Trading Statement

BP PLC
02 October 2002



October 2, 2002



BP 3Q'02 TRADING UPDATE



This trading update is aimed at providing an overview of the revenue and trading
conditions experienced by BP during the third quarter ending September 30, 2002.



The third quarter volume, expense, margin, throughput, sales, debt, tax rate and
other data referred to below are currently provisional and remain estimates of
likely outcomes, some being drawn from figures applicable to the first month or
so of the quarter. All such data are subject to change and may differ quite
considerably from the final numbers that will be reported on October 29, 2002.
The statement is produced in order to provide greater disclosure to investors
and potential investors of currently expected outcomes, and to ensure that they
all receive equal access to the same information at the same time.





3Q Headlines



•        BP's aggregate trading environment remained slightly above mid-cycle
during 3Q

•         Crude realisations are expected to be up around $1.70/bbl compared
with 2Q, although US gas realisations may be down around $0.35/mscf, in line
with regional movements

•         3Q'02 oil and gas production is expected to be up around 4% compared
to a year ago, with liquids contributing around 5%, and natural gas around 2%

•        The overall refining and marketing trading environment is expected to
be broadly similar to 2Q, with slightly lower refining margins and essentially
unchanged retail margins. Marketing volumes, including Veba, were at record
levels for the quarter.

•         The chemicals environment and volumes remain broadly flat compared
with 2Q

•         As indicated at the time of our Q2 2002 results, BP remains on track
to deliver $1.4bn in underlying pre tax performance improvement in 2002

•         $0.7bn in share buybacks were completed in the quarter.





Exploration and Production



Third quarter 2002 hydrocarbon production is expected to increase around 4%
versus the corresponding period last year. This forecast is below the 5%
expectation contained in our September 4 Outlook statement, primarily due to the
effect of Tropical Storm Isidore in the Gulf of Mexico.  As indicated on the
September 4, production in Q3 2002 was expected to be lower than planned owing
to a number of operational difficulties in the North Sea and North America
during the quarter: these are likely to have some knock-on effects into the
fourth quarter. Nonetheless 3Q liquids production is likely to grow around 5%
and gas production around 2% versus 3Q'01, reflecting new production from
Alaska, Deep Water Gulf of Mexico, Trinidad, Angola, and China; and from
deepening our position in Russia through our increased holding in Sidanco.



Full year hydrocarbon growth for 2002 is now expected to approach 4%, lower than
previously expected due to ongoing operational difficulties and the impact of
Tropical Storm Isidore. The principal uncertainties which could adversely affect
Q4 production include the outcome of the Gulf of Mexico Hurricane season, the
pace of resolution of recent operational difficulties in the North Sea, Alaska
and elsewhere, and a mild Northern Hemisphere winter.



Despite these operational difficulties in H2 2002, new projects continue to come
on stream broadly as planned. New projects that contribute to production in the
second half of the year include King, King's Peak and Trinidad LNG train 2 -
already in production - and Horn Mountain, Aspen, and Princess in the Gulf of
Mexico, all due to start production in 4Q. As indicated in our September 4
Outlook Statement, BP's medium term production target of a 5.5% compound average
growth rate between 2000 and 2005 remains unchanged.




                                                             3Q'02          2Q'02          3Q'01
Brent dated ($/bbl)                                          26.91          25.07          25.30
WTI ($/bbl)                                                  28.26          26.30          26.72
ANS USWC ($/bbl)                                             27.26          25.04          24.05
Gas Henry Hub first of month index ($/mmbtu)                 3.16           3.38           2.93
UK gas price - National Balancing Point (p/therm)            12.74          12.10          17.07





Average crude realisations are anticipated to be up by ca. $1.70/bbl compared
with the previous quarter, in line with the Brent marker. This rise in crude
prices is expected to result in a negative non-cash charge to operating profits
of around $60m in Unrealised Profit In Stock (UPIS), which compares with a
charge in 2Q'02 of $83m and a negligible UPIS effect in 3Q'01. 3Q'02 US gas
realizations are expected to fall by around $0.35c/mmbtu from their second
quarter level, a larger decline than the $0.22c/mmbtu decline in Henry Hub gas
prices, primarily driven by continued transportation capacity restrictions and
weak local demand in the Rockies region.



