BP : p.l.c. Annual Report and Form 20-F

From IOC toIEC

International Oil Company

to Integrated Energy Company

bp Annual Report and Form 20-F 2023

Growingthe value of bp

Our destination is unchanged - we are transforming from an international oil company to an integrated energy company.

Investing in today's energy system, while helping build out tomorrow's - all in service of growing the value of bp.

We are confident in our strategy and plan to deliver this as a simpler, more focused and higher value company.

Our strategy

Our strategy is focused on three key areas of activity, which include our five transition growth engines. Our sustainability frame and the power of integration underpins and connects it all.

Resilient	Convenience	Low carbon
hydrocarbons	and mobility	energy
Oil and gas	Retail fuels
Castrol, aviation,
Refining
B2B/midstream
	Transition growth engines
Bioenergya	Convenience	Hydrogen
	EV charging	Renewables & power

Sustainability

Integration

Our strategy, page 12

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Online quick read

A concise summary of the bp Annual Report and Form 20-F2023, highlighting strategy, performance and sustainability information.

Glossary

Words and terms marked with are defined in the glossary on page 373

Task Force on Climate-related Financial Disclosures (TCFD)

Information that supports TCFD Recommendations and Recommended Disclosures in relation to Metrics and Targets is indicated with .

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All our bp corporate reports, including the Sustainability Report, the Net Zero Ambition Progress Update and the bp Energy Outlook.

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a Bioenergy includes customer-facing and midstream biofuels activities that form part of convenience and mobility.

2023 at a glance

As at 31 December 2023

Scale

87,800b

employees

(2022 67,600)

2.3

million barrels of oil equivalent

• upstreamproduction (2022 2.3mmboe/d)

21,100

retail sites

(2022 20,650)

Performance

$15.2bn

profit for the year attributable to bp shareholders

(2022 loss $(2.5)bn)

95.0%

bp-operated upstream plant reliability(2022 96.0%)

2,850

strategic convenience sites

(2022 2,400)

$5.78/boe

61

countries of operation

(2022 62)

>29,000

electric vehicle charge points

(2022 ~22,000)

$13.8bn

underlying replacement cost (RC) profit(2022 $27.7bn)

96.1%

bp-operated refining availability(2022 94.5%)

6.2GW

developed renewables to FID (net)

(2022 5.8GW)

Strategic report

Strategic report

2023 at a glance	1
About bp	2
Chair's letter	4
Chief executive officer's letter	6
The operating environment	8
Energy outlook	10
Our strategy in action	12
Consistency with the Paris goals	14
Our business model	16
Progress against our strategy	18
Key performance indicators	24
Our financial frame	28
Our investment process	30
Group performance	35
Gas & low carbon energy	39
Oil production & operations	42
Customers & products	44
Other businesses & corporate	46
Sustainability	48
Climate-related financial disclosures (TCFD)	55
How we manage risk	73
Risk factors	77
Compliance information	80
Non-financial and sustainability	80
information statement
Section 172 statement	80

Corporate governance

Introduction from the chair	82
Board of directors	83
Leadership team	86
Governance framework	88
Decision making by the board	89
Board activities	90
Our stakeholders	92
People and governance committee	94
Audit committee	98
Safety and sustainability committee	103
Remuneration committee	105

upstream unit production costs(2022 $6.07/boe)

Safety and sustainability

390.9

tier 1 and 2 process	million tonnes of CO2
safety events	equivalent - sustainable
(2022 50)	GHG emissions reductions
	(2022 1.5MtCO2e)
Key

Performance against our strategy, page 13

Key performance indicator, page 24

b This figure reflects new acquisitions including TravelCenters of America.

Directors' remuneration report	105
Other disclosures	133
Directors' statements	134

Financial statements

Consolidated financial statements of the bp group	137
Notes on the financial statements	169
Supplementary information on oil and natural gas	247
(unaudited)
Parent company financial statements of BP p.l.c.	275
Additional disclosures	335
Shareholder information	363
Glossary	373
Non-IFRS measure reconciliations	382
Signatures	385
Cross-reference to Form 20-F	386
Information about this report	387
Exhibits	387

bp Annual Report and Form 20-F 2023

1

About bp

We deliver energy products and services to our 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 purpose

Our purpose is reimagining energy for people and our planet. We want to help the world reach net zero and improve people's lives.

Who we are

'Who we are' defines what we stand for at bp, building on our best qualities and those things that are most important to us. It comprises three simple beliefs that can inspire each of us at bp to be our best every day.

