Introduction to Oil and Gas Environment. The Management Structure of BP

Research Paper (postgraduate), 2016

8 Pages, Grade: 97

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owners of the company and, therefore, is accountable to them. It is composed of thirteen
members, which includes the chairman (Carl Henric Svanberg), two executive members, nine
non-executive members and one independent director. The executive, through the chief
operating officer and the chief financial officer, reports directly to the board. To achieve its
mandate, it has established principles and values that guide the organization. The foundation
of the principles governing its operations is the importance of "clarity of roles and
responsibilities, and the proper utilization of distinct skills and processes". Through a
governance report to the shareholders and other stakeholders, the board outlines the
performance of the organization as well as the management activities (BP 2016a).
The executive management is composed of the chairman (Carl Henric Svanberg), two
executive directors (chief executive officer and chief financial officer) and other executive
officers responsible for different divisions and operations in the company. The CEO of BP is
Bob Dubley while the chief financial officer is Dr. Brian Gilvary. The executive has the
responsibility of managing the day to day operations of the corporation under the supervision
of the board. The owners, therefore, confer their authorities to the executive through the
board (BP 2016a).
The corporate aim of BP is to provide a steady and reliable supply of energy products
and services to its clients. To achieve this objective, the company has two major operating
divisions, Upstream and Downstream (BP 2016a). The Upstream segment is responsible for
finding fossil fuels, extracts through drilling, and transportation. The Downstream unit is in
charge of the manufacturing and blending process as well as marketing the BP products. Due
to the increased demand for renewable energy, BP has created a third division which deals

with investments and development of new sources of energy such as biofuels and wind farms
(Ferrier and Fursenko 2016).
Upstream division
The upstream sector forms the foundations of BP operations. It primary
responsibilities include exploration of oil and gas in different parts of the world, development
of the fields and production. It is also responsible for processes such as transportation, and
storage of raw and associated products. According to the BP annual report 2015, the
upstream segment of BP operations has five main operational and technical functions. They
include exploration function, development reservoirs, as well as global wells, projects, and
operational organization. These functions ensure that the resources base of the company is
renewed, stewardship in the management of the portfolios, and safety and compliance of
operations with internal and external standards (BP 2016b).
The activities of the upstream segment of BP operations are concentrated in 12
regions around the world. They are optimized by a well developed and specialized team of
experts in the exploration geology and petrochemical engineering, logistics, procurement and
supply chain management as well as financial management. One of the most phenomenon
technology used in the exploration of gas and oil is seismic imaging which has played a
significant role in supporting the strategic plan of the upstream division (BP 2016b). Despite
the immense capital and advanced technology that is involved in this segment of BP
operations, maintaining key portfolios in major fossil fuels basins is a daunting task. It has a
direct impact on the competitiveness of the group. There are several ways through which the
segment competes with other giants in the energy industry. The operations of the upstream
division are dependent on its ability to carry out successful exploration and execute projects
efficiently, putting into consideration the safety and reliability of the projects. Therefore, it

competes with other companies in the sector through operational dependability, safety
performance, and access to new oil and gas resources in the traditional and new regions (Ulph
Downstream division
The downstream segment of BP operations is responsible for manufacturing and
blending processes as well as marketing of the company's product. BP deals with three broad
categories of product, which include fuels, lubricants, and petrochemicals. The downstream
divisions have the responsibility of ensuring that what is extracted from the fields is
converted into one of the products marketed by BP. In the fuel subsector, downstream is
responsible for refining of the crude product into different forms of fuels, mainly jet fuel,
gasoline, diesel and gas, and ensuring that they are available where the customer needs them
(Bamberg 2013). Consequently, it is in charge of the management of the supply chain, retail
business, and trading activities in the organization. The lubricant subsector involves value
addition processes, branding, and marketing of lubricating materials. Over the years, the
downstream segment has established partnerships with equipment manufacturers to provide
customized and branded lubricants in the market. Petrochemicals are products derived from
fossil fuels during the refining process for industrial use. The company has invested in
advanced technologies that ensure that they can supply petrochemicals demanded by
industrial consumers, mainly paints, plastics and textile industries. This is a critical role
because all other aspects of BP business depend on whether it has a market for its products
(BP 2016b).
It is essential to note that fuel products in the market are not differentiated. However,
the downstream segment in BP has invested in modern advanced technologies which enable
the company to remain competitive in the market. The company has branded and customized

