BP p.l.c. (BP): Business Model Canvas [10-2024 Updated]

In the ever-evolving energy landscape, BP p.l.c. stands out with a robust business model that navigates between traditional fossil fuels and innovative renewable energy solutions. This blog post delves into the intricacies of BP's Business Model Canvas, highlighting its key partnerships, activities, and value propositions. Discover how BP balances its extensive oil and gas reserves with a commitment to sustainability, catering to diverse customer segments while positioning itself for a low carbon future.

BP p.l.c. (BP) - Business Model: Key Partnerships

Collaborations with regional governments for energy projects

BP has established significant partnerships with regional governments to enhance its energy project portfolio. For instance, BP signed a memorandum of understanding with the government of Iraq to negotiate a comprehensive redevelopment program for the Kirkuk region, which includes investments in oil and gas, power generation, and solar energy. This initiative is part of BP's strategy to expand its operational footprint in regions with substantial energy resources.

Partnerships with companies like Enbridge and Shell for pipeline operations

BP collaborates with Enbridge Offshore Facilities LLC and Shell Pipeline Company LP for pipeline operations related to the Kaskida project in the Gulf of Mexico. These partnerships involve constructing, owning, and operating oil and gas export pipelines to transport oil and gas to various markets. The agreements are critical for BP's logistics and distribution efforts in North America.

Partnership	Details	Expected Outcomes
Enbridge	Collaboration for oil and gas export pipelines from Kaskida	Enhanced transportation efficiency and market access
Shell	Joint operations for pipeline transportation to Louisiana markets	Improved logistical operations and reduced costs

Engagement with technology firms for innovation in low carbon energy

BP is actively engaging with technology firms to foster innovation in low carbon energy solutions. The company has announced partnerships aimed at developing sustainable technologies, including a collaboration with Audi to create advanced sustainable fuels for Formula 1 racing, and a joint venture with Iberdrola for a green hydrogen project in Spain. These initiatives reflect BP's commitment to transitioning towards a more sustainable energy future.

Partnership	Project	Focus Area
Audi	Development of advanced sustainable fuels for Formula 1	Automotive and sustainable fuel technology
Iberdrola	25MW green hydrogen project at Castellón refinery	Hydrogen energy and sustainability

BP p.l.c. (BP) - Business Model: Key Activities

Exploration and production of oil and gas

The exploration and production segment of BP is critical for its operations, contributing significantly to its revenue. In the third quarter of 2024, the replacement cost (RC) profit before interest and tax for oil production and operations was $1.89 billion, down from $3.43 billion in the previous quarter. The underlying RC profit before interest and tax was reported at $2.79 billion for the third quarter, compared to $3.14 billion in the second quarter of 2024.

Reported production for the quarter was 1,488 thousand barrels of oil equivalent per day (mboe/d), reflecting a 7.7% increase from the same period in 2023. This production is driven by BP's ongoing investments in major projects, which have helped offset declines from mature fields. The company continues to focus on reducing costs and increasing efficiency in its exploration and production activities.

Development of renewable energy projects

BP is actively transitioning towards renewable energy sources. As of September 2024, BP's renewables pipeline reached 46.8 gigawatts (GW), including 20.5 GW from Lightsource BP. The installed renewables capacity was reported at 2.8 GW, with 6.6 GW developed to final investment decision (FID). BP's strategy includes significant investments in solar, wind, and hydrogen projects, aiming to enhance its low carbon energy portfolio.

In the third quarter of 2024, BP's capital expenditure in low carbon energy was approximately $908 million, compared to $222 million in the same period of the previous year. This illustrates BP's commitment to scaling up its renewable energy capabilities and contributing to global sustainability goals.

Refining and marketing of petroleum products

BP's refining segment is pivotal for converting crude oil into marketable products. In the third quarter of 2024, BP reported a refining and trading loss of $66 million, significantly lower than the profit of $1.82 billion in the same quarter of 2023. The average refining marker margin (RMM) for the quarter was $16.5 per barrel, a decrease from $31.8 per barrel a year prior.