Live our	Play	Care
purpose	to win	for others

Financial reporting segment performance

At 31 December 2023, the group's reportable segments were gas & low carbon energy, oil production & operations and customers & products. Each is managed separately, with decisions taken for the segment as a whole, and represents a single operating segment that does not result from aggregating two or more segments (see Financial statements - Note 5).

Gas & low carbon energya

Comprises our gas & low carbon energy businesses. Our gas business includes regions with upstream activities that predominantly produce natural gas, integrated gas and power, and gas trading. Our low carbon business includes solar, offshore and onshore wind, hydrogen and carbon capture and storage (CCS), and power trading. Power trading includes trading of both renewable and non-renewable power.

$14.1bn $8.7bn

replacement cost (RC) profit	underlying RC profit before
before interest and taxb	interest and tax
(2022 $14.7bn)	(2022 $16.1bn)
Segment performance, page 39

Our people at bp's Sunbury campus in Surrey, UK	Seagull oil and gas field in the UK North Sea
Our people, page 70	Resilient hydrocarbons, page 19

a The Azerbaijan-Georgia-Türkiye and Middle East regions have been further subdivided by asset.

• IFRS requires that the measure of profit or loss disclosed for each operating segment is the measure that is provided regularly to the chief operating decision maker. For bp, this measure of profit or loss is replacement cost profit before interest and tax, which reflects the replacement cost of inventories sold in the period and is arrived at by excluding inventory holding gains and lossesfrom profit before interest and tax. Replacement cost profit for the group is not a recognized measure under IFRS. For further information see Financial statements - Note 5.

2 bp Annual Report and Form 20-F 2023

Strategic report

Oil production & operationsa

Comprises regions with upstream activities that predominantly produce crude oil, including bpx energy.

$11.2bn		$12.8bn
RC profit before interest		underlying RC profit before
and taxb		interest and tax
(2022 $19.7bn)		(2022 $20.2bn)

Segment performance, page 42

Customers & products

Comprises customer-focused businesses, which include convenience and retail fuels, EV charging, as well as Castrol, aviation and B2B and midstream. It also includes our products businesses, refining & oil trading, as well as our bioenergy businesses.

$4.2bn		$6.4bn
RC profit before interest		underlying RC profit before
and taxb		interest and tax
(2022 $8.9bn)		(2022 $10.8bn)

Segment performance, page 44

Other businesses & corporate

Comprises innovation & engineering; bp ventures; launchpad; regions, corporates & solutions; our corporate activities and functions; and any residual costs of the Gulf of Mexico oil spill. It also includes Rosneft results up to 27 February 2022.

$(0.9)bn $(0.9)bn

RC loss before interest and taxb	underlying RC loss before
(2022 loss $(26.7)bn)	interest and tax
	(2022 loss $(1.2)bn)
Segment performance, page 46

Reconciling strategic pillars to our reportable segments

At 31 December 2023 the group's reportable segments were gas & low carbon energy, oil production & operations, and customers & products. We reconcile these to our business activities and strategic pillars in the table below.

Strategic	Gas & low	Oil production	Customers &
pillars	carbon energy	& operations	products
Resilient	Gas regions	Oil regions	Refining and oil trading
hydrocarbons	Gas marketing		Bioenergyc
	and trading
Convenience			Convenience
and mobility
			Fuels
			EV charging
			Castrol, aviation,
			B2B/midstream
Low carbon	Renewables &
energy	power
	Hydrogen

Denotes transition growth engine.

2023 progress against our strategy, pages 18-23 Financial segment performance in 2023, pages 35-47

The Gigahub at the NEC campus in Birmingham, UK	Construction of Peacock Solar in Texas, US
Convenience and mobility, page 21	Low carbon energy, page 22

c Includes customer-facing and midstream biofuels activities that form part of the bioenergy transition growth engine.

See glossary on page 373

bp Annual Report and Form 20-F 2023

3

Chair's letter

bp had a strong operational performance in 2023 and its strategy remains well suited to

the energy transition as it unfolds.

Dear fellow shareholders,

The past year has been positive in many respects, but it has been challenging too. From the ongoing complexity of the energy transition to economic uncertainty and market volatility. Add to that, across the world conflict has continued to touch many lives - and our thoughts are with all those who have

been affected.

I will start with safety - both physical and psychological - because it always comes first at bp and is fundamental in the board's discussions and decision making.

On behalf of the board, I would like to recognize the work by bp's teams on operational safety

• especially in achieving a reduction in the number of our most serious process safety incidents (page 24). However, three people died while working for bp and this is unacceptable.

