Ladies and gentlemen, good morning to you all. I'm Carl-Henric Svanberg. I'm the Chairman, and on behalf of the Board, I welcome you all to the 2012 Annual General Meeting for BP. Before we start our discussions, I formally propose the resolutions as set out in the notice of the meeting. We will vote on the poll on these resolutions at the end of the meeting. 2011 was a challenging year, but also showing important progress for BP. It was a year when we relayed the foundations for the company. Let me highlight the critical points: how we are making BP a stronger and safer company, the changes that we have made to the Board, and the road ahead for BP, our company, and what this means for you, our shareholders, and value creation over time. Let us go back 12 months.
We met together in this room after a troubled year, a year that had seen the tragic accident and the oil spill in the Gulf of Mexico. In response, we, together with management, in the Board, set three priorities: safety and risk to be enhanced and embedded, trust to be regained, value creation to be achieved through the execution of a clear strategic plan. Bob on my left here, Bob Dudley, our CEO, in a few minutes, he will give you more, talk more about this in a few minutes, but I want to be clear that turning each of these priorities into actions continues to require tremendous energy and commitment by everybody in this company. Let me first describe the strategic approach that the Board has had for this work. For many years, BP operated as a largely decentralized organization.
Different business units often had their local way of working. We're now building a company where we can leverage our global strength, a company that is more efficient and focused, a company that is designed to meet the tough challenges, but also the great opportunities ahead, and a company that is designed and a company that can deliver value. We are stepping away from a system that is a legacy of our past and the acquisitions that we have made along the way. BP's new, more centralized organization enables us to better align the company around a set of clear and consistent standards. These are the documents that decide and define our way of working, to unite us around a common set of values, align our approach to risk that can encourage the sharing of knowledge and capability, and all within one system of remuneration.
From all my experience from leading global companies in global, in challenging circumstances, this represents fundamental change. I witnessed myself significant progress when I visited our U.S. operation, including Alaska last year, Azerbaijan, our oil sands projects in Canada, and some places in Asia. During the year, the Board supported and challenged Bob and his team as they worked to enhance BP's culture, systems, and processes. The Board also initiated a review on the way that the company manages, reports, and acts on risk, and we enhanced and we grew the safety and operational risk function. To be clear, safety and value go hand in hand. It is about each employee having clear and defined, well-defined tasks and responsibilities, training and tools, as well as the support and the ways to access expertise in critical situations. It is about getting it right the first time.
Therefore, there is no conflict between safety and value creation. Let me then talk about trust. In an industry that makes a vital contribution to everyday life, BP can only be successful if we have the trust of the people and the societies where we operate. You all know that you cannot win the trust of people simply by saying, "Trust me." You earn the trust through your actions, through what you do. Therefore, during the year, we worked closely with governments, with regulators, with our industry, demonstrating the enhancements that we are doing, we are making to risk management, and sharing the lessons of what we have learned. In the U.S., we continued to meet our commitments to those that have been affected by the spill, and we reached important settlements with several parties involved.
By working and making priorities of safety and trust, we reinforce the foundations of a strong BP, a BP that can deliver sustainable value. In the past, we measured our success by barrels of hydrocarbons produced. We now measure success on the value that we generate for you, our shareholders. We have therefore taken a hard look at our portfolio, disposing what has a higher value to others and thereby releasing value earlier in the life of our assets. We're playing to our strengths. BP has always been one of the great explorers, and we are now doubling the investments in exploration. It is a sign of confidence in our abilities that last year, we were awarded 300,000 square kilometers of new acreage for exploration. That is a record in BP's history. It's unprecedented in recent decades. Value creation must, of course, also be reflected in the dividend.
We restored the dividend in 2011, and recently, we increased it by 14%. These are important steps, but they're only the beginning of a journey. The company continually looks for new ways of forming partnerships and relationships around the world. Russia is particularly important to BP. Since its formation in 2003, TNK-BP has paid $19 billion of dividends to BP. Last year alone, $3.7 billion, and the assets, our share of the assets, are now worth more than $25 billion. All of this from an investment of only $8 billion, 11 years ago, nine years ago. This is what I call a good investment. We are fully committed to Russia, but there, as elsewhere, the nature of our industry is rarely straightforward. However, this will not hold us back. BP did not become one of the greatest companies in the world by being timid.