During this period, total refinery throughputs were 1,440 mb/d, slightly lower than the 1,450 mb/d recorded in the previous year. BP operated with a refining availability of 95.6%, down from 96.3% in the same quarter of 2023. The company also saw a slight increase in retail sites, totaling 21,200, as it continues to expand its market presence in the convenience and mobility sectors.

Key Activity	Q3 2024 Profit (RC)	Q3 2023 Profit (RC)	Capital Expenditure (Low Carbon Energy)	Renewables Pipeline (GW)
Oil Production	$1.89 billion	$3.43 billion	N/A	N/A
Renewable Energy	N/A	N/A	$908 million	46.8 GW
Refining	Loss of $66 million	$1.82 billion	N/A	N/A

BP p.l.c. (BP) - Business Model: Key Resources

Extensive global oil and gas reserves

BP p.l.c. holds extensive global oil and gas reserves which are critical to its operations. As of September 2024, BP's total reported production was 1,488 thousand barrels of oil equivalent per day (mboe/d), reflecting a 7.7% increase compared to the third quarter of 2023. The company has significant hydrocarbon resources, with total hydrocarbons production averaging 1,477 mboe/d for the nine months of 2024.

Category	Q3 2024 Production (mboe/d)	Q3 2023 Production (mboe/d)	Change (%)
Total Hydrocarbons	1,488	1,382	7.7
Liquids	274	266	3.0
Natural Gas	443	453	-2.2

Advanced refining and processing facilities

BP operates advanced refining and processing facilities that are integral to its value chain. The company reported a refining availability rate of 95.6% for the third quarter of 2024, slightly lower than 96.3% for the same period in 2023. BP's average refining marker margin (RMM) for Q3 2024 was $16.5 per barrel, significantly down from $31.8 per barrel in Q3 2023, indicating a challenging refining environment.

Metric	Q3 2024	Q3 2023	Change (%)
Refining Availability (%)	95.6	96.3	-0.7
Average RMM ($/bbl)	16.5	31.8	-48.0

Skilled workforce and technological capabilities

BP employs a skilled workforce that is crucial for its operational efficiency and innovation. The company reported a total of 63,600 employees as of the end of September 2024. BP continues to invest in technological capabilities, focusing on digital transformation and sustainable practices, which are essential for maintaining a competitive edge in the evolving energy landscape.

• Total Employees: 63,600
• Investment in Technology (2024): $12.5 billion
• Focus Areas: Renewable energy, digital transformation, and operational efficiency

BP p.l.c. (BP) - Business Model: Value Propositions

Reliable energy supply with a focus on sustainability

BP p.l.c. emphasizes a reliable energy supply, integrating sustainability into its core operations. The company aims to meet global energy demands while reducing its environmental impact. In 2024, BP reported an underlying replacement cost (RC) profit of $2.3 billion for the third quarter, reflecting a commitment to operational efficiency and sustainability initiatives. The company's total revenues for the nine months ended September 2024 were approximately $146.5 billion.

Diverse portfolio including traditional and renewable energy sources

BP has developed a diverse portfolio that encompasses both traditional fossil fuels and renewable energy sources. As of 2024, BP's gas and low carbon energy segment reported a RC profit before interest and tax of $1.0 billion in the third quarter, compared to a loss of $0.3 billion in the previous quarter. The company is increasingly focusing on renewable energy projects, highlighted by its acquisition of the remaining 50% interest in Lightsource BP, a leading solar energy developer, for approximately $0.5 billion.

Energy Segment	RC Profit Before Interest and Tax (Q3 2024)	RC Profit Before Interest and Tax (Q3 2023)
Gas & Low Carbon Energy	$1.0 billion	$2.3 billion
Oil Production & Operations	$1.9 billion	$3.4 billion
Customers & Products	$23 million	$1.5 billion

Commitment to reducing carbon emissions and transitioning to low carbon energy

BP is committed to reducing carbon emissions as part of its broader strategy to transition to low carbon energy. The company has set ambitious targets to achieve net-zero emissions by 2050. In 2024, BP's capital expenditure for low carbon energy was reported at approximately $1.7 billion for the nine months ended September. The company's operating cash flow for the third quarter of 2024 was $6.8 billion, demonstrating robust financial health while investing in sustainable energy initiatives.

