Master, Deputy Master, Ladies and Gentlemen
Good evening.
It's a pleasure to be here, and to be invited to speak to you this evening.
To have been appointed as an Elder Brother of Trinity House is one of the greatest honours and pleasures of my life.
I hope that when I am retired, and when I no longer have to devote my energies to serving our shareholders, I will have more time to take part in the activities of this wonderful institution.
I use the phrase "when I am retired" advisedly because, as I have come to realise, it is a passive verb.
There are times, Your Royal Highness, when I can understand the advantages of working in a family firm.
Trinity House has also warmed my heart over the last few days because last week, as I was preparing for this evening and thinking about what to say, my office received a very polite message which said, "we do hope the speaker will be short".
Master, you have chosen the right speaker.
You asked me to talk about what was happening in the world of energy but, before I do that, I just wanted to begin by saying thank you to Trinity House.
As a company, BP lives through trade and, in particular, through shipping oil and the products made from oil.
We recently celebrated the 90th anniversary of our shipping business.
That business began back in 1915 with a single ship, the Ferrara, trading crude oil between Persia and England.
Now we own 68 ships, with another 81 on charter carrying not just oil, but also natural gas. In total, those ships carry around 4 per cent of the world's traded energy needs every day.
We have 2,000 seafaring staff, of whom more than 1,000 are at sea at any one time.
Their safety depends on the work done by Trinity House and your counterpart organisations around the world. On their behalf I want to say thank you.
The safety of those ships matters for the people who sail in them, but it also matters for those who need the products they carry.
Over the last decade in particular, there has been a marked increase in the amount of energy which is traded across international borders.
Worldwide, over half of all the oil we use and 25 per cent of all the natural gas comes through trade.
And that proportion is growing.
That's what I thought I'd talk about tonight - not least because there are so many myths and fictions around the energy business - and this is a good occasion to put some facts on the record.
So let me offer you four facts, and one conclusion.
The first and most fundamental fact is that the demand for energy continues to increase, driven by population growth and by the gradual spread of prosperity.
Over the last twenty four hours, the world's population has risen by almost a quarter of million - as it does every day, week in, week out. 10,000 new citizens every hour.
And as people's incomes grow in China, and India, and elsewhere, they spend a significant proportion of any increase on energy. They light their home, and increasingly they buy a car.
The second fact is that the United States, Europe, Japan and now China and India, are all significant importers - of both oil and natural gas.
And in each case the requirement for imports is likely to grow.
The forecast for ten years from now is that, worldwide, 70 per cent of total oil consumption and 40 per cent of all natural gas demand will be supplied through trade.
The third fact is that on the other side of that trading relationship are a very limited number of suppliers.
There's no physical shortage of the necessary resources. There are many decades worth of available supplies of both oil and gas.
But the resources are concentrated in a very limited number of places.
Within ten years, if nothing changes eighty per cent of all traded oil will come from just three areas of the world - West Africa, Russia and the Middle East and, in particular, from Saudi Arabia, Iran and Iraq.
The Saudis will remain the key swing producers, but by then they will have to be exporting around 15 million barrels a day, and even that figure assumes that both Iran and Iraq are producing and exporting at full capacity.
Most of the resources are in the Middle East and, having spent much of last week in that region, I have to say that I can understand why Governments and commentators - and increasingly the public - are worried about energy security.
And then there is a fourth fact which represents another longer term reason for insecurity.
That is the fact that the emissions of carbon into the atmosphere are growing by 1.5 to 2 per cent a year.
The science of climate change is incomplete, but the evidence is mounting.
The concentration of carbon in the atmosphere is rising, and moving steadily towards the level at which, on the basis of the best scientific analysis, the balance and sustainability of the climate is at risk.
So those are four facts.
What conclusion should we draw from them?
Let's first eliminate the conclusions we should not draw. First, there's no need for fatalism, or for hand-wringing despair.
We don't have to choose between economic growth and improved living standards on the one hand, and security and a clean environment on the other.
The idea that everything would be well if we returned to a simpler, bucolic green golden age is a fantasy.
I don't think morally that we can tell people who have just emerged from grinding poverty that they should stop trying to improve their living standards.