products, mainly lubricants but can be substituted with products from other firms. However,
the principal product, fuel, is not differentiated. The top priorities in the downstream strategy
are to adopt technologies that result in advantaged manufacturing, increased efficiency and
safe operations. The state of the art refining technologies is the main competitive advantage
enjoyed by BP (BP 2016b). Also, the company uses its resources power to finance marketing
and sales promotion activities throughout the world. As a direct impact of trademark publicity
initiatives, BP is one of the most recognized brands in the global energy market.
Additionally, downstream has a well-developed distribution infrastructure and logistic
system. They include modern pipeline systems, rail and road transport tankers and
sophisticated storage facilities. The division recognizes the significant role of the retail
market in BP operations. Consequently, the marketing strategy involves partnering with
various retailers to sell its products in the highly competitive market (Herkenhoff 2014).
Contribution to the local community
BP upstream, downstream, and renewable facilities are located in at least seventy
countries around the world. Additionally, their products are marketed through different
channels in the energy, lubricant and petrochemical market, throughout the world (Bamberg,
2009). Consequently, there are several issues in the company operations that have a direct
impact on the local community and environment. While maximizing the return on investment
to the shareholders and meeting the demands of its clients, the company has strived to be a
responsible and the ideal corporate citizen. Being one of the largest players in the fuel and
petrochemical industry, BP has a huge responsibility in ensuring that the global society meets
the increased demand for energy. However, there are numerous issues related to the impacts
of fossil fuels on the environment that have effects on its operations at all levels (Ulph 2011).

The largest contributions of the BP businesses in the local communities are dependent
on the commitments of the organization in promoting ethical human resources management
practices. Like other large corporation, BP operations provide employment to the local
communities. The locals are employed directly by BP or by its contractors. The company has
established a code of conduct that guides the organization on how it relates to its employees.
This includes safety in the workplaces, and value for its people. According to the 2015
sustainability report, the performance of the company is dependent on "having a highly
skilled, motivated and talented workforce that reflects the diversity of the societies in which
we operate" (BP 2016c). The foremost goal of the human resources department at BP is to
build capacity in the workforce derived from the host communities. Consequently, the
company aims at attracting and retaining the most experienced and talented people. It also
provides expanded opportunities for its workforce to build capacity as well as adequately
rewarding performance. Other initiatives include promoting health and safety, inclusivity of
diverse cultures and engagement of employees. These activities are based on the fact that the
company identified its massive human capital as the most important community that
contributes to its success (BP 2016c).
In addition to the provision of employment opportunities, there are other social and
environmental activities that are undertaken by the company. Some of these activities,
although an element of the corporate social responsibility, they are part of marketing
strategies. This is because they have direct impacts on the BP brand name. In the recent past,
the company has been faced with an uphill task of dealing with the effects of the Deepwater
Horizon Oil Spill in the Gulf of Mexico, which has impacted negatively on the reputation and
safety of its operations (Partlett and Weaver 2011). Through the operating management
system (OMS), BP has developed measures that facilitate the management of social and

environmental impacts of all its operations (Gannon 2012). The company has also reiterated
its commitment to contributing to the low carbon future. Other environmental initiatives
include preparedness for oil spills and related accidents, collaboration in dealing with climate
change and greenhouse gasses emissions, water management and unethical practices such as
hydraulic fracturing (Ferrier and Fursenko 2016).
The company's operations have both positive and negative impacts on the local
communities. They create employment, generate local government revenues and provide
opportunities for other business organizations. On the other hand, the activities can result in
adverse effects such as destruction of natural environments and cultural heritage (Ulph 2011).
Consequently, the company has adopted community engagement strategies through which the
local communities can communicate their grievances. While employing the locals, the
company invests in local developments programs such as education, disaster relief, donations
to charity through the BP Foundation, and working with local indigenous people to promote
their culture. These initiatives play a critical role in promoting the BP brand name, and this an
important aspect of marketing strategy (BP 2016b).

Albrechtsen, E. & Besnard, D. (2013). Oil and gas, technology and humans: assessing the
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Bamberg, J. (2013). British Petroleum and global oil: 1950-1975: the challenge of
nationalism. Cambridge: Cambridge Univ. Press.
BP (2016a). bp Global.
BP (2016b). Strategic Report 2015,
BP (2016c).Sustainability Report 2015.
Ferrier, R. W. and Fursenko, A. (2016). Oil in the World Economy. Routledge, ISBN
Gannon, M. (2012). Dissecting a Disaster: The Deepwater Horizon Oil Spill. Waco: Baylor
Herkenhoff, L. (2014). A profile of the oil and gas industry: resources, market forces,
geopolitics, and technology. New York: Business Expert Press.
Hilyard, J. (2012). The Oil & Gas Industry: A Nontechnical Guide. Tulsa, Okla.: Penn Well.
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Restitution. Washington and Lee Review, 1342-1355.
Ulph, C. (2011). PR Analysis of British Petroleum. Munchen GRIN Verlag GmbH.
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Introduction to Oil and Gas Environment. The Management Structure of BP
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Selina Kolls (Author), 2016, Introduction to Oil and Gas Environment. The Management Structure of BP, Munich, GRIN Verlag,


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