BP 2005 Annual Report Download - page 49

5 Disposals $ million
2005 2004 2003
Proceeds from the sale of Innovene operations 8,304 – –
Proceeds from the sale of other businesses 93 725 179
Proceeds from the sale of businesses 8,397 725 179
Proceeds from the sale of property, plant and equipment 2,803 4,236 6,177
11,200 4,961 6,356
Exploration and Production 1,416 914 4,801
Refining and Marketing 888 1,007 1,050
Gas, Power and Renewables 540 144 67
Other businesses and corporate 8,356 2,896 438
11,200 4,961 6,356
As part of the strategy to upgrade the quality of its asset portfolio, the group has an active programme to dispose of non-strategic assets. In the
normal course of business in any particular year, the group may sell interests in exploration and production properties, service stations and pipeline
interests as well as non-core businesses.
Cash received during the year from disposals amounted to $11.2 billion (2004 $5.0 billion and 2003 $6.4 billion). The divestment of Innovene
contributed $8.3 billion to this total. The major transactions in 2004 that generated over $2.3 billion of proceeds were the sale of the group’s
investments in PetroChina and Sinopec. For 2003, the major disposals representing over $3.0 billion of the proceeds were the divestment of a
further 20% interest in BP Trinidad and Tobago LLC, the sale of 50% of our interest in the In Amenas gas condensate project and 49% of our
interest in the In Salah gas development in Algeria, and the sale of the UK North Sea Forties oil field, together with a package of 61 shallow-water
assets in the Gulf of Mexico. The principal transactions generating the proceeds for each segment are described below.
Exploration and Production The group divested interests in a number of oil and natural gas properties in all three years. 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. In 2003, the UK North
Sea Forties oil field, together with a package of 61 shallow-water assets in the Gulf of Mexico, were sold to Apache. A 12.5% interest in the
Tangguh liquefied natural gas project in Indonesia was sold to CNOOC. Interests in 14 UK Southern North Sea gas fields, together with associated
pipelines and onshore processing facilities, including the Bacton terminal, were sold to Perenco. BP sold 50% of its interest in the In Amenas
gas condensate project and 49% of its interest in the In Salah gas development in Algeria to Statoil. In January 2003, Repsol exercised its option
to acquire a further 20% interest in BP Trinidad and Tobago LLC. BP’s interest in the company is now 70%. In February 2003, BP called its
$420 million exchangeable bonds, which were exchangeable for Lukoil American Depositary Shares (ADSs). Bondholders converted to ADSs
before the redemption date.
Refining and Marketing The churn of retail assets represents a significant element of the total in all three years. 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 asset 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. As a condition of the approval of the acquisition of Veba in 2002, BP was, among other things, required to divest approximately 4% of its
retail market share in Germany and a significant portion of its Bayernoil refining interests. The sale of 494 retail sites in the northern and north-
eastern part of Germany to PKN Orlen and the sale of retail and refinery assets in Germany and central Europe to OMV in 2003 completed the
divestments required.
Gas, Power and Renewables In 2005, the group sold its interest in the Interconnector pipeline. During 2004, the group sold its interest in two
Canadian natural gas liquids plants.
Other businesses and corporate 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.
In 2003, the group sold its 50% interest in Kaltim Prima Coal, an Indonesian company, and completed the divestment of the former Burmah Castrol
speciality chemicals business Sericol and Fosroc Mining.
Summarized financial information for the sale of businesses is shown below.
$ million
2005 2004 2003
The disposals comprise the following
Non-current assets 6,452 1,046 104
Other current assets 4,779 477 111
Non-current liabilities (364) (44) (7)
Other current liabilities (2,488) (59) (1)
8,379 1,420 207
Profit (loss) on sale of businesses 18 (695) (28)
Total consideration and net cash inflow 8,397 725 179
BP Annual Report and Accounts 2005 47