And I don't think practically and realistically that we can expect people in the developed world to give up what they have.
We can, and should, use energy efficiently - of course. But that's quite different from the idea that we can reverse the whole process of economic development.
Equally, mythical is the idea of self-sufficiency - the notion that each country can look after itself.
Lets us take the example of our own country.
The UK has sufficient oil supplies to meet our own needs.
We have sufficient supplies of gas to meet ninety per cent of our needs, with extra supplies readily available from Norway, through the Interconnector from Europe and, increasingly, through LNG.
And if we can overcome the challenges of cost and waste disposal, we could have a renewed nuclear industry.
But even if we were completely self-sufficient, we wouldn't be totally immune to the risks of energy insecurity because this is a trading nation, and if our trading partners are affected by energy shortages or volatile prices, we'll be affected - even if we have all the energy we need.
The same is true when it comes to the environment.
Even if this country, or Europe as a whole, managed to reduce emissions to the target level set at Kyoto, we wouldn't be environmentally secure because the climate doesn't recognise the lines we draw on maps of the world.
Energy security and the protection of the environment are international issues.
So neither fatalism nor isolation are good enough.
In the long term, I'm sure that the answer lies in a radical change in the mix of fuels that we use.
In new ways of producing oil and oil products, in technology and engineering advances which can take the carbon out of hydrocarbons and produce clean, carbon-free electricity.
In new sources of energy such as solar wind and wave power. In fuels based on biological materials, including waste.
We're working on all those things - and so are many other companies. They're very exciting. One day they will make a difference.
But we have to be realistic. At the moment, all the renewable and alternative sources of energy in the world provide less than 3 per cent of total daily supply.
The forecast produced by the International Energy Agency predicts that that percentage might rise to 3.3 per cent by 2015.
So the reality is that for the foreseeable future - for the working lifetime of almost everyone in the room - unless you are even younger than you look - we will remain reliant on hydrocarbons - on oil, gas and coal.
What then is the practical answer?
I think it's the same as that expressed by a young British government minister 101 years ago. Winston Churchill, an Elder Brother of this organisation, said that the key to security of energy supply lay in diversity.
That's never been more true.
Diversity has to begin with investment which opens up every possible source of supply.
That is what the industry has been doing for the last decade.
I can only talk about BP, but many other companies can tell you a comparable story.
Since the turn of the century we've invested more than $26 billion in exploration and development in places such as Russia, Azerbaijan, Trinidad, Angola, Algeria and Egypt.
That broadening of the base of supply is very important, and includes the development of different fuels, as well as oil.
We have to ensure that the growth in demand for oil is lower than the growth in demand for energy as a whole.
And for real security, you have to combine that diversity of inputs with multiple channels of supply, so that the energy comes not just from one source, but from many.
That is why natural gas is so important.
Gas has traditionally been traded in local and regional markets - tied to fixed contracts between the producer and the consumer and, most important of all, tied to specific pipelines.
But science and engineering have moved on.
It is now commercially viable to liquefy the gas, to put it into specially designed ships, and to take the gas to wherever in the world it is needed. That is creating a global market for gas for the first time.
We are now developing gas in Trinidad and Algeria and Egypt and soon in Indonesia. And I hope that, before too long, we will be able to develop an export business from Russia.
We will trade that gas into the US, Japan, China and Europe - including the UK - to replace any decline in North Sea production.
And that is what real security is about, because the use of ships means that those who can import gas in this way need never be completely reliant on a single pipeline.
In the UK, LNG will sustain the level of supply. In China it will do more - because it will help to substitute gas for coal in the production of electricity.
And that is important because, for any given amount of electricity produced, the emissions from gas are 50 per cent lower than those from coal.
So energy security is a challenge, and the concern is well justified.
But there are things we can do, particularly if we hold Churchill's words in mind.
Diversity is the key to security.
That diversity has many aspects, but I do believe that as we respond to a difficult situation, we will all be reminded once again that our ability to trade freely and safely across the open seas is our most important strength.
Thank you again for all that you do for us. Your work has never been more important.
Thank you very much.