Safe efficient and disciplined delivery of the plans that we have laid out.

And maybe our biggest takeaway from our experience thus far.

As we transform.

We must perform our shareholders expect and deserve nothing less.

And I hope our results show that we are doing just that.

Now I'll be emphasizing six points today.

That was point number one the direction is set to change is done it's behind us and we're focused on one thing and Thats delivery and we will cover these points throughout the presentation, but let me briefly summarize them.

Point number two is that we have confidence in delivering our 2025 financial targets.

This is underpinned by.

Our resilient hydrocarbons, where we expect to sustain EBITDA 325 at around $33 billion.

Convenience and mobility, where we expect ratable EBITDA growth to around $7 billion.

And our disciplined financial frame.

Including annual capital expenditure unchanged at 14% to $16 billion.

Would at least 40% to be invested into transition by 2025.

Our commitment to return at least 60% surplus cash through share buybacks subject to maintaining a strong investment grade credit rating.

And our resilient and growing dividend.

And as a result, we remain on track to deliver what we said, 7% to 9% EBITDA per share CAGR.

1% to 14% ROE Archie.

20% of capital employed and the transition.

Additionally, we aim to continue to grow EBITDA to 2030.

And we plan to do this by sustaining EBITDA from resilient hydrocarbons.

Continuing ratable growth in convenience and mobility.

And aiming to deliver two to 3 billion contribution from low carbon energy.

So turning next to <unk> three.

We aim to sustain.

EBITDA from our hydrocarbons business through 2030.

We will do this by high grading, our oil and gas portfolio.

Growing the underlying contribution from refining.

And deepening our investment in bioenergy.

Point number four.

We aim to deliver between nine and $10 billion of EBITDA from transition growth businesses by 2030.

That's up from about $1 billion today.

And that will be driven by five transition growth engines.

Bioenergy convenience EV charging renewables and hydrogen.

And you can think of them as non fossil.

And in high growth sectors.

In each of these areas and this is what I am increasingly.

Cited about but in each of these areas our experience our skills our networks our brand our assets gives us real competitive advantage.

Capital expenditure invested in the transition.

So as I said expected to be over 40% of total spend by 2025 rising to around 50% by 2030.

And this leads the capital employed in transition rising from over 20% at 2025 to around 40% by 2030.

And then on the chart you can see the returns that we expect from each of the growth engines.

All of this within our existing $14 billion to $16 billion frame.

Point number five we are now aiming for net zero emissions across operations productions and sales by 2050 for sooner sales.

Sales will now include traded and marketed energy products.

Finally point number six we will remain focused on the disciplined application of our financial frame providing compelling.

Shareholder distributions, while continuing to strengthen the balance sheet and remaining disciplined in our capital expenditure. The framework is unchanged and Murray will come back to it later.

So with these six points as context, let me turn then to progress across our strategic themes since starting with number one which is resilient hydrocarbons.

Here, we plan to high grade our portfolio.

Lower our emissions and drive higher returns, we will do this through three focus areas oil and gas refining and bioenergy.

And before I turn to each let me take you through some of the strategic highlights to date.

As I've said since the start of 2020, we've delivered 11 major projects, bringing the total to 35% since 2016 executed on average on schedule and around 15% under budget from that target. We set back in <unk> and there is more to come with four startups expected during 2022.

Through 2021, we have driven competitiveness through portfolio decisions.

<unk> maintain reliability and availability in the face of what I think Gordon described a challenging operating environment.

We've reduced the nonproductive time, and our drilling and completion operations by 20% over that time period, and we have embedded our single operating model with around 75000 people now deployed in agile structures fundamentally changing how we work.

For example, this single operating model helped with our approach to planned turnarounds in 2021. The first year that these were managed globally across oil gas and refining we delivered 26 planned turnarounds on average under budget and with a production impact lower than planned.

And we are in action on emissions for example, further reducing our Permian.

Methane flaring intensity to a record low of around 6% in December that's down 95% from when we acquired the assets in 2018.

We expect to sustain EBITDA from resilient hydrocarbons at around $33 billion through 2025, and thereafter, we now aim to maintain EBITDA in a range of $30 billion to $35 billion until 2013.

Now with our nominal with our 2030 nominal oil price assumption broadly flat versus 2021 $71.

This is driven by three factors, we aim to grew underlying EBITDA from oil and gas we aim to grow the underlying contribution from refining and we aim to deepen our investment in bioenergy.

Let me take each in turn.

In oil and gas we have continue to have a deep and high quality resource base of 30 billion barrels of oil equivalent and that allows us to choose the best investments, we have a disciplined capital frame for oil and gas of around seven $5 billion per annum through to the middle of the decade.

In allocating this capital we look for paybacks of less than 10 years for oil listen to 15 years for gas.

So that we can select the highest quality options as we focus on cycle time.

And we are confident in the value and the resilience of this investment plans for the following reasons.

It leverages existing assets around 70% of the spend will be on existing hubs.

Typically lower risk and higher quality returns.

It holds managed base decline in a range of 3% to 5%.

It is capital efficient with an average point forward development cost of around $9, a barrel compared to a 2021 unit DD&A of $15 a barrel.

We aim to manage our orthopedic ratio down to around eight years by 2030.

And it is focused with 80% of the capital spent in just six regions.

This investment plan holds underlying production broadly flat through 2030.

Now the depth of our resource base provides flexibility by 2030, we aim to high grade over the next nine years high grade around 700000 barrels a day of oil equivalent per day relative to 2021.

And the margin on these barrels is lower than average actually less than $20 per barrel.

And this is expected us to allow realize additional value through the divestment of those assets, which I would add we are not in a rush.

And we plan to continue to drive cost efficiency, while maintaining safety and operational integrity.

Realizing synergies through the single operating model that I discussed our relentless focus on digital and our adoption of agile work constructors that Gordon is leading.

We plan to drive unit production costs to around $6 per barrel by 2025, and we aim to hold them at this level through to 2013.

And this is expected to result in a high quality highly focused portfolio with 90% of the EBITDA in 2013 coming from six regions.

And an improvement in unit margins relative to 2021 of more than 20%, 20% improvement in unit margins by 2030 relative to 'twenty one.

In refining we aim to deliver around $2 billion of EBITDA underlying EBITDA growth by 2030 relative to 'twenty. One this is excluding biofuels, which I will come to.

All of this around half is expected to come as demand recovers with COVID-19 impacts easing supporting an increase in realized.

Refining margins and the remainder is expected to be delivered by our business improvement plans focused on three areas first availability.

On track to deliver over 96% Solomon availability.

Our turnaround improvement plans have already delivered improvements and we expect the impact of the higher maintenance of activity in 2021 to reduce overtime.

Second cost efficiencies, we plan to deliver Solomon second quartile or better non energy costs, which is a competitive position given our refinery configurations, while all the time, keeping our rigorous focus on safety and operational integrity.

And third flexibility and yield improvements for example, and I was there last year through investments in Cherry point Hydrocracker improvement project and are there investments in the U S. Midwest. In addition, we remain focused on high grading the portfolio through either conversion consolidation of less advantage units.

Indeed, divesting where it makes sense.

And together these points underpin our target of delivering top quartile Sullivan net cash margin margin by 2025.

Turning to bio energy. This is the first now of our transition growth engines the.

The market backdrop is strong.

Bp's energy outlook, a rapid transition scenario shows biofuels growing by an average of 6% per annum to 2030 with sustainable aviation fuels, SaaS and biogas growing significantly faster.

We aim to deliver around $2 billion of EBITDA by 2030 around half driven by the production of Biofuels from feedstocks that meet applicable sustainability standards and around half driven by biogas and other trading opportunities let.

Let me start with bio fuels our.

Our refineries operate in regions, where we expect to see strong growth in demand and our manufacturing processes are well positioned to adapt to this we already produce more than 5000 barrels per day of Biofuels at three of our refineries through by our co processing and we aim to triple that production by 2030 across.

The sites.

We plan to invest in five major biofuels projects.

<unk> three adjacent to existing refineries.

And we aim to convert up to two of our refineries to bio refineries.

This focus on leveraging existing infrastructure logistics scale and customer relationships is expected to create real capital efficient growth.

Turning to buy I guess this is a sector that we are increasingly excited about it is capital light.

It is highly modular and capable of rapid growth.

It can achieve very low carbon intensities at Cree.

<unk> value for BP through strong integration in trading and it delivers high returns and very fast paybacks.

Through our co marketing agreement with clean energy fuels.

In the U S. We're already the largest supplier of biogas in the U S to heavy duty fleet customers.

And we recently here in the U K acquired a 29% stake in gastric and they are a major provider of biogas to heavy goods vehicles here.

And we plan to retain our leadership position in the U S expand in the fast growing European market and we aim to scale equity production around 20 fold to AUM.

10000 barrels a day by 2030 and through additional offtake, we expect further margin capture.

That was resilient hydrocarbons.

Strategic three strategic.

Strategic theme number two is convenience and mobility.

And now Emma has got this business here. Our aim is to double EBITDA by 2030, while sustaining returns of between 15, and 20% and it's all through a focus on customers.

Our growth is driven by the following is driven by our differentiated convenience and fuels offers and selective growth market expansion is driven by the acceleration of our EG charging ambition across key markets and it's driven by the contribution from Castro aviation B to B and midstream.

And since we outlined our strategy our capital allocation plans have changed in two areas.

First we are tightening our expansion in growth markets and second we're accelerating our EV charging ambition.

This slide shows just some of the examples of the progress that we've made which I will highlight when I cover these businesses.

And this it is this strong delivery I think that gives us confidence in the future.

Now as a reminder, we.

We expect to deliver around $7 billion of EBITDA by 2025, and we aim for around between nine and $10 billion by 2030 with returns of 15% to 20%.

