BP 2005 Annual Report Download - page 70

68 Making energy more
Notes on financial statements continued
29 Investments in jointly controlled entities
The significant jointly controlled entities of the BP group at 31 December 2005 are shown in Note 51. The principal joint venture is the TNK-BP joint
venture. Summarized financial information for the group’s share of jointly controlled entities is shown below.
$ million
2005 2004 2003
TNK-BP Other Total TNK-BP Other Total TNK-BP Other Total
Sales and other operating revenues 15,122 4,255 19,377 7,839 2,225 10,064 1,864 1,795 3,659
Profit before interest and taxation 3,817 779 4,596 2,421 586 3,007 521 489 1,010
Finance costs and other
finance expense 128 104 232 101 69 170 37 65 102
Profit before taxation 3,689 675 4,364 2,320 517 2,837 484 424 908
Taxation 976 220 1,196 675 314 989 43 57 100
Minority interest 104 – 104 43 – 43 – – –
Profit for the year 2,609 455 3,064 1,602 203 1,805 441 367 808
Innovene operations – 19 19 – 13 13 – 18 18
Continuing operations 2,609 474 3,083 1,602 216 1,818 441 385 826
Non-current assets 11,564 6,310 17,874 11,715 5,112 16,827 10,312 3,663 13,975
Current assets 4,278 1,682 5,960 2,565 1,283 3,848 1,950 1,427 3,377
Total assets 15,842 7,992 23,834 14,280 6,395 20,675 12,262 5,090 17,352
Current liabilities 3,617 914 4,531 1,959 981 2,940 1,575 773 2,348
Non-current liabilities 3,553 2,550 6,103 3,485 560 4,045 3,062 68 3,130
Total liabilities 7,170 3,464 10,634 5,444 1,541 6,985 4,637 841 5,478
Minority interest 583 – 583 542 – 542 527 – 527
8,089 4,528 12,617 8,294 4,854 13,148 7,098 4,249 11,347
Group investment in jointly
controlled entities
Group share of net assets (as above) 8,089 4,528 12,617 8,294 4,854 13,148 7,098 4,249 11,347
Loans made by group companies to
jointly controlled entities – 939 939 – 1,408 1,408 – 1,562 1,562
8,089 5,467 13,556 8,294 6,262 14,556 7,098 5,811 12,909
On 29 August 2003, BP and the Alfa Group and Access-Renova (AAR) combined certain of their Russian and Ukrainian oil and gas businesses to
create TNK-BP, a new company owned and managed 50:50 by BP and AAR. TNK-BP is a jointly controlled entity accounted for under the equity
method. BP contributed its 29% interest in Sidanco, its 29% interest in Rusia Petroleum and its holding in the BP Moscow retail network. There
was additional consideration from BP to AAR comprising an immediate $2,604 million in cash (which was subsequently reduced by receipt of pre-
acquisition dividends, net of other adjustments, of $298 million) together with annual tranches of $1,250 million in BP shares payable in 2004, 2005
and 2006. There were costs of $45 million in connection with the transaction. The first two tranches were issued in September 2004 and 2005.
BP also agreed with AAR to incorporate AAR’s 50% interest in Slavneft into TNK-BP in return for $1,418 million in cash (which was subsequently
reduced by receipt of pre-acquisition dividends of $64 million to $1,354 million). This transaction was completed on 16 January 2004.
BP Solvay Polyethylene Europe became a subsidiary with effect from 2 November 2004. See Note 3, Acquisitions, for further information.
In 2005, it was sold as part of the Innovene operations.
During 2004, BP China and Sinopec announced the establishment of the BP-Sinopec (Zhejiang) Petroleum Co. Ltd, a retail joint venture between
BP and Sinopec. Based on the existing service station network of Sinopec, the joint venture will build, operate and manage a network of 500
service stations in Hangzhou, Ningbo and Shaoxing. Also during 2004, BP China and PetroChina announced the establishment of BP-PetroChina
Petroleum Company Ltd. Located in Guangdong, one of the most developed provinces in China, the joint venture will acquire, build, operate and
manage 500 service stations in the province. The initial investment in both joint ventures amounted to $106 million.
Transactions between the significant jointly controlled entities and the group are summarized below. In addition to the amount receivable at
31 December 2005 shown below, a further $771 million was receivable from TNK-BP in respect of dividends.
Sales to jointly controlled entities $ million
2005 2004 2003
Amount Amount Amount
receivable at receivable at receivable at
Product Sales 31 December Sales 31 December Sales 31 December
BP Solvay Polyethylene EuropeaChemicals feedstocks – – 230 – 259 33
Pan American Energy Crude oil 75 2 118 4 171 5
Ruhr Oel Employee services 169 527 192 780 188 587
TNK-BP Employee services 125 14 49 – – –
Watson Cogeneration Natural gas 272 31 214 10 73 6
Purchases from jointly controlled entities $ million
2005 2004 2003
Amount Amount Amount
payable at payable at payable at
Product Purchases 31 December Purchases 31 December Purchases 31 December
BP Solvay Polyethylene EuropeaChemicals feedstocks – – – – 18 14
Pan American Energy Crude oil 661 81 481 43 381 48
Ruhr Oel Refinery operating costs 384 134 477 249 435 131
TNK-BPbCrude oil and oil products 908 17 1,809 80 349 52
Watson Cogeneration Electricity and steam 185 19 149 14 248 12
aThe 2004 BP Solvay Polyethylene Europe sales and purchases shown above relate to the period to 2 November 2004.
bThe 2003 TNK-BP sales and purchases shown above relate to the period from 29 August to 31 December 2003.