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BP PLC
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Good morning, everyone, and welcome to BP’s Second Quarter 2022 Results Presentation. I’m here today with Bernard Looney, Chief Executive Officer; and Murray Auchincloss, Chief Financial Officer.
Before we begin today, let me draw your attention to our cautionary statement. During today’s presentation, we will make forward-looking statements, including those that refer to our estimates, plans and expectations. Actual results and outcomes could differ materially due to the factors we note on this slide and in our UK and SEC filings. Please refer to our annual report, stock exchange announcement and SEC filings for more details. These documents are available on our website.
I’ll now hand over to Bernard.
Very good. Well, thanks, Craig, and good morning to everyone, and welcome to our second quarter results. It's great to have you join us on the call, obviously, and it's great to see those of you who are here in person, thank you for making the trip.
You're going to hear about what I hope you will agree, is some good progress from us today. But before we do that, let me take a moment to put what follows in context. Russia's military action is continuing in the Ukraine, devastating people's lives and disrupting energy supplies. And the cost of living is spiraling upwards, with energy costs a big contributor to that. And since the start of the Ukraine conflict, power generation from coal in Europe has significantly increased, and these are stark examples of what we call the energy trilemma; energy security under threat, energy affordability and acute problem for many and a pressing need for lower carbon energy.
And we see this at BP, obviously, and the question -- the obvious question for us and for our people and that our people ask is how can we help? And that is why we are absolutely focused on delivering our strategy to become an integrated energy company, a company that we believe can help solve that energy trilemma.
And we do that two ways. We do that by working hard to keep the energy flowing today. And, not or, and at the same time, investing to accelerate the energy transition. That's the role of an integrated energy company, and I believe and we believe that its purpose has never been clearer. And we do all of that while remaining acutely focused on delivering long-term value for our owners, our shareholders. That is the context against, which we present today's results, a set of results that show us performing while transforming.
During the quarter, we generated operating cash flow of $10.9 billion. We reduced net debt for the ninth consecutive quarter to reach $22.8 billion, and we're growing distributions to our shareholders, our owners by announcing a 10% increase in the quarterly dividend per ordinary share and a further $3.5 billion share buyback. Crucially, we're doing this within a financial frame, which is unchanged and maintaining a resilient $40 per barrel cash balance point.
With all the uncertainty in the world now is not the time to lose discipline. We also have real momentum in our transformation. And in a moment, I will update you on how we are driving improvements in our oil and gas portfolio. And making good progress in our transition growth engines. But for now, I'm going to hand over to Murray to take us through the second quarter results.
Over to you, Murray.
Great. Thanks, Bernard, and good morning, everyone. It's nice to see you here in the room. Let's begin with the macro environment. Starting with the oil price. During the second quarter, Brent averaged $114 per barrel, up from $102 per barrel in the first quarter. This was driven by reduced spare global capacity and inventory levels significantly below the five-year average. Looking ahead, we expect these factors to keep oil prices elevated during the third quarter.
Turning to gas prices. During the second quarter, average European prices declined as high LNG imports supported a recovery in inventories. However, in the latter stages of the quarter, prices moved sharply higher, driven by reduced Russian supply and the outage at Freeport.
In the US, Henry Hub rose by an average of 60% from the first quarter. This was supported by limited gas production growth and strong gas to power demand. The outlook for global gas prices is heavily dependent on Russian pipeline flows. We expect prices to remain elevated and volatile during the third quarter, due to a lack of supply to Europe.
Moving to Refining, margins more than doubled to average $45.50 per barrel in the second quarter. This reflects resilient demand, lower stocks and sanctioning of Russian crude and product. In the third quarter, we expect refining margins to remain elevated due to ongoing supply disruptions.
Moving to results. In the second quarter, we reported an underlying replacement cost profit of $8.5 billion compared to $6.2 billion last quarter. Compared to the first quarter, in gas and low carbon energy, the result benefited from higher realizations. This was offset by an average gas marketing and trading result following the exceptional performance in the first quarter.
The result includes our best estimate of the impact of the recent outage at Freeport LNG, leading to a significant reduction in the number of cargoes expected to be received. In oil production and operations, the result reflects higher realizations. In customers and products, the products result benefited from a significant increase in refining margins, partially offset by higher turnaround and maintenance activity. The contribution from oil trading remained exceptionally strong.
Strengthened products more than offset the impact of weaker fuel retail margins and higher inflation in a challenging environment in our customers' businesses. Despite these factors, the convenience contribution remains strong.
Turning to cash flow. Operating cash flow was $10.9 billion in the second quarter. This included $1.2 billion of Gulf of Mexico oil spill payments, with a working -- within a working capital build of $2.9 billion. Capital expenditure was $2.8 billion, with our guidance for 2022 remaining in the range of $14 billion to $15 billion. And disposal proceeds were $700 million in the quarter, bringing the first half total to $1.9 billion. Guidance of $2 billion to $3 billion in 2022 is unchanged.
During the quarter, we repurchased $2.3 billion of shares. The $2.5 billion program announced with first quarter 2022 results was completed on July 22. Reflecting underlying cash flow delivery, net debt fell for the ninth consecutive quarter to reach $22.8 billion. And with second quarter surplus cash flow of $6.6 billion, we intend to execute a share buyback of $3.5 billion prior to reporting third quarter results.
Moving to our disciplined financial frame, which has five priorities and importantly remains unchanged. Our first priority remains a resilient dividend. As Bernard has outlined, we have announced a 10% increase in the quarterly dividend. Crucially, this is funded within an unchanged 2021 to 2025 cash balance point of around $40 per barrel Brent, $3 Henry Hub and $11 per barrel RMM, all 2020 real. This increase reflects the underlying performance and cash generation of the business, which has enabled strong progress in delivering share buybacks and net debt reduction.
Our second priority is to maintain a strong investment-grade credit rating. We intend to continue to allocate 40% of 2022 surplus cash flow to further strengthen the balance sheet.
Our third and fourth priorities are the disciplined allocation of investment to our low carbon and convenience and mobility businesses, and to resilient hydrocarbons.
And our fifth priority is share buybacks. We are committed to returning 60% of 2022 surplus cash flow through share buybacks, subject to maintaining a strong investment grade credit rating. And we have now announced share buybacks from 2021 and the first half of 2022 surplus cash flow of over $10 billion. This is equivalent to 60% of the cumulative surplus.
I'll now hand back to Bernard.