The businesses have remained resilient very resilient during the pandemic and we expect COVID-19 impacts of more than $600 million in 2021 to reverse over the coming years, and we expect EBITDA growth to 2030 to be split across the three businesses shown on the chart.

Our convenience and fuels business, along with Castro of ratable and they drive most of the growth through 2025, and then its EV charging that drives more of the growth in the second half of the decade.

So let me outline our plans in each of our business areas and I'll start with convenience and fuel retail.

Convenience is the second of our transition growth engines. It is a material business and in 2021 delivered a record one five a record $1 5 billion gross margin more than 20% growth in just two years through dependent and we aim to continue to grow at around 7% per.

We're confident in this growth.

Because we aim to further expand our convenience our strategic convenience network to around $3 5000 sites by 2030. It was 3000, having already added 500 sites. Since 2019, we continue to see increased basket sizes, which does is it says under 10.

And we have taken full ownership of Thorntons in the U S and we have extended our partnership with marks <unk> spencers in the U K through the end of the decade.

In our convenience offer built on a strong and material retail fuels business.

We have a great network of sites and established markets, which generally sell more fuel than the industry average, we strong trusted brands like <unk> in a row, we have premium fuels that generate around double the margin of our regular fuels in many markets and we have differentiated digital offers and loyal.

T schemes.

For example, our <unk> app.

Customers have grown threefold over the last two years since 2019, and these customers typically spend twice as much as another customer.

We now aim to expand our presence expand our presence in growth markets to over 6000 sites by 2030, which will be primarily driven now by our successful <unk> BP joint venture in India.

So turning to EV charging the third of our transition growth engines, and we aim for this business. Some very exciting business I have to say, we aimed for this business to deliver more than a third of our overall EBITDA growth from convenience and mobility to 2030.

We're accelerating our EV charging ambition, that's what we're saying today across key growth markets through a focus on on the go charging 10 fleets.

For undergo charging marine I think we're getting to be expert at this stage Murray almost almost almost customers want fast convenient reliable and seamless charging integrated with leading convenience offers and services.

And we're confident that we can succeed in this space for three reasons.

First we have an advantaged retail and convenience network in our key focus markets and the UK and Germany. For example, we have established a leading presence with more than 90% of the population live within a 20 minute drive of our stores in fact 550 million customers.

Lift within 20 minutes of a BP store today.

Second we are focused on rapid and ultra fast charging and that drives higher utilization and therefore drives higher margins and third we expect to invest in digital technology and strategic partnerships, we expect that to drive up utilization and increase the footfall at our convenience stores, while you're getting a charge and overall, we aim to <unk>.

Our network now to more than over 100000 television charge points and to increase our energy sales. This will become a key metric for those sites by more than 100 fold by 2030.

Our second focus area is fleets and we think this has enormous growth potential for BP, we have a material fleet business with customers, who we aim to support.

They wanted to transition all these fleets one of transition and they want someone to help them. We can do that we already provide dedicated fleet solutions, which includes hardware software and other services and our acquisition of amply power.

Has accelerated our entry into the U S, which is one of the fastest growing fleet charging markets in the world.

Now taken together these plans give us confidence in aiming to deliver 50% margin share from convenience and electrification by 2030, that's up from 30% today.

Turning finally to Castro aviation B to B and midstream here to three drivers of growth are as follows first we aim to grow <unk> revenues to more than $8 billion by 2030.

We'll do that through expansion and growth market, including in India, where kestrel as the number one brand.

Extending our Castro branded service and maintenance offers globally and providing market leading offers in EV fleets.

More than two thirds, if you can believe it more than two thirds of major Oems have approved Castro on as part of their factory Phil.

Improving cash flow profitability through a focus on cost cost efficiency simplification digitalization and optimization of its manufacturing footprint.

Third growing aviation B to B and midstream by leveraging our strategic relationships with major airlines and airports, establishing an established position in SaaS, where we aim to be a sector leader with 20% share of supply and continued growth in our bio ground fuels business.

Summing up.

These case these steps give us the confidence in our ability and our aim to deliver 9% to $10 billion of EBITDA from convenience and mobility by 2030.

Apparel is still with me.

Strategic theme number three is low carbon energy.

Our focus on returns and building scale with capital discipline is unchanged.

We're aiming to create integrated low carbon energy hubs enabled by our last two transition growth engines.

First renewables, we aim to build a leadership position in offshore wind and accelerate our solar growth through light source BP and Bp's U S solar pipeline.

And we remain confident in achieving 8% to 10% returns that are levered.

Second it's hydrogen here, we aim to leverage bp's existing refinery demand to build regional supply positions.

And as hydrogen markets develop we aim to create a portfolio of globally advantaged supply hubs and we aim to capture a 10% share of core markets by 2030.

Over the past two years, we've made real progress in offshore wind, we grew our pipeline from zero to over five Gigawatts net in two core markets through our partnership with Ecuador, and the U S and <unk> in the U K.

In solar light source BP has increased its pipeline from one six gigawatts.

When we did the investment in 2017 to 26, Gigawatts and they progressed 53 projects to <unk>.

At a weighted average expected returns of 8% to 10% prior to farm down.

And we are achieving significant milestones in building, our hydrogen and Ccs businesses.

We successfully increased the size of our renewables project pipeline to 23, Gigawatts net to BP and we've got a material hopper of early stage renewables and hydrogen projects.

Our capital investment in these businesses is growing we spent $1 6 billion here in 2021, and we expect to between three to invest between three and $5 billion per annum by 2025 rising to 4% to $6 billion per annum by 2030.

We are rigorous in evaluating opportunities.

Rejecting a lot Murray and selecting only what we see is the very best projects and this momentum and this discipline gives us confidence in the quality of the business. We are building and by 2030, we aim for this business to deliver between two and $3 billion of.

EBITDA.

And as this slide shows we now have a global portfolio of projects.

We're trying to recreate the sort of oil and gas major project list right. That's what we're doing here you see it in offshore wind do you see it in hydrogen and it gives us the confidence and it gives us the platform to develop those future low carbon energy hubs.

Turning to hydrogen where we have conviction in our ability to create differentiation and building material business. We now have a hopper of 0.7, MTP eight of which have been announced including H T side here in the U K Lincoln in Germany and Oman.

And this hopper has the potential to grow to up to one three MTA as we continue to activate demand and scale up production.

And we're focused on growing scale in key regionally integrated markets, such as the UK Europe and U S.

And we're playing to our strengths here.

We're leveraging our technical capabilities, we're leveraging our existing demand at our refineries to be that anchor for those first projects. We're building on our experience of delivering an operating complex projects remember those 35 projects delivered on time under budget.

We're creating value through integration of marketing trading and shipping Karl's business for example, with power customers in Asia, just like we've done for decades in LNG and we're deepening our partnerships, creating integrated low carbon energy hub opportunities through longstanding relationships many times built through our oil and gas.

Businesses, such as with Abu Dhabi, such as in Oman, and with companies such as Daimler and White Hay group, and we're confident and energized by the potential of this business and Anya when she arrives we'll get into this and she will discuss this with you all the broader low carbon business.

A session that we will do with you later this year and I'm excited to introduce her formally to you.

Turning to integration.

Let me spend a few minutes explaining.

While we see a rule and I would say indeed, a need for an IEC such as BP.

One of the few companies, we believe and I don't say this in a boastful way, but one of the few companies who have the scale and the expertise and the experience to navigate complex markets and who can help manage increasingly interconnected energy systems, the importance of which I think have been highlighted in the past few months.

For over 100 years, we had been in before your time Murray.

We've been in the business of integrated energy value chains based on hydrocarbons as the energy source, we get oil and gas out of the ground as the upstream business, we transformed our hydrocarbons into marketable products.

Refining business and we sell those hydrocarbon based products in our marketing business.

We've created a portfolio, which gives us a global presence across that hydrocarbon value chain and of course, we have our trading organization to optimize the flows and to provide an uplift to.

The group returns of at least 2% in addition to what each standalone business can do on its own.

As we move from an IOC to an IEC and Decarbonize our portfolio. We plan to replicate this model of integrated energy value chains, combining hydrocarbons now with electrons and hydrogen.

We're moving into renewables solar and wind, that's where we generate the electrons it's a new upstream business, we transformed those electrons into hydrogen so new downstream business and we will sell the products will sell the electrons will sell the hydrogen to customers so new marketing business.

And this creates an electron and hydrogen energy value chain with upstream downstream marketing businesses that will complement our existing hydrocarbons value chain.

And at the heart of our integrated value changes are world class.

Carl trading business. It has been decades in the making with a presence in 140 countries and over 2000 employees.

And through it we can leverage our global asset portfolio to provide a consistently reliable supply.

We have expertise in managing risk in volatile markets with high commercial and regulatory complexity, we have deep analytics and technology expertise and we can create integrated bespoke energy solutions for our customers.

All of these are transferable, allowing us to grow in new products and markets.

<unk> for example, biogas and low carbon products.

And together, we believe this capability can allow BP to offer customers a one stop shop for their energy needs.

And do U K, where we are today is an example of how these integrated hydrocarbon electron and hydrogen value chain can come together in one region.

We've been present across the hydrocarbon value chain in the U K for over 50 years, we produce oil and gas in the North Sea, we sell oil and gas customers and gasoline and coffee to consumers, we're bringing gas into the UK from overseas to the Isle of grain terminal as well as <unk>.

Shipping products from European refineries.

We're now in action to create electron and hydrogen.

Energy value chains in the U K, we intend to produce electrons through offshore wind farms in Scotland and in the RSC and through our light source BP joint venture.

We plan to construct hydrogen Ccs and biogas plants.

We plan to scale up our EV charging and customer offers using our extensive physical retail network, our brand and our convenience offer wood.

