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BP chief defends green energy record

"BP chief defends green energy recordChief executive Tony Hayward denies firm has turned its back on renewables
as it reports massive slump in profits caused by fall in oil price.(By David Teather via guardian.co.uk)BP chief executive Tony Hayward today defended the company's record on
renewable energy, as it reported a dramatic slump in profits for the latest
quarter due to the decline in oil prices.Hayward said it was ""not true"" that the oil firm had turned its back on the
alternative energy industry, despite the recent closure of separate offices
for the division and the decision to pull it into the main headquarters. He
said the company would invest between $500m and $1bn this year and was on
track to exceed the $8bn (£5bn) of investment it pledged over 10 years in
2005. But he reiterated that the money would be more clearly focused, and
mostly outside Britain – bemoaning the lack of available land for wind
power and the difficulty in gaining planning permission.""We established the alternative energy business in 2005 with the purpose to
explore options, which we did,"" he said. ""It was now right to look at the
array of options before us, and to step back and say 'What can make
commercial returns? What could be material to BP? And, frankly, what would
have some synergies with the existing business?' It is a perfectly
reasonable way of proceeding.""The company is concentrating on four main areas: biofuels, chiefly in
Brazil; carbon capture and storage in the US and Abu Dhabi; solar power –
where manufacturing has been shifted to India and China; and wind, in the
US.""We have focused on onshore wind power in the US, because you can do it at
scale,"" he added. ""We have a wind farm in Texas the size of Berkshire,
which would be rather difficult in the UK, and it gives us economies of
scale. It is very challenging to do onshore wind in this country because of
scale and permitting issues."" BP has interests in six large wind farms in
the US, producing 1 gigawatt of power – enough to supply a medium city. The
company later said the largest farm is at Fowler Ridge in Indiana, which is
being expanded to 350 turbines producing 600MW.BP reported second quarter profits of $3.14bn, a drop of 53% on the same
three months a year earlier.The business said it had managed to reduce costs by $2bn in the first half
of the year, cutting 5,000 jobs in the process, and that it now aimed to
exceed targets by taking another $1bn out of the business before the year
end. But Hayward said there were unlikely to be any more large-scale job
losses, with further cuts coming from third parties and deflation in the
supply chain. ""We have done the vast majority of everything we expected to
do,"" he said.The company would not be taking the axe to its dividend, he added,
describing it as ""sustainable at this point in time"".Hayward reiterated his view that a price of $60 to $90 for a barrel of oil
was ""a sensible range"", although he acknowledged that the price was likely
to hover near the lower end of that range for the near future. The price
reached highs of $147 last year and slumped to as little as $35 a barrel.
It is now hovering in the mid-60s. ""We see little evidence of any growth in
demand and expect the recovery to be long and drawn out.""The company said production of oil and gas rose 4% in the quarter compared
to last year, the equivalent of 4m barrels a day, as new fields were
exploited. Hayward said he hoped to finalise a deal to develop the Rumaila
oil field in Iraq later this year. The Iraqi oil field is the third or
fourth largest in the world, depending on the measure, with 65bn barrels of
oil in place.There were suggestions from environmental groups this week that the world
might soon face a peak in oil demand as governments grow more concerned
over climate change, energy security and the economic damage wrought by
volatile oil prices. But Hayward dismissed the scenario. ""I don't see it
coming anytime in "