BP 2009 Annual Report Download - page 36

34
BP Annual Report and Accounts 2009
Business review
• On 16 April 2009, the US FERC issued an initial ruling on shipper
challenges of TAPS interstate tariff rates for the years 2007 and 2008,
ordering interim refunds to be paid to shippers based on the January
2009 tariff rate filings. As a result of this order, BP, as a TAPS carrier,
paid refunds of $7.3 million to third-party shippers covering the period
from 1 January 2007 to 30 June 2009, based on its January 2009
tariff rate filing of $3.45/bbl. Shippers had also filed challenges of the
TAPS carriers’ 2009 interstate tariff rates, based on the FERC rulings
issued related to 2005 through 2008 tariff rates. On 12 January 2010,
an agreement to settle all remaining challenges to TAPS carrier
interstate tariff rate filings for the years 2008 and the first half of 2009
was signed by all the TAPS carriers and shippers. Under the terms of
the settlement, BP will pay additional refunds to third-party shippers
for the period from January 2007 through June 2009 of $0.12/bbl,
representing the difference between the $3.45/bbl tariff rate on
which the interim refunds for this period were based, and the
$3.33/bbl tariff rate in the settlement agreement. The signed
settlement agreement has been submitted to the FERC for final
regulatory approval. In 2009, interstate transport represented
approximately 90% of total TAPS throughput.
North Sea
In the UK sector of the North Sea, BP operates the Forties Pipeline
System (FPS) (BP 100%), an integrated oil and NGLs transportation and
processing system that handles production from more than 50 fields in
the Central North Sea. The system has a capacity of more than one
million barrels per day, with average throughput in 2009 of 671mb/d. BP
also operates and has a 29.5% interest in the Central Area Transmission
System (CATS), a 400-kilometre natural gas pipeline system in the central
UK sector of the North Sea. The pipeline has a transportation capacity of
1,700mmcf/d to a natural gas terminal at Teesside in north-east England.
CATS offers natural gas transportation and processing services. In
addition, BP operates the Dimlington/Easington gas processing
terminal (BP 100%) on Humberside and the Sullom Voe oil and gas
terminal in Shetland.
Asia
BP, as operator, manages and holds a 30.1% interest in the
Baku-Tbilisi-Ceyhan (BTC) oil pipeline. The 1,768-kilometre pipeline
transports oil from the BP-operated ACG oil field in the Caspian Sea to
the eastern Mediterranean port of Ceyhan. BP is technical operator of,
and holds a 25.5% interest in, the 693-kilometre South Caucasus Pipeline
(SCP), which takes gas from Azerbaijan through Georgia to the Turkish
border. In addition, BP operates the Azerbaijan section of the Western
Export Route Pipeline between Azerbaijan and the Black Sea coast of
Georgia (as operator of Azerbaijan International Operating Company).
Significant events were:
• On 23 April 2009, BP completed the sale of its 49.9% interest in
Kazakhstan Pipeline Ventures (KPV) to Kazakhstan state oil and gas
company KazMunayGas (KMG) for $250 million. KPV holds a 1.75%
interest in the Caspian Pipeline Consortium (CPC) that carries crude
oil from Kazakhstan’s largest producing oil field, Tengiz, to the Russian
port of Novorossiysk on the Black Sea.
• On 11 December 2009, BP also divested its interest in the CPC
pipeline (held through LukArco) by selling its 46% stake in LukArco to
Lukoil.
Liquefied natural gas
Our LNG activities are focused on building competitively advantaged
liquefaction projects, establishing diversified market positions to create
maximum value for our upstream natural gas resources and capturing
third-party LNG supply to complement our equity flows.
Assets and significant events included:
• In Trinidad, BP’s net share of the capacity of Atlantic LNG Trains 1, 2, 3
and 4 is 6 million tonnes of LNG per year (369 billion cubic feet
equivalent regasified), with the Atlantic LNG Train 4 (BP 37.8%)
designed to produce 5.2mtpa (294 billion cubic feet per annum) of
LNG. All of the LNG from Atlantic Train 1 and most of the LNG from
Trains 2 and 3 is sold to third parties in the US and Spain under long-
term contracts. All of BP’s LNG entitlement from Atlantic LNG Train 4
and some of its LNG entitlement from Trains 2 and 3 is marketed via
BP’s LNG marketing and trading business to a variety of markets
including the US, the Dominican Republic, Spain, the UK and the
Far East.
• We have a 10% equity shareholding in the Abu Dhabi Gas
Liquefaction Company, which in 2009 supplied 5.4 million tonnes
(279,000mmcf) of LNG.
• BP has a 13.6% share in the Angola LNG project, which is expected
to receive approximately one billion cubic feet of associated gas per
day from offshore producing blocks and to produce 5.2 million tonnes
per year of LNG (gross), as well as related gas liquids products.
Construction and implementation of the project is proceeding and
is expected to start up in 2012.
• In Indonesia, BP is involved in two of the three LNG centres in the
country. BP participates in Indonesia’s LNG exports through its
holdings in the Sanga-Sanga PSA (BP 38%). Sanga-Sanga currently
delivers around 13% of the total gas feed to Bontang, one of the
world’s largest LNG plants. The Bontang plant produced more than
17 million tonnes of LNG in 2009.
• Also in Indonesia, the Tangguh project (BP 37.16% and operator) in
Papua Barat, Indonesia, started LNG production in June 2009,
delivering its first commercial LNG delivery in July. Tangguh is BP’s
first operated LNG plant. The first phase of Tangguh comprises two
offshore platforms, two pipelines and an LNG plant with two
production trains with a total capacity of 7.6mtpa. Tangguh adopted
a fully integrated approach to development and its impact on local
communities. The Tangguh project has five long-term contracts in
place to supply LNG to purchasers in China, South Korea, Mexico
and Japan.
• In Australia, we are one of seven partners in the North West Shelf
(NWS) venture. The joint venture operation covers offshore
production platforms, trunklines, onshore gas and LNG processing
plants and LNG carriers. BP’s net share of the capacity of NWS LNG
Trains 1-5 is 2.7mtpa of LNG.
• BP has a 30% equity stake in the 7mtpa capacity Guangdong LNG
regasification and pipeline project in south-east China, making it the
only foreign partner in China’s LNG import business. The terminal is
also supplied under a long-term contract with Australia’s NWS
project.
• In both the Atlantic and Asian regions, BP is marketing LNG using BP
LNG shipping and contractual rights to access import terminal
capacity in the liquid markets of the US (via Cove Point and Elba
Island), the UK (via the Isle of Grain) and Italy (Rovigo), and is
supplying Asian customers in Japan, South Korea and Taiwan.