AGM Statement

BP PLC
15 April 2004

April 15, 2004

ADDRESS TO SHAREHOLDERS AT THE ANNUAL GENERAL MEETING OF BP p.l.c. ON APRIL 15,
2004 BY PETER SUTHERLAND, SC, CHAIRMAN, AND LORD BROWNE, GROUP CHIEF EXECUTIVE

Introduction by Peter Sutherland

Good morning ladies and gentlemen. Welcome to our 95th Annual General Meeting.
We appreciate your presence here today. I am Peter Sutherland. Seated on the
stage with me in the front row, on my left, are John Browne, group chief
executive; Byron Grote, chief financial officer; and Walter Massey, chairman of
the Ethics and Environment Assurance Committee

To my right, in the front row, are David Jackson, our company secretary; Ian
Prosser who is deputy chairman, chairman of the Audit Committee and our senior
independent director; and Robin Nicholson, chairman of the Remuneration
Committee.  Unfortunately, our newest director, Antony Burgmans, cannot be with
us today due to an engagement which was arranged prior to his appointment as a
director. Antony has asked me to send his apologies to the meeting.

All the other members of the Board are on the stage with us. Joining us for the
last time are Floris Maljers and Dick Olver. Floris will retire at the close of
the meeting. Dick will stand down on July 1, 2004 when he takes the chair at BAE
Systems plc.

We are very sorry to lose Dick. He has had an excellent career with BP over some
30 years. In the early part of his career, he worked on a number of significant
oil, gas and refining projects worldwide. More recently, he has taken a number
of senior roles in the group, among them chief of staff and head of our
Corporate Strategy. He became chief executive of Exploration and Production in
1988 and last year was appointed the Group's deputy chief executive.
He has made a great contribution to our company and its development both
personally and professionally. I am pleased to say that he has agreed to become
a director on the Board of TNK-BP, our Russian joint venture taking up the
office of deputy chairman. I am personally delighted that he will continue to
work with us in that role. I would ask you to join the Board and myself in
wishing Dick and Pam well.

I would also like to pay special tribute to Floris Maljers. Floris joined the BP
board in 1998 at the time of the merger with Amoco. Over these years Floris has
had a significant presence on the Board, bringing a continental European focus
which has enhanced our discussions. His wisdom has been particularly beneficial
to the Ethics and Environmental Assurance Committee, whose role has developed
and widened over time. I am sure that you will join the board and myself in
thanking Floris and wishing him and his wife, Henneke, all the very best for the
future.

BP had a strong year last year. We are helped by consistently high oil prices
which to date have shown no indication of falling. John Browne, our chief
executive, will review the past year in more detail when we consider the Annual
Report and Accounts later in the meeting.

There are a number of issues upon which I would like to comment briefly before
we move to the main business of the meeting.

Our goal, as a Board, is to maximise the value that we create for you, the
shareholders, over the long term. You are able to realise that value through, we
hope, an increase in our share price and through dividends and other
distributions that we make.

We report to you quarterly and have done so for over a decade. Dividends are
also declared quarterly and have been denominated in dollars since 1998 when we
merged with Amoco. The oil business is a dollar business. As we report in
dollars we believe that it is the correct course for our dividends to reflect
this.

As you know we announce a sterling equivalent to the dollar dividend and I
appreciate that the weakness of the US dollar over the past year or so has lead
to our UK shareholders not receiving the full benefit of the increases that we
have recently made to the dividend.

However, in periods of a strong US dollar, which we experienced in 2000 and
2001, the sterling dividend growth was 12 per cent, well over the 3 per cent and
7 per cent growth experienced by shareholders who receive US dollar dividends.
Over the past five years, since moving to US dollar based accounts, our dividend
has grown an average 5 per cent a year in both Sterling and US dollar terms.

In reviewing dividend policy and determining the dividend each year, your Board
is mindful of its current intentions, which, subject to performance and market
considerations, are to continue to grow the dividend level. As was recently
announced, we also intend to distribute all cash flows in excess of operating
investment and dividend needs to shareholders using the mechanism of share
buybacks as long as the oil price remains above $20 per barrel.

When I spoke to you last, I reflected on a number of the events that were taking
place in the world stage. Two thousand and three proved to be a turbulent year;
but a year when BP emerged as a truly global enterprise. This represented the
culmination of the integration of all of these businesses that had been acquired
over the previous four or so years.

