Mar 22, 2021 — bp Annual Report and Form 20-F 2020. Dear fellow shareholders,. 2020: the year of the pandemic. In every sense, 2020 was an extraordinary.
356 pages

125 KB – 356 Pages

PAGE – 2 ============
This means we plan to We have set our strategy to transform from an International Oil Company to an Integrated Energy Company focused on delivering solutions for customers. This is a major, necessary step in support of our purpose to reimagine energy for people and our planet, and our ambition to become a net zero company by 2050 or sooner and help the world get to net zero. After more than a century de˜ned by oil and gas through two core businesses, upstream and downstream, we set our strategy to become a very different energy company in the next decade. We remain committed to delivering long-term value for stakeholders Œ including shareholders Œ through a compelling investor proposition. As we reinvent bp, we remain committed to performing while we transform, maintaining our focus on safety, operational excellence and ˜nancial discipline. Signi˜cantly scale-up our low carbon energy business Focus our oil, gas and re˜ning portfolio Transform our customer mobility and convenience offer Drive down emissions as part of our net zero ambition

PAGE – 3 ============
01Strategic report bp Annual Report and Form 20-F 2020 Strategic report Our purpose: reimagining energy 2Chairman™s letter 4Chief executive of˜cer™s letter 6Energy markets 8Reinventing bp: Our strategy 15Our business model 16Our strategic focus areas 18Our ˜nancial frame and investor proposition 22Pursuing a strategy that is consistent with the Paris goals 26Our organizational model 36Our ˜nancial reporting segments 38Key performance indicators 39Group performance 42Sustainability 48Section 172 statement 63How we manage risk 64Risk factors 67Corporate governance Introduction from the chairman 72 Board of directors 74Leadership team 78Board activities 80Decision making by the board 82How the board has engaged with shareholders, the workforce and other stakeholders 86Governance framework 88Learning, development and induction 90 Board evaluation 91People and governance committee 92Audit committee 94Safety and sustainability committee 100 Geopolitical committee 102 Directors™ remuneration report 103 Remuneration committee 105 Directors™ statements 127 Financial statements Consolidated ˜nancial statements of the bp group 129 Notes on the ˜nancial statements 160 Supplementary information on oil and natural gas (unaudited) 231 Parent company ˜nancial statements of BP p.l.c. 259 Additional disclosures 301 Shareholder information 331 Glossary 341 Non-GAAP measures reconciliations 348 Signatures 350 Cross-reference to Form 20-F 351 Information about this report 352 Exhibits 352 About bp Through our scale, reach and range of activities we deliver heat, light and mobility products and services to customers around the world, and we plan to do so increasingly, in ways that we believe will help drive the transition to a lower carbon future. We have operations in Europe, North and South America, Australasia, Asia and Africa. Our quick read provides a concise summary of the annual report, highlighting strategy, performance and sustainability information. Glossary Like any industry, ours has its own unique language. For that reason, words and terms marked with are de˜ned in the glo ssary. See page 341 2020 in numbers $20.3 bnloss for the year attributable to bp shareholders 94%upstream plant reliability $12.2 bnoperating cash ˚ow $72.7 bn˜nance debt 2.4 mmboe/d upstream production excluding Rosneft 14.1 GWtotal developed renewables to FID and renewables pipeline bp net 9%reduction in estimated emissions the carbon in our Upstream oil and gas productionOur reportin g centre brings together all our key reports, including our sustainability report and energy outlook. $5.7 bnunderlying replacement cost loss 96%re˜ning availability Ÿ7%upstream unit production costs reduction $5.5 bndivestment proceeds $38.9 bnnet debt 1,900 strategic convenience sites

PAGE – 4 ============
02bp Annual Report and Form 20-F 2020 Our purpose for people and our planet. Five aims to get bp to net zero Five aims to help the world get to net zero Our ambition is to be a net zero company by 2050 or sooner and to help the world get to net zero. We™ve set out 10 net zero aims, ˜ve to help bp get to net zero and ˜ve to help the world get there too. We want to help the world reach net zero and improve people™s lives. We will aim to dramatically reduce carbon in our operations and in our production, and grow new low carbon businesses, products and services. We will advocate for fundamental and rapid progress towards the Paris climate goals and aim to be an industry leader in the transparency of our reporting. We know we don™t have all the answers and will listen and work with others. We want to be an energy company with purpose; one that is trusted by society, valued by shareholders and motivating for everyone who works at bp. We believe we have the experience and expertise, the relationships and the reach, the skill and the will to do this.

