The countrys finance minister backs on demands that they write off the debt. Instead proposing a swap. They send the aussie dollar to a six year low. The Indian Central Bank keeping its powder dry. Youre watching Worldwide Exchange bringing you Business News from around the globe. Hello everybody. Good morning. Welcome to a full two hours of Worldwide Exchange. Good to be back on the show. Great to have you. Great to be back. Lots going on today. Bp shares are already trading higher this morning despite a Fourth Quarter loss on deplacement cost basis. It will reduce cap exspending this year. In a short time well be speaking with the bp ceo bob dudly for his take on the numbers. Well be talking to the man himself any minute now. Lets take a look at oil prices. They have been rallying in fact gaining about 11 . Were looking at light crude trading at 50. 67. Up about 2 . Brent crude up about 2. 5 . Interestingly enough were ceiling this rally in oil prices despite the u. S. Refinery strike and as well as weaker than expected manufacturing data. Theres been a little bit of a turn in the price of oil. As said steve is at bps headquaters. Steve take it away. Thank you very much indeed. The reaction from shareholders this morning to bp has been positive. The reaction to the story over the last couple of months has been positive. We all know theres a huge number of issues for bp specifically and the broader industry. Bob my first question is when i saw the numbers i thought its 2. 2 billion as opposed to the 1. 5 or 1. 6 that people are expecting but then i saw the impairments. Does it feel like a beat to you . Because when youre making those cuts and tough decisions across the group beating expectations does it leave a sour taste . The fact that youre having to leave so many downgrades . Well it feels like a beat because the numbers were good but with the Lower Oil Prices certain triggers have made us to impair a good chunk of the assets. We reviewed 90 of our upstream assets as part of the impairment testing so you never know. We went through most of the portfolio. This is a pretax as well. You and i have been talking four or five years now and back in 2011 you were hoping you reached it but you put a plan in action to try to make bp ready with a lot. Has that plan been overwhelmed by events in terms of price . No we achieved that plan. It was a three year plan to get us to the end of 2014. Increasing the cash flow by 50 . We have cleaned up the portfolio. Its in response to the terrible accident we had in the gulf and thank goodness we did achieve that plan. I tell people at bp its like we came through 2014 opened the door and were in a raging gale and now we have a different challenge. Cutting cap ex is a situation, low Commodity Companies have to do it. Its difficult to get it right at this stage of the cycle. Youre cutting down from the expectation of 25 or 26 billion a year but down to 20 billion a year. But wouldnt you like to be increasing it at the moment . Picking up market share and assets . Youre right. Were one of the longest wavelength Investment Industries in the world. Sometimes its seven to ten years before theres a revenue and you have big projects that are like a horse halfway across the river. You have to keep going with those. But others you step back and we know the costs are going to rebase themselves. Youre putting a salary freeze in. Youre cutting costs aggressively. This industry desperately needed rebasing of costs. Is this just giving you the opportunity to do something . As hard as it may be that was desperately needed to do . We needed to do it to put bp in a world that might be 50 oil for some time and in addition very complicated company after our events in 2010. We were going to be streamlining it so these two things will come together and it will accelerate it. Shareholders want to know about the 10 cents a share as well. Any concerns about that . Its been gradually increasing. There were obviously issues about dividend a couple of careers ago but any threats as far as youre concerned if we stay in a 45 to 55 barrel level . One of the things is protect the dividend. We have lots of shareholders pension holders, that this is vitally important. This is really number one. Because its a big yield in a world where we have German Government bonds trading beyond japanese tenure this year. 5 plus yield. People are very excited about that. You dont need to rebase that at any stage. Well absolutely it is number one priority to protect that dividend. What about planning . You have been saying were planning possibly a bit higher but we wont see the rebound back to 100. Why not . If there was a descent amount of 90 barrels a day at 110 barrel. Why wonltt we see the big demand response. Its going to take time. It could take a long time. There is excess supply. The u. S. Production is growing and chinese demand has great growth in china. But not as high as it was. We have stock levels filling up all over the world. It wont be long before we see people putting them in ships and that takes a long time to work its way off. The price of oil is around 12 as well. Do you think we need to see further shakeout first . Well i dont know some of this tension, i was reading reports, uncertainty in iraq and concern about iraqi production. Im actually not worried about iraqi production from that. You could have geo political events that could move it but fundamentally that really drives the price down and i think the market is having a hard time. Is it 45 . Is it 55. Now interesting you said that, you didnt mention the phone call you probably make on a daily basis saying what about the shorts out there as well . Because i thought the shorts were getting squeezed aggressive. Specks still part of the oil price would you say . Well every market has people that invest not really in the