It was a year in which we consolidated our portfolio of assets. These assets, in
which we are making a substantial investment, allow the Company to look forward
with some confidence.

The challenge for the Group in the coming years is to exploit the advantages
open to it from this excellent asset portfolio, and to make the most of the
strategic positions that it has established in many markets. In doing so, we
believe the scale of our operations worldwide form a solid base from which we
can not only sustain but enhance shareholder value.

The TNK-BP joint venture is the prime example of the type of transaction in
which the Group must be involved in the future if it is to continue to gain
first mover advantage.

In this new phase of the Company's strategy, the monitoring role of the Board
and its Committees is vital - assessing the opportunities and risks confronting
the Group and the internal controls being applied to manage and exploit them.
However, in ensuring meaningful oversight, we must recognise the need for the
executive team to be free to exercise judgement and display an entrepreneurial
fleetness of foot - so essential to the business of a company of our scale.

The Group's business brings it into contact with many different societies and
peoples in many parts of the world. There is also oversight from numerous
regulatory authorities and those who represent the interests of the people who
are affected by our operations. We recognise that it is essential for us to be
responsive to those with whom we come into contact, in discharging our overall
responsibility to you, our owners, to protect and enhance the long-term value of
the Company.

This past year has seen the implementation of a number of initiatives on both
sides of the Atlantic influencing the way in which companies are governed. Some
years ago, BP adopted a principled approach in implementing a series of
governance policies to delineate the role, authority and accountability of the
Board and the executive management of the Group. We have reported to you
annually on this topic. These governance policies are well embedded into our
culture and ensure ready compliance with many new regulatory developments in
this area.

The work of the Board has been particularly challenging over the past year.
Recently there has been considerable focus upon the manner in which companies in
our industry report on their reserves.

This is a complex topic, but one over which you as shareholders may, in the
light of press comment, have concerns.

Your Board, principally through the Audit Committee, has kept this matter under
review and has reviewed with the Executive Management, BP's approach to this
issue.

On the basis of that review, we are satisfied that there are appropriate
processes in place within the Group to estimate the proved reserves that we
report to you, our shareholders.

More broadly, in the area of Corporate Governance we have seen the introduction
of the revised Combined Code in the UK and the implementation of Sarbanes-Oxley
in the US. These are important initiatives and we have responded appropriately.

In our governance report we have set out not only how we will approach
compliance with the requirements of the Combined Code but also our succession
plan for the non-executives on the Board. We have to balance the need to refresh
Board membership with the requirement that we have directors of sufficient
experience who can man and attend our various committees.

BP is in a business with a long-term project development cycle with investments
coming to fruition over an extended period. In these circumstances, the Board
believes that it is strongly in the interests of shareholders that a number of
non-executive directors have long-term experience of the business.

Much of the work of the Board takes place in the committees, which have an
increasingly heavy workload. We have, in our governance report, given an insight
into the work of these committees. We intend to build on this in the coming
year.

Annual re-election is now proposed in the Combined Code for directors who have
served on a Board in excess of a particular period. We have decided that our
optimal approach is for all of the Board to offer itself for re-election
annually. This will enable our shareholders to be given an opportunity for them
to show their support for the Board each year. We have a resolution today which
amends our Articles to facilitate this.

We will continue to keep developments in this area under careful review and
respond as practice develops.

Remarks by John Browne

Ladies and Gentlemen, good morning. It is a very great pleasure to see so many
of you here, in particular former employees and members of our various Pension
Funds.

This morning, I am going to talk about only four things:

   • Firstly, about what we did in 2003;

   • Secondly, looking ahead and talking about our unchanged strategy to
     create long-term shareholder value for this decade and beyond;

   • Thirdly, explaining our thinking behind dividends and the distribution
     of excess free cash flow to shareholders, by way of share buybacks;

   • And finally, reviewing our approach to building a sustainable Group, a
     crucial underpinning to the generation of long-term shareholder value. This
     is covered in much more detail in our Sustainability Report, copies of 
     which are available to you here.

So first let's look at the year 2003. For us, it was another good year, despite
the challenges presented by a weak global economy, the war in Iraq, the security
implications of terrorism and increasingly complex regulations, particularly
coming from the US. BP rose convincingly to all these challenges and achieved
one of the strongest performances in our history.

Our financial result was up by over 40 per cent to $12.4 billion. Our pro-forma
return on average capital employed rose from 13 per cent to 16 per cent,
reflecting improved margins and very disciplined management.