We'll be able to link gas and electrons to help create reliable power.

And as mentioned earlier the returns from each of these hydrocarbons electron and hydrogen businesses can be further enhanced by integration through our trading organization.

And it's this ability to leverage existing infrastructures existing capabilities and relationships and integrate across offshore wind hydrogen and EV charging supported our recent successful debt in the Scotland leasing growth.

And we're already working to replicate this model in other countries.

Equally crucial to our transformation to an IEC is having the right capability to enable our success.

And here we're in a good position, we have great incumbent capabilities skills that we can leverage that we can increasingly leverage across our three strategic themes.

120 strong extended leadership team is representative of our broader workforce, bringing together a broad and diverse set of expertise views and perspectives and it's made up around 40% female and around 25% global minority.

And from next month, I look forward to having a gender balanced leadership team reporting to me and on the right of this slide you will see what we thought.

Where we feel we need different skills, we're hiring.

Bringing in high caliber specialized.

<unk> often from other industries over the past 18 months alone. We have hired 38 senior executives from outside BP and that's a marked change with our history and for me personally. It's the most Terry does this work it's hugely encouraging to see the interest in our strategy and in our diary.

Action.

Turning then to sustainability in 2020, we announced a.

Two years ago.

Our ambition to be a net zero company by 2050 or sooner and to help the world get to net zero.

Two years on we continue to believe our ambition is good business and we continue to believe it supports societies drive towards the Paris climate goals.

We are in action and we're on track for our 2025 targets.

As we progress we continue to learn.

We have growing confidence in the opportunities, especially over the longer term and building participating in and integrating a lull and across net zero value chains.

And this has enabled us to make some changes and this work has been led by Julia for AME, one which encompasses our scope one and two emissions from our operations. We are accelerating our 2038 from 30% to 35% to 50%.

Today.

For <unk> III today, which includes the lifecycle emissions from the products we sell.

We're increasing our 2050 or sooner aim from a 50% reduction in carbon intensity zero ambition and we are updating our 2030 aim to 15% to 20% and we're expanding aimed three scope to now include physically traded sales of energy products.

Delivering of our 2030 aims will be driven by execution of our strategy first and foremost for am. One. This includes improvements from reduced flaring energy efficiency electrification and the use of low carbon electricity as well as the contribution from base decline and divestments.

<unk> three this is driven by our evolving portfolio, including investment in EV charging bioenergy renewables hydrogen as well as an energy product trading mix and Carlos organization that reflects decarbonization of global energy and Bp's activities overtime.

Our other Ames remain as this including those on methane and net zero production.

So and aiming for net zero across our operations across our production and across our sales by 2050 or sooner. We believe that our ambition supports the global push to meet the Paris goals, including helping the world pursue efforts to limit temperature rise to one five degrees.

Above preindustrial levels, and we intend to provide shareholders with the opportunity of an advisory vote on our net zero ambition at our 2020 to AGM and we're grateful for the continued engagement and the challenge and especially support from our investors, including CA 100, plus.

Turning finally to Rosneft, who also continued to make significant progress on their sustainability agenda, we welcomed our new 2030 strategy, which incorporates a target to be net zero by 2050 for scope, one and two operational emissions their.

Our ambitions are leading among large Russian energy companies. They are supported by interim targets on absolute emissions on methane and on flaring.

And this builds upon <unk> commitment to improving environmental performance with a strong focus on energy efficiency and carbon and methane intensity and we're almost to the day, one year into BP and Rosneft strategic collaboration agreement on carbon management and sustainability.

And through sharing prospectus and exploring emissions reductions opportunities. The agreement supports both companies' decarbonization journeys.

Don't know how it did for time, but let me now hand back to Marie to update you on our financial framework.

Thanks Bernard.

I'll try to.

Great.

I'll try to be a bit more so thanks for those of you who know me so thanks Bernard.

The detail we provided today links the delivery of our strategy try 2025 financial targets. It also shows how we aim to transition the cash flows of the company to 2030 based on our plans let.

Let me briefly recap.

First we have a high quality resilient hydrocarbons business that we expect to sustain EBITDA around 2021 levels through 2025, and we aim to hold around this level through 2030, and broadly constant price assumptions with returns of 12% to 15%.

Second from 2021, we aim to more than double EBITDA from convenience and mobility to around $9 billion to $10 billion by 2030, while generating returns of at least 15% to 20%.

Our customer businesses or ratable and drive growth to 2025 with EV charging driving growth in the second half half of the decade.

And third in low carbon we aim to grow EBITDA in the second half of the decade, reaching $2 billion to $3 billion by 2030.

Our renewables and hydrogen businesses come online.

This is all underpinned by continued relentless focus on cost efficiency investment in digital and agile ways of working we continue to expect to deliver cash cost savings from reinvent VP of $3 billion to $4 billion by 2023 relative to 2019.

Taken together this underpins our confidence in the guidance. We gave you in August 2020, we expect to deliver 7% to 9% EBITDA per share CAGR between 2019, one H 'twenty and 2025, yes, that's a mouthful and ROE at <unk> of 12% to 14%.

This assumes oil price of $50 to 60 per barrel in 2020 real terms.

And looking further ahead as the business was transition we aim to continue to grow EBITDA to 2030, while sustaining overall returns of 12% to 14%.

Within this we are increasing our exposure to businesses, which are expected to see rapid growth through the energy transition as Bernard mentioned this was driven by five transition growth engines bioenergy convenience EV charging renewables and hydrogen these businesses contribute about $1 5 billion of our EBITDA today, but we are deepening our investment.

In 2021, they represent more than 15% of our Capex by 25, we expect this to be greater than 40% and by 2030 around 50% capital employed will follow while modest today and is expected to reach over 20% by 2025 and close to 40% by 2030.

And then the second half of the decade, we aim to deliver double digit EBITDA growth from these businesses as the capital we are investing matures.

Together these transition businesses underpinned by these five growth engines aim to deliver around $900000 of EBITDA by 2030.

Our confidence in this potential reflects the progress made in building strong foundations in each of these businesses and as a result, a clear set of operational milestones from which you can start tracking our progress as Bernard has highlighted and bioenergy our plans to under are underpinned by five major projects, including three adjacent to existing refineries. Additionally, we will continue to rapidly.

Expand our arrangements with biogas companies with further off take an equity positions and convenience we have grown our network of strategic convenient sites by around 30% in the last two years with clear line of sight to our upgraded targets. In 2025, we are rapidly building a network can be recharge points to underpin our focus on fleet and on the go fast charging in our core market.

Yes.

We have established a five two gigawatt pipeline in offshore wind. This includes Empire wind and Beacon wind in the U S Mona and Morgan and the IRC and our new Scott when venture Marvin We expect the first projects do online before the end of the decade and our first green hydrogen projects are scheduled to start up from 2024.

As we invest to drive this growth we are committed to the disciplined allocation of capital we expect to maintain a disciplined capital frame of 14% to $16 billion per annum through 2025, and we aim to sustain this level through 2030 and resilient hydrocarbons, we expect to invest 9% to $10 billion per annum between 2023, and 25 with our plan to invest around seven five.

Billion per annum in oil and gas through 2025 unchanged. The range reflects our plans to deepen in biotechnology.

In convenience and mobility and we expect to invest between two to 3 billion per annum. This underpins our convenience strategy on our plans to accelerate in the EV charging and then low carbon energy, we expect to invest three to 5 billion per annum between 2023, and 2025 rising to $4 6 billion per annum in the second half of the half of the decade as we build out positions in renewables.

And hydrogen.

We have a standardized approach to investment allocation balancing investment economics volatility in rate ability optionality and integration strategic alignment safety risks and sustainability and we have stringent investment hurdles. These include payback periods of less than 10 years for oil and refining and less than 15 years for gas and we also have returns expectations for low carbon energy.

As well as the transmission growth engines Bernard mentioned earlier.

This capital frame is also underpinned by a strong balance sheet I like this one we remain focused on maintaining a strong investment grade credit rating and have made strong progress I've already outlined the strong progress we made in reducing net debt by over $8 billion. In 2021. In addition, we remain focused on maintaining an efficient balance sheet.

Since the end of 2019, we've repurchased around 15 billion and short dated bonds and issued over 11 billion of bonds with a duration of 20 years or longer.

More than doubling the duration of our debt book to over nine years, and increasing our exposure to fixed rates at attractive coupons, that's looking like pretty good timing right now.

Looking ahead and subject to maintaining an investment grade credit rating in 2022, we plan to allocate 40% of surplus cash flow to further strengthen the balance sheet and to manage the business with a conservative cash balance point of around $40 per barrel on average through 2025.

Our financial frame enables us to reward shareholders today through committed distributions subject to board discretion and at around $60 per barrel. We expect to have the capacity for an annual increase in the dividend per ordinary share of around 4% through 2025.

And we remain committed to returning at least 60% of surplus cash flow through share buybacks guiding.

<unk> to 60% in 2022 subject to maintaining strong investment grade credit rating.

On average at around $60 per barrel, we expect to be able to deliver buybacks of around 4 billion per annum through 2025 with upside at higher prices as you can see here.

Finally, this slide provides a summary of what you can expect from US in 2022, the continued disciplined execution of our financial frame.

With that I'll hand back to Bernardo to conclude today's presentation. Thank you.

Very good.

But that was more succinct.

Yes.

Great. So this is one to two minutes and then we'll go to questions.

So in summary, it says you have heard a lot today I agree on our strategic progress towards transitioning into an integrated energy company.

And at the end of the day it all comes together.

In our Investor proposition Craig's favorite slide.

And we've shown that it is a simple, but we believe compelling proposition that combines the following.

Number one committed distributions generating competitive cash returns today as we transform the company number two profitable growth growing EBITDA per share and growing returns.