Let me now turn to the changes we made to the Board. We have sought skills and experience that are relevant to our strategy and to the challenges that we will face in the future. After this AGM, 8 of the 11 non-executive directors will have served less than three years on the Board. This represents a substantial refreshment. Andrew Shilston just joined us, as did Professor Dame Ann Dowling. Andrew was the Finance Director at Rolls-Royce. Equally important, he's an oil man with many years of experience from Enterprise Oil and CAN Energy. Ann heads up the Engineering Department at Cambridge, one of the finest engineering academies in the world, and she brings exceptional academic and engineering expertise. Brian Gilvary took over as our CFO. Brian has over 20 years' experience from BP.
Byron Grote, our previous CFO, stays on with us as a director responsible for corporate business activities. After nearly six years on the Board, Bill Castell has decided not to seek reelection. Bill has made a substantial contribution to the Board, not least as Chair for the Safety, Ethics and Environment Assurance Committee. He's unable to join us here today, but I speak for the entire Board when I thank him for all that he has done. Bill's role as Senior Independent Director will be taken over by Andrew Shilston, who I said just joined. He will be supported in this role by Antony Burgmans, our longest-serving Board member. Paul Anderson, during the year, Antony Burgmans took over the Chair for the Remuneration Committee, and Brendan Nelson took over the Chair of the Audit Committee. Paul Anderson has taken over the Chair for the [SEAC] Committee.
Meanwhile, Ian Davis has continued as the Chair for the Gulf of Mexico Committee, which has been invaluable in allowing the main Board to manage its work during the restoration of the Gulf of Mexico and the litigation. We have been through tough times, but I can tell you that the enthusiasm and the commitment from this Board to the success of the company is total, as is mine. I want to thank all the directors for their efforts and advice. I want to thank Bob Dudley and the team for all that you have done during the year, and I would like to thank our employees for their commitment to make BP a stronger and safer company. Thank you. Very kind. What lies ahead for our company? BP's Energy Outlook 2030 points at a 40% increased energy demand for energy over the next 20 years.
In mature economies, energy consumption is expected to be largely flat despite continued growth in the economy because of ongoing energy efficiency activities, and the CO2 emissions have already peaked. In the world's emerging markets, billions of people are striving to reach the same standard of living as we enjoy today. That is driving economic growth, and it is driving energy demand. The encouraging development of new forms of energy continues. It's the fastest growing form of energy, but from a very low base, and hydrocarbons will still dominate over the next several decades with an over 80% market share of energy produced. It is therefore important to recognize the essential role that hydrocarbons will continue to play in fueling progress around the world.
In this world of great opportunity, it is our determination to significantly enhance the value of BP by actively managing our portfolio, by expanding our exploration activities, and by working with our partners to explore for oil in increasingly difficult areas. You will see BP tackle the very tough technical and physical challenges involved in meeting the world's energy needs. You will see BP live up to its commitments to local communities and to society. Finally, you will see BP repay the loyalty shown by you, our shareholders, by creating material rewards. In all of this, I can assure you that we, as a Board, will commit all our expertise and energy to the realization of these objectives. BP is a great company with a great history, and I'm convinced of a great future.
As your Chairman, I'm determined to lead a BP that can succeed in meeting the opportunities ahead. I would like to end by thanking you for the support that you are showing, and I thank you for coming here and being here with us today.
Thank you, Carl-Henric, and thank you for your leadership and support over the last year. Our non-executive directors have a wide range of experience, not only in energy, but areas such as safety, engineering, and finance. As a management team, we greatly appreciate their scrutiny and expertise. I also want to thank and add a personal welcome to all of you and to say thank you for sticking with BP through the past couple of years. It has been a challenging period. We've continued to apply the lessons from the Deepwater Horizon accident, and we've continued to make BP fit for the future, strong enough to grasp the new opportunities we face and wise enough to manage the risk that brings with them.
As Carl-Henric has said, BP continues to learn the lessons of 2010 and continues to make changes to enhance our systems and processes and our ability to operate safely and effectively. Let's look at the company that we are today. All our BP operations, with the exception of those recently acquired, apply a single operating standard. Our upstream has undergone the biggest change in 20 years by moving from a series of local businesses to global teams that apply global standards, whether that's in Aberdeen, Angola, or Azerbaijan. We put in place new checks and balances, largely through a new team of safety experts who work alongside our business leaders, and they can intervene if necessary. We've reviewed the company's performance and reward system. We reward safety and teamwork alongside financial and operating outcomes, and we launched a new set of values and a refreshed code of conduct.
