BP SWOT Analysis Sample UK

Parent Company: BP p.l.c.

Category: Oil & Gas

Sector: Energy & Power

Tagline/ Slogan: Beyond petroleum

USP: The third-largest energy company in the world and fourth-largest company overall by revenue, ExxonMobil is one of the six oil and gas “supermajors.”

Founded: 1908

Headquarters: London, United Kingdom

BP is one of the world’s leading oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.

The company has operations in over 70 countries and its activities include exploration, production, refining, marketing and trading of crude oil and natural gas, as well as manufacturing and marketing of petrochemicals. It employs around 84,500 people.

BP’s revenues totaled $224.3 billion in 2018, of which $67.6 billion was generated by Upstream, $81.8 billion by Downstream and $74.9 by Rosneft.

The company’s operations are organized into four business segments: Upstream, Downstream, Rosneft and Other businesses and corporate.

BP’s Upstream segment is engaged in the exploration, development and production of oil and natural gas. The Downstream segment refines, markets and supplies crude oil and petroleum products. The Rosneft segment is engaged in the exploration, development and production of oil and gas, as well as marketing of refined products. Other businesses and corporate includes other activities such as biofuels, shipping operations and treasury management.

BP’s primary listing is on the London Stock Exchange, where it is a constituent of the FTSE 100 Index . It also has ADRs listed on the New York Stock Exchange.

Let’s learn about the  Strengths, Weaknesses, Opportunities and Threats of BP through a SWOT analysis:

BP Strengths

1. One of the World’s Largest Energy Companies: BP is one of the six oil and gas “supermajors” and is the third-largest energy company in the world. The company has operations in over 70 countries and its activities include exploration, production, refining, marketing and trading of crude oil and natural gas, as well as manufacturing and marketing of petrochemicals. It employs around 84,500 people.
2. Diversified Business Segments: BP’s operations are organized into four business segments: Upstream, Downstream, Rosneft and Other businesses and corporate. This diversification protects the company from fluctuations in oil prices as different segments are affected differently by changes in oil prices.
3. Strong Refining and Marketing Operations: BP’s Downstream segment is engaged in the refining, marketing and supply of crude oil and petroleum products. The company has a strong global refining network with 14 refineries in 11 countries. It also has a retail marketing network of around 18,200 service stations in 70 countries.
4. Strategic Alliances and Joint Ventures: BP has formed strategic alliances and joint ventures with leading oil and gas companies such as  ExxonMobil,  Royal Dutch Shell,  Total SA and Chevron Corporation. These alliances help the company to share risks and costs, as well as benefit from each other’s strengths.
5. Extensive Research & Development: BP invests heavily in research and development activities to develop new technologies for the oil and gas industry. The company has around 3,500 scientists and engineers working on projects across the globe.

BP Weaknesses

1. High Dependence on Oil & Gas Prices: BP is a major oil and gas player and is therefore highly dependent on oil and gas prices. Changes in oil and gas prices can have a significant impact on the company’s financial performance.
2. Significant Exposure to Political Risks: BP operates in many politically unstable regions such as the Middle East, Africa and Russia. These regions are subject to political risks such as terrorism, wars and sanctions, which can adversely affect the company’s operations.
3. Environmental Risks: The oil and gas industry is associated with environmental risks such as oil spills and air pollution. BP has been involved in some major environmental disasters in the past, which have damaged its reputation.
4. High Debt Levels: As of December 31, 2018, BP’s total debt was $69.6 billion. This high level of debt can put the company at risk if there is a decrease in oil and gas prices or an increase in interest rates.
5. Ethical issues: BP has been involved in some ethical scandals in the past, which have damaged its reputation. In 2010, the company was responsible for the Deepwater Horizon oil spill, which was one of the worst environmental disasters in history.

BP Opportunities

1. Growth in Emerging Markets: BP is present in many emerging markets such as Brazil, China and India. These markets are expected to grow at a faster rate than developed markets and provide growth opportunities for BP.
2. Expansion of Refining Capacity: BP plans to expand its refining capacity by 20% by 2020. This will help the company to meet the growing demand for petroleum products.
3. Increased shale gas production: The US is expected to see a significant increase in shale gas production in the coming years. This presents an opportunity for BP, as the company has a significant presence in the US shale gas industry.
4. Growth in Electric Vehicle Market: The electric vehicle market is expected to grow significantly in the coming years. This presents an opportunity for BP, as the company is involved in the production of charging stations for electric vehicles.
5. Investment in alternate business: In recent years, BP has been investing in alternate businesses such as solar and wind energy. This presents an opportunity for the company to diversify its business and reduce its dependence on oil and gas.

BP Threats 

1. Volatility in Oil & Gas Prices: Oil and gas prices are highly volatile and can have a significant impact on BP’s financial performance.
2. Increased Government Regulation: The oil and gas industry is subject to increased government regulation. This can lead to higher costs for BP and limit its growth prospects.
3. Competition from Major Oil & Gas Players: BP competes with major oil and gas players such as ExxonMobil, Royal Dutch Shell and Total SA. These companies have much larger resources and can therefore out compete BP in the market.
4. Environmental Risks: The oil and gas industry is associated with environmental risks such as oil spills and air pollution. BP has been involved in some major environmental disasters in the past, which have damaged its reputation.
5. High Debt Levels: As of December 31, 2018, BP’s total debt was $69.6 billion. This high level of debt can put the company at risk if there is a decrease in oil and gas prices or an increase in interest rates.

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