Number three sustainable value as we invest with discipline in the five transition growth engines and lower our emissions.

All of this in service of delivering long term shareholder value.

So thanks again for listening this morning, and now it's over to you Mary and I will be delighted. It says we will try anyway to take your questions from the room and online we've got all the technology that we need to do to do that May we ask you to keep them to two points only please.

Most.

And to frame them as briefly as you can to solar Craig's language. If you want to blame anybody so that we can get through as many questions as possible.

And it will also be helpful. If you will just state your name for those people who are online and I guess, we'll start here.

And in the room, so who wants to lead off we'll go to the back here.

Go ahead.

Hi, Thank you very much for the presentation.

I'll ask you two questions.

Remind people, where you're from and just sort of people not perfect. It syndicated deal avino from Goldman Sachs.

Two questions if I may.

First one relates to your buyback program I was wondering under what circumstances, you would go above a 60% payout of the free cash flow I was wondering if perhaps at higher oil prices. It makes sense to dedicate more to buybacks and whether there is a high bill limit to how much.

You can do.

How much more than let's say $2 billion per quarter can you actually execute on the markets given the liquidity and the amount of shares you want to buy back any.

And then my second question relates to the EU Green taxonomy, a lot of companies are starting to work to think about what is the percentage of revenues and investment that is consistent with it I was wondering when I look at your numbers on the Green transition should we just effectively take keeps ex convenience, which does.

<unk> fit into the EU green taxonomy, and seeing that that could be a good approximation of where you could end up when you start to report those numbers in the next 12 months. Thank you.

Very good excellent.

On.

On buybacks.

We'll speak to limits and his own views on things.

Kelly you know as well as I do it's there are many debates about what is the right use of surplus cash and I think from day. One I think we've outlined a very clear financial framework that takes each of those potential uses of cash in order starting with the first call on cash being.

The dividend then we want to strengthen that balance sheet and we have done.

A lot I think we had our largest reported debt was $51 billion net debt that was at the end of a quarter. It might've been different in the middle of a quarter.

We're now down at 36, I think we're in a much better.

With our rating agencies, we're now stable outlook with S&P.

Being upgraded from a negative outlook and we will continue to want to put that 40% on the balance sheet through this year, we didn't want to invest in our hydrocarbons business and our growth engines and if theres any leftover at the fifth and final point is for buybacks. So the board keeps us under constant.

Review, we've been very clear in terms of buybacks for this year, what you can expect and it's not at least 60%. It is 60% for 2022 with a 40% going to the balance sheet and will update our views on that again at the same time next year and obviously the dividend is kept under review by the board on a quarterly basis, but.

We've laid out our expectations around that anything you'd add anything around limits to what we can do yes, I think it's just important given the uncertainty in the world that we continue to dedicate money to strengthen the balance sheet I feel that's very important.

<unk>.

Sure. It can happen at any moment in time on omicron or the next wave and so I think it's better to posture and a conservative place to be honest. So that's why we're continuing to dedicate cash.

So the balance sheet.

I don't think there's any way, we would regret that as far as limitations on share buybacks, there will be market limitations, we're still learning about that about what's possible.

Of course, it depends on how fast the shares share price appreciates as well that creates limitations in itself.

We've already done half a billion dollars of buybacks this quarter for employee offsets in January so that's behind US, we will do 1 billion and a half by the result states.

Thats carefully worded because sometimes it's a little bit tricky to do it inside the quarter. So there are days, where we're buffing up against that but.

Liquidity in the shares is high we just have to watch a rising share price, but it's difficult to continue the buyback with that rise in share price. So so far so good.

But.

Probably another half a billion in the quarter as getting getting tight depending on what happens with share price, but that's a nice problem to have mckinley.

Yes.

That's a bad thing that's a great thing, yes, okay got it.

EU taxonomy.

Look I think it's a moving space.

The proposals being issued I think a big question, you'll have to ask yourself Kelly's what to do with natural gas, which is in the current proposal, albeit a decarbonize version.

All natural gas, let's see how that survives.

<unk> is in our.

Transition growth engines, because it's the non fuel element of our convenience business, which.

In the U K today, I don't know what the numbers are but more than half, 60%, 70% potentially of people who visit the BP.

Stroke patients don't buy any fuel.

So it's a convenience offer for convenience reason, it's an incredibly fast growing business I've looked at the UK market.

Expect it to grow at 12, 5% per annum over the next five years so.

It's a trend it's a growth business, it's in transition because it's non fossil inside aspects of the business. That's in there the trick will be what happens with natural gas and that could obviously swing your numbers.

Up and down the others are clearly very much part of EU taxonomy. So hopefully that helps great questions. Thank you.

We'll go here next.

Everybody's going to ask questions.

Gordon Gray HSBC, just one of them.

Mobility, and particularly EV charging you got very ambitious targets for growing EV charge points. Some of that obviously is going to cannibalize. Your conventional fuel sales can you just give us a feel what youre seeing on the ground today.

About the margin you get from EV charging in the typical fuel station relative to historic conventional fuel margins I think that's the most we've said so far as Emma said in our interview recently that we're at the point, where the margins are.

Broadly equivalent so we're at the stage, where the margins are equivalent.

We probably think that they can get better.

If you look at our Hammersmith.

EV charging station.

Our utilization rate in Hammersmith.

67% today, 67% that's on a time basis.

Many of the assumptions that people have in their plans or around single digit utilization rates. When you look at the residence time.

A charge of charging customer.

Probably a little bit longer than that of perpetual.

Customer, we see enormous opportunity on the convenience side in fact, we see that with our station here in <unk>.

In the car Parc underneath Hyde Park in London, where the convenience offer is also a big draw so we see opportunity there.

So we're very excited about this business, we're opening 115 charge points a week now, we're adding 115 charge points a week in the fourth quarter, we sold more power in December in China than we did in the entire 2020 year. This is a business that's growing exponentially.

Italy.

When you talk about the role of a company like ours into transition and people question. It.

Why wouldn't we want to absolutely take on that market look at the starting position, we have 550 million customers within 20 minutes of a BP side look at the brand that we have looked at the convenience offer that we have right way to go in Germany.

<unk> in the Netherlands, A&P M in America.

Huge we would be foolish not to embrace this opportunity that is being presented to us. So we see massive opportunity. That's why since last year that plan has accelerated more capital is being deployed and we're very excited about the long term potential fleets hugely interesting.

6% to 8% of the power that we discharged through our charging network in the UK in 2021 was to Uber.

So fleets will become important fleets, that's where we're concentrating in America. So.

Four five times more electricity more power sold in 2021 than in 2020, and we're targeting 100 fold increase by the end of the decade.

All about undergo fast charging ultra fast charging.

It's a very different business, but it wasn't that plays enormously to our strengths you love It what have I missed.

The growth in fleets in the U S is pretty surprising 10 times growth over the decade, So 254000 electric vehicles now and fleets.

Sometimes go through the end of the decade is the most conservative estimate we see and that's why we went and tamplin power to really going to leapfrog ahead on their customer book and then their digital offers and have a great digital stack. It allows you to help manage the business.

Our behalf the overall fleet and you can charge on our fleet on a service basis. So we're bringing that back to the UK as well, we've got deals with Royal Mail Fire Brigade.

Police.

Just as in customer after customer after customer and if we can link together the offshore energy onshore hydrogen.

With these fleet and fast.

<unk>.

You have recreated the upstream and about a decade's time. So it's just a fabulous fabulous opportunity ahead of us and if youre in with very high returns and if you're charging geek like we obviously our checkout the blood zone close on blogger in Germany, who compares reliability of charging networks, all across Germany in a row, which.

As our brand in Germany is number one with 1% downtime so.

Anyway Fund space, who next Lucas and then we'll start heading over to the side of the room here shortly.

Yes.

Thanks Gordon.

As I mentioned earlier.

So it's really a curtailment from Exxon too.

Two questions a little more here and now perhaps.

The first is you must have very good visibility on the LNG trading business into Q1, given I suspect Carol would have set most of your positions for you I Wonder whether you can make any commentary on how you expect trading in that quarter over the next quarters ago relative to shall we say the last two and the second just goes back to.

Balance sheet Maury, maybe it ties in with trading to some degree as well, but just the mix of cash and debt.

It's very visible to the Europeans carry a lot of cash relative to the U S.

It's also very apparent that you trade a lot more than the U S. But.

The level of cash carried on balance sheet. Now is it is it really appropriate or should you be thinking about bringing that down and suffering less of an interest fit through differentiation.

<unk>.

Thanks, Lucas Murray I'll, let you take those sure.

Starting with balance sheet my favorite thing Lucas.

$39 billion of cash at the end of last year down to $30 billion of cash.

And you saw the statistics on that buybacks will continue to do that as long as that economically makes sense to continue to buyback debt.

Ends on what happens with interest rates, but for now we think that continues to be a sensible thing to do.

We do have the carrying high levels of cash that wasn't trading organization in order to train trade on exchanges.

You have to have cash buffers for initial initial margin and variation margin and that's why we can drive the returns that we drive thru through having that cash.

I think that's an effective use of the returns are pretty darn high on a cash basis much better than you can get them the depository bank or anything else. So I think I think we will run a little bit higher cash position, especially as we go through a volatile times, we're in right now.

Exchanges are demanding more margin call. These days given the volatility out until <unk>.

While this deficit in energy supply loss will just need to run on our cash balances. So I don't think Thats a bad thing I think it's a good thing Lucas because it enables carol's profits as far as speculating about how Carol will do in the first quarter.

I think I think I'll hold fire.

The gas markets are pretty volatile right now predicting as gas prices go up is about gas price is going to go down is tricky right now.

We obviously have a large LNG traded but <unk> been doing a lot of cargo deliveries into Europe I think we did 35 30.