Chief executive transition

If bp made progress on safety and had a strong operational and financial performance in 2023, there were challenges too, including the change in CEO in September. However, for me and for the board, the positive here was the effectiveness of our emergency succession planning, which allowed us to appoint Murray Auchincloss immediately as interim leader, and avoid a leadership vacuum. The robust and competitive recruitment process that followed, and his performance in that process, led the board to appoint him as CEO on a permanent basis at the beginning of 2024.

The board was in full agreement that Murray was the best candidate - but this was not just our view. We sought feedback from many stakeholders including our shareholders. It was very important to have this dialogue with so many of you and I want to thank you for your advice and support.

Murray has been at bp for more than two decades and he is deeply committed to the company and its people. He has a track record of performance, he knows how to bring out the best in a team, he was one of the chief architects of the strategy - and he knows the industry inside out. I say more about this transition on page 82.

I am grateful to my fellow board members for their support in this process. Their constructive scrutiny of candidates allowed us to make a decision that, we believe, is right for bp.

Murray's strategic vision and focus on performance will help bp to unlock even more of our potential to compete, win and grow the value of bp. With her strong finance leadership experience, the subsequent appointment of Kate Thomson as chief financial officer in February gives the board great confidence in what can be achieved in 2024 and beyond.

4 bp Annual Report and Form 20-F 2023

Strategic direction

This leadership transition marks a new chapter for the company, but not a new strategic direction.

This year, it has become even clearer that the world needs a better, more balanced energy system. One that is secure, affordable and lower carbon. bp's strategy to go from an international oil company to an integrated energy company is designed both to help build a better system and to create value for shareholders while doing so.

bp had a strong operational performance in 2023 and its strategy remains well suited to the energy transition as it unfolds. The global move to a lower carbon energy system is not straightforward and presents both challenges and opportunities for an energy company like bp. With global markets remaining unpredictable, flexibility will be important and the strategy allows for this.

Role of culture

As bp's business activities evolve, the strength of its culture is paramount. It builds trust within bp's teams, encourages better performance and helps bp to attract and keep the best talent.

A key aspect of this is its speak-up culture.

bp encourages everyone to raise any concerns they have, including when they see something they think is inconsistent with the code of conduct or is unsafe or unlawful. bp tools allow them to do this safely, securely, in confidence and without fear of retaliation (see page 72).

Closing thanks

Every day, bp teams continue to go to work on rigs, in our refineries, in offices, at sea, at our retail sites and at our solar and wind installations - to mention just some of bp's many areas of operation. I want to thank them all for the considerable progress bp made in 2023.

I also want to thank Paula Rosput Reynolds and Sir John Sawers for their distinguished service. Over almost nine years, Paula has been a valued member of the board, including roles as chair of the remuneration committee (Remco) and senior independent director (SID). I am pleased that Amanda Blanc will take on the role of SID and, for an interim period, Tushar Morzaria the role of Remco chair, both with effect from the end of our annual general meeting in April 2024. Sir John's considerable work since 2015 includes supporting our safety and sustainability committee and our people and governance committee - and he has been highly regarded as chair of our geopolitical advisory council. Both will step down at the end of our annual general meeting in April 2024.

I will close with a final thank you. As I look back at this year, one of the highlights for me personally has been my meetings with you, my fellow shareholders - this year more than ever. In a time of internal change and external uncertainty, I want to thank you for your advice, your belief in bp - and for your trust and support throughout.

Strategic report

$6.5bn

share buybacks announced from our 2023 surplus cash flow

$4.8bn

total dividends distributed to bp shareholders

Helge Lund

Chair

8 March 2024

See glossary on page 373

bp Annual Report and Form 20-F 2023

5

Chief executive officer's letter

Dear fellow shareholders,

Thank you for your support over the last year, especially during the period of leadership transition. It is an honour to lead your company as CEO.

Our destination is unchanged. We're moving from an international oil company to an integrated energy company - IOC to IEC. We're investing in today's energy system, which is mainly oil and gas, while building out tomorrow's. And we are focused on growing the value of bp.

Nearest IFRS-equivalent measures

$15.9bn

profit for the year 2023a

17.8%

profit for the year 2023 attributable to bp shareholders divided by total equity at 31 December 2023b

$52.0bn

finance debt at the end of 2023c

Safety first

Safety always comes first in everything we do. In 2023 three people lost their lives while working for bp - a contractor at bpx energy and two colleagues at our newly acquired TravelCenters of America business. We will never accept this as part of doing business. Our goal is the elimination of all fatalities, life-changing injuries and the most serious process safety incidents.