Financial Metrics	Q3 2024	Q3 2023
Operating Cash Flow	$6.8 billion	$8.7 billion
Capital Expenditure for Low Carbon Energy	$1.7 billion	$0.8 billion
Net Debt	$24.3 billion	$22.3 billion

BP p.l.c. (BP) - Business Model: Customer Relationships

Long-term contracts with large industrial customers

BP engages in long-term contracts with significant industrial customers, ensuring stable revenue streams and fostering strong relationships. The company has established agreements that cover various segments, including natural gas and renewable energy. For example, BP's gas and low carbon energy segment reported a replacement cost (RC) profit before interest and tax of $1,007 million for the third quarter of 2024, down from $2,275 million in the same period of 2023.

Responsive customer service for retail and convenience segments

BP emphasizes responsive customer service, particularly in its retail and convenience segments. The customers & products segment reported an underlying RC profit before interest and tax of $381 million in Q3 2024, compared to $2,055 million in Q3 2023. This decline was attributed to lower refining margins and a weak oil trading contribution, indicating the importance of maintaining high service standards to retain customers during challenging market conditions.

Loyalty programs and incentives for frequent customers

BP has implemented various loyalty programs and incentives to encourage repeat business among its customers. The company's retail fuels margins have benefited from these initiatives, with an underlying result for the customers segment being higher in Q3 2024 compared to the previous year, driven by seasonally higher volumes. BP has also expanded its EV charging network, with energy sales increasing by over 100% compared to the same period last year, highlighting the effectiveness of its customer engagement strategies.

Metric	Q3 2024	Q3 2023
Gas & Low Carbon Energy RC Profit Before Interest and Tax ($ million)	1,007	2,275
Customers & Products Underlying RC Profit Before Interest and Tax ($ million)	381	2,055
Retail Fuels Margins Impact	Higher due to loyalty programs	Lower than previous year
EV Charging Network Growth (%)	100%	N/A

BP p.l.c. (BP) - Business Model: Channels

Direct sales through retail service stations

BP operates approximately 2,950 retail service stations globally, with a focus on providing fuel and convenience products to consumers. In the third quarter of 2024, BP's marketing sales of refined products averaged 2,827 mb/d, showing slight variation from 2,847 mb/d in the same quarter of 2023.

B2B relationships with industrial clients

BP maintains significant B2B relationships, particularly in the gas and low carbon energy sectors. The company reported a replacement cost profit before interest and tax of $1,007 million in gas and low carbon energy for the third quarter of 2024, a decrease from $2,275 million in the same quarter of 2023. BP's total revenues from sales and other operating revenues for the third quarter of 2024 were $48.33 billion, down from $54.02 billion in the same quarter of 2023.

Online platforms for customer engagement and service

BP has expanded its digital presence through various online platforms, enhancing customer engagement. The company has seen growth in its EV charging network, with a reported increase of 20% in installed charge points and a two-fold increase in energy sold compared to the previous year, exceeding 1 TWh. BP's online platforms also facilitate the sale of renewable energy solutions, contributing to its overall transition strategy towards lower carbon energy sources.

Channel Type	Key Metrics
Retail Service Stations	2,950 stations globally, 2,827 mb/d sales in Q3 2024
B2B Relationships	$1,007 million profit in gas and low carbon energy in Q3 2024
Online Platforms	20% growth in EV charge points, >1 TWh energy sold

BP p.l.c. (BP) - Business Model: Customer Segments

Commercial and industrial clients needing bulk energy

BP serves a diverse range of commercial and industrial clients that require large volumes of energy. This segment includes businesses in manufacturing, transportation, and utilities that depend on reliable and cost-effective energy solutions. BP's commitment to providing tailored energy solutions is reflected in its sales and operating revenues, which amounted to $47.3 billion in the third quarter of 2024, down from $53.3 billion in the same period of 2023.

Consumers using retail fuel stations and convenience products

BP operates a network of retail fuel stations that cater to individual consumers. This segment includes sales of gasoline, diesel, and convenience store products. In the third quarter of 2024, BP's underlying replacement cost profit for the customers and products segment was $381 million, a significant decrease from $2.1 billion in the same quarter of 2023. The decline in profit was attributed to lower refining margins and a weaker oil trading contribution, indicating the challenges faced in the retail sector due to fluctuating fuel prices and competition.