We are a smaller company today, but we're also a stronger one, and we continue to invest boldly in what we do best. At the same time, we are divesting assets that are less strategic or competitive. When I spoke to you last year, those changes were just beginning. Today, they've mostly been made. We were largely focused on stabilizing the ship. Today, we've set a course, and we're moving forward with increasing speed. We've made progress by focusing on three simple priorities: striving for continuous improvement in safety and risk management, earning back trust, and growing value for our shareholders by playing to BP's strengths. Today, I'm going to divide my remarks into two sections. First, looking back on how we drove those priorities of safety, trust, and value in 2011, and then looking ahead to the way we plan to further drive them in the next three years.
As I'm looking forward, I have to show you this cautionary legal statement that essentially points out what you already know is the future is always uncertain. Now, looking back in 2011, much of our focus was on laying the foundations for a stronger and a safer BP. A major structural change was the establishment of a new corporate safety team, our Safety and Operational Risk Management Organization. We call it S&OR in BP. The leader of S&OR reports directly to me, and the organization has two clear roles. First, it has a central team of experts who design and maintain the group standards. These standards are kept under review, and they are updated often in light of information from the field and progress in technology.
Secondly, S&OR has hundreds of deployed staff who work alongside the people who manage and run our operations in rigs and refineries and other plants. They're not part of the line business management. They're independent, and their remit is to provide advice and also challenge. They need to approve appointments of safety-critical staff, for example. If they believe that an operation needs to stop, then it stops. Last year, there was continued progress. We had fewer days away from work injuries. We had fewer recordable injuries, fewer losses of primary containment, such as spills and leaks. We are anything but complacent. Safety is a never-ending journey of learning, improvement, and it will always be good business. Last year, we restructured our upstream business into three global divisions of exploration, developments, and projects. Production.
This allows us to establish and propagate our standards globally more simply so that, for example, we have a standardized BP drilling and wells operation globally. This organization change was the biggest change in the upstream business in a very long time. Also, in 2011, we carried out a very large number of turnarounds, which is where you take an asset out of service for a major maintenance overhaul. We carried out 47 turnarounds in the upstream in 2011, which was an unprecedented number for us. Let me move on to the subject of trust. I believe that trust comes from doing what you say you're going to do, and this is how we've sought to act in the Gulf of Mexico.
From the very beginning, we stepped up to our commitments to the communities in the region, and we've worked hard to deliver on those commitments now for nearly two years. Our guiding principle was not to do the minimum as required by law, but to do the right thing. We've continued to devote people and resources to that area, and we are seeing recovery. The beaches are open, and 2011 was a great year for tourism. Independent studies have shown that the Gulf seafood is safe. In February, we achieved an important milestone in the legal proceedings when we reached a proposed settlement with the Plaintiff Steering Committee, which represented thousands of people who have brought claims from the Gulf Coast region. BP has estimated that that proposed agreement will cost around $7.8 billion and will resolve the substantial majority of legitimate economic loss and medical claims.
Aside from that, BP has spent more than $22 billion towards meeting its commitments in the Gulf, including more than $8 billion already paid to individuals, businesses, and government entities, as well as around $14 billion spent on the operational response. Another way in which we build trust is to be consistent all over the world. Last year, the management team spent a lot of time discussing the values we wanted BP to exhibit every day. Rather than coming up with textbook examples, we came up with five simple personal qualities that we believe the company stands for, and they are safety, respect, excellence, courage, and acting as one team. These are more than just words. They are how we work. The values are built into our performance management system and our reward systems.
As of last year, BP's people are now paid not only on their contributions to business results, it's obviously important, but on their contributions to safety and risk management and behaviors that exhibit our values. Turning from personal and corporate values to shareholder value, 2011 was a solid year, both in terms of in-year performance and in positioning BP for the years ahead. We had an outstanding year for access to new acreage. As the Chairman said, we were awarded 55 licenses in 2011 alone, making a total of 84 licenses in 12 countries since October 2010. We also saw good progress in our operations, and the large number of turnarounds and temporary cessation in the Gulf of Mexico activity did affect our production.