physical barrel. Could be a little bit of a short squeeze but its more than the market really isnt sure where to base around here and to me 45 and 55 its still down a lot. Its going to stay there. I believe so. So i talk to him a lot and i speak to a lot of the ministers over at opec as well and the impression im getting and they refuse to say theyre in a game of chicken with u. S. Shell or the russians do you think opec and traditional producers are in a game of lets just see how long we can survive these lower prices and to challenge what happened in terms of those nonconventional suppliers because they believe it was the u. S. And others that created this decline. I hear theres high cost production thats growing. High cost production in north america in particular. Why should they as low cost producers shut in to allow the high cost oil to be produced. I think they do want to test this market and test it pretty hard. Do you fear the u. S. Shell boom is challenged before its even really begun to be a longterm part of our energy mix. Its come up 3 Million Barrels a day is quite extraordinary. We havent seen that happen anywhere in the world. You look at the rig count which is dropping like a stone now. I think youll see that shell is shell. It will really got parts of the shell can sustain 30 oil but those on the fringes of that will struggle and well see eventually by definition it will flatten out and drop. Let me ask you a question you have the latest judgment i think it was 3. 2 Million Barrels deemed to have been leaked out of that as well. Its 13. 7 billion. Do you feel youre getting through these issues now . Youre in the home run in terms of the issues concerning them. So what just finished and its going on this week i cant say much but its in the trials right now is a look at the to develop penalties and trials. The second was to look at the spill response. How bp responded to the spill and cleaned up and the ruling was we were not grossly negligent in that. We had about 50,000 people working around the gulf on that. Its working its way through. This thing could go on for a long time. Everybody sort of realizes now this is a long process. Well final question, russia, you have just under 20 stake in that as well . Whats the future in that operation. The profit was 500 million this time around. Weve been there this month for 25 years. We have a long history and we have a good relationship. Were looking at the tensions around ukraine. Russia is the largest Oil Producing country today on the planet. We think this is a very longterm investment. We will not do anything outside of we will stay within the sanctions. John talked to me from blackstone talked to me about the weaponization of energy Going Forward. Do you fear though that given the ukraine situation its not frozen but its on going and the racheting up of the pressure will fall upon the Energy Sector and your relationship to put more pressure on the kremlin . I dont think well play a role in that. But as far as your ability to attend board meetings and have the alliance and continuing operations . I dont think so. The sanctions are pretty clear. I can operate and work there and interact as a member of the board. We have people working with them on Environmental Programs and working inside the Company Helping them. They adjusted their plan dramatically. They are behaving like any of the other majors in terms of responding to things. I dont foresee that. Youre always very generous with your time. Thank you very much indeed for talking to us today. Bob dudley from ceo talking about a host of issues from the price he thinks will stay where it is now and how bp was perhaps in a better position to cope with some of these challenges and maybe some of the rivals. Steve thank you so much. You got him to talk about everything from sanctions in russia to its exposure and what to expect Going Forward. Bp one of the out performers today. Now sticking to oil, do you think, dear viewer the price of oil has seen a bottom . Let us know what you think. Join the conversation here on Worldwide Exchange. You can get in touch with us by email. Tweet us at cnbcwx. As soon as we see a turn around everybody is speculating. Well 11 rally in the last two days. That is notable. I know it is. It might well be. We had a bet earlier on. I thought we had hit a bottom at that time and oil was at 42. Exactly. Which i was wrong. You won. You owe me a cake. You got it. After break. Italys new president is being sworn in after he was elected by parliament on saturday to replace napalitano. He is 73 years old. Hes had a whole host of previous positions in government. Theres a quote here thats nice. Its often said the italian president needs at least four important qualities. Deep knowledge of the political scene, intimate understanding of the constitution and International Standing and empathy with public opinion. So thats just taking place just as were here on the new swearing in of the italian president. From italy to greece. Greeces new government offered an olive branch to creditors by dropping calls of a write off of its debt and proposing a swap for growth linked bonds. The finance minister also told investors that the government will press ahead with reforming the greek economy. Its not clear if the proposals were discussed with the ecb or European Unions officials. By the way, i found this meet and greet to be kind of awkward. I was cringing a little bit. It was a meeting. They both had positive things to say about each other afterwards. Breath of fresh air was a quote. It seemed to go well. Fine. Looking at the greek bonds, yields there pushing lower across the board. Weve seen a big drop in the greek bond yields on the back of the latest developments. Were getting them on a day by day basis. And yields on the german bond falling below japans