35 into Europe over the past year $7 seven here into the U K to try to help with gas supply, but theres a large large position that will be delivered and if I know Carol she'll do pretty well.

Let's see let's stay with us.

And then LNG cargo I've learned provides enough.

Heat for 100000 homes for a year, so 35 cargoes into Europe last year, seven cargos into the UK over the winter, which is double our normal capacity Chris.

Thank you very much Chris <unk> from Bank of America.

I fully endorse your message on the balance sheet.

If I may can you remind us of your sensitivity away from net debt in your provisions and lease books to rising interest rates, which I guess, we have to prepare for.

And my second question. If I May 2021 is a special year, because I remember well 2016 in 2017 Investor days targeting 2021, and you've made it not exactly easy to compare.

With targets that were set at the time, but I would argue downstream is the the one that let you down and of course, we're in Covid times downstream was particularly hit during 2021, you highlighted $600 million.

Bennett on Covid impacts pet Chem is gone.

Youre using again convenience and mobility as a.

As a target to get excited about earnings growth and I cant see much earnings growth over the last four years that we talked about in Pangbourne. So how can you may be convinced at this time it's different.

Very good very balance sheet.

Sensitivity to interest rates as I mentioned in the speech and awful lot of the debt book that we've we've.

We've gone with recently on the debt raise this is fixed.

So we've taken advantage of the low rates and twenties thirties and since most of our balance sheet at pretty low rates, we won't retrained those some of those they should carry most of the debt book fixed for the next few decades.

I think that'll turn out to be fortunate timing, but two or three cfos down the road will actually tell us what happens as far as the rest of the leases the leases arent sensitive to interest rate moves. So that's not a risk and of course macondo. The macondo paydown remains out there as well on a gross basis and that's not subject to interest rate volatility as well so I think.

<unk>.

As I came into the job there were a lot of people asking me.

About the strength of the balance sheet the nature of our debt book I think Canada now needs has done a fabulous job.

Fixing it lengthening out and decreasing the risk profile of the business significantly. So I think that concern is largely behind us and something that shareholders can now count on for moving forward.

On convenience mobility.

The downstream business from the old days with them without products I'd say, a couple of things I think.

The area that's been challenged over the last year or two in particular aside from corporate has been kestrel.

We've had higher base oil cost feed through last year Theres a lag there.

Twice, what they were pre COVID-19 .

Our margins are off we have challenges on the supply chain on additives.

So that's an area, where we've seen some challenge no question about that.

We're on it.

Have a plan.

We will grow that revenue base, we are going to take out cost we see massive opportunities for digitization, we see massive opportunities in the warehouse base and we do believe that the additive.

Situation will resolve itself around the middle of the year. So the underlying premise of Castro remains very very strong in fact, they had their highest sales on record in China last year and there remains a number one brand in India. So that's some work to do beyond that the convenience and mobility business why do we have confidence.

20%.

Increase in gross margin between 2019 and 2021, that's on top of a 10% increase the previous year and a 10% increase the year before that whats driving these types of things basket sizes people are wanting to shop or local and if the quality is there they're going to come to your store basket sizes are up 20%.

Since we're seeing basket sizes are up 29%.

We have I think 16 million loyal customers, that's way up over the past couple of years and a loyal customer is worth four times more than a regular customer we've talked about the digitization and the app through <unk>, we've had the highest number of transactions ever in November on the <unk> App in there too.

What a non <unk> the U K and retail had its best Christmas ever on record. So when I look at the inputs to the business I'm very confident that under <unk> leadership, we will deliver the plans that we've laid out COVID-19 has been some headwinds we've had a few challenges and kestrel, but the underpinnings of that.

<unk> in that space.

And they are all driven by our commitment to the brand commitment to the quality of the offer and a real commitment and an investment in the digitization of that offer so pretty excited about it Chris.

Youll have to hold us to account that's what we're here to do and that's what we intend to do going to come to Lithia here in the front row.

Thanks, a lot DNA for some updates and key questions. If I could let me. Thank you for doing this investment.

That means as you say.

In terms of the EBIT.

People.

And if you think about the transitioning that sort of 20% to 25% I think April eight it done in the <unk> setting.

Thanks.

<unk> say within.

Theres been discussions that it doesn't actually looks like that kind of messaging about being in high season, and I guess he sees the shaft rice so at what point do we.

We need to be more around that for the efficient structure that you have and then the second part is clearly there's a lot says thank you something like carbon and energy transition how do you feel about inflation within the Capex side of state renewals I left on the <unk> side around the renewables business given that these are new projects are the same.

You can then.

<unk> Capex.

Or do you want to take inflation I'll take the question, yes inflation more broadly.

<unk> eight months of the inflation in 2021, the only place we're seeing material inflation in 2022, right now as things like solar panels in our lower 48 business.

Predictable isn't that when you see an upswing in price in the first place that it shows up as lower 48.

We're probably seeing a forecast of 5% to 10% inflation in the lower 48, but I suspect the guys will do better than that.

I've met Dave Lawler, he likes to sandbag little bit. So I think he was just trying to make room for more activity with them.

So I think I think all of that is just kind of love that business I think it's I think we're okay in the historic upstream and the downstream and won't be able to eat most of the inflation in 2022.

Polysilicon start inflation, 30% or some of the numbers, we're seeing but because of the cycle time with it it's fine yes.

Spend the money, but you get a higher PPA and you still get the returns you want so it doesn't really impact the returns ratio of the business itself as far as the longer wavelengths inside offshore wind. We're just now on Empire wind in Empire to going to market with bids we'll see what those look like and we will be interested to hear back from Ecuador throughout the year, we should hear back by the end.

I suspect that corner and will update the market. Once they are through all that process near the back end of 2022 about what we're seeing.

I think there will be bubbles of this stuff so there'd be some heat and then more capacity will come on et cetera. So I think it will all be on the timing of when you. When you can track versus when the inflection of PTA and when you factor in your debt and I think two big companies such as ourselves will be able to manage our way through that to get to the returns as far as capex linear will stick with.

2014 to 16, and we will just modulate modulate our equity to manage that or modulate the debt levels. We have to make sure that we manage through this we're focused on returns and we're focused on capital discipline.

That's a core in our mind as we go through this.

And on your first question Lydia.

Talked about a couple of ways one is I think.

Think.

As the World is beginning to grapple with the complexity of the energy transition.

I think there is.

A day by day.

Increasing understanding that there is a rule and not alone just a rule, but actually there is a need for a company like ours and I think that is becoming more and more apparent.

It has a long journey still to go no doubt, but it is becoming more and more apparent because.

Reliability and affordability matters as well as clean and the reality is is that now.

Natural gas with renewables.

Which we have both which we can add a trading organization to so that we can provide our customer with that predictable reliable affordable cleaner.

Supply.

There's a role for a company like that because people don't want to have to go to somebody for their renewable power and go to somebody else for their base load power and go to somebody else to hedge their pricing and do all of these things.

There is a one stop shop here, it's called an IAC, it's called BP. So I think in some ways the challenges and we don't wish them.

To be like this but it is a complex transition and I think it increases the argument that we have a role in that there is more than that that companies like ours are needed. The second thing that I would say.

That is why we had confidence clearly when we laid out our strategy 18 months ago.

But the more.

I learn and the more we learn and the more time, we spend in it the more excited you get about just what a company like ours has to offer so let's take sustainable aviation fuel if the world is going to Decarbonize aviation sustainable.

Aviation fuel is going to be a big part of that.

Now you can start up a company tomorrow.

To try and do that or you can become a.

A single sourced business that that's what you do.

But it is not straightforward now look at the advantage that decades of history gives us.

First of all the biggest issue in sustainable aviation.

Fueled today is supply.

Charles organization does offtake agreements from all around the World. We just signed a deal last week, Carl 10 year agreement with new seat.

To do carry NAFTA, which is a food cover non food cover crop farmers can I wish we had it back in Ireland back in the day, but that's another story between crops.

We signed the deal there. So we can do these big supply off take agreements things go to manufacturing.

But why wouldn't you use the refinery and the power and utilities and all of the things that are refinery hasn't put a unit next to that of which we will do too that will be much more capital efficient than anybody can recreate.

And then go to the downstream of that.

You're going to sell it to customers.

<unk> is in 50 60 countries around the world.

They are in every airport they have a relationship with every airline all ready to go.

And your rapid trading business around the totality of that slow.

And you start to say Wow.

Now you go to offshore wind I spent a day in New York with the team out there I heard as much there.

Many of the oil and gas stays permitting issues local content issues supply chain issues cost maintenance issues vessels. All these things that we're so used to hydrogen.

Who's going to build tens of billions of dollars of hydrogen facilities.

Bill ports converted into ammonia build ships ship it to Asia to customers in Japan, and Korea that want to Decarbonize, but can't who can do that that reminds you of the LNG business. We've been doing it for decades, we can do that again if that is what is needed. So our confidence in the rule and we can do that because we are together.

The structure of being an integrated energy company means we can do that so you want to add no that was pretty passionate about.

Okay does that help.

<unk> will go over brush.

And we go to the phone lines here.

Luke sorry, obviously.

On divestments I mean at this point in the cycle your balance sheet doesn't need divestments, but you obviously have your sort of top.

Top down targets in the upstream.

The full extent decline I just wanted to get a sense of how youre thinking about accelerating that potentially in light of high commodity prices.

And then the second question related to that but the 2022 guidance could you just remind us if theres anything left due from Alaska and if that's embedded in that two to 3 billion number.

Mary handle the second part of the rationale and the first part.

Top down in terms of the 40% reduction in production there.

We've looked back to the year 2000, and BP has consistently every year done.

<unk> $4 billion to $5 billion of divestments every single year since since the year 2000 and.

Portfolio high grading is a natural piece of running a good business and we will be doing this.

