According to a report published on 2006 annual report, petroleum industry was rendered lucrative due to the then global demand although the oil companies got exposed to great risks. Sooner the cheap oils that they refined were wholly consumed and what they were left with were the war-torn and politically unstable areas within which the oil companies were forced to dig deeper into their pockets to raise the money to facilitate the mining process of the petroleum that by then had proven to be an expensive transaction to venture into.
To survive the massive loss of products, British Petroleum spent a huge amount of money trying to explore new territorial reserves to control the refining and distribution in the entire chain through downstream technology. BP had limited choices left for it and to fully contain the situation that it had at hand, BP had to take precautionary measure among which included diversifying into new generation technologies.
British Petroleum was disassembled into three major segments; oil exploration and production, oil refining and marketing and finally gas power and renewables. The three newly formed segments of British Petroleum formed the background of their critical success factors. For instance in oil refining and marketing, the department pumped the crude oil from the ground and refined it into various other products such as gasoline, kerosene and motor oil that were sold to consumers in over 25000 gas stations or to other individual oil sellers. Despite oil refinery being a capital intensive activity, BP managed to qualify as a part owner of around 18 refineries that processed approximately 2.8 million barrels in one day. (Bamberg, 2000)
With this kind of ownerships, BP was able to revive itself and come through to the top as one of the leading producers and refiners of oil in most parts of the continent, and this meant great destiny for BP. British Petroleum’s management used the three segments of the British Petroleum; oil exploration and production, oil refining and marketing, and gas power and renewables as securities. They did that to spread their risks and to avoid concentrating on only one part of the business but also to try and diversify their options. The three segments make the critical success factors of the British Petroleum.
Through the division of labor among the three departments available in the British Petroleum, BP was able to form a joint business venture with Yukos, an oil giant refinery in Russia. The business agreement led to the provision of the firm with 50% access to reserves of about 44billion barrels of oil or and equivalent on top of an additional production of about 1.2 million barrels in a day. With the departments at hand, BP was able to make significant progress to becoming the leading oil producers in Britain.
John Browne the CEO of British Petroleum since 1995 has been termed the most successful CEO of the country over a long time. He is given credit on pushing BP to become one of the world’s largest oil producers and the best and most successful oil companies in the world. He is known mainly for his fearlessness towards taking risks to pursue great deals. During his tenure a deal to acquire Amoco, an American-based oil company, was initiated. The deal was valued at approximately more than $60 billion an amount that led to a great success of the company by doubling their annual income. Over the years, British Petroleum has provided people with job opportunities employing up to 100,000 people in more than 100 countries worldwide given that the company had started operating under humble backgrounds.
- Bamberg, J. H. (2000). British Petroleum and Global Oil, 1950-1975: The challenge of nationalism. Cambridge, UK: Cambridge University Press.