This was achieved against a backdrop of strong oil and gas prices. Underlying
oil demand increased as the world moved out of recession and as China's strong
economic growth continued.

Let me now pull out some highlights of the year:

   • We closed our TNK-BP deal, giving us 50 per cent of the third largest
     oil producer in Russia - a country that is the world's most significant
     producer of hydrocarbons, both today and for tomorrow;

   • We more than replaced our production with new proved reserves. Overall,
     we replaced over 120 per cent of the oil and gas we produced. We made new
     discoveries in Egypt, Angola and the deepwater of the Gulf of Mexico;

   • We produced around 3.6 million barrels a day of oil and gas, in line
     with our expectations;

   • We continued to expand our presence in the important LNG market by
     producing over 40 per cent more LNG from our equity gas than in 2002;

   • We completed the steps to integrate Veba into the BP Group achieving
     synergies and cost savings well in excess of those we had originally
     expected. Veba gives us a leading market share in oil products in Europe's
     largest economy;

   • Globally, our oil products and convenience sales grew significantly and
     profitably;

   • And in North America, we were the leading wholesale gas marketer.

Our improved result was founded on cash flow from operations which rose by 25
per cent to over $24 billion pre-tax. In addition, we generated over $6 billion
pre-tax from divestments.

How did we use this cash flow? We set aside around $2.5 billion to strengthen
our various Pension Funds. Some $14 billion was devoted to organic capital
expenditure; 70 per cent in the upstream and 30 per cent in our customer-facing
businesses. We spent $2.6 billion on acquisitions, chiefly the cash part of the
payment for our share of TNK-BP. We paid $5.7 billion in dividends - which rose
in dollar terms by $0.4 billion or 8 per cent. And we devoted $2 billion to buy
back our shares. Those are the headlines.

The story of 2003 was about maintaining the strength of the assets we have
presently in service - while laying in the investment, and the human and
organisational capability for the future.

And that brings me to our future. The strategy we have established over a number
of years is proving to be very effective. It is delivering results, and
positioning us well for sustainable growth.

We believe that the strategy gives us the strength to manage through the
inevitable volatility of energy markets and the capacity to deliver
progressively improving returns.

Our strategy in the E&P segment is to build production with steadily improving
underlying cash returns by investing in the largest, lowest cost, new
hydrocarbons developments and managing the decline of our more mature producing
fields. In the customer facing businesses our aim is to increase the flow of
cash by building on the relationships we have with our customers and maintaining
cash returns despite intensive competition. In both cases we are on track.

Over the last few years, we have invested heavily in the customer facing
businesses. The mergers and acquisitions of the last five years have brought us
a set of great market positions, brands, people and skills which enabled us, for
the first time, to consider developing the full potential of the customer facing
side of the Group. During that period we re-invested all the cash flow generated
by these businesses. That phase is now largely complete and we can now focus on
the generation of free cash flow by capturing margins and controlling costs.

Then on the E&P side, including TNK-BP in Russia, our production of oil and gas
is set to grow quite strongly to the end of the decade. Production in some of
the mature areas such as the North Sea will inevitably decline but the
developments in our five new profit centres, including Trinidad, Angola, the
Caspian and the deep water of the Gulf of Mexico are all on schedule, with new
fields due on stream in 2004 and 2005.

As a result of these projects, the capital we are investing now will start to
produce a growing stream of revenue, the requirement for new capital will be
reduced to a more stable level and cash returns will be growing.

The result is that there will be significantly more cash available for
distribution.

We want to continue with the progressive dividend policy to which Peter
referred. In establishing the level of dividend we use discretion but are guided
by several considerations, including:

   • Firstly, the actual prevailing circumstances of the Group, including its
     cash flow, indebtedness and results;

   • Secondly, the future expected results for the Group, at underlying
     conditions;

   • Thirdly, the effect of circumstances which may require our view of the
     world to be modified;

   • And lastly, our track record of dividend growth which has been 6.8 per
     cent per annum since 1999, the year in which we started to announce our
     dividends in dollars.

Importantly, these considerations are examined within a broader context of our
approach to long-term shareholder value creation based on cash returns.

In periods of high oil prices such as the one we find ourselves in today, the
Group generates significant 'excess free cash flow' after capital expenditure
and dividends. Rather than using this cash to reduce debt below our long
standing target gearing levels, we are committed to the return of 100 per cent
of this excess free cash flow to our investors, for as long as oil prices remain
above $20 a barrel, all other things being appropriate. While it is possible
that some of the 'excess' might be used, for example, for material acquisitions
if we saw opportunities which fitted our strategy, we see no such opportunities
at present.