Murray, thank you. So turning then to some strategic momentum in transforming BP to an integrated energy company. First, I'm going to provide a little update on the progress that we're making in our oil and gas business. And second, I want to highlight some examples, which give us growing confidence in our transition growth engines and how this is underpinned by incumbency, by our assets, by our capabilities, by our relationships, by our brand. And I will focus on two engines specifically, EV charging and hydrogen, where we're particularly excited by the progress over the last quarter.
So turning first to our oil and gas business. Our strategy in oil and gas is to maximize returns and cash flow, creating resilience through lower costs, higher margins and lower operating emissions, focusing on the best barrels, and high-grading through divestments and at the right time and for the right value. So let me say three things about our oil and gas portfolio.
Firstly, leverage to price. Today's results show our portfolio doing what it is supposed to do, capturing the upside from higher prices. And as the first chart shows, over the decade, we expect our oil and gas EBITDA to remain highly leveraged to price as we high-grade our portfolio and reduce production. This is enabled by EBITDA growth coming from just six material regions.
Secondly, focus, the middle chart. Underpinned by a deep resource base, we are focusing our investment and leveraging our incumbency. Through 2030, we plan to allocate around 80% of all oil and gas investment in these six material regions, and we expect EBITDA to grow from them and represent around 90% of the total and 2030 that comes from oil and gas from just those six.
Thirdly, higher unit margins. The third chart illustrates our evolving margin mix. It's the same chart we actually shared at our strategy update in February. And it demonstrates how unit margins are expected to grow by over 20% by 2030 relative to 2021 as we focus our investment in the higher margin regions as we execute our plans to drive cost efficiency and as we high grade through divestments in lower-margin regions. And this high-graded oil and gas portfolio, together with our EBITDA plans, growth plans in refining and in Bioenergy, gives us confidence in sustaining EBITDA from resilient hydrocarbons at around 2021 levels through 2025, aiming to hold this level to 2030.
And we're making real progress in four areas in particular. First, in investment. By the end of 2024, we expect to start up a seven -- a further seven high-margin major projects. And to maximize value, we'll be flexible in our capital allocation. For instance, within our disciplined capital frame, we plan to increase investment in BPX Energy from around $1 billion in 2021 to around $1.7 billion in 2022. And here, we're leveraging a hopper of around 3,500 drilling locations capable of delivering returns of over 30% at just $55 WTI and $3 Henry Hub.
Second, reliability and efficiency. In the first half of 2022, plant reliability increased to over 95% and unit production costs fell by almost 11% compared to the same period last year. Third, exploration and renewal. We continue to selectively explore aiming to further enhance the portfolio. And so far this year, we've announced an oil discovery Offshore Brazil, with the potential to become a new hub. And we participated in a gas discovery Offshore Indonesia. And we strengthened our position Offshore Canada, agreeing to acquire a 35% interest in the Bay du Nord discovery.
Finally, portfolio optimization. This year, we have agreed to divest our Canadian Sunrise and Pike oil sand assets. We've created a new Angola focused company called Azule Energy, I think its first day is today, in a joint venture between E&I and ourselves, very exciting for Angola and for our two companies. And we've restructured our business in Iraq with Petro China. So that's hydrocarbons.
Let me turn now to two of our transition growth engines, starting with EV charging. Here, we aim to deliver around $2 billion of EBITDA by 2030, focusing on fleets and focusing on fast charging to on-the-go customers. With clear sources of competitive advantage underpin this. What are they? Our global network of 20,600 retail sites land, integrated convenience offers at our 2,200 strategic sites, our customer base with around 16 million loyalty customers and around 170,000 fleet customers. Our trading and shipping organization, which provides optimized and reliable electron sourcing.
Over time, one of the benefits of integration is expected to be the sourcing of electrons from our own renewable business. And here, we've already secured offshore wind licenses with over 5 gigawatts of capacity net to BP. And strategic relationships with partners like Volkswagen, like Uber, like DiDi, like Daimler Trucks. And we're accelerating our rollout plans.
We now have around 16,000 charge points, up almost 50% since the same time last year. We've announced partnerships with Volkswagen and Iberdrola that have the potential to help achieve half of our targeted growth by 2025. And we're excited about potential opportunities in other regions like the United States.
Importantly, we have a distinctive focus on fast charging. Around 50% of our charge points are now rapid or ultrafast. And that's at least 50 kilowatts for rapid, more than 150 kilowatts for ultrafast. We recently became the leading provider of ultrafast charging in Germany, building on our leading position in the UK. And by 2030, we expect around 90% of our 100,000 on-the-go chargers to be rapid or ultrafast, resulting at around 10 gigawatts of installed capacity.
No what is 10 gigawatts in this context? This is the equivalent to around 30 billion EV miles driven per annum, 30 billion EV miles driven per annum, assuming just a 10% utilization of our network. And if you had seven-kilowatt charge points for the same number, that's 15 times more mileage that will be driven.
And we are rapidly growing electron sales, supporting by increasing utilization rates, the amount of electricity that we sold through EV charging rose more than two-fold in the first half of 2022 compared to the previous year.
Turning then to hydrogen. We see a huge opportunity given the anticipated and growing growth in global demand for low carbon hydrogen. Our strategy is to leverage existing demand pools, often our own by the way, and develop advantaged production hubs around that, manufacturing green and blue hydrogen at scale to create competitive supply for global markets, and is underpinned by our distinctive sources of competitive advantage.
What are they, you ask again. Delivering and operating complex global scale major projects, our global trading capability and experience in building integrated value chains, our track record in building and maintaining partnerships and establishing long-term customer relationships, and we're actively progressing our business development and now have a global scale risked project hopper of over one Mtpa of hydrogen production capacity and we have identified more than two and half, 2.5 MTPA of potential customer demand, and this includes our recently announced strategic collaboration with Thyssenkrupp Steel to advance the decarbonization of steel production.
Initially, we are progressing projects that help decarbonize hydrogen feedstock to deliver low carbon hydrogen to our Rotterdam, to our Lingen, to our Gelsenkirchen and to our Castellón refineries. We're also helping to decarbonize industrial clusters, including in Texas and at Teesside in the UK. And we're accelerating our aim to create cost-advantaged global production hubs.
We've agreed, as you will have read, I think, to lead and operate the Asian Renewable Energy Hub, AREH in Australia, where BP will hold a 40.5% stake. AREH has the potential to be one of the world's largest renewables and green hydrogen hubs that will help decarbonize the Australian market as well as supplying competitive green hydrogen and ammonia to major international users. This project is planned to reach up to 26 gigawatts of renewable energy. To put that in context, that's around one-third of all electricity generated in Australia in 2020. And it will target production of 1.6 million tonnes of green hydrogen or nine million tonnes of green ammonia per annum. That's hydrogen at scale.
