BP 2014 Annual Report Download - page 219

Africa
BP’s upstream activities in Africa are located in Angola, Algeria, Libya,
Egypt and Morocco.
In Angola, BP is present in nine major deepwater licences offshore and is
operator in four of these. Two of these are in production (blocks 18 and
31), and two are in the exploration phase (blocks 19 and 24). The first
exploration well on block 24 (Katambi-1) is currently being drilled.
• Following a successful drill-stem test in May, BP had another oil and
gas discovery in the pre-salt play of Angola in block 20 (BP 30%)
operated by Cobalt International Energy, Inc. This discovery (the Orca-1
well) is the second pre-salt discovery in block 20. The Orca-2 appraisal
well is currently being drilled.
• Production commenced from the Total-operated CLOV (Cravo, Lirio,
Orquidea and Violeta) major project in Angola (BP 16.67%) in June.
Plateau production of 160,000 barrels of oil was achieved in September.
• In the first quarter the Angola LNG plant (BP 13.6%) produced and sold
a number of LNG cargoes, along with its first LPG, pressurised butane
and condensate cargoes. Following a technical incident in April 2014,
which caused an unplanned interruption to production, the plant’s
planned shutdown was brought forward to address both technical and
plant capacity issues. The plant is projected to re-start fully in 2016.
• In December, several fields in Angola were subject to impairment
charges, primarily as a result of changes in estimates of reserves and
resources and decreases in near-term oil price assumptions. The total
impairment charge during the year was $968 million, of which the
Plutão, Saturno, Vénus and Marte (PSVM) area was subject to an
impairment charge of $859 million.
In Algeria, BP, Sonatrach and Statoil are partners in the In Salah (BP
33.15%) and In Amenas (BP 45.89%) projects which supply gas to the
domestic and European markets. BP’s total assets in Algeria at
31 December 2014 were $1,717 million ($290 million current and
$1,427 million non-current).
• The security assessment following the terrorist attack in January 2013
has been completed.
• BP also had an appraisal and exploitation agreement with Sonatrach in
the Bourarhat Sud block, located to the south west of In Amenas. This
asset was in the exploration phase and was BP-operated. The
Bourarhat agreement with Sonatrach expired on 23 September 2014.
Sonatrach and BP were granted a six-month period to negotiate new
terms and those negotiations commenced in the fourth quarter. With
insufficient certainty of success, BP recorded an exploration write-off
of $524 million.
In Libya, BP is in partnership with the Libyan Investment Authority (LIA)
to explore acreage in the onshore Ghadames and offshore Sirt basins,
covered under the exploration and production-sharing agreement (EPSA)
ratified in December 2007 (BP 85%). BP’s total assets in Libya at
31 December 2014 were $515 million ($38 million current and
$477 million non-current).
BP served the National Oil Corporation with notices of force majeure on
17 August. This is the result of continued civil unrest in Libya, which has
made it impossible for BP to undertake its obligations under the EPSA
safely and securely. If the period of force majeure continues for two
years, the EPSA may terminate if the parties have failed to reach an
agreeable arrangement.
In Egypt, BP and its partners currently produce 10% of Egypt’s liquids
production and more than 30% of its gas production. BP’s total assets in
Egypt at 31 December 2014 were $7,715 million, of which $2,266 million
were current and $5,449 million were non-current. The current assets
include trade receivables and Egyptian pound denominated cash.
Egypt is moving forward towards the completion of the political roadmap
set out in June 2013. The government is committed to completing the
current transitional period and has already completed the first two
milestones, the adoption of the Constitution by a majority vote earlier this
year and the election of President Al Sisi in June. These are to be
followed by Parliament elections scheduled to take place through two
phases in March and April of 2015. Economic conditions remain
challenging despite the government’s clear focus on triggering economic
recovery and embarking on widescale national projects (such as the Suez
Canal). Egypt is also holding an Economic Summit in March with the
attendance of major foreign investors and with the government targeting
significant investments in projects across the various sectors. Another
key priority for the government is improving general security conditions
and combating extremist elements in North Sinai.