In October, as in many of our operations, came back on stream, and production started to rise again and increased by 5%, or 170,000 barrels per day between the third and the fourth quarters. Also, in October, we received our first permit since 2010 to drill a new well in the Gulf of Mexico, where we now have five big rigs up and running. In the downstream, performance kept improving, and the business ended the year with a record underlying pre-tax profit of $6 billion. In the alternative energy business, we focused our activity on biofuels and wind, the two areas where we believe we can build substantial businesses. We invested for growth, acquiring new ethanol businesses in Brazil and taking the total number of wind turbines in the U.S. to over 1,000.
Our headline profit for the full year was $23.9 billion, and that compares to a loss of $4.9 billion in 2010. This enabled us to increase the dividend by 14%, as the Chairman has said, and that's the first rise since we resumed paying a dividend a year ago. Must be a plane. I'll speak up. Now let's look ahead to the rest of 2012 and the years beyond that. Once again, I'll look at it through the lenses of safety, trust, and value. In safety and risk management, as I mentioned, we have renewed our foundations and are focusing on three big principles to drive continuous improvement. First is strong safety leadership, with leaders now in the company spending more and more time in the field and maintaining a culture of great sensitivity to risk.
The second is to ensure we use our operating management system to its full potential, and we use it to continue to drive safe operations and continuous improvement everywhere. Third is a principle of checks and balances, inspections, audits, checks by line managers, by S&OR, and even by external assessors. Admiral Bowman, who's on our Board, reminds us of a famous statement by Admiral Rickover. He said, "You get what you inspect, not what you expect." It's one of our principles of driving our actions. In terms of trust, we will continue to meet our commitments to the Gulf of Mexico region, and we continue to fund restoration and research projects across the Gulf. Our business in the U.S. is important, where we have 23,000 employees. We will also--it's getting louder. Must be the Docklands Light Railway back there.
We will also continue to play an active part in society everywhere we work. Here in Britain, for example, we employ more than 15,000 people, and we've increased our graduate recruits by 50% this year in the UK. Our commitment remains strong to the North Sea, and we're now planning to invest a further GBP 10 billion with our partners over the next five years. This should provide 3,000 more jobs. We also help build skills for future generations, and our schools link program has linked BP employees to local schools now for more than 40 years. We've got strong partnerships with the leading universities in Britain and around the world. This year, of course, we are making a particular contribution to the UK as the official oil and gas partner for the London Olympics and the Paralympic Games.
We will provide advanced fuels and engine oils for the over 5,000 official vehicles. We will help all ticketed spectators offset their carbon footprints as they travel to the Games. Let's turn from sporting competition to business competition. How is BP going to compete in the years to come? You may have seen we've laid out a very straightforward 10-point plan to grow value in BP. The plan includes five things that you can expect from BP and five things you can measure. I'm going to take you through them briefly. The first point, as you would expect, is that we will continue to have a relentless focus on safety and risk management. You can expect that. The second point is, as Carl-Henric said, we will play to our strengths. BP is what is known as a supermajor, a global energy company with operations all along the energy supply chain.
Each stage of the chain is becoming more complex, and we need to focus on BP's distinctive strengths. We're investing in those strengths in those parts of the value chain. That chain starts with exploration. We're good at finding oil and gas, and we also have strengths in managing deepwater operations, giant fields, and gas value chains. We have a world-class downstream business, and we have some industry-leading technologies, and we have strong relationships around the world. We would not have lasted over a century without those. We're now investing in those strengths, and we are divesting other areas. For example, we are investing in exploration but divesting mature oil and gas fields that other companies can specialize in. Those areas include the southern North Sea and some fields in the Gulf of Mexico.
We're investing in refineries that are well-positioned and well-configured, such as the Whiting Refinery in the Midwest of the U.S. We are divesting those refineries that are less well-positioned or configured. The principle is to prioritize value over volume and quality over quantity. We're exploring in four main deepwater areas: the Gulf of Mexico, the North Sea, North Africa, the South Atlantic, Southeast Asia, and Australasia. It's actually more than four. We have gas value chains around the world, shipping gas from Trinidad to Europe and from Indonesia to China, and most recently from the Indian Ocean to customers in India with our partners in Reliance Industries.
Giant fields under BP's operation include one called—we have colorful names in the oil and gas industry—it includes the Mad Dog Field in the Gulf of Mexico, the Clare Field in the North Sea, Rumaila, which is Iraq's biggest field, Tangguh in Indonesia, and Shah Deniz in the Caspian Sea. These are some of the largest fields in the world. We're investing for quality in our downstream businesses, for example, in that major upgrade of the Whiting Refinery in the U.S. Technology is being used in support of safety and value creation. One current example is the system of wireless corrosion monitors that's being deployed in our refineries to monitor pipes and valves. Moving back to the 10-point plan, point three is that we will be stronger and more focused, and this comes about largely through the strengthening and focusing of our portfolio.