Energy transition our new energy transition. This is good business and this is what we will do in the years ahead.

We set out a target already a $25 billion. That's what we said we do by 2025, we've done <unk> they've got tend to do two to three per annum, which was kind of what our guidance used to be many many years ago $2 billion to $3 billion of.

Divestments per annum.

Accelerating divestments, it's all a question of value we're not in a rush no rush here at all.

If someone else sees more value in an asset that we feel is less important to us than it might be to them. Then we're open minded, but there's no intent to accelerate there is an intent to prosecute the plan that we've laid out and the main thing to do is we're going to be driven by value. That's what we're going to be driven by it and if we see value.

We will do it if we don't we want and that's where I would leave it Alaska 2022, yes. So $15 5 billion proceeds have been announced are transactions have been announced for sale 12, and a half has been received so we've got three of deferred payments, including Alaska.

We will probably get it depends on the oil price depends on performance, but 10% of that Alaska, 10% of that two to three is Alaska.

Inside 2022, and that's it.

Gradual a gradual path structure over time based on price and performance could be higher if the price goes higher RFA performed better but that gives you a rough range for us.

Thanks, <unk>, let's go to the phone line our zoom can we can we go to Jason Kenney a suntan there.

Jason.

I thought you were supposed to be here.

I wish it was.

Okay.

Who should have been bullish.

Julien.

Very good.

Christopher.

Really enjoy it.

Kumar Adrienne.

So stupid that you generate.

Phenomenal to see to watch.

Good points of clarification, you mentioned on the biogas bioenergy.

Kind of assistance principally against a much larger pool to be able to do since two from biogas.

Relative to the volume.

Could you just clarify that for me.

Nuclear fleet challenging.

Any data points around the <unk>.

A deal in the U S would be much appreciated.

So the mortgage business to reach in the fleet space to be fleets.

A number of opportunity.

Would you say, there's going to be mainly organic growth from Nebraska.

Positioning.

One more.

If I may.

Is there a scenario.

BP Moose net cash.

Is that something that you've envisaged any implications you see.

Yes.

Great Jason. Thank you I thought you were being nice genuinely but you want it to three questions. So.

Now I get it.

If you take bio and net cash I'll take amply.

And these are great.

It's a great acquisition, where we've.

I haven't met the team personally, but the team obviously has and we're excited what did we buy we bought three things we bought number one a great management team number two we bought a long list of customers and number three we bought a digital stack that would have taken US 234 years to build on our own.

I know that Richard Bartlett, who runs our EV charging business is in America. This week or next week and he is meeting with the team and they're going out to other customers. Some very big customers potentially that would be fantastic. If we could sign up so hugely excited about that it's given us a big acceleration in our fleet journey in America and Thats, what we want.

Is it to do when we do more deals like that possibly but what you should know is that all of what we do is within our 14% to $15 billion frame for this year and within our 14% to $16 billion frame going forward. So we may use acquisitions out of <unk>.

Relatively small scale like that too to help accelerate our ambition.

But you Shouldnt see you won't see any surprises in our in our capital because it's all in marine on biofuel as it is $1 billion in Biofuels and 1 billion of biogas anything else you want to say, it's just very high returns biogas right yes.

The biogas is a bit of a different model on the biofuel side.

Inside our trading organization, we don't generally trend to use capex, we tend to use our balance sheet for a commercial commitments. So you won't see much capex put into biogas there'll be some.

I don't see much capex going to that will be long term commercial commitments.

Leveraging now so you get some pretty extraordinary returns inside our biogas business plus the credits.

Clustered <unk>.

Plus the credits of course, which are very attractive and can be traded as well and then the biofuel side, we will have a capex heavy period, we'll invest somewhere around $2 billion to $3 billion into the five facilities that Bernard talked about through the middle of the decade and defined now on three of them. So let's see how the engineering estimates come through and then very much looking forward to building building these things.

Options that would be fantastic.

As far as net cash negative well I guess, that's my question on oil price isn't it.

We have given you a lovely little chart I cant remember what slide it was.

Giving you a lovely little chart and we've added a yellow brick at the top for what happens to that.

Price goes up so that gives you the total.

Total free cash flow that we're getting out of the business and certainly its possible that we are getting more cash than we know what to do with for now I'm going to be conservative and manage the company as if it's $40 oil.

Anything we need to get above that just helps obviously and that will go to 60% to buybacks and 40% continuing turned out but it's that's possible with with the pricing we're seeing now Jason but for now I'll just focus on 2022 and make sure we continue to be conservative with the balance sheet.

Thank you Barry excellent, let's go to Jason gave them on from Cowen and company on zoom as well and Jason. Thank you for your question, but just didn't gave them on.

Yeah. Thanks for taking my question.

Are you.

Yes.

Do burden.

It was on clarification on.

Trying to compare this to kind of when you initially laid out the strategy and it looks like when you laid out the strategy bioenergy and LNG was in your low carbon energy.

Business footprint and the EBITDA growth that you were discussing that portion in the low carbon energy and now it looks like it's been resilient hydrocarbons and the EBITDA growth associated with bioenergy in LNG and resilient hydrocarbons. So if you could just clarify that.

0.2, I wanted to ask.

Murray you mentioned poly silicon inflation at 30%.

And it seems like a pretty high pumping number and you're obviously focused on growing your renewables power business quite a bit. So can you just discuss how you think about that inflation potentially continuing over time as solar and wind growth continued to accelerate industry wide 100 gig.

Capital budget.

How do you manage that and think about hitting your growth targets in terms of.

Capacity you plan to bring online thanks, Jason Thank you.

On the on bio in LNG <unk> and LNG is definitely in the resilient hydrocarbons. The reason bio is in there is because it's based on.

The Biofuels business and there is based around those refineries right. That's what we're going to do in there.

There is no perfect place to allocate these.

Believe me, we've been back and forth on on this a lot.

And Theres no theres nothing theres nothing cute going on there.

Irish phrase it simply that's where we think that best belong in that the key is what it adds up to at the end and the returns that we get from each business, but.

That is exactly where bio in LNG set and where it used to sit in the old frame the old description looker and low carbon gas oil and gas and with Hibernia syngas and low carbon because the LNG was there we put all of the resilient hydrocarbons together LNG gas all of that.

And biogas and Theyre poly Silicon motion. So, let's remember the model we have in <unk>. So we injected tier $300 million into light source BP a few years ago, we don't inject capital after that so it doesn't impact our capital frame the points of light source BP has to be a developer so theyre going to develop 25.

Gigawatts through the first half of the decade, that's the target they've set and they are going to acquire land get Greg get the permits get the design done get a power purchase agreement in place get the debt in place and then they plan to flip those molecules. So the capital construction associated with the polysilicon goes to whoever is buying it mostly pension.

<unk> funds. These days so from our perspective sitting inside BP and I'm, a shareholder of lights, our SPP and sitting inside light source BP, they're not expanding this capital on the solar panels themselves. That's further purchasers to do instead, what we're trying to do is create this developer model that creates profit out of the flip and provides electron sources for <unk>.

Trading business, if it makes sense, we kind of have the option to the off take that electrons into our portfolio. So that polysilicon inflation level has doesn't impact BP so to speak and it's more impacting the consumer Jason.

We're not seeing anywhere near those levels of inflation in other spaces inside offshore wind et cetera, but again, we're just inside the first bidding process with our supply chain really this.

This year and Ecuador is as lean partner in Empire, one and two will report back to the market in due course, so I think no real impact from the polysilicon because of the nature of the way we run light source may pay right now.

They're also looking I think Leon in your old job with and procurement with.

Developing long term supply agreements like we would have our long term relationships like we would have in the old oil and gas business. So it's one of the things that I think we're working with them on to these frame agreements that we have traditionally used in oil and gas to see if they can develop long term relationships, Jason there so and some of these megawatts that were.

Flipping on at the moment look like they're not being impacted by inflation prices they seem to be very attractive and there are a lot of solar panels that they bought in a couple of deals a while back but they're not having to pay the increased prices yet. So we're doing light source PPE is doing its first big flip.

As we speak and it will be interesting to see what comes out of that in the first half of the year interesting to see what the pricing is great. Thanks, Jason We're encouraged great. Jason. Thank you, let's go back to the room here.

It's gone from tumor.

Yes.

That's not somebody's head.

As Martin Rats, Morgan Stanley I've got two questions, if I may about the oil and gas business.

<unk>.

The first one relates to the long term production targets that were initially said during <unk> and <unk>.

I do remember.

Sort of a 20% to 25% decline by the middle of the decade, and a 40% decline by the end of the decade initially through disposals, and then later through sort of runoff of the portfolio.

But listening to you earlier.

I think I heard you say, but I just wanted to check that you said.

With the investment plan that is now in place this could keep underlying production flat so it sounds like.

More long term less near term and more disposal naughton underlying sort of decline in the portfolio.

Wanted to ask you.

To what extent this guidance.

The targets on long term production have actually changed.

Sort of broadly sort of got this correct.

And then secondly, the second thing relates to.

Oil prices as in.

The interesting thing about 2013 guidance is of course, if you do get into that period, where you could conceivably start to think very differently about the oil markets now I am not asking you to speculate but oil prices by 2016 higher or lower.

Well exactly.

Yes.

That is.

Stuff is anything but but.

But it's not entirely unimportant and it does signal.

But at least the underlying BP view is that even by 2030, we will not be in a sharply declining oil demand environment, where prices are all down to the marginal cost still still low supplier. It does signal that you think by 2030 oil is still kind of soils at least in terms of price. This is.

It has historically been asked that correct. So I'll take the second.

Question around price and <unk> will take the volume question and help me of if we got anything right. So on oil prices.

It's.

So we updated our oil prices as we do every year, we update in last year and basically the.

