BP 2006 Annual Report Download - page 115

BP Annual Report and Accounts 2006 113
6 Disposals continued
Exploration and Production
The group divested interests in a number of oil and natural gas properties in all three years. During 2006 the major transactions were disposals of our
interests in the Gulf of Mexico Shelf, in the Shenzi discovery in the Gulf of Mexico, in the Statfjord oil and gas field and in the Luva gas field in the North
Sea. We also divested our interests in a number of onshore fields in South Louisiana, interests in fields in the North Sea, the Gulf of Suez and
Venezuela, and part of an interest in Colombia. During 2005, the major transaction was the sale of the group’s interest in the Ormen Lange field in
Norway. In addition, the group sold interests in oil and natural gas properties in Venezuela, Canada and the Gulf of Mexico. In 2004, in the US, we sold
45% of our interest in King’s Peak in the deepwater Gulf of Mexico to Marubeni Oil & Gas, divested our interest in Swordfish, and additionally sold
various properties, including our interest in the South Pass 60 property in the Gulf of Mexico Shelf. In Canada, BP sold various assets in Alberta to
Fairborne Energy. In Indonesia, we disposed of our interest in the Kangean Production Sharing Contract and our participating interest in the Muriah
Production Sharing Contract.
Refining and Marketing
The churn of retail assets represents a significant element of the total in all three years. In addition, in 2006, we disposed of our interests in Zhenhai
Refining and Chemicals Company in China and in Eiffage, the French-based construction company. We also exited the retail market in the Czech
Republic and disposed of our interests in a number of pipelines. During 2005, the group sold a number of regional retail networks in the US and in
addition its retail network in Malaysia. During 2004, major transactions included the sale of the Singapore refinery, the divestment of the European
speciality intermediate chemicals business and the Cushing and other pipeline interests in the US.
Gas, Power and Renewables
During 2006, we disposed of our shareholding in Enagas, the Spanish gas transport grid operator. In 2005, the group sold its interest in the
Interconnector pipeline and a power plant at Great Yarmouth in the UK. During 2004, the group sold its interest in two Canadian natural gas
liquids plants.
Other businesses and corporate
During 2006, the group disposed of miscellaneous non-core businesses and assets. 2005 includes the proceeds from the sale of Innovene. The disposal
of the group’s investments in PetroChina and Sinopec were the major transactions in 2004. In addition, the group sold its US speciality intermediate
chemicals and fabrics and fibres businesses.
Summarized financial information for the sale of businesses is shown below.
$ million
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2006 2005 2004
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The disposals comprise the following
Non-current assets 143 6,452 1,046
Other current assets 169 4,779 477
Non-current liabilities (10) (364) (44)
Current liabilities (70) (2,488) (59)
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232 8,379 1,420
Profit (loss) on sale of businesses 167 18 (695)
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Total consideration 399 8,397 725
Consideration not yet received (74) ––
Closing adjustments associated with the sale of Innovene (34) ––
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Proceeds from the sale of businessesa291 8,397 725
aIncludes cash and cash equivalents disposed of $2 million (2005 $15 million and 2004 $10 million).
7 Segmental analysis
The group’s primary format for segment reporting is business segments and the secondary format is geographical segments. The risks and returns of
the group’s operations are primarily determined by the nature of the different activities that the group engages in, rather than the geographical location
of these operations. This is reflected by the group’s organizational structure and the group’s internal financial reporting systems.
BP has three reportable operating segments: Exploration and Production; Refining and Marketing; and Gas, Power and Renewables. Exploration and
Production’s activities include oil and natural gas exploration and field development and production, together with pipeline transportation and natural gas
processing. The activities of Refining and Marketing include oil supply and trading as well as refining and petrochemicals manufacturing and marketing.
Gas, Power and Renewables activities include marketing and trading of gas and power, marketing of liquefied natural gas, natural gas liquids and low-
carbon power generation through the Alternative Energy business. The group is managed on an integrated basis.
Other businesses and corporate comprises Finance, the group’s aluminum asset, interest income and costs relating to corporate activities worldwide.
The accounting policies of operating segments are the same as those described in Note 1.
Sales between segments are made at prices that approximate market prices, taking into account the volumes involved. Segment revenue and
segment result include transactions between business segments. These transactions and any unrealized profits and losses are eliminated on
consolidation.
The group’s geographical segments are based on the location of the group’s assets. The UK and the US are significant countries of activity for the
group; the other geographical segments are determined by geographical location.
Sales to external customers are based on the location of the seller, which in most circumstances is not materially different from the location of the
customer. Crude oil and LNG are commodities for which there is an international market and buyers and sellers can be widely separated geographically.
The UK segment includes the UK-based international activities of Refining and Marketing.