To summarize, I hope you agree that today's results show that BP is focused on delivery. We are performing while transforming, doing exactly what we said we would do. The company is running well and it's continuing to strengthen. We have real strategic momentum in our transformation to an IEC. Our financial frame has clarity and discipline. It is unchanged and is doing what it is intended to do. And we are growing distributions, remaining acutely focused on delivering long-term value for our owners. And we believe more than ever that BP has the capabilities and the scale to help address that energy trilemma. And this is needed now more than ever. So thank you for listening. We should stop. And Murray and I will be delighted to take any questions that you have.
So over to you, Oli. And Craig, we're running this aren't we? So let's start in the room, and start with Gordon. Great. Do we need microphones for people in the room, or are they okay? We do. So if we can get microphones people, that would be great. Thank you. Thanks, Gordon.
Gordon Gray of HSBC. With the cash balance of somewhere like $40 per barrel. The amount of excess cash flow at the moment is huge. Your distribution policy, with 40% of that going to the balance sheet. If the macro environment stays anything like it has been in recent quarters, the balance sheet delevers massively quickly. Can you give us a sense of how long you think -- or rather where you think you would like to take the balance sheet over time? And because at some point, you would imagine that 40% going to debt reduction will be unnecessary. So just a comment about the longer-term capital frame, I guess, beyond this year.
Very good. Good question for the CFO, I think.
Great. Good morning, Gordon. Thanks for the question. Just back to financial frame, if I can. Point one is that we focus on a $40 world and that we make sure the dividend can be funded in a $40 world. That's critical to us. Point two then is the balance sheet, as you say. What's critical for us there, given the scale of our trading organization, is that we maintain a strong investment-grade credit rating. That's what's super important.
We focus on the ratings agencies when we think about this, S&P in particular right now have us newly affirmed at A-. We need to continue to drive down drive down net debt as we move forward. That's why we're allocating 40% of surplus cash flow to debt reduction in 2022. Of course, we'll update the market in 2023 when we make a decision there. But it's all about strong investment-grade credit rating.
S&P focuses on a $55 world, so we're focused on this lower price world and ensuring that through cycle at a $55 world, we're able to maintain that strong investment-grade credit rating. And I'll let you use our rules of thumb to think about what that might be -- might mean relative to the ratings agencies. I hope that helps.
The only thing I'd add is the comment that we made during the tax, which is that -- and Murray is a big proponent of this, now is not the time to lose discipline. This is very, very important for us. And therefore, it's very important that we execute on the financial framework, which I hope is very, very clear in terms of its priorities, it's order of priorities and so on. So we're very focused on that. Let's keep going. And you might want to introduce yourself for people online, if you don't mind.
Hello. It's Martijn Rats at Morgan Stanley. I've got two questions, if I may, both related to the Upstream. And I was hoping you could say a few words about the CapEx increase from $1 billion to $1.7 billion in the US shales business. Not specifically about US shale, but sort of broadly about Upstream CapEx. Sort of -- what sort of cost of capital do you use these days to evaluate those sort of oily type projects? And how do you make the trade-offs with other types of CapEx?
And the second question I want to ask is, what do you think the outlook is for your business in the Gulf of Mexico, given some regulatory changes, licensing rounds? I have to say I found a little bit sort of difficult to read really what's going on, but I was wondering if you could say a few words about that.
Very good. I mean I think on the Upstream, in hydrocarbons overall, we've generally guided to between $9 billion and $10 billion of investment in the hydrocarbons business this decade. We are increasing investment into hydrocarbons at the margin. So we're probably in the process of allocating around $0.5 billion to things like the Haynesville in the US. The Haynesville is 11 Tcf of gas. It's right next to the market. So it's probably one of the lowest cost, lowest methane emissions gas in the United States. And, obviously, it's a very flexible investment and we will allocate, are allocating, will allocate more capital to that.
The returns in that business at anything like strip are significant. The returns that we're expecting from our oil and gas investments, our oil investments need to make over 20% rate of return at $60. So we're very focused on where we can, making decisions that allocate capital to where energy security can be helped and to where we can make good returns.
We'll probably add a rig in the Gulf of Mexico this year, which takes me to your second question. The GOM continues to be a core business for BP. It's running well. We are investing in it. We've got three rigs going there right now. We're going to add a fourth. We've had one intervention vessel in the GOM. We're going to add a second. They're in the process of adding a second intervention vessel. There is some uncertainty around the leasing.
The current -- what was a climate bill now, I think, an inflation proof bill or something, 725 pages, so I can't say I've read it all. It hasn't yet passed as well. So we need to wait on that. But it gives a nod to the importance of oil and gas. It gives a nod to leasing in the Gulf of Mexico. And I think is attempting to strike a balance, which I think is quite sensible and pragmatic between delivering energy security today, which is a hydrocarbon based system for the United States. And at the same time, obviously, a lot of climate provisions, which will help our hydrogen business, our offshore wind business, our EV business in the US.
Murray, anything I've missed?
Just very, very, very strong seismic that we've recently seen, lighting up new exploration opportunities that we didn't think we'd have in the past, seven targets around Thunder Horse as an example, that we wouldn't have seen in the past. But new algorithms, new seismic have been done, and so there's interesting stuff there. So I think along with a very solid base of four moving to five big hubs, we're now starting to see further exploration opportunities that, I hope, allow us to maintain the Gulf of Mexico through the decade and maybe beyond would be fantastic.
Certainly one of the six core regions, as you might imagine, and definitely will be a core region in 2030 just like it is today. We'll head to this side of the room, and we'll come back. Yes, please, and then Lydia.
Thanks. Chris Kuplent from Bank of America. I wonder whether you can talk a little bit about your outlook on Henry Hub in particular. You've already mentioned the Haynesville offering some very exciting returns at the margin. And alongside that, perhaps comment on your hedging strategy regarding your exposure to Henry Hub. I wonder Haynesville seems to me in a great place in terms of takeaway capacity, how you view the world as you refer to it, Bernard, the energy trilemma seems like it's locking Europe into a higher for longer gas price environment. What's your view? How long would it take for that to translate to a higher for longer Henry Hub price environment and your strategy around that would be interesting?
And another one on North America briefly, your Husky Energy deal or let's call it swap. I don't think either of you have announced any financial flows, but I'd be interested to hear how excited you are about opening up effectively potentially a new core region Offshore, East Canada, and how that fits into your high-grading strategy that you laid out, Bernard? Thank you.
