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Notesonnancialstatements
Financial statements
6.Eventsafterthereportingperiodcontinued
AnapplicationwasbroughtintheEnglishHighCourton1February2011byAlfaPetroleumHoldingsLimited(APH)andOGIPVenturesLimited(OGIP)
againstBPInternationalLimitedandBPRussianInvestmentsLimited.APHisacompanyownedbyAlphaGroup.APHandOGIPeachown25%ofTNK-BP,
inwhichBPalsohasa50%shareholding.ThisapplicationallegesbreachoftheshareholdersagreementonthepartofBPandseeksaninteriminjunction
restrainingBPfromtakingstepstoconclude,implementorperformthepreviouslyannouncedtransactionswithRosneftOilCompanyrelatingtooiland
gasexploration,production,reningandmarketinginRussia.ThosetransactionsincludetheissueortransferofsharesbetweenRosneftOilCompanyand
anyBPgroupcompany.ThecourtgrantedaninterimorderrestrainingBPfromtakinganyfurtherstepsinrelationtotheRosnefttransactionspendingan
expeditedUNCITRALarbitrationprocedureinaccordancewiththeshareholdersagreementbetweentheparties.Thearbitrationhascommencedandthe
injunctionhasbeenextendeduntil11March2011pendinganexpeditedhearinginrelationtomattersindisputebetweenthepartiesonanalbasis
duringtheweekcommencing7March2011.Theexpeditedhearingwilldecide,amongothermatters,whethertheinjunctionwillbeextendedbeyond
11March2011.
7.Segmentalanalysis
Thegroup’sorganizationalstructurereectsthevariousactivitiesinwhichBPisengaged.In2010,BPhadtworeportablesegments:Explorationand
ProductionandReningandMarketing.BP’sactivitiesinlow-carbonenergyaremanagedthroughourAlternativeEnergybusiness,whichisreportedin
Otherbusinessesandcorporate.Thegroupismanagedonanintegratedbasis.
ExplorationandProduction’sactivitiesincludeoilandnaturalgasexploration,elddevelopmentandproduction;midstreamtransportation,storage
andprocessing;andthemarketingandtradingofnaturalgas,includingliqueednaturalgas(LNG),togetherwithpowerandnaturalgasliquids(NGLs).
BPannouncedthatin2011itintendstoorganizeitsExplorationandProductionsegmentinthreefunctionaldivisions–Exploration,Developments
andProduction,integratedthroughaStrategyandIntegrationorganization.Thiswillnotaffectthegroup’sreportablesegmentsandExplorationand
Productionwillcontinuetobereportedasasingleoperatingsegment.
ReningandMarketing’sactivitiesincludethesupplyandtrading,rening,manufacturing,marketingandtransportationofcrudeoil,petroleumand
petrochemicalsproductsandrelatedservices.
OtherbusinessesandcorporatecomprisestheAlternativeEnergybusiness,Shipping,thegroup’saluminiumbusiness,Treasury(whichinthe
segmentalanalysisincludesallofthegroup’scash,cashequivalentsandassociatedinterestincome),andcorporateactivitiesworldwide.TheAlternative
EnergybusinessisanoperatingsegmentthathasbeenaggregatedwiththeotheractivitieswithinOtherbusinessesandcorporateasitdoesnotmeet
thematerialitythresholdsforseparatesegmentreporting.
In2010,followingtheGulfofMexicoincident,weestablishedtheGulfCoastRestorationOrganization(GCRO)andequippeditwithdedicated
resourcesandcapabilitiestomanageallaspectsofourresponsetotheincident.Thisorganizationreportsdirectlytothegroupchiefexecutiveandis
overseenbyaspecicnewboardcommittee,howeveritisnotanoperatingsegment.
Theaccountingpoliciesoftheoperatingsegmentsarethesameasthegroup’saccountingpoliciesdescribedinNote1.However,IFRSrequires
thatthemeasureofprotorlossdisclosedforeachoperatingsegmentisthemeasurethatisprovidedregularlytothechiefoperatingdecisionmakerfor
thepurposesofperformanceassessmentandresourceallocation.ForBP,thismeasureofprotorlossisreplacementcostprotorlossbeforeinterest
andtaxwhichreectsthereplacementcostofsuppliesbyexcludingfromprotorlossinventoryholdinggainsandlossesa.Replacementcostprotorloss
forthegroupisnotarecognizedGAAPmeasure.
Salesbetweensegmentsaremadeatpricesthatapproximatemarketprices,takingintoaccountthevolumesinvolved.Segmentrevenuesand
segmentresultsincludetransactionsbetweenbusinesssegments.Thesetransactionsandanyunrealizedprotsandlossesareeliminatedon
consolidation,unlessunrealizedlossesprovideevidenceofanimpairmentoftheassettransferred.Salestoexternalcustomersbyregionarebasedonthe
locationoftheseller.TheUKregionincludestheUK-basedinternationalactivitiesofReningandMarketing.
Allsurplusesanddecitsrecognizedonthegroupbalancesheetinrespectofpensionandotherpost-retirementbenetplansareallocatedto
Otherbusinessesandcorporate.However,theperiodicexpenserelatingtotheseplansisallocatedtotheotheroperatingsegmentsbaseduponthe
businessinwhichtheemployeeswork.
CertainnancialinformationisprovidedseparatelyfortheUSasthisisanindividuallymaterialcountryforBP,andfortheUKasthisisBP’scountry
ofdomicile.
a
InventoryholdinggainsandlossesrepresentthedifferencebetweenthecostofsalescalculatedusingtheaveragecosttoBPofsuppliesacquiredduringtheperiodandthecostofsalescalculated
ontherst-inrst-out(FIFO)methodafteradjustingforanychangesinprovisionswherethenetrealizablevalueoftheinventoryislowerthanitscost.UndertheFIFOmethod,whichweuseforIFRS
reporting,thecostofinventorychargedtotheincomestatementisbasedonitshistoriccostofpurchase,ormanufacture,ratherthanitsreplacementcost.Involatileenergymarkets,thiscanhavea
signicantdistortingeffectonreportedincome.Theamountsdisclosedrepresentthedifferencebetweenthecharge(totheincomestatement)forinventoryonaFIFObasis(afteradjustingforanyrelated
movementsinnetrealizablevalueprovisions)andthechargethatwouldhavearisenifanaveragecostofsupplieswasusedfortheperiod.Forthispurpose,theaveragecostofsuppliesduringtheperiod
isprincipallycalculatedonamonthlybasisbydividingthetotalcostofinventoryacquiredintheperiodbythenumberofbarrelsacquired.Theamountsdisclosedarenotseparatelyreectedinthenancial
statementsasagainorloss.Noadjustmentismadeinrespectofthecostofinventoriesheldaspartofatradingpositionandcertainothertemporaryinventorypositions.
BPAnnualReportandForm20-F2010 167