Point four is that we will be simpler and more standardized, and that's what you're seeing with the new S&OR organization and the new upstream structure to drive standards throughout BP. We've also promised to give shareholders more visibility to the value of our business, and we are delivering on that promise. For example, in our full-year results, we reported separate figures for three parts of our business in the downstream. We've separated out the value coming from fuels, from lubricants, and chemicals, and we have now separated out for you to see the results more clearly of TNK-BP in Russia.
Turning to what you can measure, we have pledged that active portfolio management will continue, and in 2012, we will continue to strengthen the portfolio, and we'll do that through a series of divestments, which will total, we believe, $38 billion through the end of this year, from beginning in 2010. The expected total of announced divestments today stands at around $23 billion. Point seven is that we plan to bring onstream new upstream projects with higher unit cash margins. In fact, we expect to see 15 new projects coming onstream in the next three years with margins that are around double the existing average of our portfolio if we assume a $100 barrel contribution. Having a stronger portfolio with higher margins means we will create more cash, and our goal is to generate 50% more operating cash by 2014, working on assumptions again of $100 a barrel.
The full details of these assumptions and calculations are in the annual report of accounts. Point nine of the plan relates to how we use that cash. The plan is to reinvest half of that in the portfolio of assets that we have so it gets stronger all the time, and to use the other half for other purposes, such as distributions to our shareholders or paying down debt. All of that requires financial discipline and a strong balance sheet, and we aim to keep the gearing level of the company in the lower half of the 10%- 20% range. That's the 10-point plan in summary. What can you expect to see year-by-year? This is what we showed to investors when we presented our results in February. You can expect 2012 to be a year of milestones as we invest around $22 billion in good projects.
We plan to start up six new projects this year, and we plan to have eight big rigs running on BP-operated fields for exploration work in the Gulf of Mexico. We plan to deliver $2 billion in underlying downstream performance improvement compared to 2009, and we also expect to complete our payments into the Gulf of Mexico Trust Fund this year. In 2013 and 2014, as investment continues, you should expect to see greater financial momentum coming through in our operations. A further nine new projects are planned to start up with strong cash margins in 2013 and 2014. The upgrade at the Whiting Refinery is planned to come onstream in 2013, and the divestments are expected to reach that $38 billion number that I mentioned. All of this means that by 2014, we can expect to see that approximate 50% increase in operating cash flow over 2011.
I think this is just the beginning of the next chapter of BP's history, and that chapter will bring its own opportunities and challenges. Our analysts set out in our energy outlook to 2030, and I think this is an amazing slide. It says a lot about our industry, says a lot about where the future is going in the world. It says that energy demand in all forms is set to increase by up to 40% by 2030. It's mainly driven by growth in the emerging economies. The world is going to need new sources of energy supply in all forms, and that is why BP is investing across the spectrum of energy types, from Brazilian ethanol to natural gas in Indonesia to Canadian heavy oil. The energy of the future will be a mix of hydrocarbons and alternatives.
It's a mix that constantly evolves as we make this long, wavelength transition to a lower carbon economy, and we are acting to make BP fit for that future. For example, we advocate carbon pricing, and we assure that our projects can be competitive in a world where carbon is priced by factoring in the cost of carbon when we look at a business case. I hope that you leave here today clearly appreciating how BP has changed. We've come through a major crisis, and the company has been tested to the limit. We have a very clear plan for our future and yours as shareholders. Time prevents me from going into more detail, but I do encourage you to pick up the information you'll be offered as you leave. Read the articles and reports on what BP is doing around the world. It's all about safety, trust, and value.
In terms of safety, we put in place new structures, standards, expertise. In terms of trust, we are meeting our commitments in the U.S., and we're attaining the confidence of governments, customers, and investors around the world. In terms of value, we are on course to build our business and reward our shareholders by playing to our strengths. I do want to record my thanks to BP's people, without whom this progress would not have been possible. As I said at the start, we are deeply grateful to all of you for supporting BP. Without your support, we would not be here today, but thanks to your support, we plan to be here tomorrow and for many years to come.