From our existing assumption the near term prices drifted up a little bit.

In the long term prices drifted down a little bit such that on average throughout the period there were pretty much the same.

Our oil price assumption for 2030 is $60 real based on a 2020 baseline which is $71, which is roughly what it was in 2021.

Now the question of course that you ask is well what if the transition goes faster it does this or that.

What I think is interesting Martin about the transition question.

Is that.

An accelerating transition doesn't always lead to a lower oil price.

It depends on investment patterns.

Just demand.

So you could argue you could see a world where because of lack of investment even though the energy transition is accelerating oil prices are much much higher.

Which is sort of counterintuitive to how some people would think about it I think because.

The kind of general sense is that accelerating transition means lower prices.

That need not be the.

Case because.

As we know it.

It relies not just on a demand side of the equation, but also a supply side and of course, what people, sometimes forget is that oilfields decline and therefore they will.

They need investment so that's a long story short to say the energy transition could actually result in higher prices, even if it's accelerating as well as obviously result in lower prices power job on an annual basis is to put forward our best view knowing that.

It's probably not right I think I can say that because it's true.

Not right, but it is our best estimate on our best estimate of $60 real and we think that balances up all the things that we know about in the world.

If oil prices are lower our business is resilient to that we've taken out costs were at $6 per barrel production costs. So we've got the tightest highest margin portfolio that we can and that 9% to $10 billion wont be 20% of overall EBITDA, it will be 50% or something higher.

And vice versa. So there's no simple answer to your question I'm afraid, but that's how we would think about it and then on the upstream volumes and underlying production flat you have no one in the SAA Gibson Gibson here each quarter, our latest view on oil price and we don't see the dip in oil price and the FCA until 2020.

God knows if we're right, but that's our viewpoint right now.

Production so.

Production guidance that we gave two years ago to six down to two down to one five.

As estimates a decade out there's a little bit tricky a decade out.

We were a little bit vague and what we said about divestments versus underlying decline.

We didn't really give hard guidance Ariel and the team are and with Gordon had been working very hard now for the past couple of years since we last talked to you.

<unk> transactions have changed Angola has become a very very strong asset with DNI transaction, we did it.

It looks like a fabulous set of assets. There. So we have had portfolio change with that drilling success with we're applying we're digitizing our 10 core processes inside the upstream and refining and Gordon denominator uncovering some pretty cool things that mean, the reservoirs are going to perform better than we thought in the technology.

Capital efficiency of the business is going to be higher than we thought last time around so right now what we're guiding to as we were at $2. Six in 2019, we're obviously around two 2% in 2021, we still have this guidance of around two in.

2025, and we still have this squiggle, one five and 2030 and what we're now saying is that declined from two two to $1 five basically going to be a gradual divestments overtime and that we can hold the base business flat now.

Growing margins, 20% growth in at least 20% growth in margins as we bring on Mad dog phase II, tango et cetera, et cetera, and we pivot the investment more to the deepwater Gulf of the world to the BP access of the World, where the Permian is doing really well.

It's a pretty material uptick.

Update to our view on the hydrocarbons business.

It's a fabulous cash flow generator for us through the decade, and we're investing pretty much everything we can in every basin with the exception of one which is <unk>, which will continue to manage for a dividend.

So very quickly so there's a half a million barrels a day of production in the second half a decade for zero incremental capex relative to previous guidance.

Including divestment et cetera.

Well, we were a bit vague.

We werent, we werent very specific on one divestment was in the second half of the decade, Martin so little bit little bit tricky to suggest that we.

We were just bank.

We're not doing we're not investing for growth.

No.

And that capital, we're not exploring in new basins all of those things remain as is what we are doing is investing in high quality investment opportunities and continuing to high grade the portfolio. So it will be smaller.

Volume since well as equivalent cash flow it'll have higher returns it will have lower emissions.

For us it feels like a good way to run the business and.

The world needs it and it will provide us with the cash flows and hopefully you're used to us. We generally don't make promises we can't deliver tend to try to make sure that we can deliver these things so it feels prudent right now.

Australia at out there, we keep going in the room go ahead.

Hi, its Henry Tarr from <unk>.

Two questions obviously in the current environment shortly high commodity prices.

Are you seeing risks of an increasing fiscal burden.

So we're seeing headlines in the U K around windfall taxes that Linda was.

Post Covid governments are looking for.

Ways to refill the coffers to some extent.

And then the second question on the balance sheet, you'll see the <unk>.

Physician there is improving has been a focus on divestments as.

Your own valuation starts to improve we have seen on the transition and low carbon side valuations there sort of come the other way over the last 12 months.

Are you starting to get more interested.

In acquisitions in some of that low carbon area. Thanks, great Henry Thank you.

Quickly on Merial correctly.

Fiscal burden.

Are we seeing anything around the world the answer to that is.

No we're not we're not seeing increased pressure.

At this point in time, obviously, there is a debate in the U K about a windfall tax.

We obviously have said what we.

We feel this morning.

That which is.

If anything to work the UK needs more gas not less gas right now and.

Uh huh.

That's going to require more investment not less investment in windfall tax isn't probably going to incentivize more investment number one and number two what we need to do is help Britain.

Transition and we also announced this morning.

That's for every pound we make in the U K. This decade, we will invest more than two pounds into the U K. This decade, and the vast majority of that investment will be into the energy transition offshore wind in Scotland offshore wind in the RSC hydrogen power hydrogen at T side <unk> side for power.

Refueling are charging network that will build out the list goes on and on so.

That's our position here in the U K fiscal burden upping around the world.

No we're not.

Not seeing that very second question do you want to take it I think the second question was do.

Do we have more appetite for inorganic so I suppose we.

We will look at inorganic obviously, but we'll stick to our 14% to $15 billion of capital range for 2022 that includes inorganic.

And the longer term that we've laid out of 14 to 16 includes inorganic as well.

Youll see us do 250 $500 million deals, where we think it's sensible.

Biogas is interesting places to do it amply charging is an interesting place to do it et cetera. So we'll we'll do modest we'll be pursuing modest things Henry one of the slides in Murray's back is so very important because I think one of the.

Let's be transparent about the challenges.

Some people have had with the strategy has been around.

The renewable space, where the returns are guided at 8% to 10% and we're talking about.

$2 billion to $3 billion of EBITDAR, there by 2000.

30 in a business that could be generating over $40 billion of EBITDA. So that has been a question and that's why this disclosure. This morning around these five transition growth engines are so important.

Because it is not just a renewables strategy has some commentators have maybe written it to be it's much more than that first of all it's a three part strategy of which low carbon is one but importantly in the transition we talk about five growth engines.

And.

$2 billion to $3 billion from renewables at 8% to 10% is one of five elements in that transition.

And all the other ones have higher much higher returns. So it is an element of but not the totality of Bp's transition story bio energy is very important EV charging is going to be a big business for us hydrogen is going to be a business we've talked about convenience.

So I think that is a very important message that we want to land today Henry Thank you, we keep going hiring.

Hiring please at frontier.

Thank you.

One is as it is.

You gave us a lot of.

Visibility of financial visibility under transition and my question concerns and the announcement that you aim for net zero crush operations production and sales.

I see you are adding the sales states I wonder if you can help us understand.

West Coast Sea States in that is there any change to the previous definition of scope three from your production only and then do we assume that they in turn targets remain the same except they now include sales. Thank you very good great. Thank you. So on so aim to.

Two is production our definition of scope III came three is product lifestyle.

Product lifecycle emissions and most people will call that scope III. So we cover.

Product emissions in two places in our aim to which is our production and three which is around our sales and.

The total sales and a three used to just have our marketed volumes in there, but it's now also got are physically traded volumes in there as well with the exception of crude which is <unk>.

Not something that is immediately turned into a mission that has to go somewhere before it happened. So we're consistent with other some other companies on that and that means that our baseline on aimed three increases from about a gigaton to about two giga tonnes. When we include those physically traded volumes. So.

Scope aim too is unchanged.

That is still our plan aimed three.

Three three updates it used to be 15% by 2030, it's now 15% to 20% by 2030, it used to be 50% reduction in intensity by 2050, It's now 100, Alright, now net zero by 2050.

And the third change is that it is now total sales on all of those measures I. Just gave you on <unk> III and not just marketed and that's what we're doing.

A one has also changed and that we have accelerated to 2030 ambition, which used to be 35, 30%, 35%, we've updated that to 50% from our operational emissions. So thats a one is operations aimed to as production in <unk> III is sales are marked.

<unk> products. So hopefully that helps thank you Irene will go to Oswald here.

Yes.

Yes, sorry also extended Bernstein two questions first.

One of your peers over in the U S. I think last week talked about collapsing.

Structure in the silos to bring out the best of the organization. So it's something I think you said years ago, bringing downstream management from the basement up to six floor and working together and things like that so you mentioned the 26 turnarounds working together last year, but would love to get some more examples.

What the best of the organization has come out <unk>, maybe numerically or cost savings structurally with volume improvements structurally will be the first question and secondly back on renewables.

Confident message again on the 8% to 10% returns I noticed in light source. They do deals like last year and one in Spain. If you can talk about commercial closed pretty quickly eight months, but one of the ways to get there is with the PPA and a competitive process with BP trading. So there is a good price coming from here to light source allows you to.

Be confident there, but is there any value leakage.

As karl's team take that the other side and how can we be confident theres a strong return coming the other side.

Great Oswald Murray be thinking of the second one unhealthy with the first one I think.

We can talk to Gordon afterwards on some already examples but the.

The upstream tend to be a pretty proud bunch, but but the refineries people have been helping them out as we brought in these organizations together.

So it's not a specific cost number but we have challenges in.

In Egypt around flange integrity on one of our projects.

And we deployed some refining piece.

People, who were experts in that space to go and sort of the issue for us.