PAGE – 5 ============
03Strategic report A sustainability frame linking our purpose and Integrating energy systems Partnering with countries, cities and industries Driving digital and innovation Low carbon electricity and energy Convenience and mobility Resilient and focused hydrocarbons Embeddinginto our DNAEngagingstakeholdersOur values and foundat ions bp Annual Report and Form 20-F 2020 Our strategy is to become an Integrated Energy Company focused on delivering solutions for customers. We expect to be a very different bp by 2030 by implementing this strategy. We believe our strategy and ˜nancial frame support the delivery of our investor proposition. To deliver our strategy we must operate within a resilient ˜nancial frame. Strategic frame Our sustainability frame Financial frame A coherent approach to capital allocation Investor proposition The sustainability frame we set out in September 2020 links our strategy to our purpose Œ to reimagine energy for people and planet. It focuses on three areas: net zero, people and planet. See page 48 for more information on our sustainability frame. See page 22 for more information on our ˜nancial frame. See page 23 for more information on our investor proposition. See page 15 for more information on our strategy. 1 Resilient dividend 2 Strong balance sheet 3 Investing at scale in the energy transition 4 Investing to maximize value in resilient hydrocarbons 5 Share buyback commitment Committed distributions Pro˜table growth Sustainable value

PAGE – 6 ============
04bp Annual Report and Form 20-F 2020 Chairman™s letter While this is a journey that will require patience, our goal is that bp over time will become a more valuable company for its shareholders and bring wider bene˜ts for society. 7.9% annual dividend yield ordinary share (2019 6.9%) $6.4bn total dividends distributed to bp shareholders (2019 $8.3bn)

PAGE – 8 ============
06bp Annual Report and Form 20-F 2020 Chief executive of˜cer™s letter $20.3bn loss attributable to bp shareholders Dear shareholders, The year 2020 will be remembered above all for the pain, sadness and loss of life caused by COVID-19. At bp, our thoughts are with the families and loved ones of the colleagues we have lost. Thousands more on our teams have had the virus, and life under lockdown has meant additional challenges, and anxiety for everyone. I want to pay particular tribute to those on the frontline of our business who have kept our plants and platforms running, our shops and forecourts open, and energy ˚owing to the world. They have sacri˜ced so much and earned our deepest respect and appreciation. Responding to brutal conditions We began our transformation from an International Oil Company to an Integrated Energy Company against this backdrop, along with lower oil and gas prices, lower re˜ning margins and unprecedented falls in demand for our retail and aviation fuels. Our response included lowering costs, strengthening the balance sheet with an innovative hybrid bond issue, and advancing our strategy to become I want to pay particular tribute to those on the frontline of our business who have kept our plants and platforms running, our shops and forecourts open, and energy ˚owing to the world.

