Trading Statement

BP PLC
2 July 2002



July 2, 2002



BP 2Q'02 TRADING UPDATE



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



The second 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 July 30, 2002. The
statement is, however, 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.





2Q Headlines

•        2Q'02 oil and gas production up around 5% on same quarter last year at
         over 3.5mmboe/d

•        Downstream and Chemicals volumes at record levels after full quarter of
         contribution from Veba acquisition.

•        BP's trading environment improved to around mid-cycle by the end of the
         quarter.

•        BP's liquids realisations rose around $4.00/bbl and BP's North American
         gas realisations were up ca.$0.60/mscf compared with 1Q'02, although
         both lagged the rise in marker prices.

•        Refining margins strengthened over 1Q'02 by around 25%, but remained
         well below mid-cycle conditions.  Retail margins recovered from the 
         depressed levels of 1Q'02.

•        Chemicals trading environment improved slightly relative to last
         quarter.



Exploration and Production



Second quarter total production is estimated to be up around 5% over the same
period last year at above 3.5 mmboe/d. The increase reflects continued build up
from projects commissioned last year and from the King field in the Gulf of
Mexico, which came on stream during the quarter. Output from these new projects
more than offset the impact of OPEC related quota restrictions, which restricted
production by around 20 mb/d compared to 2Q'01. Total production for 2Q 2002 is
also expected to be around 1% higher than last quarter, overcoming normal
seasonal decline factors. Output in 1Q 2002 was depressed by 100 mb/d due to
unusually mild weather, OPEC quota restrictions and asset disposals. Despite
this, full year production remains on track to grow at our target annual rate of
5.5% as many new projects, including King's Peak, Horn Mountain and Princess in
the Gulf of Mexico and Trinidad train 2 are due on stream during the second half
of the year.






                                                      2Q'02      1Q'02     2Q'01
Brent dated ($/bbl)                                   25.07      21.13     27.39
WTI ($/bbl)                                           26.30      21.54     27.88
ANS USWC ($/bbl)                                      25.04      19.76     26.05
Gas Henry Hub first of month index ($/mmbtu)          3.38       2.35      4.66
UK gas price - National Balancing Point (p/therm)     12.10      19.22     21.66



BP's average liquids realisations are anticipated to be up by ca. $4.00/bbl
versus the first quarter. Whilst BP's UK realisations have moved largely in line
with the Brent marker, BP's US realisations have lagged relative to WTI, as US
NGL prices rose by only around $1.80/bbl, compared to a $4.76/bbl rise in WTI.
In addition, the quarter on quarter rise in oil prices is expected to result in
a negative non-cash adjustment to operating profits of around $100m, reflecting
an Unrealized Profit In Stock (UPIS) on oil inventories.



Whilst Henry Hub (HH) gas prices have strengthened by $1.03/mscf versus the
previous quarter, BP's North American gas realizations are expected to be up by
around $0.60/mscf. This difference is due to widening regional differentials,
caused by short-term transportation capacity restrictions from the San Juan and
Rockies basins.



Exploration expenses for the quarter are expected to be over $100m higher than
1Q'02, mainly due to an $85m write-off relating to the Neptune discovery in the
deepwater Gulf of Mexico. BP relinquished the lease after concluding that the
discovered volumes did not rank highly enough in BP's portfolio of investment
opportunities.



Gas Power and Renewables



Gas marketing operating profits are projected to be similar to 1Q 2002. For the
quarter, improved marketing margins have been offset by declines in Ruhrgas and
the NGL business, both of which are impacted by the end of the heating season.



Refining and Marketing



The second quarter 2002 refining and marketing trading environment improved
significantly from first quarter 2002, which had been the worst environment in
both the US and Europe since 1992, but remained well short of the exceptional
environment of the second quarter 2001.



Refining margins are estimated to have improved by about 25% from the first
quarter 2002, with significant improvement across most geographic areas except
the US West Coast. However, this still leaves refining margins down about 65%
versus the second quarter 2001.



After beginning the second quarter 2002 at mid-cycle levels, refining margins
weakened to BP's bottom-of-cycle market conditions during May as high refinery
run rates led to a build of inventory, while light - heavy crude price
differentials narrowed, disadvantaging complex refineries. Margins then
recovered during June due to a reversal of these factors, alongside higher US
gasoline demand.





Global Indicator Margins ($/bbl)


                                   2Q '02      1Q '02      2Q '01

USA

 - West Coast                      4.46        5.43        9.11
 - Gulf Coast                      2.62        2.04        7.71
 - Midwest                         3.76        2.06        10.51
North West Europe                  0.59        0.09        3.35
Singapore                          0.18        0.21        0.96
Global Indicator Margin*           2.06        1.64        5.78



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



Refinery throughputs are anticipated to be up about 5% versus the first quarter
2002, reflecting the Veba acquisition that was effective in February and a
somewhat smaller turnaround programme: excluding Veba and the effect of
disposals, throughputs are expected to be up about 2-3%.



Retail marketing margins have recovered, particularly in the highly competitive
US market, from the depressed levels experienced during first quarter 2002,
which had been down about 45% from fourth quarter 2001 worldwide and 80% down in
the U.S. Gasoline demand increases and lower inventories have helped the
recovery. On average, BP worldwide retail margins are expected to be up about 5-
10% from the second quarter 2001.



Product sales (retail and commercial) are anticipated to be up about 6% from the
previous quarter due to the Veba acquisition that was effective in February.
Excluding Veba, product sales are expected to be up about 1% from the first
quarter, in line with our plans.





Chemicals



Weighted Chemicals Indicator Margin ($/te)*
 2Q'02                1Q'02                 4Q'01                2Q'01
 N/a                  96 (prov)             112                  105



Underlying demand for key products has improved this quarter in all regions and
production volumes should be around 7 million tonnes. Margins for many products
improved during the middle part of 2Q although generally margins still remain
some way below middle of cycle market conditions. PTA margins have improved
almost to middle of cycle in all regions and our monomers products have
benefited from markedly improved margins. The restructuring programme announced
last year is on track. All parts of our Plastic Fabrications businesses were
sold during the quarter.



*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.







Debt



The Group's net debt gearing ratio on a proforma basis at quarter-end is
expected to be around 30%, compared with last quarter's figure of 32%. This
reflects strong operating cash flows and disposals of Veba upstream assets and
other BP assets during the quarter.



Tax



The Group's effective tax rate in the second quarter on the pro forma result
adjusted for special items is expected to be around 36-37%. The 1-2% increase
over the rate of 35% in the previous quarter would reflect the increases to
North Sea tax announced in the recent UK Budget (a supplementary charge
increasing the corporation tax rate from 30% to 40%), assuming that the Budget
legislation had been passed in July. A further one-off charge of around $350m,
to increase the brought forward deferred tax provision for the supplementary
corporation tax of 10%, would be identified as a special item.



Stock Purchases



In line with BP's financial framework, there have been no stock purchases by the
company during the first half of 2002 as the trading environment remained below
mid-cycle. By the end of the second quarter the recovery in downstream margins,
and continued firm oil and gas prices, restored the trading environment to
around BP's mid-cycle level. A resumption of share buy-backs requires the
aggregate trading environment to remain above mid-cycle on a sustained basis.
Shares in issue as at the May 31 were 22,462 million.



- ENDS -





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