BP 2008 Annual Report Download - page 26

BP Annual Report and Accounts 2008
Performance review
Venezuela
• In Venezuela, despite the transition since 2006 of BP’s interests to
incorporated joint venture (IJV) entities with the state oil company
Petróleos de Venezuela, S.A. (PDVSA), and OPEC quotas, 2008 liquids
production increased by 3mb/d compared with 2007.
• In the second quarter of 2008, BP concluded the migration of the
Cerro Negro operations to an IJV with PDVSA while retaining the
same equity interest.
Colombia
• In Colombia, BP’s net production averaged 38mboe/d. The reduction
of 8mboe/d compared with 2007 is mainly due to natural field decline
and lower gas transfers from Recetor (BP 50%) to Santiago de las
Atalayas (BP 31%). 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 Floreña and Pauto fields in the Piedemonte
Association Contract.
• On 20 June 2008, the National Hydrocarbon Agency gave its official
approval for equalization of RC4 and RC5 Caribbean offshore blocks
with partners Ecopetrol and Petrobras, with the main objective of
simplifying partner relations and agreements. New equity interests
resulting from this approval are BP 40.6%, Ecopetrol 32% and
Petrobras 27.4%. Seismic operations for these two blocks were
completed successfully. Processing and interpretation of the data to
determine potential prospects for offshore field developments and
drilling operations is under way and is expected to be completed
in 2009.
Argentina, Bolivia and Chile
• In Argentina, Bolivia and Chile, activity is conducted through Pan
American Energy (PAE), a joint venture company in which BP holds
a 60% interest, and which is accounted for by the equity method.
In 2008, total PAE gross production of 250mboe/d represented an
increase of 3% compared with 2007. Most of this production comes
from the Cerro Dragón field in the provinces of Chubut and Santa
Cruz. The field is now producing at its highest level since inception of
the licence area in 1958. PAE also has other assets producing gas and
liquids in the Argentine provinces of Salta, Neuguén and Tierra del
Fuego, and in Bolivia, as well as interests in exploration areas,
pipelines, electricity generation plants and other midstream
infrastructure assets, primarily in Argentina.
• In 2007 and early 2008, PAE was granted extensions of the two
principal Cerro Dragón licence areas by the provinces of Chubut
and Santa Cruz in exchange for material long-term investment
commitments in exploration and production, and for long-term
commitments to local community and supplier development. The
licence expiry dates have been extended from 2017 to 2027, with
further extension potential to 2047.
• In May 2008, following its decree of 2006 requiring all private owners
of shares in Bolivian oil and gas companies to transfer back a majority
shareholding to the Bolivian national oil company Yacimientos
Petrolíferos Fiscales Bolivianos (YPFB), the Bolivian government
issued a second decree requiring this transfer to be made with
immediate effect. PAE, as the majority shareholder of Empresa
Petrolera Chaco S.A. (Chaco), a company created in the 1990s, was
affected by these decrees. PAE was required to sell approximately
1% of the share capital of Chaco to YPFB, such that YPFB would own
50% plus one share of the total. From May 2008 and into January
2009, PAE was in discussions with the government regarding the
decrees and options for implementation. However, on 23 January
2009, the president of Bolivia issued a decree nationalizing PAE’s
shareholding in Chaco. PAE is currently evaluating all options to
preserve the value of its shareholding.
• On 26 November 2008, the Argentine government issued a decree
creating a new regime called Petróleo PLUS. This regime is aimed at
increasing oil production and reserves. The detailed rules of Petróleo
PLUS were issued on 4 December 2008. On 15 December 2008,
PAE made its first applications under Petróleo PLUS for fiscal credit
certificates with the Secretary of Energy.
Africa
Algeria
• BP, through its joint operatorships of the In Salah Gas (33.15%) and
In Amenas (12.5%) projects, supplied 33mboe/d (BP net) to markets
in Algeria and southern Europe during 2008. This is a decrease of
15% from 39mboe/d in 2007 as a result of lower gross volumes at In
Salah due to planned turnaround maintenance and the impact of
lower entitlement in our PSAs driven by higher prices, partly offset by
improved operating efficiency at In Amenas. Further, BP, through its
joint operatorship of the Rhourde El Baguel field, received 4.4mboe/d
(BP net) of oil in 2008.
• Sonatrach and BP announced an exploration success with the Tin
Zaouatene-1 (TZN-1) discovery in the Bourarhet Sud Blocks 230 and
231. On 24 September 2008, BP moved into the second prospecting
period, which lasts for a further two years.
Angola
• In Angola, BP net production in 2008 was 202mboe/d, an increase of
45% from 2007 due to the start-up of the Mondo, Saxi and Batuque
(Kizomba C, BP 26.67%) fields, and the ramp-up of the Greater
Plutonio field (BP 50% and operator), more than offsetting the impact
of lower entitlement in our PSAs driven by higher prices in existing
fields. We expect to have invested over $15 billion in our Angolan
business by 2010.
• In January 2008, the Kizomba C project (BP 26.67%) came onstream
with the start-up of the Mondo field, followed by first production from
the Saxi and Batuque fields in July 2008. The Kizomba C development
is located approximately 140 kilometres off the coast of Angola in
water depths of nearly 800 metres.
• In June 2008, the Plutão, Saturno, Vênus and Marte (PSVM) project
was authorized by Sonangol. The programme is expected to comprise
four fields that lie in the north east sector of Block 31 (BP 26.67%
and operator), in a water depth of approximately 2,000 metres, some
400 kilometres north west of Luanda. Contracts have been awarded
and construction work started during 2008.
• During the third quarter of 2008, production was shut down at the
Greater Plutonio FPSO located in deepwater Block 18 (BP 50% and
operator), offshore Angola, due to operational issues. Production was
restarted on 12 October 2008. The adverse impact on full-year
production was 14mb/d.
• In the ultra deepwater Block 31 (BP 26.67% and operator), there was
further exploration success with the Portia and Dione wells, bringing the
total successes for Block 31 to 16. The Portia well is located in a water
depth of approximately 2,000 metres, some 386 kilometres north-west
of Luanda. The Dione well is located in a water depth of approximately
1,700 metres, some 390 kilometres north-west of Luanda.
Performance review
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