• We achieved first gas from the DEKA project offshore Egypt in August
with the start of production from the Denise South-6 well. The DEKA
project is centred on the Denise and Karawan gas fields in the Temsah
concession (BP 50%) in the East Nile.
• In September, we were awarded the El Matariya and Karawan
concessions in Egyptian Natural Gas Holding Company’s bid rounds
through partnering (50%) with Dana Gas and ENI respectively.
Karawan is located in the Mediterranean Sea in the northwestern part
of Egypt’s economic waters. El Mataria is an onshore block and BP is
an operator. BP and its partners have committed to invest a total of
$105 million in the blocks during the first phase.
• BP started drilling the Atoll-1 HPHT deepwater exploration well, the
second exploration well in the North Damietta offshore concession, in
September. Well performance is currently exceeding target pace and
drilling operations are expected to be completed in second half of 2015.
• West Nile Delta Project Concessions amendment was approved by the
Egyptian cabinet in December and will now proceed to the ratification
process in 2015.
In Morocco, BP has a non-operating interest in each of the Essaouira
Offshore (BP 45%), Foum Assaka Offshore (BP 26.325%) and
Tarhazoute Offshore (BP 45%) blocks in the Agadir Basin, offshore
Morocco. The exploration periods run until 2017.
Asia
BP has activities in Western Indonesia, China, Azerbaijan, Oman, Abu
Dhabi, India and Iraq.
In Western Indonesia, BP participates in LNG exports through our interest in
Virginia Indonesia Company LLC (VICO), the operator of Sanga-Sanga
PSA (BP 38%) supplying gas to the Bontang LNG plant in Kalimantan.
Sanga-Sanga currently delivers around 14% of the total gas feed to Bontang,
Indonesia’s largest LNG export facility and one of the world’s largest LNG
plants. It has a capacity of 22 million tonnes of LNG per annum and output of
more than 18 million tonnes.
In addition, BP participates in the Sanga-Sanga CBM PSA (BP 38%).
Another CBM PSA, Tanjung IV (BP 44%), in the Barito basin of Central
Kalimantan, will be relinquished pending the approval from the
government of Indonesia.
In China, during the year BP has exited blocks 42/05 (BP 40.82%), 43/11
(BP 40.82%) and 54/11 (BP 100%) in the South China Sea in accordance
with the PSAs and with government approvals. BP has a 30% equity
stake in the 7 million tonnes per annum capacity Guangdong LNG
regasification and pipeline project in south-east China, making it the first
foreign partner in China’s LNG import business. The terminal is supplied
under a long-term contract with Australia’s North West Shelf venture.
BP and the China National Offshore Oil Corporation (CNOOC) announced
a heads of agreement in June for the supply of up to 1.5 million tonnes of
LNG per year over 20 years starting in 2019.
In Azerbaijan, BP invests more than any other foreign investor, operates
two PSAs, Azeri-Chirag-Gunashli (ACG) (BP 35.8%) and Shah Deniz (BP
28.83%), and also holds other exploration leases.
• In 2012 further EU and US regulations concerning restrictive measures
against Iran were issued. The Shah Deniz joint operation and its gas
marketing and pipeline entities, in which Naftiran Intertrade Co. Ltd
(NICO) has an interest, were excluded from the main operative
provisions of the EU regulations as well as from the application of the
new US sanctions, and fall within the exception for certain natural gas
projects under Section 603 of the US Iran Threat Reduction and Syria
Human Rights Act of 2012. The Shah Deniz Stage 2 project (referred to
below) is also excluded from the EU and US sanctions. For further
information see International trade sanctions on page 238.
• The West Chirag platform came online in January, completing the
Chirag oil project (BP 35.8%), sanctioned in 2010.
Additional disclosures
*Defined on page 252. BP Annual Report and Form 20-F 2014 215