BP 2006 Annual Report Download - page 26

– In December 2006, BP, in common with the other partners in the
Jusepin property, reached agreement with PDVSA for compensation
in return for the relinquishment of our interest in the property.
– Cerro Negro is a non-BP-operated property that is a heavy oil project
from which production is sold directly by BP. The Venezuelan
government has communicated its intention of converting this strategic
association to an incorporated joint venture. It is too early to determine
the effect of this.
– In 2005, changes were made by the Venezuelan government to
increase corporate income taxes from 34% to 50% on those
companies operating under operating service agreements. Changes
were also made in 2006 to the taxation of oil extraction companies,
such as Cerro Negro. From 1 June 2006, a new extraction tax at a
maximum rate of 33.33% was introduced (the existing royalty of
16.67% can be offset against the new extraction tax) and, on
25 September 2006, the corporate income tax rate was raised from
34% to 50% with effect from 1 January 2007.
Colombia
– In Colombia, BP’s net production averaged 50mboe/d. The main part of
the production comes from the Cusiana, Cupiagua and Cupiagua South
Fields, with increasing new production from the Cupiagua extension
into the Recetor Association Contract and the Floren˜ a and Pauto fields
in the Piedemonte Association Contract. In March 2006, cumulative
production from the BP-operated fields reached 1 billion barrels gross
since operations began in 1992.
– In December 2006, the corporate income tax rate was reduced from
its current rate of 35% to 34% from 1 January 2007 and to 33% from
1 January 2008.
Argentina and Bolivia
– In Argentina and Bolivia, activity is conducted through Pan American
Energy (PAE), in which BP holds a 60% interest, and which is
accounted for by the equity method since it is jointly controlled. In
2006, total production of 145mboe/d represented an increase of 7%
over 2005, with oil increasing by 4% and gas by 10%. The main
increase in oil production came from the continued focus on drilling and
waterfloods in Golfo San Jorge in Argentina, where oil production was
60mb/d, compared with 58mb/d in 2005. The field is now producing
at its highest level since inception in 1958 and further expansion
programmes are planned. PAE also has interests in gas pipelines,
electricity generation plants and other midstream infrastructure assets.
– In November 2006, PAE and all other oil and gas companies with
operations in Bolivia entered into agreements with the state-owned
oil company Yacimientos Petrolı
´feros Fiscales Bolivianos (YPFB) that
establish governmental control over the country’s hydrocarbon
resources. The agreements have been approved by the Bolivian
Congress. YPFB will be responsible for marketing all hydrocarbons
produced in Bolivia and for determining the terms of sales contracts.
Africa
Algeria
– BP, through its joint operatorship of In Salah Gas with Statoil and the
Algerian state company, Sonatrach, supplied 300bcf (gross) of gas
to markets in Algeria and southern Europe during 2006. The carbon
dioxide (CO
2
) capture system, part of the In Salah project (BP 33.15%),
is one of the world’s largest CO
2
capture projects.
– BP, through its joint operatorship of In Amenas with Statoil and
Sonatrach, completed the development of the In Amenas project
(BP 12.5%). First production was achieved in June 2006.
– From 1 August 2006, a windfall profit tax was announced that applies
to certain producers when the monthly average price of a barrel of oil
exceeds $30. At present, the only asset of BP affected by this is the
In Amenas project.
Angola
– In Block 15 (BP 26.7%), development of Kizomba C commenced in the
first quarter of 2006. Development of Kizomba A Phase II continued,
with first production planned for the end of 2007.
– In Block 17 (BP 16.7%), development activities were completed and
the FPSO moored on the Dalia project. First production commenced in
December 2006. Development on the Rosa project, a tie-back to the
Girassol hub, continued, with first production expected by the end
of 2007.
– In Block 18 (BP 50% and operator), work has continued on the Greater
Plutonio development in line with expectations to commence
production by the end of 2007.
– In Block 31 (BP 26.7% and operator), three additional discoveries were
made in 2006. There have been a total of 12 discoveries that are at
various stages of assessment of commercial viability.
– We are participating in the Angola LNG project (BP 13.6%).
Egypt
– In Egypt, the Gulf of Suez Petroleum Company (GUPCO) (BP 50%), a
joint venture operating company between BP and the Egyptian General
Petroleum Corporation, carries out our operated oil and gas production
operations. GUPCO operates eight PSAs in the Gulf of Suez and
Western Desert and one PSA in the Mediterranean Sea, encompassing
more than 40 fields.
– The Temsah redevelopment project was completed and production
achieved in the second quarter of 2006.
– Progress continued on the Saqqara field (BP 100%) development
project, with first production expected in the first quarter of 2008.
– In June 2006, the Egyptian Natural Gas Holding Corporation (EGAS),
BP, SEGAS and Eni signed a framework agreement marking a major
step forward for the development of the second liquefied natural
gas (LNG) export train at the Damietta site on the Egyptian
Mediterranean coast.
Asia Pacific
Indonesia
– BP produces crude oil and supplies natural gas to the island of Java
through its holding in the Offshore Northwest Java Production Sharing
Agreement (BP 46%).
– During 2006, progress continued on the Tangguh LNG project (BP
37.2% and operator). The project development includes offshore
platforms, pipelines and an LNG plant with two production trains.
First LNG is expected by the end of 2008.
Vietnam
– BP participates in the country’s largest project with foreign investment,
the Nam Con Son gas project. This is an integrated resource and
infrastructure project, including offshore gas production, pipeline
transportation system and power plant. In 2006, natural gas production
was 392mmcf/d gross, an increase of 13% over 2005. This increase
was mainly due to higher demand resulting from continuing growth
in the economy. Gas sales from Block 6.1 (BP 35% and operator) are
made under a long-term agreement for electricity generation in
Vietnam, including the Phu My Phase 3 power plant (BP 33.33%).
China
– The Yacheng offshore gas field (BP 34.3%) supplies, under a long-term
contract, 100% of the natural gas requirement of Castle Peak Power
Company, which provides around 50% of Hong Kong’s electricity.
Some natural gas is also piped to Hainan Island, where it is sold
to the Fuel and Chemical Company of Hainan, also under a long-
term contract.
Australia
– We are one of six equal partners in the North West Shelf (NWS)
venture. Each partner holds a 16.7% interest in the infrastructure and
oil reserves and a 15.8% interest in the gas reserves and condensate.
The operation covers offshore production platforms, a floating
production and storage vessel, trunklines and onshore gas processing
plants. The NWS Venture is currently the principal supplier to the
domestic market in Western Australia. During 2006, progress
continued on the construction of a fifth LNG train (4.7 million tonnes
a year design capacity), with first throughput expected in 2008.
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