100 years of BP Shipping: a timeline

8 December 2015 (Last Updated November 10th, 2017 10:54)

A look back at BP Shipping’s century-long history provides a fascinating insight into how the company survived, and indeed thrived, throughout some of the most challenging events that shaped our past.

100 years of BP Shipping: a timeline

In April, BP Shipping (BPS) celebrated its 100-year anniversary as the longest continually operating company in the BP group. Since its inception as the British Tanker Company in 1915, it has braved some of the most challenging events in history, including two world wars, the Great Depression, the closure of the Suez Canal and the surge in oil price in the 1970s.

Throughout the hardships, BPS often defied the odds to grow into what is currently one of the world’s biggest and most environmentally aware shipping companies, leading the way in marine safety and efficiency.

BTC’s creation on the cusp of WWI

The British Tanker Company (BTC) was formed in April 1915 with the aim of carrying oil products from Persia for the Anglo-Persian Oil Company. Its first ship, out of an order of seven oil tankers, was British Emperor, a dual-fired 5,500 dwt steamer, which was launched in September 1916.

The outbreak of WWI upped the demand for oil and shipping overnight. In this new climate, Anglo-Persian thrived due to a significant financial investment from the government which made possible the order of new ships.These would carry American oil to European ports via the North Atlantic. By 1919, BTC owned a fleet of 25 tankers, representing 5% of the world’s tanker fleet and 28% of the world’s dtw tons.

The inter-war period and the Great Depression

The inter-war years brought a surge in oil production in Persia and BTC struggled with a short-lived surplus of shipping capacity.

In autumn 1929, as a crash in share prices hit the market, the global demand for oil spiralled down, posing a serious threat to Anglo-Persian’s operations. BTC nonetheless continued with shipbuilding, despite the fact that the market was feeling the ripples of the Great Depression in the early 1930s.

In the run-up to BTC’s 25th anniversary five years later, its fleet counted 90 owned ships on the water or under construction in British yards, as a result of a total investment of over £20m in shipbuilding over the previous two decades.

Between 1916 and 1938, BTC’s owned and managed fleet grew from three to 94 ships and their volumes increased from one to six million tons. The company emerged virtually unscathed from the Great Depression.

World War II

BTC had little time to enjoy its sprawling operations. In September 1939 the UK declared war on Germany, marking the start of a deep restructuring of the company’s operations. A second war meant that the company put its private business interests to one side and aligned its resources towards a military victory. Following the same path as during WWI, BTC went back to short-haul shipping of oil between the US and the Caribbean.

In 1942, the company was managing 146 ships, a fleet 50% larger than in pre-war times. By the end of WWII, the losses were tragic: between 1939 and 1945, 50 ships manned by BTC seafarers were destroyed, 657 lives were lost and 260 more seafarers were taken as prisoners of war.

The company quickly recovered in the post-war period, aided by the improving economy and growing oil production. Its fleet doubled between 1945 and 1965, from 69 to 120 ships. The world’s fist supertanker, British Adventure, entered service in 1951 carrying over 30 million dwt at 15 knots cruising speed – almost double the capacity of any other tanker in the fleet.

A change of identity during the Suez crisis

At the end of 1954, the company was renamed The British Petroleum Company (BPTC) as its staffing levels continued to grow. The company had matured from a general purpose fleet to one that managed specifically designed crude oil carriers and products carries, on the backdrop of an uninterrupted delivery of new ships. This continuous delivery peaked with the launch of the 21,000 dwt British Victory.

The tensions brought by the Suez crisis did not have a significant impact on BPTC, which introduced precautionary bunkering as a safety net but kept operating through the canal. But the crises in the 1950s did force BPTC to analyse its business strategy and consider a tighter co-operation between BP’s oil supply and shipping departments.

At the same time, the shipping industry was under intense competition from the growing popularity of air travel. BPTC placed orders for 39 more ships and for the first time, orders were placed at a shipyard outside the UK. British Explorer, a 215,000 dwt crude carrier, was built in Japan in 1969.

BPTC introduces Inert Gas System

The 1960s marked a major milestone: the company developed and patented the Inert Gas System (IGS), hailed as one of the most important contributions to oil tanker safety. Inert gas contains less than 8% oxygen, which suppresses the combustion of flammable hydrocarbon gases, thus reducing the threat of fires aboard ships.

The technology was first introduced by BPTC across its fleet and then made available for free to the international shipping industry. In the 1970s, the International Maritime Organisation officially adopted and mandated IGS, which became a mandatory and widely accepted industry practice. According to BPS’s history, the introduction of IGS represents “one of the finest achievements of BP’s shipping arm across the 100 years of its existence”.

Discovering oil at the outset of the oil crisis

The 1970s marked another significant discovery for BP. In September of that year the company revealed the first giant oilfield in the UK North Sea, the Forties field, which firmly placed Britain on the map as a major player in the oil industry. BPTC despatched a safety and general service vessel, later known as Forties Kiwi, to the field.

Shortly after the discovery, however, the oil crisis hit countries worldwide as the price for one barrel of crude oil surged from $3, to $5 and even up to $12 within two months. The crisis, devastating to the world’s economies, was also a huge challenge for BPTC and BP, since their entire operation was based on transport of low-cost crude oil from the Middle East. In the context of worldwide surplus of shipping capacity, BPTC disposed of 87 ships and 3.7 million dwt of its capacity.

The Falklands Conflict and BPTC’s downsizing

At the time of the Falklands Campaign, important changes were taking place within BPTC, starting with its renaming as BP Shipping (BPS), a title under which it still operates today. The restructuring also involved the acceleration of the sales of medium-sized ships and VLCCs, as well as 400 redundancies from among its staff.

Further cutbacks reduced BPS’ fleet from 88 to just 34 ships. Over the same period, capacity dropped from 140 million tons, to just elven milion. As a result, BP’s website notes that “the number of ships remaining was barely more than the British Tanker Company fleet immediately after the First World War”.

Through the 1990s and past the turn of the millennium

In 1995, BPS made headlines with a statement by its CEO Bill Luff, who famously said at the time: “Within the BP group, shipping is now recognised as being the biggest single risk. Consequently, we can no longer be just a shipping company. We’re actually in the risk management business.”

Under this new risk-cutting approach the company thrived and only six years later, a $3bn shipbuilding programme was approved by the BP board. Ship orders quadrupled and its capacity tripled to over five million dwt. Its fleet, comprised of a variety of product tankers, new coastal tankers and three new large LNG tankers, made BPS a leader in the shipping industry.

Over the past four years, 180 million tons of crude oil and products have been overseen by BPS and today, BP Shipping operates 50 oil and gas carriers, with a further 200 large vessels and 400 coastal and barge vessels transporting cargoes of oil, gas, refined products, lubricants and petrochemicals.