Very good. I'll let Murray talk about hedging in the US. I mean the outlook for Henry Hub in the US. as with all commodities and commodity markets right now is probably largely uncertain gas. I think, in particular, globally is -- we expect to remain elevated and for there to be quite a bit of volatility.
Storage levels, I think, are probably particularly low in the United States right now. There is limited capacity to turn on coal compared to the past because a lot of coal has been retired. On the flip side, Freeport is down, so that's relieving some of the pressure. There's been a heat wave across the US, which has drawn hard, and you're seeing prices up at $8 today.
So I think it all depends. Freeport needs to come back. We need to see what the winter looks like in terms of cold weather. Storage probably could do with being a bit higher than it is today. But those investments that we're making in the Haynesville will be very, very quick payback investments without question. High-quality, low emissions, and it seems like a robust market for the time being, Murray hedging and anything you'd add on the Haynesville, then you can go to Husky?
Yes. I think on BPX and our hedging strategy, generally, we're trying to ensure cash flow and ensure that we get a dividend so we can pay back the acquisition price of a few years ago. So we're hedged out about 18 months right now, 1.5 years. Happy with that, and it's along with the increase in CapEx that Bernard mentioned, we're still getting a dividend out of BPX, about $1.2 billion this year due to the hedges. So we feel very comfortable continuing with that strategy of locking in returns, locking in cash flow and making sure that we pay back the dividend, pay back the original purchase price that we had a few years ago from BHP.
As far as Husky, yes, we're very excited about Bay du Nord, fantastic discovery. Looking forward to opening up. I think maybe we'll describe it as another hub in an extended Gulf of Mexico over time. I'm winking at you, as I say that. Very extended. But as a Canadian, I can get away with that, can't I? So no, we're very excited about it. It's a lovely reservoir. We're happy to take the 35% interest in that and work with the operator Equinor. And we'll talk to you more about it once we close because then we can actually say stuff right now. We're on the outside. But very excited, Chris.
Good. Great. Just because we're going into oil in Canada, it doesn't mean we're going to go exploring in Ireland, I would add. But...
You did get license rounds in the IRC. Didn't you?
Yes, true. Close. Lydia?
Thanks. Good morning. It's Lydia Rainforth from Barclays. And two questions, if I could. First one, just coming back to that idea is probably the largest gap I can remember between planning assumptions and where existing macro prices are. So what challenges does that present to you as an ExCo side of things? Do you actually end up talking through other things you should accelerate or things that you're risk missing out on or other opportunities to accelerate? So just how that creates challenges, if it does at all?
And then the second one on cash returns to shareholders. And I appreciate this is a little bit of a difficult question in a context of also a cost of living crisis as well. But how far can that n umber -- the cash returns to shareholders go? You've obviously increased the dividend this time around, what's the threshold for looking at further dividend increases? Why the 3.5 billion for this time? And just in terms of going forward, where that can go to.
If Murray will take the planning prices, really, I'll have a go at the second question, and he will correct me. I mean in terms of cost of living, I think we all have to recognize that it's a very, very difficult place for -- you and I talked about this, it's a very, very difficult place for people, not just by the way, in the UK but right across the world right now. That's something that is absolutely that we understand that. We get it. Our people inside the company, get it. They want to help.
And so the question becomes what can we do to help? And, of course, what we do here in the UK is we're back in Britain. We said we're going to invest up to £18 billion in Britain this decade. We're going to continue to do that. The majority of that is going to be in the energy transition, but there's also going to be a lot going into energy security for today in hydrocarbons, and that's with the Merloc development that we're taking to the next stage in the North Sea as one example.
The second thing that we do is we're trying to create jobs. So we think we'll create over 10,000 jobs in Britain over this decade through those investment plans. Net-zero Teesside power project alone will create 3,000 jobs are in construction, 1,000 during operation. We just announced this week that we're going to put our global R&D center for battery research in Britain, in Pangbourne.
And the third thing that we do is we pay taxes. And when prices are higher, rightly so, we pay higher taxes. And now we have an energy profits levy, which means that we'll pay even more taxes on top of what we had already planned and that's what we will do.
In terms of cash returns into shareholders, of course, we have to remind ourselves that it's just two years ago that we had to cut our dividend and take a difficult decision to cut the dividend by 50%. If you look at the numbers today, the 3.5 billion that we've announced in buybacks for the second quarter, that takes us to exactly 60% of the cumulative surplus cash that we've had since beginning this program. I think it was $17.1 billion of surplus and the amount today takes us to exactly 60%.
So Lydia, on that, we're simply following the math. And on the dividend increase, what you've seen is we want that number one priority, resilient dividend. We wanted to be anchored in that word resilient. Therefore, we say $40 world because we think that is the prudent way to plan our company. You've seen the reduction in share count, which means a reduced dividend burden. Murray has also taken down gross debt, which has taken down our interest expense and the balance of all of that is that we can then afford a 10% dividend increase, while keeping the balance point -- importantly, keeping that balance point constant. And given the operating performance of the company and all of the things that we look at we felt that was a prudent thing to do. So hopefully, I haven't explained any of that incorrectly. You can correct me or move to the planning prices.
Brilliant answer, Bernard. On the planning prices, Lydia, it's important, we'd like to look through cycle. So if you look back two years ago, oil price was negative. We didn't change how we did things. Price is higher now. We're not changing things. So we look through cycle, we have our return hurdles. We invest into those.
On the margin, where does planning change on the margin, you'll pursue options faster in fast payback. So you'll look at doing well work, adding well work rigs, like Bernard talked about in the Gulf of Mexico. You look at accelerating from some short-cycle stuff inside BPX as well. But that's really on the margin relative to the overall shape of the business. We focus on through cycle and a $60 world to us seems a sensible thing to focus on through cycle.
We should probably go online, get a couple of people. Jason Kenny is on Zoom, I'm told, and then we'll go to maybe Oswald Clint on audio. So go to Jason. Jason, if we can bring you into the room. I think it's possible with the technology. Can you hear us, see us? Not yet. Maybe that's Jason. Yes. Not yet. So let's go -- there you are. There you are. Not at all. No problem. Go for it. Please, Jason.
Return to couple of years you get the hydrogen, soon. So hydrogen, phenomenal positioning, Bernard, massive scale, particularly in Australia, also Spain, Portugal, UK. When do you expect to first outline your investment frame for that? What kind of money is it going to take? What kind of earnings you're going to generate the kind of contribution to the bottom line when do you see you being able to define that?
