Statement re IFRS

BP PLC
14 March 2005


March 14, 2005

                  BP DETAILS 2005 FINANCIAL REPORTING CHANGES

BP today detailed the changes it is making to its external financial reporting
for 2005, and the impacts these are expected to have on its reported results.

As previously indicated in its strategy update in February this year, in 2005 BP
is moving from reporting under UK Generally Accepted Accounting Principles (UK
GAAP) to the new International Financial Reporting Standards (IFRS) and, as a
consequence, will also discontinue supplemental disclosure of results on a pro
forma basis. The company is also reorganising how it reports its businesses,
primarily as a result of its plans to divest its olefins and derivatives
business.

While some of these reporting changes will impact BP's reported earnings and
capital employed, they will have no impact on the economic value or the
underlying cash flow generated by the company. There will be no impact on the
cash available for investment or for distribution to shareholders and there will
be no changes in BP's strategy and targets.

Full details of the reporting changes and their impacts on BP's reporting will
be given in a presentation hosted by Byron Grote, BP's chief financial officer,
to be webcast today, accessible at www.bp.com/webcast .

The 2005 reporting changes fall into three main areas:

   • Re-segmentation: In preparation for the sale of its olefins and
    derivatives (O&D) business, BP has divided reporting of its petrochemicals
    operations between its refining and marketing segment and 'other businesses
    and corporate' (OB&C). These changes have no impact on BP's overall reported
    earnings and capital employed. Five years of historical data, for 2000 to
    2004, re-stated on this new re-segmented basis, are being made available on
    BP's website.


   • International Financial Reporting Standards: As for all UK-listed
    companies, IFRS is replacing UK GAAP as BP's primary reporting framework for
    2005. BP is also providing comparative data for 2003 and 2004 on an IFRS
    basis.

Restated 2004 earnings under IFRS are $15.4 billion on a replacement cost basis
(excluding inventory holding gains and losses) and $17.1 billion on an
historical cost basis (including inventory holding gains and losses). In each
case these earnings are $1.3 billion higher than under UK GAAP, principally due
to the absence of the amortisation of goodwill under IFRS.

Under IFRS, 2004 year-end capital employed is essentially the same as under UK
GAAP at $101 billion.

IFRS also expands mark-to-market reporting, potentially making future reported
earnings more volatile. The main impact of this relates to long-term UK North
Sea gas contracts that are priced relative to oil and electricity, rather than
gas indices, and contracts for the sale of natural gas liquids. BP will disclose
mark-to-market gains and losses on such contracts as a Non-Operating Item in our
quarterly Stock Exchange Announcements.

   • Pro forma reporting: BP introduced supplemental disclosure of pro forma
    results in 2000, reporting results before acquisition amortisation for the
    ARCO and Burmah Castrol acquisitions which was required under UK GAAP, to
    allow better comparison to other oil companies who reported comparable
    combinations under 'pooling of interest' or 'merger' accounting under US or
    French GAAP.

US GAAP, and now IFRS, have since prohibited pooling of interest accounting and
also eliminated goodwill amortisation on previous transactions such as the ARCO
and Burmah Castrol acquisitions, providing a clearer and more comparable
presentation of underlying business results.

As the IFRS income statement is now aligned more closely with the supplemental
pro forma disclosure, BP has decided, as announced at the February 2005 strategy
update, that pro forma reporting is no longer necessary and has therefore chosen
to discontinue it to simplify its financial reporting.

Due to the inclusion of goodwill on the balance sheet, capital employed under
IFRS is $11.6 billion higher than on a pro forma basis, reducing BP's gearing -
the ratio of net debt to net debt plus equity - by some 3 per cent at year-end
2004.

BP is therefore reducing its target gearing band - a key element of the
company's financial framework - from 25-35 per cent to 20-30 per cent to
maintain the economic substance of the financial framework. BP expects to
continue operating in the lower half of the band in the current price
environment.

Further details of all these changes will be available on BP's website following
today's presentation, including comparative data for 2003 and each quarter of
2004 and spreadsheets to assist investors in the updating of their financial
models. The presentation takes place at 14.00 GMT and can be accessed at
www.bp.com/webcast .

                                    - ENDS -




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