BP 2007 Annual Report Download - page 24

Norway
In 2007, our total production in Norway was 56mboe/d, a 15% decrease
on 2006. This decrease in production was driven by natural decline.
Significant activities were:
– Progress on the Valhall (BP 28.1% and operator) redevelopment
project continued during 2007. A new platform is scheduled to
become operational in 2010, with expected oil production capacity of
150mb/d and gas handling capacity of 175mmcf/d.
– In June, we announced the sanction of the combined Skarv and Idun
development. This development is located in the Norwegian Sea
approximately 200 kilometres west of Sandnessjøen. The fields will be
developed using a Floating Production Storage and Offloading vessel
(FPSO), subsea wells and an 80-kilometre gas export pipeline
connecting to the Asgard Transport System.
Netherlands
On 1 February 2007, we completed the sale of our exploration and
production and gas infrastructure business in the Netherlands to the Abu
Dhabi National Energy Company, TAQA. This included onshore and
offshore production assets and the onshore gas storage facility, Piek Gas
Installatie, at Alkmaar.
Rest of World
Development expenditure in Rest of World (excluding midstream) was
$5,045 million in 2007, compared with $4,522 million in 2006 and
$3,735 million in 2005.
Rest of Americas
Canada
– In Canada, our natural gas and liquids production was 52mboe/d in
2007, a decrease of 9% compared with 2006. The year-on-year
decrease in production is mainly due to natural field decline.
– In January 2008, we sanctioned the Noel Cadomin sweet gas project.
A total of 130 wells are planned to be drilled with first production
expected in 2009.
– The Mist Mountain coalbed gas project is in the appraisal stage, which
is expected to last for a number of years. The purpose of this stage is
to assess the viability of coalbed gas production in British Columbia’s
Crowsnest coalfield by proving technologies and practices that will
allow for the design of an environmentally sustainable commercial
project. We are seeking British Columbia government approval to
access public land for this project.
– On 5 December 2007, BP announced it had signed a memorandum of
understanding with Husky Energy Inc. to form an integrated North
American oil sands business. The transaction is expected to be
completed by the end of March 2008.
Trinidad
– In Trinidad, natural gas production volumes increased by 7.5% to
2,434mmcf/d in 2007. The increase was delivered as a result of
improved operating efficiency leading to increased throughput for
Atlantic LNG Train 4, increased demand from the domestic market,
full ramp up of the Cannonball field and the start-up of two new fields
in 2007. Liquids production declined by 10mb/d (25%) to 30mb/d in
2007 from 40mb/d in 2006 as a result of the natural decline from high
condensate fields.
– The Mango and Cashima fields reached first gas on 17 November
2007 and 15 December 2007 respectively. Mango and Cashima were
designed and built in Trinidad using a standardized design with 85% of
fabrication hours and 65% of project management hours contributed
by local Trinidad workers.
Venezuela
– In Venezuela, due to the transition to the incorporated joint venture
(IJV) entities in accordance with Venezuelan regulations that came into
force in 2006, 2007 was the first full year of reduced interest. As a
result of the aforementioned, and the OPEC quotas, our 2007 liquids
production decreased by 10mb/d compared with 2006.
– On 26 June 2007, BP agreed to the migration of the Cerro Negro
operations to an IJV without diluting its interest and signed a binding
memorandum of understanding reflecting agreement to the significant
terms and conditions for migration to, and operation of, the IJV.
Signature of the final conversion contract, and finalization of the rest
of the required procedures, is expected to take place in the first
quarterof2008.
Colombia
– In Colombia, BP’s net production averaged 46mboe/d. The reduction
of 4mboe/d compared with 2006 is mainly due to natural field decline,
partially compensated by additional gas sales. 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 September, BP was awarded two offshore blocks in the Caribbean
that cover approximately 6,200 square kilometres. One block, RC4 (BP
35% and operator), will be a joint venture with state-owned Ecopetrol
and Petrobras, while BP will have sole rights to develop the other,
RC5 (BP 100% and operator).
– In December 2006, the Colombian Congress passed new legislation to
reduce corporate income taxes from 35% to 34% in 2007 and 33%
in 2008.
– After months of negotiations with Ecopetrol, agreement around
extension of the current association contracts was not reached.
However, new commercial agreements are in the final stages of
negotiation to allow partners to access new investment opportunities.
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
2007, total PAE gross production of 264mboe/d represented an
increase of 1% over 2006. This increase came from the continued
focus on drilling in Golfo San Jorge in Argentina. 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.
– On 27 April, PAE entered into an agreement with the Argentine
province of Chubut, which provides for the concession term extension
and includes certain investment commitments related to exploration
and production on the Cerro Drago
´n block, located in Golfo San Jorge
basin. On 25 June, PAE signed a similar agreement with Santa Cruz
province. These are the first agreements entered into to extend the
term of concessions in Argentina, and were formalized under the
framework established by a law recently passed by the Argentine
Congress that will allow PAE to undertake long-term projects.
– On 13 July, PAE signed a loan agreement with the International
Finance Corporation (IFC) for the amount of $550 million. This loan will
be used to finance a programme of capital investment in the Cerro
Drago
´n block in Argentina. The last tranche will mature in April 2018.
– On 2 May, following notarization, the new agreements entered into by
PAE and other oil and gas companies with Yacimientos Petroliferos
Fiscales Bolivianos (YPFB) in Bolivia in November 2006 became
effective. These agreements are intended to run until 31 December
2026 and establish the commitment assumed by each of the
companies to supply the Bolivian domestic gas market. YPFB will be
responsible for marketing all hydrocarbons produced in Bolivia and for
determining the terms of relevant gas sales contracts. Along with
these changes, the volumes that Chaco (an exploration and production
company operated in Bolivia owned 50% by PAE and 50% by YPFB,
30% BP net) is allowed to export have been significantly increased
resulting in higher overall gas sales realizations for Chaco.
– In a continuation of changes made to the export tax since its inception
in 2002, the Argentine government issued a resolution in November
2007 increasing the export tax rate on oil when the international crude
oil price is US$60.9/bbl or higher.
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