Secondly, on the transport solution, I mean, obviously, Australia is particularly significant, but you need to get those green hydrogen molecules to other parts of the world. There is a rising debate about the toxicity of ammonia and other transport mechanisms. I'm wondering if you're looking into solid state transport opportunities. And the third one, if I may, just on new businesses. I think four of the large cap integrateds are now invested into fusion startups? Is it something that BP could be interested in as well?
Very good. Okay, Jason, I think very quickly, I think on hydrogen, I'll collapse both questions into one. So Anja has joined us. She's been working hard on what we've got, what our plans are and one of the things coming out of that is that there will be a real focus on offshore wind and a real focus on hydrogen in the low carbon energy space. So you will see that coming.
In terms of when we will talk about the transport solutions, and you're right, transport is one of the big challenges for green hydrogen to create a global market in the long run. Not everybody wants ammonia. When it arrives at the other side, some people need hydrogen, it's got to be recracked into hydrogen. There are lots of different challenges. The teams are looking at that.
In terms of, when we'll update on that on our financial frame on our outlook, that will be in February of next year when we do our annual sort of update, and Anja will be joining us then to share her insights and her updated look at things.
In terms of new businesses, I think one of the things that we are trying to do is get very, very focused. We've talked about our five transition growth engines. That's where the energy of the company is and needs to be. We may do some knowledge investing, if you call it, at the margin through our ventures business.
But we are -- there's a world of opportunity out there and one of the ways to slow down the transition is to try to do too much. So we're very focused on those growth engines, those five, and we need to deliver on those, and they are the things that matter to us. So that's really where we're focused, Jason, on those five. So thank you for your question. Let's go to Oswald Clint of Bernstein. please, if we can hear Oswald.
Yes. If you can hear me?
Yes, go ahead, Oswald.
Yes. Good morning. Thank you very much. Firstly, just on customers and products. I think you called out in the release the inflation impacting margins and costs and actual customer purchasing behavior. You do have 200 more strategic convenience sites year-over-year.
So I wanted to get a sense of what that's changing purchasing behavior is. If you could flesh that a little bit more. Is it North America, or is it affecting your India growth strategy here? That would be interesting on the first slide.
And then secondly, I mean, I know you don't believe in carving out pieces of the business, additional guidance. But it's interesting to know around combining gasoline this week. It looks like around eight times EBITDA, BP trading on 2.5 times EBITDA. That would put your business on -- $10 billion, if not, $20 billion closer to 2030 for a business you have number one position in China and India. So I'm just curious, does your thinking evolve in any way when you see such transactions, or should we just assume we let all come together, it comes out through the DPS line and the buyback line over time? Thank you.
Great. Murray, I'll let you take the Castrol question. In terms of customer behavior, the reality, Oswald, is that it's a relatively complex picture as you look across the various customer pools that we have. So I think gasoline sales are down relative to pre-COVIDM down relative to 2019. And of course, it's very hard to get a true sense of what is driving that? Is it price? Is it changing customer behaviors and patterns? Is it the impact of people worried about inflation and a recession today? So we're seeing that on gasoline.
On the other side, diesel sales are up 5% in United States. So diesel is quite resilient, and our refining system is actually biased towards diesel, which is one of the reasons that you will have seen some strong numbers today in the refining side. Diesel tends to be a bit more recession-proof, shall we say, than others. So diesel sales in the United States are up. Aviation fuel is way up quarter-on-quarter. It's up over 60% quarter-on-quarter. So aviation is really rebounding, but it's still not back to pre-pandemic levels.
The convenience business is actually doing relatively well. And as you said, we've added strategic sites. It's actually doing relatively well. If you adjusted for ForEx, it's one of the strongest quarters that we've had. We have now, I think, 16 million loyalty customers. The BPme app had the greatest number of transactions in May that it's ever had, and those customers come back more and more and we are seeing basket sizes on the up.
So it's a mixed picture, and I think it's very early to draw too many conclusions other than that this integrated business, and maybe Murray will talk about that in the Castrol question. This integrated business where we can see value shifting up and down the value chain remains a very, very important part. So hopefully, that gives you a little sense on the customer side. Murray, Castrol?
Yeah. I think, Os, nice to hear your voice. You know you know that we think integration is the way to go and that we create more value that way. That sits with each of the businesses we have right now. Castrol in particular, has lots of integration value with AV Fluids as those emerge, including the manufacturing side as well.
Additionally, Castrol has tremendous upside. It's got huge headwinds right now on base oil price because of the price of oil, passing out on the customers has lagged. The additive shortage is starting to move behind us. We have the opportunity to high-grade the warehouses around the world. We have the opportunity to decrease SKUs massively that will drive efficiency into the business. And as markets rebound, especially in Asia from COVID, we'll get back to advertising, and we should start getting more market share.
So we see a tremendous opportunity for profit growth in Castrol that's built into the numbers that we talk about. And we think we'll create value by having it together with BP. And so yes, the answer to your question is, yes, you'll see that through dividends and share buybacks.
Interestingly, Murray, and I think it's an extraordinary number. I think between 60% and 70% of the vehicle manufacturers in the EV space are recommending and filling Castrol coolants into the system on day one, 60% to 70% in this new emerging market of coolants for batteries. It's pretty extraordinary number, and I think it says a lot to what the team has done, which is why we're doubling down on the R&D in that space. Because obviously, it's a source of growth. And we're seeing that in the EV charging business. . Thank you, Oswald. I think we'll go to Irene here in the room, and then we'll keep going, Lucas and Amy and -- great. Yes. Great. Go for it, Irene.
Thank you. Good morning. It's Irene Himona, Societe Generale. My first question, if I can just clarify a couple of numbers. What was the provision relating to the Freeport LNG outage in these numbers? And what is your estimated cost this year of the UK windfall tax, please? And then my second question was actually on Russia. You've exited and the worst on mass is trying to exit and unplug Russian energy. As a major oil and gas producer, can you try and explain to us what are the challenges you're facing in this situation, whether that be logistical or operational financing? Just to try and understand the gravity or not of what we're trying to do here. Thank you.
Very good, Irene. I think only you could put Freeport and windfall tax in one question, but you get full marks for ingenuity on that. Murray, maybe have a go at Russia, but we can do it together. Just on Freeport LNG, we're not providing a number. But what we are seeing is that the best -- management's best estimate of the full impact of the Freeport outage is in today's accounts. Okay? So full impact.
