BP (BP)

(a)

Excludes BP's share of joint venture turnover of $594 million in 2004, $453 million in 2003 and $415 million in 2002.

(b)

The Global Indicator Refining Margin is the average of six regional industry indicator margins which we weight for BP's crude refining capacity in each region. Each regional indicator margin is based on a single representative crude with product yields characteristic of the typical level of upgrading complexity. The refining margins are industry specific rather than BP specific measures, which we believe are useful to investors in analysing trends in the industry and their impact on our results. The margins are calculated by BP based on published crude oil and product prices and take account of fuel utilization and catalyst costs. No account is taken of BP's other cash and non-cash costs of refining, such as wages and salaries and plant depreciation. The indicator margin may not be representative of the margins achieved by BP in any period because of BP's particular refining configurations and crude and product slate.

(c)

Refining availability is the weighted average percentage of the period that refinery units are available for processing, after accounting for downtime such as turnarounds.

        Turnover for 2004 was $180 billion compared with $149 billion for 2003 and $126 billion for 2002. The increase in turnover in 2004 compared with 2003 was principally due to higher prices contributing approximately $36 billion and foreign exchange movements contributing approximately $8 billion due to sales in local currencies being translated into the US dollar, partly offset by lower volumes (including trading and crude oil sales) of around $14 billion. The increase in turnover in 2003 compared with 2002

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is due primarily to higher oil prices contributing approximately $14 billion and foreign exchange movements and higher volumes (including trading and supply sales) contributing a further $8 billion and $3 billion respectively.

        Profit before interest and tax for 2004 includes net exceptional losses of $117 million which includes a gain on disposal of the Cushing to Chicago Pipeline in the US, and losses on the disposal of our interest in the Singapore Refining Company Private Limited and the closure of the lubricants operation of the Coryton Refinery in the UK. Profit before interest and tax for 2003 includes net exceptional losses of $213 million resulting from a number of disposals which primarily relate to retail assets. Profit before interest and tax for 2002 includes net exceptional gains of $613 million which include gains on the sale of our interest in Colonial Pipeline and a US downstream electronic payment system, along with a number of smaller items.

        Total operating profit for 2004 was $6,084 million, including inventory holding gains of $1,245 million, and is after charging $206 million in relation to new, and revision to existing, environmental and other provisions. The Group undertakes an annual review of its environmental provisions in relation to current and former refinery, retail and other sites taking account of new legislation and emerging industry practice.

        Total operating profit for 2003 was $2,483 million after inventory holding losses of $48 million and is after Veba integration costs of $287 million, a $369 million charge in relation to new, and revisions to existing, environmental and other provisions, and a credit of $10 million arising from the reversal of restructuring provisions.

        Total operating profit for 2002 was $1,969 million including inventory holding gains of $1,049 million and is after a credit related to business interruption insurance proceeds of $184 million, as well as charges of $348 million related to Veba integration, $132 million restructuring costs, $62 million costs associated with an Olympic pipeline incident in 1999, a $35 million write-down of retail assets in Venezuela and $22 million settlement costs associated with a pre-acquisition Atlantic Richfield Company US MTBE supply contract.

        The increase in operating profit for 2004 compared with 2003 is primarily due to stronger refining margins contributing approximately $3,100 million, offset by a decrease in marketing margins of approximately $400 million, the impact of weaker US dollar of approximately $250 million and charges of around $310 million related primarily to a review of carrying value of fixed and current marketing assets. The increase was further offset by higher purchased energy costs of around $100 million and portfolio impacts of around $100 million. Refining throughputs at 2,976 kb/d were 4% lower than in 2003 due principally to the disposal of BP's interests in SRC, the closure of refining operations at the ATAS Refinery in Mersin, south eastern Turkey and the disposal of the Bayernoil refinery in Germany in the second quarter of 2003. Refining availability for the year was 95.4% compared with 95.5% in 2003 and marketing volumes were relatively flat compared with 2003.

        In addition to the factors above, operating profit for 2003 compared with 2002 reflects approximately $1,400 million from improved refining margins and approximately $600 million from marketing margins improvement. This was offset by adverse foreign exchange effects of around $100 million and additional portfolio impacts of around $150 million. Refining throughputs were relatively flat compared with 2002, with refining availability for the year at 95.5% in 2003 compared with 96.1% in 2002. Marketing volumes for 2003 were 4% lower than 2002, due to divestments.

        The integration of Veba, which began in February 2002, was essentially completed during 2003. The 2003 charges of $287 million relating to the Veba acquisition comprised some $46 million of severance costs, $37 million of other integration costs such as consulting, studies and internal project teams, $48 million of system infrastructure and application costs and the balance of $156 million related to

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additional synergy projects. 2003 cash outflows related to these charges were approximately $260 million.

        The 2002 charges of $348 million related to the Veba acquisition comprised $210 million of severance costs, $77 million of other integration costs such as consulting, studies and internal project teams, $24 million of system infrastructure and application costs, $22 million of office consolidation and relocation and $15 million of additional synergy projects. 2002 cash outflows related to these charges were approximately $140 million. The $132 million restructuring costs were associated with several restructuring and cost reduction initiatives during 2002 in different business units and support functions, primarily in the USA, Western Europe and in Africa. The largest single functional area affected was information technology. In Venezuela an impairment review was triggered by the current political crisis and poor business performance in 2002.

The refining margins in the fourth quarter were higher than that suggested by the increase in the Global Indicator Margin due to the combination of wider light/heavy spreads, higher clean fuels premia, locational advantages and greater supply optimization benefits. Marketing margins were stronger than in the equivalent period in 2003 assisted by the fall in crude and product prices late in the quarter.

Refining throughputs for the quarter were 2,933 mb/d, some 81 mb/d lower than in the fourth quarter of 2003, due principally to the disposal of BP's interests in the SRC and the closure of refining operations at the ATAS Refinery in Mersin, south eastern Turkey earlier in 2004. The fourth quarter's refining availability was 96.6%. Marketing sales in the fourth quarter were 3,989 kb/d, a similar level to the equivalent quarter a year ago.

During the quarter BP China and Sinopec announced the establishment of the BP-Sinopec (Zhejiang) Petroleum Co., Ltd, a retail joint venture between BP and Sinopec, to build, operate and manage a network of 500 service stations in Hangzhou, Ningbo and Shaoxing. Also during the quarter BP China and PetroChina announced the establishment of BP-PetroChina Petroleum Company Limited, to acquire, build, operate and manage 500 service stations in the province. BP continued its strategic progress in the development of premium offers. This included the opening of 101 new format Connect stores by the end of the quarter, bringing the total worldwide to 576. The Group also continued its roll-out of new generation Ultimate gasoline and diesel fuels, now available in the UK, Germany, Austria, Spain, Portugal, Greece, France, Poland, Australia and the US.

From January 1, 2005, the Aromatics and Acetyls business has been included in the Refining and Marketing segment and the Lavéra and Grangemouth refineries have been included in the Olefins and Derivatives business, which will be reported as part of Other businesses and corporate.

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