A BP-PetroChina dual-branded petrol site is seen in Guangzhou.[Photo/China Daily]
Oil giant’s vice-president expects big deals during President Xi Jinping’s state visit to the United Kingdom this month.
The oil industry may face its worst situation ever, with crude prices standing at sharply lower levels after plunging more than 50 percent since last summer. But Dev Sanyal, BP’s executive vice-president for strategy and regions, said that low oil prices are not all bad news, as they can bring about greater focus and discipline. “Oil prices reflect the imbalance between supply and demand. Inevitably, there will be a recalibration, with all its attendant consequences, as the world adjusts to the new price set,” he said. “This will result in a number of opportunities, from efficiency to asset trades. So it is not entirely a bad thing.”
Sanyal has spent almost three decades working at BP, and his current role is Executive vice-president for strategy and regions, and a member of the Group Executive Committee of BP Plc.
But he said his proudest career achievement has been as a member of an executive team that has been steering BP through challenges it has faced over the past five years, since the Gulf of Mexico oil spill in 2010.
Dev Sanyal visits BP’s Lubricants Technology Center in Shanghai in August. [Photo/China Daily]
The British company has been seriously weakened by the incident, but Sanyal said he was proud of the efforts they have made in gathering resources and containing the disaster, creating the company that it is today.
A wide consolidation in the energy sector coupled with sharply falling crude oil prices has squeezed the profits of many oil giants. BP is also going through a “simplification plan” to reshape its portfolio and make it more efficient.
Sanyal expects crude oil prices to stay low for longer as global supplies continue to outpace demand this year. But will the oil prices return to normal levels? What is BP’s next move, and will the company continue its investment in China?
Sanyal shares his views with China Daily.
Dev Sanyal, BP’s executive vice-president for strategy and regions.[Photo/China Daily]
China’s GDP has been expanding at the slowest growth rate since 2014. For this reason, some foreign companies have either cut their investment in China or moved their plants to China’s neighboring countries to reduce costs. What is your plan for China next year?
BP continues to invest in China. It is a country of great significance to BP, given its size, rapidly growing economy and influence on the global stage. We are committed to contributing to China’s energy solutions and to creating material value growth for BP by continuing to be a trusted energy partner both with China and within China. We will continue to actively seek attractive new opportunities with our partners inside and outside China. For example, in March, BP signed a strategic partnership agreement with Guangdong province. The agreement covers three areas of strategic importance to both parties－the petrochemicals value chain, the “green Guangdong” agenda and market liberalization. This strategic partnership is not an end, but a beginning.
What is your expectation for cooperation between Chinese oil and gas companies and their counterparts in the UK? Are you expecting any deal or agreement from BP during the period of President Xi’s official visit?
We see great potential for enhanced cooperation and collaboration between both sides, particularly in the areas of technology, trade, and technical cooperation. High-level government visits help bring together new and innovative developments. For instance, last year during Premier Li Keqiang’s visit to the UK, BP signed a deal worth around $20 billion to supply CNOOC with liquefied natural gas (LNG). During President Xi’s upcoming visit, we expect to sign a number of agreements with our Chinese partners, demonstrating our long-standing commitment to China.
Crude prices have been on a downward trend this year. Do you think this will last long or do you think it is only temporary?
We believe it is prudent to be prepared for continued low prices in the short-term. If you compare the oil price curve to a letter, I think the curve is neither an “L” nor a “V” but more like a flat “U”. The biggest question for now is how long the bottom of “U” will last.
What’s your company’s strategy to keep profitable under such circumstances?
We have an integrated business, a strong balance sheet, a rigorous financial framework and capital and cost discipline. We have repositioned our portfolio to drive value over volume. The key for the coming years is to ensure that our portfolio remains resilient, with a focus on simplification, capital discipline and efficiency.
As falling crude prices have squeezed BP’s profit, does your company have any plan to sell assets to the cash-rich Chinese companies?
When oil prices fall, there is inevitably speculation on M&A. However, I believe the key in any commodity industry is efficiency, irrespective of the cycle. It is a precondition for resilience and for being competitive. Energy is an industry with a long time horizon. As a company, we seek to position ourselves strategically for the long term, while ensuring competitiveness in the short-term. In short, a combination of driving the right portfolio, improving efficiency and increasing reliability will create enduring value.
BP in China is focusing on the downstream sector, and we’ve seen your PTA Phase 3 just in July. On the other hand, petrochemicals are in a downward cycle. How does BP manage to conquer that cycle?
Every part of the company is important. We are a balanced and integrated company. In July, we were proud to bring in the most advanced PTA technology through the Phase 3 PTA plant of Zhuhai Chemical Co, enhancing our position in the purified terephthalic acid (PTA) market and reinforcing our long-term commitment in China. As a company, we aim to build a competitive advantage by being resilient through the cycle. Operating safely, reliably and efficiently is an integral part of successful business management.
The development of shale gas in China is not going as fast as expected. What do you think are the challenges?
According to the World Resources Institute, China ranks No. 1 in terms of volume of technically recoverable shale gas. BP has strong expertise and advanced technologies on shale gas. A combination of factors including technology, infrastructure and access are important platforms for the growth of shale.
This year BP has reached a settlement with federal statement and local on the Gulf of Mexico spill following the Deepwater Horizon accident in 2010. What does this settlement mean to BP？
It has now been five years since the Deepwater Horizon accident, and we have worked hard to build a safer and a stronger BP. We believe that this agreement is a realistic outcome which provides clarity and certainty for all parties.
You have spent almost three decades working at BP, with a wide range of management roles. What achievement is your biggest source of pride in your career?
I am proud to have been a member of the BP family for over 26 years, since joining in 1989. There have been many highlights during that time, but my proudest achievement has been as a member of an executive team that has been steering BP through the challenges we have faced over the past 5 years to create the company that we are today. This is a great industry, and I look forward to the coming years with excitement and anticipation.
What are your suggestions to young businesspeople who are working to become successful corporate leaders?
I would like to use some of our BP values to give suggestions to young business leaders: “respect”, “excellence”, “courage” and “one team”. To put it more specifically, you should respect those you work with — both inside your company, with partners and with communities and countries — and build strong relationships based on mutuality of interests and trust. Always strive for excellent execution, and have a thirst to learn, and to improve. Achieving the best outcomes is not easy and often requires the courage to face difficult choices, to speak up, and to be open to new ideas. And remember, whatever the strength of the individual, as one team, you will accomplish more together.
What are your hobbies? How do you spend your time off duty?
I enjoy the many things that a resident of this great city of London has on offer. I would particularly point to my sporting interests of cricket, rugby and golf and to balance it, opera and the theater!
What do you usually do to break the ice when dealing with business partners?
If we have a common purpose and goal, there is no need to break the ice. I always try to create the kind of environment that I would if I were hosting friends, to make people feel comfortable and at ease.
What’s your impression on working with Chinese people?
I would like to tell you a story of my personal experience to describe my impression of working in China and with Chinese people. Ten years ago, when I was the CEO of Air BP, I attended an inauguration ceremony for a major airport in China. A key event at the ceremony was to welcome the passengers on the first plane that landed at the airport. I was expecting the passengers to be political and business leaders. It turned out to be the workers who constructed the airport getting off the plane, whom we all then welcomed and celebrated! It has been an image and lesson that has stayed with me all these years.
When did you first travel to China? How often do you come to China now?
I have been visiting your great nation since 1997. I visit around three times a year, and each time I am positively amazed by the extraordinary developments that I see in the places that I visit.
What kind of books do you like to read?
I like reading historical books and biographies and do as much as I can, in between travel and keeping up with the corporate papers!