Our best judgment is in today's accounts. And secondly, on the windfall tax, you will have seen a number in our accounts that is not the estimated cost of the windfall tax that is an accounting issue around deferred taxes and the changes in valuation and so on and so forth. You'll have seen our estimate of tax increase for the second half of the year, and we will provide what the number is when we report our taxes at the end of the year. You're a tax expert, you can correct me on that, and then talk about Russia.
Great. I'll just leave that one alone. Russia challenges in the systems, obviously, energy provision. Russian oil is about back to where it was prior to the conflict. Products remain lower. So products coming out of Russia, especially diesel, are a challenge for Europe and the rest of the world. And then obviously, natural gas with flows of natural gas being down at, I think, 20% of historic levels on Nordstream, that's -- those are really the biggest impacts and that's just creating volatility inside the market with low supplies. So that's really the principal impact that we see across our portfolio and really the world right now. There's a bit of loss of other products like iron ore, et cetera. We're well diversified in our sources of that, so that's not really impacting us. So I think it's principally products and natural gas are the key impacts that we see at this stage.
Thank you, Murray. Thank you, Irene. We'll go to Lucas and Amy.
Thanks very much Ben and Murray. Lucas Herrmann from BNP Exane, and congrats to see a very strong result. Trading, I wanted to ask about if I might, Murray. Could you just -- trading has obviously had a very good six months. Typically, you talk about 2% add to return on capital as a consequence of trading. Can you give us some idea what the run rate might actually be if we looked at first half trading income and how it's impacted numbers? And just staying with trading for a moment, volatility has been pretty extreme. Back end of last year within LNG, as an example, you elected to take down volumes, take down trading in that business to some degree. Just how volatility is impacting the way you think about the trading business at the moment because not only the opportunity is large, but obviously, the risks are pretty substantial as well?
And then secondly, Bernard, could you just give us a wrap on projects? You didn't mention Mad Dog. You didn't mention Tangguh. I presume that with just an oversight rather than -- or an emission rather than anything else, but where are we in terms of progress? And on projects, when are you expecting to take first cargoes from Coral?
Very good. Great. Murray, trading.
Yeah. Lucas, I'm not going to guide on run rate. We'll give you our exceptional and average quarter for oil and gas. And, of course, you had double exceptional in them. The first half, obviously, it's above the 2% impact that we've talked about. I'll let you decide how you'd like to model that, but we don't guide that specifically. Apologies.
Volatility, you're right the natural gas volatility is the big challenge with trading right now. The way that we really think about it is our job is to provide energy flows, first and foremost, 100 cargoes into Europe to help. And as you do that, you hedge those cargoes to make sure that your profits are sustainable as you go through this.
Obviously, liquidity isn't particularly high inside the traded markets right now. You're seeing that in many of the press announcements you see from other companies. So the principal risk that we really manage is liquidity risk and making sure that we have enough liquidity to move through a volatile price market. That's why you see our cash levels are so high to manage that liquidity as we move through this difficult time through the winter. So it is volatile, and that demands liquidity. And that's why a company like ourselves can work our way through that particular system.
Over to you, Bernard, on projects.
On projects, the intent wasn't to go through all the projects, Lucas. We said seven projects by 2024. I think, we could have talked about any number of them. But I will give you an update on as you asked on Tangguh and on Mad Dog.
Tangguh has been very, very challenging from a COVID perspective, as you might imagine, over the last couple of years. Having to -- you can imagine a site with 10,000 workers at the time with medical facilities for an accident or somebody getting hurt, but not medical facilities for pandemic and having to demand that site and then ramp it back up. And we're actually back at 12,000 people on site today in Tangguh. It's going well. The team is doing, I think, a fantastic job, and we would hope to start that up by the end of next year.
Mad Dog Phase 2, on location. Argus, the topsides commissioning has gone well. It's all done. That's looking good. We have encountered some issues with two flex joints on the riser, on two risers in Argus. We're evaluating those at the moment. The guidance remains as the guidance. And as soon as we know more, we will update. Lots of other projects, ACE, Tortu, the list goes on. On Coral, I think it's before the end of this year, right around year-end for first lifting.
Great. Amy.
Good morning. It's Amy Wong from Credit Suisse. Two questions from me, please. The first one is on your effective tax rate, which is you've guided down now, and you said it is due to a change in the geographical mix of the profit. So could you elaborate what some of those moving parts are in those geographies? And what's changed relative to when you first guided on the effective tax rate?
And then the second question is unrelated. Apologies for that, but it's on carbon offset market. It's a fairly new area but -- and not core at the moment, but nonetheless, a very important topic, I think, in the industry. So I'd love to hear more about an article that appeared during -- recently about your practices in Mexico, your response to that, and some talk about compensation prices and how that's all evolving. Thank you.
Great. I'm happy to take the second one, and our tax expert will take the first one. You did start in tax.
Can't sit down on that, can't I?
No. That's true. On carbon offset markets and the article in Mexico, the frank answer is we think the article is misleading. We actually went into Mexico and created -- I don't have all the details, but created a grant to get the market established.
We did a contract or whatever, and we did a contract at the price at the time that the market was. We're obviously adhering to carbon market sort of offset principles here around making sure that communities and so on, get fair share and all of that. So all of the things that you should expect from a company like ours.
So we went in and made a grant to establish it. We did contracts based on the market price at that time. Prior to the article being published, we realized that the market had -- recognized not realized, recognized that the market had increased and are in the process of renegotiating that to make sure that there is a fair more equitable outcome based on today's prices, which I think is a thing that maybe not everyone would do, but we are doing.
So I think overall, the tone we would say, is somewhat misleading. And you should expect high levels of integrity from a company like ours and what we do in carbon offsets. And in that particular situation, I believe, is no exception. So thanks for asking the question. It gives me the opportunity to clarify our position. Effective tax rates.
Yes, Amy. First half of the year, 30%, give or take, effective tax rate. Second half of the year, back to normal 40% tax rate. Hence, the full year guidance 35. I suppose what we didn't plan for at the beginning of the year was a much stronger refining market that we didn't plan for nor did we plan for exceptional trading results. So if you take account of those things, that's what drives the effective rate lower. It is possibly the hardest thing to guide on is trying to guide on an effective rate. We never really do seem to get it right. But we think we'll be back at 35% for the full year.
Thank you, Amy. Let's go to Jason Gabelman, if we can, on Zoom. And see if we can get Jason in and then we'll go to Paul Cheng at Scotiabank. So Jason, good morning.