PAGE – 9 ============
07Strategic report bp Annual Report and Form 20-F 2020 a more diversi˜ed, resilient and lower carbon company. As part of our strategy planning process, we reviewed our portfolio and development plans. This work Œ informed by bp™s views of the long-term price environment Œ led to signi˜cant impairment charges and non-cash exploration write-offs in the second quarter. For shareholders, all this was re˚ected in a reset dividend and a diminished share price. I recognize the ˜nancial impact this must have had on you. However, I wholeheartedly believe we will not just restore, but will enhance the long-term sustainable value of your company through the actions we are taking to reinvent bp. And despite the most brutal operating conditions I can remember in almost 30 years in this industry, we have made considerable operational and strategic progress. Performing while transforming The loss of $20.3 billion we reported for the year is clearly disappointing. However, it in no way re˚ects the heroic efforts of the bp team in extremely dif˜cult circumstances, or their deep commitment to performing while transforming: Most importantly Œ our safety performance continued to improve. Reliability of 94% for bp™s operated plants and re˜ning availability of 96% represents remarkably strong performance, especially given the challenges faced by our frontline staff. Capital was reset and we delivered at the lower end of the range. We made good progress towards our net debt target, including the contribution from high grading our portfolio and $6.6 billion of divestment and other proceeds received during the year. New oil and gas production came on from four major projects Œ in India, Oman, the UK and the US. Natural gas from the Shah Deniz ˜eld in the Caspian Sea arrived in Italy following ˜nal completion of the historic Southern Gas Corridor project. And we doubled our retail network in growth markets to around 2,700 retail sites , plus the addition of around 300 strategic convenience sites .Reinventing bp This performance is even more remarkable given that we have been carrying out the most extensive reorganization in bp™s 112-year history. We have retired the upstream/downstream business model that has served bp very well. In its place we have introduced a leaner, ˚atter structure, stripping away tiers of management and lowering the workforce towards a target of around 10,000 fewer jobs. My role is now ˜ve layers at most away from more than half of our employees. That means people™s ideas and voices can be more easily heard Œ and decisions taken much faster. We are now more centralized, more agile, and better integrated. This enables us to maximize value creation in a rapidly evolving market through economies of scale, and by exploiting synergies and driving continuous improvement in operational performance. We are now organized around four business groups. Production & operations is the operating heart of the company Œ and is focusing our resilient hydrocarbons portfolio on value. Customers & products is growing our convenience and mobility offers for an increasing number of customers. Gas & low carbon energy is growing to help meet rapidly increasing clean energy demand. Innovation & engineering acts as a catalyst, opening up new and disruptive business models and driving our digital transformation. And our trading & shipping business and regions, cities & solutions team knit together the offers of our four core groups to drive greater value creation. Reimagining energy Completing our transformation to a net zero Integrated Energy Company will take time. But we are led by our purpose Œ to reimagine energy for people and our planet Œ and motivated by the opportunity we see in the energy transition. Trillions of dollars of investment will be needed over the next 30 years in replumbing and rewiring the global energy system. We now have offshore wind partnerships in the US with Equinor and in the UK with EnBW Œ two of the best regions globally for the world™s fastest-growing source of energy. Our solar development joint venture , Lightsource bp, is growing proli˜cally. We are working with Ørsted to develop green hydrogen for our Lingen re˜nery. We have joined forces with the mobility platform DiDi to build a network of electric vehicle chargers in China, by far the world™s biggest market for EVs. And we have a growing list of low carbon partnerships with cities such as Aberdeen and Houston and some of the world™s leading companies, including Amazon, Microsoft, Qantas and Uber. A compelling investor proposition We are fully focused at all times on the bottom line of the business Œ on executing our strategy while operating safely, reliably and with discipline. We continue to build resilience and strength in the balance sheet as conditions remain challenging and uncertain while vaccines roll out, the pandemic recedes, and economies look to recover. At the same time, we are transforming to create value from the energy transition over the long term. We see tremendous business opportunity in providing people with the reliable, affordable, clean energy they want and need. Our net zero ambition is clearly the right thing for society, but we know it does not give us a free pass in a fast-changing world. We have to show you the evidence that we can compete ˜ercely and add value Œ in service of the compelling investor proposition we believe we offer: Committed distributions Œ including the dividend as the number one priority; Pro˜table growth; and Sustainable value. This is all in service of growing long-term shareholder value, that is our job. And I promise to keep you well informed as we execute our plans. As ever, thank you for your continued support Œ I will never take that for granted. And I look forward to any feedback you might have. Thank you. Bernard Looney, Chief executive of˜cer 22 March 2021

PAGE – 10 ============
08bp Annual Report and Form 20-F 2020 Energy markets Global context Mobilizing safely in the North Sea In 2020 bp managed more than 15,000 journeys by people mobilizing to and from our North Sea assets. As the COVID-19 pandemic took hold in the UK, the bp North Sea team quickly implemented wide-ranging and robust COVID-19-speci˜c measures to protect the safety and wellbeing of offshore colleagues. The ‚Safe Passage™ programme was introduced during the ˜rst UK lockdown to help individuals travel to Aberdeen for mobilization as safely as possible. The programme provided door-to-door transport, accommodation during the journey to Aberdeen and hotels in the city dedicated to bp staff and contractors. We introduced pre-mobilization COVID-19 testing in Aberdeen, one of the ˜rst operators in the North Sea to do this. Social distancing and enhanced hygiene and cleaning regimes continue to play a vital role in protecting the health and wellbeing of our offshore teams. Specialist ‚C-MED™ medevac helicopters, equipped with an on-board medic and con˜gured to enable social distancing, were introduced to safely transport individuals suspected of contracting the virus back to shore for further treatment and support. COVID-19 The COVID-19 pandemic has affected individuals, countries and businesses. The spread of the pandemic quickly plunged the world economy into recession and reshaped social norms and attitudes. Globally, businesses have had to change established assumptions and introduce new models and ways of working. For bp, it has had an adverse impact on our business, including on the demand for our products and on their prices. But the more we understand about the consequences for the global economy Œ and the inevitable uncertainty it brings Œ the more convinced we are that our ambition and strategy are taking us in the right direction for bp, for our employees, our shareholders and society. Impact on the economy The global economy is estimated to have contracted 4.3% in 2020, the steepest decline in economic activity since 1946, caused by COVID-19. In advanced economies the recovery from the initial contraction was dampened by resurgences of COVID-19 cases, leading to an annual contraction of 5.4%. Most emerging markets, excluding China, also experienced deep recessions, with growth of -5% in 2020, while in China the economy grew by 2% a.a World Bank Global Economic Prospects, January 2021. Our response As COVID-19 continues to affect communities around the world, we have focused our effort on three priorities. 1 Protecting our people. 2 Supporting communities where we live and work. 3 Strengthening our ˜nances. Our leadership teams were in daily discussions to respond to the conditions in the countries where we operate as the pandemic unfolded. We had a three-tier response model with executive-level, business, country and incident management steering committees. Some examples are given on the next page. The business environment is fundamentally changing. The world is on an unsustainable path and its carbon budget is running out. Energy markets have begun a process of signi˜cant, lasting change in response to this Œ shifting increasingly towards low carbon and renewables. And in 2020 we saw further changes, as COVID-19 spread across the globe.

