Before the

Mr Chairman,
Minister Khelil,
Your Excellencies,
Ladies and Gentlemen,

Good Morning,

It gives me great pleasure to be back in Washington and to see friends and colleagues once again.

I am honored as well to address this important gathering at the Corporate Council on Africa's business summit.

Before I begin my remarks, I would like to thank Neil Ritson and Burlington Resources for organizing the panel. I appreciate Neil's stewardship in bringing together a diverse group of panelists who reflect the evolving nature of the energy business in Algeria.

I would also like to salute the presence today of His Excellency Dr. Chakib Khelil.

I must admit, as I listened intently to the Minister's presentation, I reflected on particularly poignant moment during a visit to Algiers at end of May.

As many of you know, a massive 6.8 earthquake struck northern Algeria a little over a month' ago. It was an immense tragedy that claimed a significant loss of life and thousands of injuries. The earthquake destroyed much of the region's infrastructure and left 150,000 homeless.

I was in Algiers just a few days after the earthquake and traveled to some of the hardest hit areas. With me were my Country Manager, our In Salah Gas project leader, and many of our Algerian employees from our office in Algiers.

The ground was still trembling. I cannot begin to attest to the destructive power of nature and the deep scars inflicted on one of Algeria's most populous areas.

Perhaps some you may not realise that Sonatrach did not escape tragedy either. The earthquake was centered not far from the city of Boumerdès, a lovely community along the Mediterranean coast. For more than four decades, Boumerdès has been the home of Sonatrach. The heart and soul of Sonatrach.

Boumerdès did not fare well. The earthquake claimed the lives of some of Sonatrach's brightest leaders and technical experts. Over a thousand Sonatrach officials and families were injured. Many lost homes. Sonatrach's research center and training school suffered much damage.

Amid the devastation and chaos, I was most struck by a remarkable sight. Along the major highways and thoroughfares, coming from all over the country, were thousands and thousands of Algerians, rushing to reach the scene. It was, seemingly chaotic - cars and trucks and buses

everywhere. These Algerians were the first on the scene, helping pull survivors from the rubble, carrying the injured to hospitals, and offering water and food to the dazed victims.

At the center of the relief effort was Sonatrach.

What is not well known is that from the first few hours after the earthquake, without fanfare or public attention, and coming to grips with its own losses, the Ministry of Energy and Sonatrach played an inestimable role in the government's relief efforts, providing equipment, funding, resources, and organisation.

That role continues today.

This does not just happen. It begins with the l values and commitment to Algeria so well embodied by Minister Khelil and so well practiced by Sonatrach.

As I reflect back on that day in late May, the images of devastation and grief remain indelibly etched in my mind. But what I will not forget is the interminable civic spirit expressed both by Algerians and Sonatrach at the moment of Algeria's greatest need.

Algeria is indeed a country of contrasts, a country that never fails to impress or elicit a strong attachment.

For me, those images put into a better perspective much of what we do. How we do it. And why we are in Algeria.

ALGERIA - WHY INVEST?

The theme of this panel is Algerian Energy: What Now. Minister Khelil just offered a compelling case for investment in Algeria and for Sonatrach's vision for the future.

I am certain that as you who travel the world in search of opportunities and business, you ask the same question. Why Algeria?

It is perhaps one of the most asked questions of us at BP. And not just energy companies, but from many companies which operate in many different sectors.

For me, the more pertinent question is Why Not?

In oil and gas, there are four principal reasons:

• First, Algeria has the resources.

Proven oil reserves run to 9.2 billion barrels. To put this into perspective, Algeria's reserves roughly equal those of Norway and are twice as great as Angola's.

The story with gas is even more impressive. It has proven reserves of over 4.5 trillion cubic meters put Algeria 6th in the world. 57% of its reserves are gas.

• Second, the market for these resources continues to grow.

In the coming decades, we will likely see increased supply from almost all energy sources. .P But, oil and gas will remain the fuels of choice. The demand for gas, however, is growing faster than demand for oil.

• Third, Algeria is ideally positioned to help meet this growing demand.

Algeria is the second largest supplier of gas to Europe and a leading exporter of gas to the U.S. Algeria already accounts for a quarter of all gas consumed in Europe and a significant proportion of oil.

• Fourth, Algeria possesses a world-class oil and gas infrastructure.

Sonatrach's facilities include an extensive network of pipelines linking oil and gas fields to, major distribution centers; two export pipelines under the Mediterranean Sea to Europe; gasification plants; modem LNG transportation capability; refineries, etc.

And new infrastructure continues apace.

There are firm plans for a new subsea natural gas pipeline that will link Algeria directly to Europe via Spain. And for another sub-sea pipeline from Algeria to northern Italy.