Hey, thank you. I have a few. First, on the refining business. I think you and your peers have been discussing lower intake of third-party natural gas and our refineries in Europe, the minimized cost. Can you just discuss how that impacts were planning output on the yield side? I'm assuming less NGLs being produced, but does that have an impact absolutely is all margin capture? That would be helpful.
And then secondly, just on CapEx cost inflation, we've heard from your peers that within the oil and gas business, they seem to be managing that well just given established relationships with suppliers. But I'm wondering more the renewable power side how you're managing through the inflationary environment as you build out our portfolio.
Thanks, Jason. I'll take refining. I'll let Murray take the second one. On refining. In Europe, we've managed to reduce our gas -- natural gas usage by almost 50%, which I must say surprised me when I saw the number. I think the teams have been working very hard on trying to find different ways to power the facilities and use natural gas, and they've been doing that and optimizing the refining system as they try to help their own countries. We have refineries in Germany and Spain and in Holland.
Thus far, it hasn't impacted output in any way. In fact, our refineries utilization, and if you look at that compared to some others, is exceptionally high. Running at over 90% utilization, Jason, which is one of the highest for quite some time. So we're managing to maintain strong utilization. Some of the strongest around, I think reducing natural gas usage, but no impact at this stage on the output of the refining system.
Murray, inflation on renewable power.
Yeah. And Jason, thanks for joining us so early from the US. On renewable power, probably the same answer that I gave last quarter. Nothing's really changed since last quarter. Year-on-year, we've seen 30% inflation in solar panels due to different rules around the world. But power purchase agreements are going up by a commensurate amount, so returns aren't changed. That's especially in the United States.
And then in offshore wind, we've seen a 5% increase in the overall cost of the offshore wind programs. That's mainly reflected steel and iron ore prices. That's kind of theoretical. It's a theoretical measure because we're not locking in right now. But, of course, in the latest contract for difference rounds, you're seeing a commensurate rise in power price that offsets that as well, so the returns stay relatively stable.
The thing to watch is iron ore prices, steel prices, et cetera, are starting to deflate with recessionary talk. And you can all see the indices and what those are doing in 2023. So we'll be trying to make sure that that flows through into these types of businesses, and we capture some of that deflation as we enter 2023.
Great. Thanks, Jason. Let's go to Paul Cheng of Scotiabank.
Hi, good morning. Can you hear me okay?
Yes. Paul, go ahead. It's early for you as well. So thank you for joining us early.
Thank you. Two questions, please. First, on the dividend increase, you guys still talking about 4% annually through 2025, but you are also buying back a lot of stock. And so with the shift phase shrink, since like you would be able to afford more than 4% because public going to buy back more than 4%. So how should we take that into consideration when we're looking at the potential increase, the pace of increase? That's the first question.
The second question, I want to go back into your refining system in Europe. Even though you reduced your gas consumption by 50%, but with the much higher natural gas price in Europe versus the US, that's a cost difference of disadvantage. Can you quantify for us that how big is that caused this advantage weighing between your US and the European system, again, the refining due to the high -- much higher natural gas prices over there? Thank you.
Thank you, Paul. Mary, maybe help me on the second one a little bit. On the dividend, I think it's really what we said earlier, isn't it? It's -- the guidance for 4% is at a $60 oil price. The fundamental factor here that we're dealing with is we want to maintain a strong balance point. We want to anchor on that $40. We think it's the right way to run our company.
As you quite rightly pointed out, we've purchased a lot of shares that, has brought the share count down. We've also repaid a lot of debt in a gross debt sense, that's brought our interest expense down. That means that this quarter, given the fact that the company is running well and the outlook for the environment, we are able to raise the dividend by 10%, and do so while maintaining a $40 oil price breakeven.
So our guidance remains what the guidance is. First call on capital, resilient dividend. Resilient, meaning $40 breakeven and 4% at $60. And you've seen today what we've managed to achieve in the current environment, and I should leave that at that. Great.
On European refining, I think, Paul, what you're mentioning is that the price of natural gas in Europe is much higher than the United States. And so does that impact the European refineries. Of course, it makes them much less profitable. But carbon taxes are different between nations. Demand is different between nations as well. So it's probably more complicated than that. I would say refining profits inside Europe are quite suppressed though. It's a difficult time period, and we're primarily focused on flow for society. But I think that's all we should say.
Okay. Great. Excellent. Christian Mallik on the phone, and then we're done with everybody online. Craig, how are we doing on time? Okay, great. There are 10 minutes in the room. So Christian, over to you, please.
Hey, good morning. So accompany there in-person. Most of my questions have been answered. This is going to be slightly more sort of strategic. The $40 balance point was a great sort of degree of discipline during heightened periods of volatility into areas where we just didn't see demand visibility and so on. But to what extent is becoming a double-edge sword for you now? In the sense that it does feel to me that concerns around demand, recession and ultimately disbelief from a high long-term view, I guess it gets exacerbated by the industry also pointing towards a fairly sort of lower for longer relatively conservative planning assumption.
So I guess my question is, what does it take for you to raise that balance point? I can't give -- ask that question because people always focus on cash breakeven anticipate good degree of efficacy of cash flow. But just wondering if you're going to need the market to believe that this is a sustainable macro environment beyond the next one to two years, what does it take for you to do that? And then sort of I guess the sort of the corollary from that is, would you then consider thinking about maintaining or managing your oil volumes over the medium term as opposed to decline? So there's more of an interim to questions, but just want to know your thought process and what are the key sort of pace determinants around it. Thank you.
Yes, Christian, thank you. So I think just a couple of things to say on this. So First of all, I think we all know the history of our industry, which is that I'm not sure a lot of value was created when we chased price. So we feel, at BP, Murray and I, feel like that is a lesson that we have learned. And the comment in the script today was meant with that purpose in mind, which is now is not the time to lose discipline. So that's the first thing to say is that we are anxious not to get drawn into this into believing that this new world will be this new world forever, and we're cognizant of the industry's history. So that's point number one.
Point number two, is that the first call on capital in our financial framework is our dividend. And we talk about it being a resilient dividend, which means that we want to protect that dividend given our experience of having to cut it just two years ago. So we're very focused on making sure that our investors and our owners can rely on that dividend.
And, therefore, we believe that it remains prudent to maintain a $40 breakeven price in light of the fact that prices are much, much higher today. But we believe that, that is the right thing to do in terms of production and so on. You've heard us talking today about allocating about $0.5 billion, potentially more, towards energy security today, which is about hydrocarbons, in particular, natural gas in the Haynesville. And we will continue to make those adjustments at the margin where we can get the returns for our owners that we feel are good returns and where that capital is relatively flexible. So we believe this is the right thing to do and the right way to run the company. And I understand the question very, very well, but that's what we have concluded.