PAGE – 11 ============
09Strategic report bp Annual Report and Form 20-F 2020 In 2020 we set a new target of $25 billion of proceeds between the second half of 2020 and 2025, of which we™ve completed or agreed transactions for over half of this target. This includes the agreed sale of a 20% interest in Oman™s Block 61 and proceeds from the divestments of our petrochemicals business and Alaska interests. We have a deep hopper of potential future divestment options. As we execute this programme, we will continue to be focused on value. Capital expenditure Capital expenditure for 2020 was $14 billion, around 28% lower than 2019. Organic capital expenditure for 2020 was $12 billion, in line with the guidance given in April. Liquidity Finance debt was $72.7 billion and net debt was $38.9 billion at the end of 2020. We are actively managing the pro˜le of our debt portfolio. We issued perpetual hybrid bonds with a US dollar equivalent value of $11.9 billion in June 2020, and we bought back an aggregate US dollar equivalent value of $8 billion of debt in the third quarter of 2020, January 2021 and March 2021. bp had around $44 billion of liquidity, consisting of cash and cash equivalents (net of restricted cash) plus undrawn revolving credit facilities committed credit and bank facilities, at the end of 2020. In April 2020 Moody™s reaf˜rmed BP p.l.c.™s A1 credit rating and revised its outlook from stable to negative. The short-term P-1 rating was also reaf˜rmed. In January 2021 S&P revised its outlook on BP p.l.c. from stable to negative and af˜rmed BP p.l.c.™s long- and short-term corporate credit rating of A-/A-2. From January 2021, Fitch Ratings has provided a solicited long-term corporate credit rating to BP p.l.c. of A with stable outlook. In February 2021, Fitch Ratings assigned BP p.l.c. a short-term corporate credit rating of F1. bp™s ˜nancial performance, including cash ˚ows and net debt, has been and will continue to be impacted by the extent and duration of the current market conditions and the effectiveness of the actions that it and others take, including its ˜nancial interventions. It is dif˜cult to predict when current supply and demand imbalances will be resolved and what the ultimate impact of COVID-19 will be. See page 22 for more information on capital allocation. We have addressed our response to COVID-19 in further detail throughout this report: See page 63 Our stakeholders. See page 64 How we manage risk. See page 67 Risk factors. See page 87 Workforce engagement. 1 Protecting our people Our ˜rst priority is the safety and health of our people. Our people involved in, or supporting, critical operations continued at their normal workplace during the pandemic and we put additional processes in place to help protect them. These included operating robust protocols for health and pre-mobilization checks, PPE, travel and workplace access, social distancing and isolation. Employees who were able to work from home were asked not to come into their workplace and we put business travel restrictions in place. Many of˜ce-based workers continue to work from home at the time of publication and are likely to do so for the foreseeable future as ways of working change. We liaised closely with industry peers and other organizations to regularly test our approach on speci˜c safety issues. And we created a global COVID-19 OneMap, providing our businesses with current local COVID-19 risk pro˜les including rates of infection, vaccines rates and procurement. 2Supporting communities Providing essential support for the communities where our people live and our businesses operate was a priority throughout our response to COVID-19. We offered support to governments and partners, using our expertise and resources to support the relief effort. The bp Foundation donated $2 million to the World Health Organization™s COVID-19 Solidarity Response Fund, which supports medical professionals and patients worldwide by providing critical aid and supplies. The fund also helps track and understand the spread of COVID-19 and supports efforts to develop tests, treatments and vaccines. 3Strengthening our ˜nances The economic consequences of COVID-19 for the world remain uncertain at the time of publication. In response to this uncertainty, we took deliberate steps to strengthen our ˜nances Œ reinforcing liquidity, rapidly reducing spending and costs, driving our cash balance point lower. Divestment programme We delivered our plans for $15 billion of announced divestments, which commenced at the start of 2019, in June 2020 Œ a year earlier than expected. In 2020 we supplied more than 10 million litres of free fuel to emergency service vehicles across the UK. We ran programmes during 2020 and 2021 offering free fuel to UK emergency vehicles Œ including police, ˜re, blood transportation, emergency NHS ambulances and NHS Trust non-emergency vehicles. Under the programmes, emergency services vehicles issued with either a bp Plus or Allstar fuel card could ˜ll up without charge at bp™s network of 1,200 retail sites across the UK, including charging of electric vehicles through bp pulse. Supplying free fuel for emergency services vehicles

125 KB – 356 Pages