Our plan is to continue, subject to your approval and to market conditions, our
programme of share buybacks. Since the completion of the Arco acquisition in
2000 until the end of 2003 we had bought back some 775 million shares for $6
billion, reducing the number of shares in issue by 2.5 per cent.

In February, we restarted our share buyback programme and as of yesterday we had
bought back $1.3 billion of shares - nearly 161 million shares - this year.

The amount which we will distribute in the future will depend on, amongst other
things, the Brent oil price. Our current expectation is that oil prices will be
somewhat higher than $20 a barrel and, if this turns out to be the case, we
intend to make additional share buybacks this year.

I want to give you an illustration of the potential amounts of cash which could
be distributed by way of dividends and buybacks by looking at what we actually
distributed over the three years since the start of 2001, and what might be
possible in the three years to the end of 2006, at different oil prices.

The average oil price over 2001 to 2003 was similar to that used in a $25 a
barrel case. However, in this case the cash available for distribution is
expected to be higher than over 2001 to 2003 since capital expenditure is
reduced and the capital which has been invested starts to produce revenue. I
stress that these are calculations of potential, all other things being
appropriate.

I want to repeat our intent, which is to distribute one hundred per cent of all
excess free cash flows to shareholders. All of this is part of our determination
to provide shareholders with additional returns through disciplined cash flow
management.

Finally, let me talk about some other dimensions of making your company
sustainable for the future.

BP is of course a long-term company. The investments we are making today are not
just for this decade but for the longer term.

In addition to our proven reserves of around 18 billion barrels of oil
equivalent, we have access to over double that amount in non-proven reserves. We
continue to make discoveries and to add new oil and gas developments to our
portfolio.

And it is not only oil and gas production which forms the foundation for the
future. Our mergers and investments over the last five years have positioned us
well in the customer facing businesses and we see the capture and retention of
customers as a source of enduring value.

So we are a long-term enterprise and that means that we have a direct interest
in the long-term issues which could affect our business, and in the health and
prosperity of the countries in which we work.

That is why we believe in safety and in the protection of the environment. Our
track record on safety has improved over the years, though there is always more
to do. On the environment, we have progressively improved the quality of our
products and reduced the environmental impact of our operations and activities.

And as well as those immediate improvements, we continue to focus on the
long-term challenge of climate change - identifying the numerous ways in which
action can be taken to mitigate the risk and to keep emissions of greenhouse
gases below the level at which sustainability would be under threat.

In everything we do, we are committed to the development of people.

Our guiding principle is merit and inclusion so that everyone can fulfil their
potential. BP has some of the best technology in the world, some excellent
brands and a very strong resource base.

All of those things, however, are only made valuable by our people. The results
I have described are the product of the work of 104,000 people around the world.
They form a great team. It is a great privilege for me to lead this team. We are
determined to sustain its quality, drawing on talent from all the countries in
which we operate.

Companies like BP are clearly beneficiaries of open global markets. But we
cannot take them for granted. I believe we have a direct interest in ensuring
that the process of globalisation benefits as many people as possible - by
bringing them opportunities which would not otherwise have been available.

We also want to ensure that the benefits of the wealth we create reach as many
people as possible. That is why we are committed to transparency in everything
we do - declaring what we pay, and eliminating facilitation payments. Corruption
is an enemy of genuine business development because wealth is diverted. It isn't
a problem we can solve on our own - but we are determined to do what we can in
the interests of the countries in which we work.

We also recognise that the products we supply are vital to the world. They
provide essential income to producing countries as well as a crucial source of
energy to consumers. The world is going to need more oil and gas over the next
two decades. As the second largest private company in the sector we recognise
that we have a significant role to play in maintaining energy security -
investing in a diverse range of supplies which will help to enable consumers to
avoid a degree of dependence on a single region or country.

Energy security will only be maintained if investment flows and infrastructure
are in place, and that in turn depends on open markets. Trade has sustained the
development of the global economy over the last half century and we believe that
an open trading regime is not only good for our business, but essential if the
energy needs of the world's growing population are to be met.

So, in summary - a good year, with the prospect of more good years ahead. BP's
performance continues to improve and we believe we have the assets, markets,
technology and the people necessary to sustain that improvement for many years
to come. The world's expectations of BP are high and we are determined to fulfil
those expectations.

- ENDS -



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