Murray, anything to add?
Discipline is our focus, yes.
I guess, discipline is our focus. Christian, thank you. We'll go back in the room question here. Yeah?
Hi. Thanks for taking the question. It's Peter Low from Redburn. Yes, so I just had one on your target, develop 20 gigawatts of renewables by 2025. To what extent is that now already underpinned by your existing pipeline, or to what extent do you still need to acquire existing opportunities to deliver that?
And then perhaps linked to that, how are you thinking about the split between PPAs and merchant exposure within that renewables business? It feels like kind of in an increasingly volatile energy price environment, you're showing the advantage perhaps of having more merchant, especially where you're not reliant on PPAs for financing? Thanks.
And it also, Peter, shows the benefits of being an integrated company because I hope the point about the 10 gigawatts of demand that we will have from our own EV charging network versus our five gigawatts of offshore wind capacity wasn't lost on there being a real connection there. But I'll let Murray take the PPA and the merchant thing.
On the 20 gigawatts, I think, either largely underpinned by existing our expectation that it will be underpinned. We're at 4.4 gigawatts today. The pipeline is well over 20 gigawatts. It's 80% solar. Lightsource BP continues to be a very effective solar development machine. And, therefore, I'm very comfortable that we will reach that 20 gigawatts by 2025 in a way that satisfies our returns and doesn't mean that we're going to have to go and buy something to get there.
So that's what I would say on that. Murray, PPA's merchant.
The way that we think about it is in a portfolio sense, and we start to think about what are the different sales that we have that we can anchor electrons into. So if you think about the different parts of the business, Bernard has already mentioned the fast on-the-go charging with 10 gigawatts of potential demand. We'll have fleet customers that aren't inside that number that will have their own demand like Royal Mail. We'll have the big corporate deals that our marketing teams have done with Microsoft, et cetera that you've seen publicized.
You'll have natural sinks such as net-zero Teesside, if we put a green hydrogen plant in there, which I think we will. That will be a natural sync. We'll have other green hydrogen opportunities across all of our refineries globally. So we have a very, very large natural sink that we can plow these electrons into and then on trade, which is what we've done with natural gas for four decades. We established natural things for our natural gas, and we then untraded through trading to arbitrage.
So what percentage do we do? I don't know. That's something that we're continuing to evaluate. We'll make those decisions as we get close to sanction on each of these projects. But certainly, as you can see, the importance of that integration is very, very high. And to Lucas' question, the returns are enhanced when you can do this given the optionality you create inside the portfolio. So we'll update you in the years ahead, I think, is what I'd say as we do each of these big investment programs in the offshore wind space. And I think you'll see a very different type of company, ourselves versus the pure plays, where they'll be having fixed returns, and we'll be having returns that take -- returns that play into volatility.
Peter, thank you. Maybe the last question in the room, if we can. No more questions online. And yes, sir.
Yes. Henri Patricot from UBS. Thank you for the presentation. Just one left on your EV charging EBITDA target, $2 billion by 2030. And you provide kind of a 2025 target in terms of charging stations. I was wondering in terms of the EBITDA evolution over the course of the decade, does it follow closely a number of changing points, or is there was an inflection point in the second half and expand on the drivers here?
Yes. I think -- so we do have a number of -- we don't have an EBITDA target for 2025, but we have shown you what the EBITDA number today is for 2030. I think you will see that it will start to kick in, in the second half. I wouldn't say the late second half, I would say the early second half of the decade. We're actually seeing some of our sites already being EBIT positive, Henri. So this is a question of driving utilization. And our top 20 sites in Britain today are at double-digit power utilization already.
Our top 30 sites in China are over 20%. And I think we're beginning to see a real tipping point coming in terms of the EV sales representing globally, I think, about 5% now, and we're starting to see that being a real tipping point based on history. So very optimistic actually in this business. Very optimistic. It is exactly what we should be doing. I always say, if you wanted to start a company tomorrow, if you wanted to do a start-up, to do EV charging, the biggest issue you would have is access to land.
550 million people live within 20 minutes of a BP site. So right there and then, we have this enormous incumbent advantage. We have a brand. We have a convenience offer. We have a loyalty scheme. We have all these things that are crucial, and we're focused on fast or ultrafast charging, and we're focused on fleets. When we come back next time, we'll maybe talk about what Amply is doing in America, the company that we recently bought and the management team there, which is focused on software as a service, in charging and hardware as a service.
So huge excitement, quite frankly, about what's possible in this space. And of course, with the price of energy today, EVs are look even more attractive. So we shall see. We're all in on that space. We're expanding it Royal Mail here in the UK, continuing growth with Uber, we're now with Hertz in the United States. It's a very exciting business just to open.
In fact, at close, I was in Stuttgart a couple of weeks ago, and I was on an electric truck, which was a 28-tonne truck, which is not a prototype. It's available for sale today. And it is extraordinary I showed you a picture of this truck, and I said that's an electric. That's a battery truck and it's for sale, and people are buying it. Not a huge quantities yet, of course, but they're buying it that would have been unthinkable three or four years ago. In fact, Martin Dom [ph] talked about shutting down that program in 2016 because he felt it was going nowhere. And yet here we are in 2022 and they're building those trucks in Stuttgart, incredible to size and scale and pace of acceleration in this space.
So we're excited, as you can tell, about EV charging. It's one of our five growth engines. It's not the only one, but it's certainly one of the ones that's going to show up in an earnings sense this decade.
So let me -- I think leave it there, if that's okay. Let me just close with how I close the main session, which is I think the company overall, always things to deal with, as you might imagine. But overall, our company is running well. It continues to strengthen, and I and Murray are enormously grateful to our teams around the world who are the ones that do that each and every day. So that's the first thing.
The second thing is we are making good strategic progress. We're doing the things that we want to do, which is about providing the world, the energy that it needs today, which is mainly a hydrocarbon system. While at the same time, investing to accelerate the energy transition, and we're making real progress on that progress.
Thirdly, the financial frame. I think it is one of the things that we can say about BP is that I hope you all think that it's clear, it's consistent, it's unchanged. And it's doing what it's supposed to do, which leads me to the fourth point, which is obviously we are also growing distributions to our owners and you've seen the results of that today.
So as ever, thank you for your interest in our company and what we're trying to do. We're doing our best. We're keeping going. And if you haven't had a break, I hope you get a break over the holidays. So thanks very much. Thanks for being here.