Trading Statement

BP PLC
02 July 2004

July 2, 2004

                     BP Second Quarter 2004 Trading Update

This trading update is aimed at providing certain estimates regarding revenue
and trading conditions experienced by BP in the second quarter ending June 30,
2004, and certain identified non-operating items expected to be included in that
quarter's result. The second quarter margin, price, realisation, cost,
production and other data referred to below are currently provisional, 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 July 27, 2004. 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.

Resources Business : Exploration and Production

Marker Prices                            2Q'04   1Q'04     4Q'03     2Q'03

Brent Dated ($/bbl)                      35.32   32.03     29.43     26.03

WTI ($/bbl)                              38.28   35.30     31.15     29.02

ANS USWC ($/bbl)                         36.99   34.22     29.43     27.04

US gas Henry Hub first of month index
($/mmbtu)                                 6.00    5.69      4.58      5.40

UK gas price - National Balance Point
(p/therm)                                20.70   24.59     27.30     17.44

Overview : Exploration and Production

Overall BP production in 2Q'04 is expected to be around 3,950 mboed, up by some
17 per cent from 3,366 mboed in 2Q'03, but down by 2 per cent from 4,016 mboed
in 1Q'04. Average production for 2004 as a whole is expected to be over 4 mboed,
an increase of more than 10 per cent compared to 2003, as indicated in BP's
Strategy Presentation on 29 March 2004.

Profit centres excluding Russia:
Production in 2Q'04, excluding volumes from our Russian operations, is expected
to be approximately 3,060 mboed, compared to 3,253 mboed in 2Q'03. The decrease
relative to 2Q'03 is due primarily to divestments. 2Q'04 production is expected
to be below the 1Q'04 level of 3,184 mboed due to lower seasonal gas takes in
the North Sea; planned maintenance in Alaska, the Middle East and North Sea;
plus unplanned shutdowns at the Mars platform in the Gulf of Mexico and in
Trinidad, which impacted production by around 35 mboed.

Relative to 1Q'04, liquids realisations moved in line with marker prices.
Relative to 1Q'04, gas differentials in North America moved in line with the
Henry Hub marker, but gas realisations in the UK decreased significantly from
1Q'04 due to seasonality. Costs rose relative to 1Q'04 due to seasonal
maintenance activity, and planned revenue investment in well work and seismic.
The 2Q'04 impact of Unrealised Profit in Stock (UPIS) is expected to reduce
earnings by approximately $70m.

Russia

Production in mboed             2Q'04*    1Q'04       4Q'03       2Q'03**

TNK-BP: Oil                      813       766        669         631

TNK-BP: Gas                       77        66         51          46

Marker Prices

Urals (NWE - cif) ($/bbl)       32.43     29.01       27.90        24.10

Urals (Med - cif ) ($/bbl)      32.71     28.98       28.00        24.18

Domestic Oil ($/bbl)            19.79     17.08       17.21         7.44

* as at 25 June

**BP's acquisition of its 50 per cent share in TNK-BP was completed on August
29, 2003. BP completed the deal to include Alfa Group and Access-Renova's
(AAR's) 50 per cent interest in Slavneft into TNK-BP on January 16, 2004.
Production information for prior periods is shown for comparison purposes only.
In 2Q'04, BP's net share of production from TNK-BP is anticipated to be
approximately 890mboed, as shown in the table above. 2004 information includes
TNK-BP's interest in Slavneft (2Q'04: 106 mboed of which 103 mboed oil / 3 mboed
gas , 1Q'04: 89 mboed of which 86 mboed oil / 3 mboed gas).

During 2Q'04, Urals marker prices broadly tracked the rise in Brent. Domestic
oil prices increased by $2.71/ bbl relative to 1Q, as additional export capacity
in Russia is supporting a rise in domestic prices.

Customer facing Businesses

   •Refining and Marketing

Refining Indicator Margins ($/bbl)
                                           2Q'04    1Q'04    4Q'03    2Q'03
USA
- West Coast                                15.41    8.06     6.09     6.34
- Gulf Coast                                 9.18    6.92     3.53     3.59
- Midwest                                    9.01    4.67     2.89     4.73

North West Europe                            5.29    2.73     2.21     2.15

Singapore                                    2.80    3.42     2.20     0.66

Refining Global Indicator Margin* ($/bbl.)   7.89    4.62     3.14     3.27

*The refining Global Indicator Margin (GIM) is a weighted average based on BP's
portfolio. Actual margins may vary because of refinery configuration, crude
slate and operating practices.

During the second quarter, refining indicator margins reached new highs. Because
of product spread movements and higher energy costs not reflected in the
indicator margin calculation, these indicator margins are not an accurate guide
to the actual margins experienced by BP in 2Q'04. The actual margin gains
realised by BP's refineries are expected to be significantly below those
indicated by the change in the Global Indicator Margin. Retail margins were
under pressure from rises in crude prices and product costs for much of the
quarter, but recovered as the quarter closed. Higher marketing expenses
reflected new fuels product launches in Germany and Austria, and in the
continued development of new lubricants offers.

   •Petrochemicals

Weighted Chemicals Indicator Margin ($/te)

2Q'04            1Q'04              4Q'03                 2Q'03

n/a              125                 109                   134

*The Chemicals Indicator Margin is a weighted average of externally-based
product margins. It is based on market data collected by Nexant (formerly 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.

BP petrochemical margins and sales volumes improved from 1Q'04. However compared
with 2Q'03, higher product realizations continue to be more than offset by
foreign exchange pressures in Europe, higher energy costs, and increased
feedstock prices.

Gas, Power and Renewables

Gas marketing margins are expected to be lower than 1Q'04 in North America and
in the LNG business, offset by NGL margins which are expected to be higher than
those in 1Q'04.
Identified non-operating items

In 2Q'04, non-operating items are expected to include a loss of around $115m
pre-tax relating to the sale of certain upstream assets, and an impairment
charge of $165m pre tax in respect of a gas asset in the USA and a field in the
Gulf of Mexico Shelf.

Interest Expense

We expect interest expense to be broadly unchanged compared with 1Q'04.

Tax Rate

The effective tax rate for the quarter is expected to be around 35 per cent.

Gearing

Gearing for the quarter is expected to remain below the bottom end of our target
25-35 per cent band.

Share Purchases

During the quarter the company bought back for cancellation 225m shares for a
total consideration of $2bn. Year to date the equivalent figures are 380m shares
and $3.25bn respectively. Shares in issue as at June 28, 2004 were 21,794
million. BP has entered into an arrangement that will allow it to continue the
share buy back program during the close period commencing July 1.

Rules of Thumb

The following rules of thumb can be used to estimate the impact of changes in
the trading environment on BP's 2004 full yearpre-tax earnings. These rules of
thumb are approximate. In particular the impact of large movements in the
trading environment relative to that of 2003 may differ from those implied by
the rules of thumb. Many other factors will affect BP's earnings quarter by
quarter. Actual results in individual quarters may therefore differ
significantly from the estimates implied by the application of these rules.
Particular differences may arise between GIM and BP's realized refining margins
due to crude price levels and differentials, product price movements and other
factors.

2004 Operating Environment Rules of Thumb : pre tax per year

                                                           Full Year

Oil Price                                                    $570m

Brent +/- $1/bbl

Gas - Henry Hub +/- $ 0.10/mcf                               $110m

Refining - GIM +/- $ 1/bbl                                  $1120m

Petrochemicals - CIM +/- $10/te                              $200m

- ENDS -



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