In 2023 we continued to make progress on process safety, but there is always more to do. We need to constantly reinforce and build on our operating culture across the business, rigorously applying our Operating Management System (OMS), embedding the Lifesaving Rules and living our Safety Leadership Principles. We are determined to keep building a safer bp.

A year of delivery

In 2023 we delivered a resilient operational and financial performance, with earnings (adjusted EBITDA) of $43.7 billiona and operating cash flow of $32.0 billion. This contributed to:

• Profit for the year attributable to bp shareholders of $15.2 billion.
• Underlying replacement cost profitof $13.8 billion.
• Return on average capital employed (ROACE)of 18.1%b.
• Net debtreduced to $20.9 billionc
  - its lowest in a decade.

In turn this has allowed us to deliver competitive distributions to our shareholders:

• A 10% increase in the dividend per ordinary share (compared with the fourth quarter of 2022).
• $6.5 billion in share buybacks from our
  2023 surplus cash flow.
• 17% reduction in issued share capital between the end of the first quarter of
  2021 and 31 December 2023.

We continue to maintain a disciplined financial frame. The strength of our underlying financial performance, the disciplined approach to strengthening the balance sheet over the last few years, and our confidence in our drive towards 2025 gave us the capacity to update the financial frame earlier this year. As we announced in February 2024, we have tightened our capital expenditure guidance and enhanced our share buyback guidance, all while continuing to prioritize a strong balance sheet and strong investment grade credit rating.

Strategic progress

We are four years into our journey from IOC to IEC. Our strategy is based on the judgement that oil and gas will be needed for decades, but that a global shift to lower carbon energy is well underway. Since the pace of that shift is uncertain we will continue to be flexible and pragmatic, responding to changing demand and societal need, as we did in February 2023.

Our strategic progress in 2023 included:

• Oil and gas production growth of 2.6%, underpinned by strong growth from bpx energy and good management of our base business.
• Strong underlying year-on-year growth in our convenience gross margin.
• EV charge pointsup 35% globally, energy sold up 150%.
• Biogas supply volumesup 80%, biofuels production up 18%.
• 21.1GW net growth in our renewables pipeline.
• 1.1mtpa net growth in our hydrogen pipeline.
• Completed the planned implementation
  of methane measurement approach across our operated upstream oil and gas assets.

a Adjusted EBITDA for the group is a non-IFRS measure and its nearest IFRS-equivalent measure is profit for the year 2023.

• ROACE is a non-IFRS measure and its nearest IFRS measures of numerator and denominator are profit for the year 2023 attributable to bp shareholders of $15.2 billion and total equity at the end of 2023 of $85.5 billion respectively.

c Net debt is a non-IFRS measure and its nearest IFRS-equivalent measure is finance debt at the end of 2023.

6 bp Annual Report and Form 20-F 2023

Improve safety and reduce emissions.

Strategic report

As we drive to 2025, we will focus on executing to deliver value.

Growing the value of bp

The last few years were about generating options. As we drive to 2025, we will focus on executing to deliver value. To guide that effort, we've set out six near-term priorities for bp. These are: to keep improving safety and reducing emissions. To make the company simpler and more focused. To become more efficient by putting technology and digitization at the heart of what we do. To progress our growth projects. To invest to maximize returns. All while maintaining our commitment to shareholder distributions.

bp is a great company. We have high-quality resources, outstanding science and engineering, strong partnerships, a world-class trading capability, and above all great people.

I believe very few companies can deliver what we offer. It's why I've never been more confident that we can win in this transition as a simpler, more focused and higher value bp.

Last but not least, thank you for your continued support, and a big thank you to the whole bp team for working incredibly hard in what was at times an uncertain year.

Murray Auchincloss

Chief executive officer 8 March 2024

Six priorities to grow the value of bp

1.

2. Drive a focus in the business on activities that create the most value.

1. Deliver the next wave of efficiency
   - including technology and global capability hubs.
2. Deliver the next set of growth projects that provide growth through to 2030 and beyond.
3. Optimize ROACE through disciplined investment allocation.
4. Grow shareholder returns.

Read more: page 29

See glossary on page 373

bp Annual Report and Form 20-F 2023

7

Energy markets

The operating environment

bp operates across volatile energy markets. Here we discuss broader economic trends we have observed that influence our sector as a whole.

