BP 2010 Annual Report Download - page 195

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Notesonnancialstatements
Financial statements
34.Derivativenancialinstrumentscontinued
Derivatives held for trading
Thegroupmaintainsactivetradingpositionsinavarietyofderivatives.Thecontractsmaybeenteredintoforriskmanagementpurposes,tosatisfysupply
requirementsorforentrepreneurialtrading.Certaincontractsareclassiedasheldfortrading,regardlessoftheiroriginalbusinessobjective,andare
recognizedatfairvaluewithchangesinfairvaluerecognizedintheincomestatement.Tradingactivitiesareundertakenbyusingarangeofcontracttypes
incombinationtocreateincrementalgainsbyarbitragingpricesbetweenmarkets,locationsandtimeperiods.Thenetoftheseexposuresismonitored
usingmarketvalue-at-risktechniquesasdescribedinNote27.
Thefollowingtablesshowfurtherinformationonthefairvalueofderivativesandothernancialinstrumentsheldfortradingpurposes.
Derivativeassetsheldfortradinghavethefollowingfairvaluesandmaturities.
 $million
  2010
       Less than Over
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
Currencyderivatives  124 41 18 11 – – 194
Oilpricederivatives  797 128 82 64 21 7 1,099
Naturalgaspricederivatives  2,591 1,100 652 375 231 401 5,350
Powerpricederivatives  389 125 35 11 1 – 561
    3,901 1,394 787 461 253 408 7,204

 $million
          2009
       Lessthan     Over
       1year 1-2years 2-3years 3-4years 4-5years 5years Total
Currencyderivatives  162 83 33 22 16 2 318
Oilpricederivatives  814 136 69 59 44 18 1,140
Naturalgaspricederivatives  2,958 1,059 582 354 186 497 5,636
Powerpricederivatives  496 139 32 12 3 – 682
Otherderivatives  47 – – – – – 47
     4,477 1,417 716 447 249 517 7,823
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Derivativeliabilitiesheldfortradinghavethefollowingfairvaluesandmaturities.
 $million
  2010
       Less than Over
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
Currencyderivatives  (228) (6) (46) – – – (280)
Oilpricederivatives  (794) (76) (6) (1) – – (877)
Naturalgaspricederivatives  (2,174) (741) (484) (161) (114) (277) (3,951)
Powerpricederivatives (287) (103) (32) (9) (1) – (432)
Otherderivatives – (29) (60) – – – (89)
    (3,483) (955) (628) (171) (115) (277) (5,629)

 $million
          2009
       Lessthan     Over
       1year 1-2years 2-3years 3-4years 4-5years 5years Total
Currencyderivatives  (110) (58) (20) (32) (4) (2) (226)
Oilpricederivatives  (1,083) (67) (29) (11) (1) – (1,191)
Naturalgaspricederivatives  (2,381) (607) (248) (222) (78) (424) (3,960)
Powerpricederivatives  (335) (109) (39) (11) (3) – (497)
Otherderivatives  (47) – – – – – (47)
     (3,956) (841) (336) (276) (86) (426) (5,921)

Ifatinceptionofacontractthevaluationcannotbesupportedbyobservablemarketdata,anygainorlossdeterminedbythevaluationmethodologyisnot
recognizedintheincomestatementbutisdeferredonthebalancesheetandiscommonlyknownas‘day-oneprotorloss’.Thisdeferredgainorlossis
recognizedintheincomestatementoverthelifeofthecontractuntilsubstantiallyalloftheremainingcontracttermcanbevaluedusingobservablemarket
dataatwhichpointanyremainingdeferredgainorlossisrecognizedintheincomestatement.Changesinvaluationfromthisinitialvaluationarerecognized
immediatelythroughtheincomestatement.
BPAnnualReportandForm20-F2010 193