tenure. This is the first time on report. So an active discussion around bonds and where to put your money. Lets discuss more with our next guest. The fixed Income Portfolio manager. Thank you for joining us here in studio. Thank you. Despite record low yields investors are still gravitating toward the flight to safety trade. What do you think this tells us about how investors feel about where the markets are headed especially around the deflationary fears here in the euro zone. A lot buy bonds because you have regulations and maybe, for example, dutch Pension Funds are obliged to buy bonds. There is flight to quality and the qe in japan is huge and the Japanese Central bank is obliged to buy them because they have to buy many bonds around the world. Yields drop dramatically. Sometimes negative and thats a flight to low yield. Inflation is negative. We have to make the effort to think in terms of real rates instead of nominal rates. Why did you tell your entire division in italian and spanish bonds. It was in early january because we told that there were two major events in europe in january. First the qe finally announced by mr. Draghi. The qe was already in the price of these bonds so maybe we could experience another very small tightening of the spreads but we didnt have so much to make. On the other side the greek election could have lead to a surprise. So you have a very small expectation of gain and a very large spread widening probability. When looking at this drop this further drop that we have seen in german yields versus japanese yields those are the lowest seen on record what is that telling you . Some might speculate were heading toward more of a japan japanification of europe and others might say it has to do with the quantitative easing. Yeah its so huge that the german bond can continue to fall and now we cannot speak anymore about the japaneseation of the bond. Yields can go to almost zero. Thats why we think that strategy, that globally speaking were more bullish on the u. S. Yields rather than european yields. But theres investors sal evacuating at the yields when looking at the greek bond markets. Some of the tenure add about 14 . Would you recommend investors to get in now and buy that debt. Not at all. But even if you negotiations perhaps will come to a close at some point in the next couple of days. I have two answers, first and foremost im not sure that many investors hold greek debt because greek debt is held by institutions such as Central Banks and European Union and ecb itself. Its not for investors. Secondly i would not recommend it first because the risk is huge and secondly because did you see the slope of the curve is negative and when there is a negative slope of the curve it means that there is a huge huge risk. When you have rates at 13 or 14 it means the slope is dangerous. The u. S. Tenure is at a 21 month low. You would think with the u. S. Economy seeing growth of 2. 3 and sbelacceleration of jobs growth they would put their money in equities versus bonds but thats not the case. Its a paradox in the u. S. Because we agree growth is higher. Lets say around 3 this year. Unemployment is going down and the fed could start to have a monetary policy. If you read all the books of economy you surely read when you were a student its not time to buy u. S. Treasuries but its a pair dock. Im very bullish on u. S. Treasuries because the last factor of the behavior of the u. S. Treasury yield is inflation and inflation is decreasing sharply. Fixed Income Portfolio manager. Thank you so much for joining us and giving your outlook on bonds. Appreciate it. Now u. S. Auto makers will they continue to enjoy a ride in the fast lane. Manufactures are expected to post another set of solid sales for the first month of the year. Well be joined with a preview on that. Also were still talking about the super bowl. Find out exactly how many people tuned in for this years game and katy perrys roaring performance on the back of a mechanic tiger. Well be back with more of this. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back. Lets take a look at the european heat map and were firmly in positive territory. In fact the stocks europe 600 index up about 1. 3 . Whats fuelling the rally . A lot has to do with the rally in oil prices and energy in oil stocks pushing the stocks to a new seven year high so a rally continues when it comes to european markets vastly outperform outperforming. We are in the green across the board. The big out performer is the french markets. Interestingly enough if we switch the focus to currencies where theres been an act of discussion around the weaker euro providing a boost to exports. That story holding true with the euro weakening against the u. S. Dollar. Now at 113. The big question is will the euro at some point trade in parady with the u. S. Dollar. What does this mean for asia . Weak pmi data yesterday did weigh in on Investor Sentiment. Lets check in with samantha with the latest on trade in asia. Over to you. A bit of a mixed picture is what we looked at in asia. Lets start off with india because we saw a Rate Decision come through at 7. 75 . Of course the central bank is watching the rebound in crude and saying that theyre waiting for the annual budget to be past the end of the month before any new decisions are made. That being said, surprise australias market to rallying off the back of the rate cut record low. Its still overvalued and the weaker dollar is needed to rebalance the economy and of course were seeing them react to that. Also pointing out the rally there of 2. 5 . 3,205 3,205 points is where that market closed. Five days of losses and buyers back in the Chinese Markets but still profit warnings coming thick and fast from Chinese Companies today thats a theme were seeing from Chinese Companies. Interestingly enough shan