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26. Derivative financial instruments – continued
The following table shows the fair value of derivative assets and derivative liabilities held for trading, analysed by maturity period and by methodology
of fair value estimation. This information is presented on a gross basis, that is, before netting by counterparty.
$ million
2013
Less than
1 year 1-2 years 2-3 years 3-4 years 4-5 years
Over
5 years Total
Fair value of derivative assets
Level 1 100–––––100
Level 2 3,118 981 399 83 20 30 4,631
Level 3 389 183 252 291 210 695 2,020
3,607 1,164 651 374 230 725 6,751
Less: netting by counterparty (1,106) (358) (99) – – – (1,563)
2,501 806 552 374 230 725 5,188
Fair value of derivative liabilities
Level 1 (87) –––––(87)
Level 2 (2,790) (733) (215) (36) (15) (31) (3,820)
Level 3 (138) (143) (131) (118) (100) (532) (1,162)
(3,015) (876) (346) (154) (115) (563) (5,069)
Less: netting by counterparty 1,106 358 99 – – – 1,563
(1,909) (518) (247) (154) (115) (563) (3,506)
Net fair value 592 288 305 220 115 162 1,682
$ million
2012
Less than
1 year 1-2 years 2-3 years 3-4 years 4-5 years
Over
5 years Total
Fair value of derivative assets
Level 1 187 6 ––––193
Level 2 3,766 1,088 520 216 46 10 5,646
Level 3 302 184 137 136 136 478 1,373
4,255 1,278 657 352 182 488 7,212
Less: netting by counterparty (1,500) (264) (87) (10) (7) (2) (1,870)
2,755 1,014 570 342 175 486 5,342
Fair value of derivative liabilities
Level 1 (189) –––––(189)
Level 2 (3,476) (810) (315) (78) (19) (28) (4,726)
Level 3 (144) (104) (99) (100) (84) (405) (936)
(3,809) (914) (414) (178) (103) (433) (5,851)
Less: netting by counterparty 1,500 264 87 10 7 2 1,870
(2,309) (650) (327) (168) (96) (431) (3,981)
Net fair value 446 364 243 174 79 55 1,361
Level 3 derivatives
The following table shows the changes during the year in the net fair value of derivatives held for trading purposes within level 3 of the fair value
hierarchy.
$ million
Oil
price
Natural gas
price
Power
price Other Total
Net fair value of contracts at 1 January 2013 105 304 (43) 71 437
Gains (losses) recognized in the income statement (47) 62 81 – 96
Purchases 110 1 – – 111
New contracts – – – 475 475
Settlements (143) (52) 10 (71) (256)
Transfers out of level 3 (43) (1) 36 – (8)
Exchange adjustments –(1)2 – 1
Net fair value of contracts at 31 December 2013 (18) 313 86 475 856
174 BP Annual Report and Form 20-F 2013