BP: Uniquefied Natural Gas In North America

1. Current Situation:
a. Trades oil, natural gas, liquefied natural gas, currencies, metals, and financial derivatives.
b. In 1 year, completes about 550000 transactions, and serves 12000 customers across more than 140 countries.
c. Completes around 1.2 million transactions in US and serves about 3500 customers.
d. Number 1 marketer of natural gas in North America.
e. First energy company to register as a “swap-dealer” under Dodd Frank regulation.

2. BP has a competitive advantage in 1) cost reduction strategy, 2) sales and marketing, 3) process innovation, and 4) research and development. BP has an absolute disadvantage, but also has a comparative advantage, in producing oil. Exxon, one of its main competitors, continues to produce more

than BP.

3. Short-term forecast:
a. Decrease in refinery due to weaker demand.
b. Attempt to increase production growth to 4 million barrels of oil equivalent per day by 2020 through major projects they are planning on doing.

BP has been trying to get back on its feet after the oil spill in 2010. However, with a slow decrease in oil demand, BP might have struggles recovering. Luckily, in a short-term stand point, BP will not have to worry about the decline in demand just quite yet. If the major projects are a success, it is expected that BP will be hiring more people to work. If not, there will be more work for each employee to do in order to increase productivity.

4. Long-term forecast:
a. By 2050, global oil demand amounts to less than half of today’s oil demand.
b. China becomes a major demand for energy.

The shift in demand and the decrease in global oil demand in the next 20 years or so will greatly hurt BP and its employees. It is likely that BP will have to decrease its employee size because it has to 1) decrease production due to less demand, and 2) decrease costs to offset low revenue.

5. Advice: If there is a greater demand for energy in Asian markets, BP should concentrate on increase productivity in their Asian branches. In addition, in the future, renewables will be the highest demand. BP should start diversifying into some forms of renewable energy production.