I just outlined four reasons for investment. Let me offer you another, perhaps not as well known or as well appreciated.

• A skilled and competent Algerian workforce.

BP IN ALGERIA - ASSET PORTFOLIO

This is an important time in the history of the Algerian energy business. And, we at BP are proud to be a pail of it.

BP returned to Algeria in the early 1990s, looking for a gas project. Later in the decade, BP merged with Amoco and Arco and inherited two additional projects, one gas and one oil.

Let me briefly touch on BP's portfolio of assets in Algeria. First the oil and then the two world class gas joint development projects.

Rhourde el Baguel is a joint Sonatrach-BP oil production project at Rhourde el Baguel. It is located near the large oil fields of Hassi Messaoud. REB currently produces on average 35,000 barrels per day.

The first of our two world-class gas development is In Salah Gas, the largest and most innovative joint venture gas project in Algeria.

In Salah Gas will produce 9 bcma of dry gas, transported along a 580-kilometer pipeline to Sonatrach's principal gas collection point at Hassi R'Mel. It will also open up a new region for development.

In Salah Gas is the first project to receive the ISO 14001 environmental certification before work began, and will employ an innovative C02 filtration scheme and reinjection process that will practically eliminate flaring and substantially reduce green house emissions.

The project is about 80% complete. We will begin pipeline testing later in the year with full production scheduled next summer.

The second world-class join development gas project is In Amenas. In Amenas will produce 9 bcma and an average daily production of 50,000 barrels of condensate and LPG, transported along three I 10-kilometer pipelines to Sonatrach's gas collection point at Ohanet

First gas is scheduled for late 2005.

Taken together, production from these two joint development gas projects will enable Sonatrach will real e 80% of Algeria increase in gas export capacity. From 60 bcma today to 85 bcma by the year 3006.

Moreover, I am pleased to announce that we have reached an agreement in principle to bring additional partner to Algeria, Statoil. A world-class partner, Statoil will contribute significantly to these two gas projects. Both BP and Statoil are fully committed, in partnership with Sonatrach, to building the two projects and to delivering 18 bcma on time.

After 10 years in Algeria, BP comes full circle. We arrived in search of a major project and got three. Now, we have re-balanced our asset portfolio for a sustainable level of commitment.

As we look to the future, our interest in Algeria remains unchanged. Unchanged as well is our commitment to deliver the two gas projects, and to seek new opportunities with our partners at Sonatrach.

WHERE IS ALGERIA GOING - HOW EVOLVING?

So, where is Algeria going? How do we at BP see thing evolving?

First, a trend highlighted by many others, is the dramatic expansion of foreign operators and service companies now operating in Algeria's exciting upstream sector.

BP returned to Algeria in the early 1990s. Many other companies did as well.

They are a mix of large and small enterprises, independents and national oil companies. American, European, Asian, and Canadian.

For example: Amerada Hess, Anadarko, Agip, BBP Billiton, Burlington Resources, Ceps'a, Gaz de France, Marathon, PetroCanada, Petronas, and Repsol, and Total.

Working alongside them are numerous service companies. ABB, Bechtel, Baker Hughes, Gulf Keystone, Halliburton, Kellogg Brown Root, Japanese Gas Company, Schlumberger and Western GeoServices among them.

Many of these companies have, like BP, established strong and profitable joint venture companies with Sonatrach.

Second, and equally importantly, Algeria has now regained its rightful place as a major player on I the international energy stage. Algeria plays important policy roles in, for example, OPEC, OAPEC, and in the forum of gas producing countries. In Africa, it also plays a prominent role in the Africa initiative NEPAD and its key energy-related forums.

Moreover, Sonatrach markets its liquid hydrocarbons worldwide, and increasingly seeks new markets worldwide. Sonatrach also has equity investments in the Middle East, Latin America, Europe, and South East Asia. JVs with its North Africa neighbors. And projects in Africa.

These two steps - expansion of foreign investment as Algeria regains its prominent place on the global stage - are just two of the remarkable accomplishments authored by the Algerian government and its Minister of Energy.

We at BP are among those who appreciate Algeria's resurgence. With Dr Khelil and his Sonatrach leaders, we achieved a lot over the past several years, doing what many thought was I not possible.

Last year, for example, we expanded the In Amenas project by 50%. Next year, we will bring to production the largest joint development gas project in Algeria, In Salah Gas.

These two remarkably achievements set the framework for the future. Within that framework, Sonatrach is also setting new trends as well, taking leading international positions that distinguish it from other countries.

Collectively, they would be called "Best Practices". Let me cite a few.

One is the environment.

