BP 2010 Annual Report Download - page 52

Businessreview
Inconnectionwithitstradingactivities,thegroupusesarangeof
commodityderivativecontractsandstorageandtransportcontracts.
Theseincludecommodityderivativessuchasfutures,swapsandoptions
tomanagepriceriskandforwardcontractsusedtobuyandsellgasand
powerinthemarketplace.Usingthesecontracts,incombinationwith
rightstoaccessstorageandtransportationcapacity,allowsthegroupto
accessadvantageouspricingdifferencesbetweenlocations,timeperiods
andarbitragebetweenmarkets.Naturalgasfuturesandoptionsaretraded
throughexchanges,whileover-the-counter(OTC)optionsandswapsare
usedforbothgasandpowertransactionsthroughbilateraland/or
centrally-clearedarrangements.Futuresandoptionsareprimarilyusedto
tradethekeyindexprices,suchasHenryHub,whileswapscanbetailored
topricewithreferencetospecicdeliverylocationswheregasandpower
canbeboughtandsold.OTCforwardcontractshaveevolvedinboththe
USandUKmarkets,enablinggasandpowertobesoldforwardinavariety
oflocationsandfutureperiods.Thesecontractsareusedbothtosell
productionintothewholesalemarketsandastradinginstrumentstobuy
andsellgasandpowerinfutureperiods.Storageandtransportation
contractsallowthegrouptostoreandtransportgas,andtransmitpower
betweentheselocations.Thegrouphasdevelopedariskgovernance
frameworktomanageandoverseethenancialrisksassociatedwiththis
tradingactivity,whichisdescribedinNote27totheFinancialstatements
onpages185-190.
Therangeofcontractsthatthegroupentersintoisdescribedin
Certaindenitions–commoditytradingcontracts,onpage82.
Oil and gas disclosures
Thefollowingtablesprovideadditionaldataanddisclosuresinrelationtoouroilandgasoperations.
Averagesalespriceperunitofproduction
 $perunitofproductiona
Europe North South Africa Asia Australasia Totalgroup
  America America    average
    Restof     
  Restof  North    Restof 
 UK Europe US America   Russia Asia 
Averagesalespriceb
Subsidiaries
2010
Liquidsc 76.33 81.09 70.79 48.26 71.01 74.87 – 78.80 75.81 73.41
Gas 5.44 7.16 3.88 4.20 2.80 4.11 – 4.05 7.01 3.97
2009
Liquidsc 62.19 60.73 53.68 30.77 52.48 57.40 – 61.27 57.22 56.26
Gas 4.68 7.62 3.07 3.53 2.50 3.61 – 3.30 5.25 3.25
2008
Liquidsc 89.82 93.77 89.22 64.42 91.61 89.44 – 97.20 86.33 90.20
Gas 8.41 6.96 6.77 7.87 4.90 4.46 – 3.63 9.22 6.00
Equity-accountedentitiesd
2010
Liquidsc – – – – 61.60 – 60.39 6.72 – 52.81
Gas – – – – 1.97 – 1.91 7.83 – 2.04
2009
Liquidsc – – – – 51.01 – 47.27 5.59 – 41.93
Gas – – – – 1.90 – 1.51 5.25 – 1.68
2008
Liquidsc – – – – 56.39 – 73.7 4.80 – 61.39
Gas – – – – 1.97 – 1.68 10.53 – 1.94

aUnitsofproductionarebarrelsforliquidsandthousandsofcubicfeetforgas.
bRealizationsincludetransfersbetweenbusinesses.
cCrudeoilandnaturalgasliquids.
dIt 
 iscommonforequity-accountedentities’agreementstoincludepricingclausesthatrequiresellingasignicantportionoftheentitledproductiontolocalgovernmentsormarketsatdiscounted
prices.
Averageproductioncostperunitofproduction
$perunitofproductiona
Europe North South Africa Asia Australasia Totalgroup
  America America    average
    Restof     
  Restof  North    Restof 
 UK Europe US America   Russia Asia 
Theaverageproductioncostper
unitofproductiona
Subsidiaries
2010 12.79 9.76 8.10 15.78 2.48 7.52 – 4.59 2.03 6.77
2009 12.38 10.72 7.26 14.45 2.20 6.05 – 4.35 1.60 6.39
2008 12.19 8.74 9.02 15.35 2.34 6.72 – 5.24 1.74 7.24
Equity-accountedentities
2010 – – – – 6.32 – 5.04 0.97 – 4.26
2009 – – – – 6.12 – 4.63 0.94 – 3.95
2008 – – – – 5.84 – 5.97 0.87 – 4.73

 Unitsofproductionarebarrelsforliquidsandthousandsofcubicfeetforgas.Amountsdonotincludeadvaloremandseverancetaxes.
a
50BPAnnualReportandForm20-F2010