Through 2023 energy markets and prices were volatile as demand and supply flows continued to adjust to post-COVID-19 recoveries in demand and disruptions caused by the Russia-Ukraine war. Concerns about energy security and emissions continued to boost renewables as the world transitions towards a lower carbon future.

Economic growth was uneven across regions, as past increases in energy prices and steep rises in interest rates had varying effects

in different countries.

Inflation rates fell significantly as the effects of past increases in food and energy prices on annual inflation eased. However, inflation across much of the world remained above central banks' targets, and a combination of squeezed incomes and the sharp tightening in monetary policy contributed to a below-average growth rate of around 3% for the global economy

in 2023.

Growth in advanced economies was 1.5%a, with weakness in the euro area contrasting with continued robust growth in the US.

Emerging economies grew by around 4%a, with China experiencing a rebound in growth to 5.2%a as it emerged from COVID-19 lockdowns. Expansion of other emerging economies was dampened by higher interest rates and weak demand for their exports.

Oil

Oil prices were elevated across much of 2023, supported by a combination of robust oil demand growth and OPEC production cuts. Brent averaged $83/bbl in 2023, down from $101/bbl in the previous year. Global oil demand grew by 2.3mmb/d to 101.7mmb/d in 2023b. The structural post-COVID-19 rebound of mobility (jet and gasoline), including a significant increase in Chinese oil demand of 1.7mmb/db, supported the well-above-trend growth.

A combination of official and voluntary cuts caused OPEC+ production to fall by 390kb/db in 2023, led by Saudi Arabia, which accounted for

1. 900kb/d contraction versus 2022b. However, these reductions were offset by strong growth in non-OPEC+ supplies, which increased by 2.3mmb/d in 2023b, with the US accounting for two-thirds of that increaseb.

Natural gas

A combination of a relatively warm European winter in 2022-23 and muted European gas demand caused European and Asian natural gas prices to fall early in 2023. Even so, European gas prices in 2023 were still double their 2015-2019 average levelc following the loss of the majority of Russian pipeline gas supply to the EU in 2022.

Asian liquefied natural gas (LNG) prices followed European gas prices lower in 2023, and moved back to trading predominantly at a premium to European prices in a reversal of the trend seen in 2022. The increased demand for LNG cargoes following the loss of Russian gas pipeline supply to the EU, combined with below-average growth in new LNG supply capacity in 2023, meant the global LNG market remained sensitive to supply risks, for example reacting strongly to potential outages in Australia.

In the US, Henry Hub (HH) gas prices averaged 61%d lower than in 2022 as the growth in dry natural gas production outpaced demand. Lower HH prices incentivized coal-to-gas switching in the power sector, and heightened demand for cooling during summer heatwaves helped to avoid storage congestion. US gas storage stocks were 13%e above historical average levels at the end of 2023. In response to the lower prices, the number of US gas rigs operating declined by a third from its peak

in 2022f.

Refining marker margin

We use a global refining marker margin (RMM) to track the refining margin environment. Global RMM fell from the record highs reached in 2022, when Russia's invasion of Ukraine caused significant disruption to refining operations and established trade flows. RMM values averaged $25.8/bbl, $7.3/bbl lower than in

2022g, mainly due to elevated refinery output, including as a result of new capacity additions.

Power and renewables

Total solar and wind capacity additions in 2023 were expected to have reached around 380GW (on alternating current basis), a record increase historically, and more than 100GW higher than in 2022h, with the increase driven mainly by China and solar photovoltaic (PV) deployment. The ongoing effects of the Russia-Ukraine war have increased countries' focus on their energy security, supporting greater deployment of renewable energy capacity.

Higher commodity prices, rises in interest rates and continued supply chain bottlenecks led to some increases in costs for solar and wind power in several countries. The offshore wind sector was particularly affected, and some projects were cancelled as their economic viability was eroded. However, we saw governments in many key offshore wind markets remain committed to achieving their offshore wind targets and developing their domestic offshore supply chains, providing continued support to the sector.

• IMF World Economic Outlook, October 2023 update. b IEA Oil Market Report, January 2024.
  c Platts Dutch TTF Day Ahead price. d Platts Henry Hub cash price.
  e Weekly Natural Gas Storage Report, EIA. f Baker Hughes Rig Count.
  g The RMM may not be representative of the margin achieved by bp in any period because of bp's particular refinery configurations and crude and product slates. In addition, the RMM does not include estimates of energy or other variable costs.
  h IEA Renewables 2023 report; PV capacity additions converted from DC to AC basis by dividing by 1.25.

8 bp Annual Report and Form 20-F 2023