World demand for petroleum products, excluding Russia and her satellites, increased by about 5 per cent in 1954, following the same trend as in the previous two years. This world figure would have been greater, but for the slight business recession in the United States, where the increase was limited to 2 per cent. In the eastern hemisphere, wherein lies the bulk of your company’s interests, the increase in oil consumption in a year of generally high business activity was 11 per cent, above the 1953 level, compared with increases of about 8 per cent. in each of the two preceding years. This gain in eastern hemisphere trade, representing some 18 million tons, was matched by increased output of Middle East crude oil – particularly in Kuwait and Saudi Arabia.

The growth in refinery capacity in the eastern hemisphere last year of 24 million tons was more than adequate to cover the increased demand. About half of this increased capacity, including our new refinery at Aden, was situated east of Suez. With the commissioning of Kwinana refinery in Western Australia we have now reached the position where the output of our new refineries east of Suez, together with our share of products from Iran, has eliminated the long back haul from European refineries that was such an abnormal feature of our operations over the previous two years.

The group’s sales of crude oil and refined products in 1954 were at a record level of 41 million tons, about one million tons greater than the previous peak figure achieved in 1950, the last year in which we were fully operating in Iran. Sales in 1954 represented an increase of nearly four million tons, or 10½ per cent. over 1953.

In Australia and New Zealand our supply arrangements are now easing with the coming into commission of the additional refining capacity, east of Suez, mentioned above. Considerable further progress has been made in Australia with improving and expanding the marketing faculties of The Commonwealth Oil Refineries Limited and sales by that company during 1954 have again shown a most satisfactory increase.

I referred last year to those disquieting aspects of the price control system both in Australia and New Zealand, which failed to reflect the increasing incidence on the distributor of the higher internal costs of goods and services. In Australia, there has since been an improvement in this respect and in the States of Western Australia, Victoria and Tasmania the system has been abandoned. The problem, however, still remains acute in New Zealand, where the margin allowed for motor spirit distribution is in no way compatible with the industry’s investment in the marketing services or with the increased expenses arising both from higher wage awards and the rising cost of materials. It is to be hoped that there will be a satisfactory outcome from the independent investigations which the New Zealand Government has now instituted.

Our sales of aviation spirit have continued to expand, and the B.P. Aviation Service has again been entrusted with the task of providing in whole or part for the fuelling of many of the major international air lines, the armed services, and other flight operations in the countries covered by its growing network.

The B.P. International Oil Bunkering service continues to provide an important part of world bunker supplies.

Sales of our branded lubricants show a very satisfactory increase compared with 1953, both in this country and overseas, and our largely increased production is all being disposed of through our own marketing outlets.

In the United Kingdom the continued upward trend in industrial activity was reflected in a strong demand for petroleum products in 1954. Sales of fuel oil showed a marked expansion and we are being called upon to contribute in an increasing degree to the country’s industrial energy requirements.