Dr Khelil publicly committed Sonatrach to reducing significantly flaring and emissions in all Sonatrach projects under the global Gas Flaring Initiative.

The Sonatrach-BP team is doing its part. Earlier, I mentioned In Salah Gas and its 1 $014001 accreditation. The Sonatrach-BP team have fully integrated environmental issues into the process scheme as well as the performance management process with a firm commitment of "Ng Damage to the Environment."

This entails waste management, discharges to water, biodiversity, and, or course, air emissions.

To put this in perspective, In Salah Gas will reduce in excess of one million tons per, annum of carbon dioxide. The rough equivalent of planting a forest covering an area of 200 square kilometers.

A second is safety.

Energy projects in Algeria are located in some of the most remote and harsh comers of the Sahara desert, without much infrastructure in place. Dangerous, complex work under demanding conditions.

Sonatrach-BP teams have also fully integrated all aspects of safety into everyday aspect of work that includes a rigorous training programme and management systems. All part of a firm commitment of "No Accidents" and "No Harm to People".

Dr Khelil and I share a commitment to safety. Indeed, safety is our Number One priority. I am proud to say that Sonatrach-BP teams, and increasingly the many Sonatrach affiliates and Algerian sub-contractors, are committed to maintaining the highest standards of safety in the industry. Together, we have significantly reduced accidents and days away from work, and now stand as a "best in class" performer.

A third is a relatively new area that might be called "corporate responsibility''.

Corporate responsibility embodies behavior, values, policies, and ethics. Or, more succinctly, what we stand for.

Energy corporations and national oil companies are under increasing scrutiny on a number of fronts, including from environment and humanitarian NGOS, multi-lateral institutions, and now governments. Each increasingly seek transparency, better behavior, and a greater awareness of the impact that oil and gas operations have on fragile economies and social-economic systems.

For his part, Dr Khelil has consistently taken leading positions that distinguished Algeria from all the others.

Let me cite two important aspects.

One is transparency. Transparency is part of sound, predictable governance. Among other steps, Dr Khelil has put into place procedures in procurement contracts, equipment and services that seek to provide fairness and streamlines transactions.

Two is social investment. Social investment is a means by which business adds value for society as well as a means by which business manages its impact on society. Sonatrach is an innovator in this field, providing improvements in the quality of life and employment for thousands of Algerians, many of them living in the remote comers of the country. Its role during earthquake relief is just one example, but hardly the only one.

These three areas distinguish Algeria and Sonatrach from others, and will increasingly serve as the framework and foundation around which Algeria will attract new investment. And the framework sought by many companies as the basis for investment.

HOW WE DO BUSINESS - SAME AS ELSEWHERE

Together, they are Best Practices. They constitute values. What We Stand For.

BP in Algeria operates as BP operates anywhere else in the world. We employ the industry's highest standards of safety and concern for the environment; the latest innovations in project management and technology; ethics and transparency; and corporate responsibility, including our landmark social investment programme in Algeria.

We are proud to join with Sonatrach in becoming best in class., With shared values.

What we stand for and how we do business made our decision to invest and to operate in Algeria a very easy one.

I began my remarks with a reference to the earthquake. And thoughts on Algeria's future.

The last month has been a very difficult time for Algeria and Algerians. The earthquake has wrought an indescribable personal toll for many, and unimaginable grief on a country and a people that has seemingly known only tragedy in recent years.

I was in Algiers again just last week. Almost a month after the earthquake. The devastation was still there, as was grief and sadness.

This time, however, I saw a very different Algeria.

I found the resilient, proud Algeria. A steely determination to recover and move on.

The civic spirit and pride so much in evidence in the first few days now nurture an entire country in yet another difficult moment.

Pride was very much in evidence just, last week. The Algerian national football team won a close-fought match and qualified for the 2004 African Nation's Cup.! Algerians quickly filled the streets in celebration and car homs blared into the wee hours.

Remarkably, Algeria keeps moving, keeps progressing, keeps evolving.

BP arrived in the early 1990s, impressed with opportunities and possibilities, and looking at investments in Algeria's upstream gas sector.

Today, nearly 10 years later, we have an asset portfolio of not one but three world-class oil and gas projects with Sonatrach.

We remain convinced that Algeria is a place to do business, and can do business. Our views on Algeria have not changed. Best Practices and Shared Values.

So, what is ahead?

We see a proud, resilient, and resourceful Algeria.

We see Algeria progressing, evolving, and moving on.

We see considerable opportunities amid innovation and world-class standards that distinguish Algeria from other areas of investment.

We see the steely determination of its people, the talent and skill of Sonatrach, and the vision of its Energy Minister.

For us' in the private sector, we can embody the same grim determination and build strong, prosperous businesses.