BP 2010 Annual Report Download - page 50

Businessreview
• On17February2010,theTNK-BPboardofdirectorsendorsed
investmentprojectstotallingmorethan$1.8billiontobespentin2010
–2012.Ofthisamount,$1.7billionisallocatedfortwomajorupstream
projects:fullelddevelopmentandcreationofregionalinfrastructurein
theeasternpartoftheUvatgroupofeldsandfurtherdevelopmentof
theVerkhnechonskoyeoileldinEastSiberia.Membersoftheboard
alsoendorsedTNK-BP’sparticipationinajointventurebetween
NationalPetroleumConsortiumLLPandPetroleosdeVenezuela
(PDVSA),thestateoilcompanyofVenezuela,toappraiseanddevelop
theJUNIN6blockinVenezuelaandtoreleasefundingof$180million
tosupporttheseactivitiesin2010–2012.
• On28May2010,TNK-BPannouncedcompletionofadealtoacquire
100%oftheVikOilgroupofcompaniesintheUkraine.PreviouslyVik
Oilowned118fuelstationsin13Ukrainianregions,aswellas8oil
depots,49petroltankersand122landplotsinvariousstagesof
development.TNK-BPpaid$302millionfortheseinterests.
• On28February2011,TNK-BPannouncedthatithadsolditsinterestin
theKovyktagaseldtoGazprom.
Sakhalin
BPhasinterestsinSakhalinthroughajointventurecompany,Elvary
Neftegaz,inwhichBPholdsa49%equityinterest,anditspartner,Rosneft,
holdstheremaining51%interest.Duringtheyear,ElvaryNeftegaz,viaits
Russianafliate,heldgeologicalandgeophysicalstudieslicenceswiththe
RussianMinistryofNaturalResourcesandEcology(MNRE)toperform
explorationseismicanddrillingoperationsinalicenceareaofftheeast
coastofRussia.Todate,2Dand3Dseismicdatahasbeenacquiredand
fourwellshavebeendrilledinthelicencearea.In2010,additional
electromagneticsurveyswereperformedinadvanceoffuturedrilling
commitments.Inthefourthquarterof2010,thevalueofBP’sinvestment
inSakhalinwaswritten-downtoreectthecurrentoutlookonthefuture
recoverabilityoftheinvestment.
MiddleEastandPakistan
ProductionintheMiddleEastconsistsprincipallyoftheproduction
entitlementofassociatesinAbuDhabi,wherewehaveequityinterests
of9.5%and14.67%inonshoreandoffshoreconcessionsrespectively.
• On3January2010,BPreceivedapprovalfromthegovernmentof
Jordantojointhestate-ownedNationalPetroleumCompanytoexploit
theonshoreRishaconcessioninthenorth-eastofthecountry.BP
establishedanofceinFebruaryandhasstarteditsexplorationand
appraisalworkprogramme,includingcommencementofa
5,000-squarekilometreseismicprogramme.
• On11October2010,after32yearsasoperatoroftheSharjah
concessionarea,BPagreedtotransferitsoperatorshipofthe
concessiontothegovernmentofSharjah.BPwillretainitsequity
ownershipof40%oftheconcessionuntilexpiryinNovember2013.
• During2010,majormilestonesachievedintheOmanKhazzan
Makaremgasappraisalprogrammeincludedtheawardofthecontract
forearlyengineering,designandconceptstudiesforthepotential
long-termdevelopmentofhydrocarbonresourcesintheblock,andthe
commissioningofearlywelltestfacilities.
Iraq
FollowingasuccessfulbidwithPetroChinatoruntheRumailaoileldin
June2009,thetechnicalservicecontract(TSC)becameeffectiveon
17December2009.BPholdsa38%shareandistheleadcontractor.
Rumailaisoneoftheworld’slargestoileldsandwasdiscoveredbyBP
in1953.ItcurrentlyproducesapproximatelyhalfofIraq’soilexportsand
comprisesveproducingreservoirs.BPtogetherwithitspartnersis
activelyrefurbishingthewellsandfacilities.