Exploration expense for the quarter is expected to return to a more normal level
of around $120m, compared with $220m in 2Q'02.



Gas, Power and Renewables



Third quarter gas marketing profits are expected to be substantially down versus
2Q as a result of lower margins in North America, reduced volumes and margins as
a result of the UK Interconnector shutdown, and the sale of BP's interest in
Ruhrgas. North American NGL margins were improved compared to 2Q.



Refining and Marketing



The overall third quarter 2002 refining and marketing trading environment is
expected to be similar to the second quarter 2002, with slightly lower refining
margins. The overall third quarter margin environment remains well below that of
the third quarter of 2001, due to significantly lower refining margins.



Refining margins are expected to be down about 4% from the second quarter 2002,
with stronger margins in Europe being more than offset by lower US refining
margins. Refining margins are expected to be down nearly 50% from the
exceptionally strong third quarter 2001 levels.





Global Indicator Margins ($/bbl)


                                   3Q '02      2Q '02      3Q '01

USA

 - West Coast                      3.54        4.46        8.17
 - Gulf Coast                      1.82        2.62        3.24
 - Midwest                         3.27        3.76        7.20
North West Europe                  1.28        0.59        1.74
Singapore                          0.47        0.18        0.75
Global Indicator Margin*           1.98        2.06        3.83





Refinery throughputs are anticipated to be up about 5% versus the second quarter
2002, reflecting higher refinery runs in Europe due to lower economic run cuts
and reduced turnaround activity. Compared to third quarter 2001 throughputs are
expected to be up 9% primarily due to Veba.



Retail marketing margins are expected to be essentially unchanged from the
second quarter. Compared with third quarter 2001, overall retail margins are
anticipated to be broadly flat, with increases in Europe offsetting decreases in
the US.



Product sales (retail and commercial) are anticipated to be up about 5% from the
previous quarter primarily reflecting seasonality. Compared with third quarter
2001 sales are expected to be up approximately 15%, primarily due to the Veba
acquisition.



Chemicals



Weighted Chemicals Indicator Margin ($/te)*

3Q'02                     2Q'02                     1Q'02                 3Q'01
N/a                       109                       80                     114


Overall, chemicals margins and volumes are expected to be broadly flat relative
to 2Q. The restructuring program continues to lower costs.




Debt/Balance Sheet



The Group's net debt gearing ratio on a proforma basis at quarter-end is
expected to be around 29%, up slightly on the 2Q level of 28.3%. The cost of the
purchase of the remaining 49% of Veba was largely offset by the receipt of
proceeds from the divestment of Ruhrgas.



Special/Exceptional Charges



Net special and exceptional charges are expected to be positive for 3Q and the
year. A gain of around $1.6bn on the Ruhrgas disposal in 3Q is expected to be
partially offset by post-tax impairment charges of around $700m.



Tax



The Group's effective tax rate for the third quarter on the pro forma result
adjusted for special items is expected to be around 34-35%, compared with 36% in
the second quarter. The reduction in the tax rate is due to higher tax credits
in the second half of the year, as well as the recognition of other permanent
tax difference benefits.



Stock Purchases



During the quarter the company repurchased 100 million of its own shares for
cancellation at a total cost of $745m. Shares in issue as at September 30 were
22,348 million.



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*The refining GlobalIndicator Margin is a weighted average based on BP's
portfolio.  Actual Margins may vary because of refinery configuration, crude
slate and operating practices.



*The Chemicals Indicator Margin is a weighted average of externally-based
product margins. It is based on market data collected by Chem Systems in their
quarterly market analyses, then weighted on BP's product portfolio. This is
described more fully in the Group's quarterly results releases.



Statements made in this Trading Update, particularly those regarding performance
improvement and production growth are or may be forward looking statements .
Actual results may differ from those expressed in such statements, depending on
a variety of factors, including: the specific factors identified in the
discussions accompanying such statements; industry product supply; demand and
pricing; political stability and economic growth in relevant areas of the world;
development and use of new technology and successful partnering; the actions of
competitors; natural disasters and other changes in business conditions; and
wars and acts of terrorism or sabotage.



- ENDS -


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