We also had a situation in Trinidad on a project that we're building, where we had some compressor issues or something and again refining technology people were deployed into the oil and gas business to help that now you would argue that should be happening in any company, but there is a reality of organizational bound.

Boundaries and so on so forth so.

I personally and the turnaround one is a brilliant example.

We're going to see more and more of that.

I'd be lying to you if I said that everything was working exactly as it once we wanted to be on day. One it takes time for an organization to settle down people to get to know their new roles.

Been a lot of change and we're settling down now and that's what the focus is on this deliver so only one job now deliver and I think we're going to see more and more opportunities as the year goes ahead, you've also got Leon next to who.

Who used to in her well still does I guess or about to change runs our global supply chain organization and it's something we debated for years, we used to have in upstream supply chain organization and the downstream one.

We brought them together a few years back and again I think I've actually personally been surprised at the value that's been created through that process. So.

One other questions, we're encouraging people to ask inside the company. This year is a very simple question, which again is obvious but we need to do more of which is whenever faced with a problem whenever faced with the question. The one question, we must always ask what's the right thing for BP.

The right thing for BP, and maybe Thats a lead into the second question about integration, but.

More and more examples to come as the organization now settles down.

I think some stats ores on collapsing the remaining contracts that the downstream had cheaper rates from the upstream had 25% savings when you brought the contractors I thought we were locals in.

In the upstream yeah yeah.

When you when you when you bring that together and you've got 25% savings because the upstream is paying more than the downstream. That's a small example of what we've seen in the procurement space overtime. The part that I'm Super pumped about as we've under invested in digital and the downstream.

And history, we just haven't had that focus and the passion that Bernard and I had.

We spent five years streamlining to one financial system inside the upstream enables us to now deep dive and task mine and Knox, 30% to 40%.

Efficiency in our dispositions the out of the upstream will have a five year program to go invest in the downstream now synthesizing the back office getting onto a single system put task money on top of it.

That price is going to be back as we get into it that's something that we definitely havent done theres just.

A tremendous tremendous prize to bring to bear to bring together.

Whether the best of what downstream dead, which was railed rigor and process safety and cost discipline with the technology from from the upstream and great Fabulous results. So that's enough EMEA my diatribe on technology.

And then on trading and shipping that question maintenance mile Oz.

Carol Charles traders aren't going to allow her to do a deal that shade loses money on they're just not incentivize that way et cetera. So if you see a transaction between trading and shipping on light source BP you can know that it was a competitive process and trying.

Traders feel they're getting a good deal. There's a reason the trading and shipping does a 2% uplift in returns and that's from the competitive edge that they have and the scale of their business.

So rest assured it was a good deal we've got a few minutes left <unk> and we will see Chris.

Christian Melick.

It's on zoom.

Yes, Thanks for taking my question Christian.

Hi.

Thanks for taking my question. So we can be there.

Yes.

So this is really going to say well done on today's results.

Two questions from me.

When I look at your EBIT to EBITDA.

I thought it was going to have more EBIT.

The key trends, you're seeing on inflation and supply chain issues rising interest rates.

Do you plan to make this new oil and gas and renewables in the former.

Having hard times grew decline.

With the sustained EBITDA and constantly is cost inflation execution problems.

Problematic.

So can you just help us frame what are your base case assumptions around some of these headwinds.

These risks and.

And the second.

It also relates to the energy crisis, we were in I.

I guess, one on one hand, we ceded premium revenue coming from our LNG prices. It seems to have a negative impact this would be rising customer called <unk>.

Risks someone's question faces.

In the room, so some Russia and how you see the long term relationship evolving dividends versus the risk of geopolitics and then second on the.

The higher economic wins, which feels like a real switch sides. It becomes with strangers from the energy transition to closer to the consumer.

Thanks, Christian I'll take the second question and I'll, let Barry take the first one.

On Russia.

Ill.

One of the things.

I've learned in my life, you've probably all your life is.

Let's not worry about things until they they happen and who knows what's going to happen.

Russia is a big part of the energy system globally, It's a member of OPEC, plus it supplies gas and energy into Europe .

We along with many of our peers have a presence in Russia, we've been there over 30 years and.

Our job is to focus on the business a business, which is what we're doing there are no changes to our ongoing business in Russia today.

And if something comes down the road then obviously, we'll deal with it as it comes down the road. So that's all I would say.

On Russia on rent I think it is.

Great question Christian and it's one that's on our mind.

I'm sure it's on governments mines.

The real concern is that if.

If the consumer or if society equates higher costs with.

The transition.

And that will in effect have.

The potential risk of slowing down that transition that society, so desperately wants.

So that is why I think we feel very passionately.

About the need for real plans in this space such that we don't just tackle one side of the equation, but that all sides of the equation are tackled because.

If we don't tackle demand as well as supply if we don't.

Think about it.

That's.

What's going to replace hydrocarbons are what are we going to do with hydrocarbons. Then I think we end up in a situation potentially where.

The consumer is effectively put off the transition because of the cost and I think that would be a real shame and not something that we want to happen. So that's what we're trying to do everything that we can to be able to prove that you can get.

Clean reliable affordable energy.

But it takes some compromise and that's the reality so two great questions Murray and will begin to wrap I think.

Okay inflation, yes, great. So I mean for the past two decades Christian we've planned on CPI and then the business has to has to has to beat that inflation. That's that's what we've done for the past two decades, we've been through many price cycles through those two decades, and we have been able to achieve it.

Looking forward, we plan on CPI inflation, and then the business has to tackle and has to eat that inflation and inter.

Interestingly I think if we talk to you in Oman or in Baku, We've assumed we see 30% to 40% waste on the business I still see 30% to 40% waste in the business. There is still just tremendous opportunity in this sector to do matter and the new sectors. We're operating in it's the exact same so I think our job as a business is to eat that inflation why do I say that because.

The price can be low at any moment, we can't we can't let cost creep into our business because we don't control the commodity price. So yes, we do plan on inflation, yes, we do either we've got two decades, a track record of doing it and I remain convinced that there's huge prize to get after that will help us tackle over the next decade as well Christian So I think on balance.

Our plans are just fine.

And I'll give you an example, I've been.

<unk> spent most of my career in drilling we've had a massive focus on nonproductive time for every time every day I spent in drilling and yet we brought it down 20% over the last two years.

On our last year, we brought it down 20%.

Always room to go there is always more to do and Thats why agile.

Digital supply chain efficiencies.

There is massive opportunity as Mario says last question on the phone for those of you in the room, where you can catch US afterwards, Paul Cheng Scotiabank and then we'll wrap Paul if you can make a quick. Thank you great. Thanks, and then I'm going to get better your question Ron.

For hydrogen business.

Can you talk about what's the risk to achieve your tomcat.

Yes, yes, the pan.

Going to be driven by some of the improvement in the economics of our technology that we see or that the existing technology.

The existing supplement support might be sufficient for that business.

That's the first question.

The second question is that when we looking at.

<unk>.

Bayou field visits with.

The feedstock costs have been rising because of that and also that we see a substantial margin squeeze how that may impact you.

Investment in the future great.

I mean that you think that this just transitioned new and you don't believe that it's going to happen in the long term indication fantastic Murray will take the Biofuels question Paul on hydrogen.

Ultimately its a cost question isn't it how do we get the cost of hydrogen of Blue green hydrogen to a different.

Place so that it is truly competitive it's going to require.

Mixture of things it will require policy support.

It would require initially customers willing to pay a little bit of a premium probably it.

It doesn't really require much on the technology side other than it does require scale to be built so that we can get repeat ability.

I'm personally.

<unk> that we will see all of that I think the policy support we see it here in Britain.

We're trying to build.

And a green and blue hydrogen plant of the T side, I think we will get the support that we need customers are crying out for this they're all under pressure to decarbonize. Their portfolios are trying to figure out how to do it they are coming to us all the time trying to ask and some are willing to pay a little bit so, let's see where that goes and the scale.

So this is a business where we have.

It's like anything at the beginning it's a bit of an effort, but that's what we need to do if the world was going to Decarbonize.

Hard to abate sectors hydrogen, which it must hydrogen will be a part of it.

Necessary part of that and that will happen and.

We're beginning to see the early stages of why we should be optimistic about that and we will have.

Anya come later in the year and dive into this in greater detail Biofuels and costs and stuff and then we'll wrap it yes, I think on biogas. The key is that you need to be along the entire value chain. So you need to take positions upstream midstream downstream and that's what we do it's hard to predict where the rent will be it does move much like it has in oil valeant.

Changes in gas value chains in history. So from our perspective, we just make sure. We're all along the value chain and that way, we don't face a risk on the rent. So you will take us see it take some equity positions in the upstream.

Youll see us do an awful lot of long term contracts, both near term and long term to manage the risk and then Carol will optimize and trade around it across biofuel biogas et cetera. So.

Playing along the whole value chain is what's critical on biogas. We've got 35 floating units. It's a lovely phrase flowing units. We have 35 of them in 2500 construction. So we've got 60 out of the $2 20 that were talking about already there. They are all under long term commitments.

Kate are so so.

Pretty cool business.

Thanks, Greg.

Look at expanding with our rail network in Germany elsewhere in Europe , and we May go upstream in Europe as well in this space so very exciting.

Excellent. Thank you all sorry, we've run a few minutes over.

For those of you in the room that we didn't get to will be mingling around and.

Happy to have a chat at least for a few minutes.

Big Thanks to Craig and his team for the enormous amount of work that went into that like getting ready for today, Julia you and your teams and strategy.

Huge amount of work on it right across all the organization. Thank.

For being here in person. Thank you for those of you who have listened in.

Online hope it was helpful. Great to see you all back in person here in London and.

I appreciate the interest and we'll leave you all to it thanks.