Customer Segment	Q3 2024 Revenue ($ billion)	Q3 2023 Revenue ($ billion)	Underlying Profit Q3 2024 ($ million)	Underlying Profit Q3 2023 ($ million)
Commercial and Industrial Clients	47.3	53.3	N/A	N/A
Retail Fuel Stations	N/A	N/A	381	2,055

Government and public sector organizations for large-scale energy projects

BP collaborates with government entities and public sector organizations to implement large-scale energy projects, including renewable energy initiatives and infrastructure development. The company's investment in low carbon energy has been significant, with an underlying replacement cost profit of $1.8 billion for its gas and low carbon energy segment in Q3 2024, compared to a profit of $2.3 billion in the same period of 2023. This reflects BP's strategic focus on transitioning towards sustainable energy solutions while continuing to serve government clients effectively.

BP p.l.c. (BP) - Business Model: Cost Structure

High capital expenditures in exploration and production

In 2024, BP's total capital expenditure was reported at approximately $12.5 billion for the first nine months, with significant allocations towards exploration and production activities. Specifically, capital expenditure for oil production & operations reached $4.4 billion, while gas and low carbon energy investments totaled about $2.7 billion.

Operational costs related to refining and distribution

BP's operational costs in the refining and distribution segment reflect a complex structure. In the third quarter of 2024, the company reported production and manufacturing expenses of $5.0 billion, compared to $6.1 billion in the same period of 2023. The refining marker margin (RMM) was significantly impacted, averaging $16.50 per barrel, down from $31.80 per barrel in the previous year. This decline can be attributed to weaker realized refining margins and lower trading contributions, which have influenced overall profitability in this segment.

Cost Type	Q3 2024 ($ billion)	Q3 2023 ($ billion)
Production and Manufacturing Expenses	5.0	6.1
Refining Marker Margin (RMM)	16.50	31.80

Investments in research and development for low carbon technologies

BP is actively investing in low carbon technologies as part of its transition strategy. In 2024, the company allocated approximately $1.7 billion towards research and development in low carbon energy initiatives. This includes advancements in renewable energy projects and carbon capture utilization and storage (CCUS) technologies. BP's renewables pipeline at the end of Q3 2024 stood at 46.8 GW, marking a significant focus on sustainable energy solutions.

Investment Area	2024 Investment ($ billion)
Research and Development for Low Carbon Technologies	1.7
Renewables Pipeline Capacity (GW)	46.8

BP p.l.c. (BP) - Business Model: Revenue Streams

Sales from oil and gas production

In the third quarter of 2024, BP reported revenues from oil and gas production amounting to $6.468 billion, compared to $6.225 billion in the same quarter of 2023. For the nine months ending September 30, 2024, the revenues in this category totaled $19.559 billion, an increase from $18.155 billion in the comparable period of 2023.

Revenue from refined petroleum products

BP's revenue from refined petroleum products reached $38.437 billion in the third quarter of 2024, down from $42.908 billion in the prior year. For the nine-month period, revenue from this segment was $119.432 billion, slightly lower than $119.841 billion in the same period of 2023.

Income from renewable energy projects and carbon credits

In the third quarter of 2024, BP's income from renewable energy projects was approximately $1.007 billion, down from $2.275 billion in the third quarter of 2023. For the nine months ending September 30, 2024, this income was $1.728 billion, compared to $11.911 billion in the previous year. Additionally, BP's renewables pipeline as of September 30, 2024, comprised 46.8 GW of projects.

Revenue Stream	Q3 2024 Revenue ($ billion)	Q3 2023 Revenue ($ billion)	9M 2024 Revenue ($ billion)	9M 2023 Revenue ($ billion)
Oil and Gas Production	6.468	6.225	19.559	18.155
Refined Petroleum Products	38.437	42.908	119.432	119.841
Renewable Energy Projects	1.007	2.275	1.728	11.911

Article updated on 8 Nov 2024

Resources:

1. BP p.l.c. (BP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of BP p.l.c. (BP)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View BP p.l.c. (BP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.