BP plays down oil industry mergers

The recently-announced £47bn takeover of the business by BP rival Royal Dutch Shell has prompted speculation that a weakened BP could itself become a bid target.

At BP’s annual general meeting, shareholders pressed Mr Dudley over reports that it had baulked at buying BG itself a few years ago, and whether this was a mistake.

The chief executive said: “We are really happy with our portfolio.

“I think it is not the thing for BP to have done.”

Chairman Carl-Henric Svanberg played down the idea of more consolidation in the industry amid speculation about the likes of Exxon moving for BP.

He said: “It is not a given that if you take two oil majors and out them together you have enough synergies to make them stronger.”

The sector is under pressure because the price of oil has fallen by half since last summer, with BP also still counting the cost of 2010’s Deepwater Horizon blow-out.

The disaster, which killed 11 workers and spilled millions of barrels of oil into the Gulf of Mexico, has so far cost it $43.5bn (£29bn).

BP earlier this year said it was adjusting to the “new reality” of lower oil prices as it reported a 66 per cent fall in annual replacement cost profit for 2014.

It said it would cut investment this year by up to $6bn.

Mr Svanberg told the AGM: “The world has turned into a much more turbulent place.

“The price of oil has gone back to its old volatile ways after four years of relative stability.

“It may take a while before the supply and demand gets back in balance and we are not assuming any quick price recovery.”

Before the meeting, shareholders had been urged by advisory body PIRC to vote against Mr Dudley’s $15.3m pay package.

It had described the sum as “excessive” and said changes in the chief executive’s pay over the last five years were not in line with financial performance.“

Despite this, there were no questions from shareholders over Mr Dudley’s pay.

Shareholders overwhelmingly backed the award, with only 11 per cent voting against the remuneration report compared to 16 per cent last year.