• On1July2010,theRumailaOperatingOrganization(ROO)was
establishedandbegantotakeoveroperatorshipoftheRumailaoileld
fromSouthOilCompany(SOC),oneofthestate-ownedoilcompanies
inIraq.TheROOismadeupofapproximately4,000assigneesfrom
BP,PetroChinaandSOC,anditscreationisoneoftherststepsinthe
plantogrowRumailaproductionto2.85millionbarrelsperdayoverthe
nextfewyears.

• InSeptember2010,BPandPetroChina,astheinternationalpartnersin
theROO,signedanagreementwiththeBritishCounciltofund
dedicatedEnglishlanguagetuitionforapproximately500employeesof
theROO.TheBritishCouncilteacherswillbebasedintheRumaila
oileldandprovidetrainingforthecurrentEnglishlanguageteachersin
SOCandthelocalNorthRumailaVillageschool.AccordingtotheTSC,
BPandPetroChinaarerequiredtospend$5millionperyearon
educationandthisagreementwiththeBritishCouncilistherstmajor
programmefundedaspartofthiscommitment.
• InDecember2010,asaresultofincreasingactivitythroughout2010,
productionwassustainedat10%abovetheinitialproductionrateto
achievetheimprovedproductiontargetwhichistherstsignicant
milestoneintherehabilitationofRumaila.AchievementofIPTwas
formallyagreedwiththeGovernmentofIraqon25December2010and
consequentlytheContractors(BPandPetroChina)inaccordancewith
theTSC,becomeeligibleforServiceFeesduring2011.
Australasia
Australia
BPisoneofsevenpartnersintheNorthWestShelf(NWS)venture.Six
partners(includingBP)holdanequal16.67%interestintheinfrastructure
andoilreservesandanequal15.78%interestinthegasandcondensate
reserves,withaseventhpartnerowningtheremaining5.32%ofgasand
condensatereserves.TheNWSventureiscurrentlytheprincipalsupplier
tothedomesticmarketinWesternAustraliaandoneofthelargestLNG
exportprojectsinAsiawithveLNGtrainsainoperation.
• TheNorthRankin2projectlinkingasecondplatformtotheexisting
NorthRankinAplatform,sanctionedin2008,remainsontrackfor
start-upinlate2012.Oncompletion,theNorthRankinAandNorth
RankinBplatformswilloperateasasingleintegratedfacilityand
recoverlow-pressuregasfromtheNorthRankinandPerseus
gaselds.
• TheJanz-Ioeld(BP5.375%)development,whichispartofthe
GreaterGorgonproject,isontrack.TheJansz-Ioeldwillbedeveloped
aspartoftheGreaterGorgonproject,whichwillcomprisethreeLNG
trains,eachwithacapacityof5milliontonnesperannum(mtpa),on
BarrowIsland,withrstgasexpectedin2014.Aspartofthis,a
unitizationandunitoperatingagreementhasbeenexecutedwiththe
jointventurepartnersandsalesandpurchaseagreementsforthe
wellheadsaleofrawgasandrepurchaseofLNGex-BarrowIslandhave
beenexecutedbetweenBPandShell.
• InJanuary2011,BPannouncedthatithadbeenawardedfour
deepwateroffshoreexplorationblocksintheCedunaSubBasinwithin
theGreatAustralianBight,offthecoastofsouthAustralia.
Eastern Indonesia
• O n26November2010,BPwasawardeda100%interestintheNorth
ArafuraoilandgasPSAinonshorePapuaprovince.ThePSAwas
signedinJakartabyrepresentativesofthegovernmentandBP.The
NorthArafuraPSAislocatedonthecoastoftheArafuraSea,480
kilometressoutheastoftheBP-operatedTangguhplant,coveringan
areaofjustover5,000squarekilometres.BPexpectstocommence
seismicoperationsontheblockinthenearfuture.
Midstream activities
Oilandnaturalgastransportation
Thegrouphasdirectorindirectinterestsincertaincrudeoilandnaturalgas
transportationsystems.Thefollowingnarrativedetailsthesignicant
eventsthatoccurredduring2010bycountry.
BP’sonshoreUScrudeoilandproductpipelinesandrelated
transportationassetsareincludedunderReningandMarketing
(see page 55).
aAnLNGtrainisaprocessingfacilityusedtoliquefyandpurifyLNG.
48BPAnnualReportandForm20-F2010