BP 2012 Annual Report Download - page 71

Business review: BP in more depth
Business review: BP in more depth
BP Annual Report and Form 20-F 2012
69
t In 2012 production was impacted by the construction union (Los
Dragones) strike in the Cerro Dragon field which commenced on
21 June. At the end of October an agreement was reached with the
construction union and in November with the oil labour workers union
at a national and provincial level. Operations have now resumed.
In Uruguay, BP confirmed in October 2012 that it had signed PSAs for
three offshore deepwater exploration blocks. The contracts cover
blocks 11 and 12 in the Pelotas basin and block 6 in the Punta del Este
basin and together cover an area of almost 26,000km2. The PSAs provide
that BP will hold a 100% interest in the blocks and the Uruguayan state oil
company, ANCAP, will have a right to participate in up to 30% of any
discoveries. BP intends to carry out 2D and 3D seismic acquisition on the
blocks during the initial three-year exploration phase of the contracts. This
work is expected to begin in 2013.
In Trinidad & Tobago, BP almost doubled its exploration and production
licences acreage during 2012, and now holds licences covering 1,806,000
acres offshore of the east coast. Facilities include 13 offshore platforms
and one onshore processing facility. Production is comprised of oil, gas
and NGLs. In May, BP announced that it had signed two PSAs with the
government of Trinidad & Tobago for the two deepwater exploration and
production blocks awarded in 2011. BP has a 100% interest in both these
blocks.
Africa
BP’s upstream activities in Africa are located in Angola, Algeria, Libya,
Egypt and Namibia.
BP is present in nine major deepwater licences offshore Angola and is
operator in four of these. In addition, BP holds a 13.6% interest in the
Angola LNG project.
t The Clochas and Mavacola fields (BP 26.7%), operated by Esso Angola,
started production in May 2012 and are steadily ramping up. Production
reached 65,000 barrels of oil per day by the end of 2012.
t In December 2012 production from the PSVM development area in
Block 31, offshore Angola, started. Initial production, coming from the
Plutão field, averages 60,000 barrels of oil per day. PSVM is expected
to build towards plateau rates of 150,000 barrels per day of oil over the
coming year.
In Algeria, BP is a partner with Sonatrach and Statoil in the In Salah
(BP 33.15%) and In Amenas (BP 45.89%) projects, which supply gas to
the domestic and European markets. In addition, BP is in a joint venture
with Sonatrach in the Bourarhet Sud block, located to the south west of In
Amenas. The Bourarhet licence has been extended until September 2014
and appraisal is ongoing. BP’s total assets in Algeria at 31 December 2012
were $2,372 million ($335 million current and $2,037 million non-current).
t On 16 January 2013, a terrorist attack occurred at the In Amenas joint
venture site. Following the incident, BP had a staged reduction of
non-essential workers out of Algeria as a precautionary and temporary
measure. Limited production from Train 1 restarted on 22 February. We
are working with our joint-venture partners to assess the broader
impact of the incident. BP remains committed to operating in Algeria
where it has high-quality assets.
In Libya, BP is in partnership with the Libyan Investment Authority (LIA)
to explore acreage in the onshore Ghadames and offshore Sirt basins,
covered under the exploration and production-sharing agreement (EPSA)
ratified in December 2007 (BP 85%). BP’s total assets in Libya at
31 December 2012 were $452 million ($101 million current and $351 million
non-current).
t On 29 May 2012 BP announced that it had lifted force majeure in
respect of its Libyan EPSA with the National Oil Corporation (NOC)
with effect from 15 May 2012. Force majeure had been in place
since 21 February 2011 following the outbreak of civil unrest in Libya.
Since lifting force majeure we have completed the rehabilitation and
re-staffing of our Tripoli office, and resumed planning and preparation
work towards our onshore and offshore exploration drilling
programmes.
In Egypt, BP and its partners currently produce 10% of Egypt’s oil
production and more than 30% of its gas production. BP’s total assets in
Egypt at 31 December 2012 were $7,818 million, of which $2,982 million
were current (see Financial statements – Note 26 on page 224) and
$4,836 million were non-current.
t During 2012 Egypt elected President Morsi and executive power was
passed from the interim military ruling council to the new government.
There has been a significant reduction in Central Bank foreign currency
reserves and the political and economic outlook remains uncertain. Our
production and operations continue and we are monitoring and working
with the government to manage the situation.
t In June 2012 first gas from the Seth development in Egypt was
announced. The Seth field is located 60km offshore in the Ras El Bar
concession in the east Nile Delta, close to the existing producing
Ha’py and Denise fields.
t In August 2012 BP announced the Taurt North and Seth South gas
discoveries in the North El Burg offshore concession (BP 50% and
operator), in the Nile Delta. These are the fourth and fifth discoveries
made by BP in the concession following Satis-1 and Satis-3 Oligocene
deep discoveries and Salmon-1 shallow Pleistocene discovery.
In Namibia, BP is a non-operating partner in five deepwater blocks, which
are currently in the exploration phase. All five blocks were accessed in
2012.
Asia
In Asia, BP has activities in Western Indonesia, China, Azerbaijan, Oman,
Jordan, Abu Dhabi, India and Iraq.
In Indonesia, BP has a joint interest in Virginia Indonesia Company LLC
(VICO), the operator of the Sanga-Sanga PSA (BP 38%) supplying gas to
Indonesia’s largest LNG export facility, the Bontang LNG plant in Kalimantan.
BP also participates in the Sanga-Sanga CBM PSA (BP 38%), as well as four
other CBM PSAs – Tanjung IV and Kapuas I, II and III in the Barito basin of
Central Kalimantan. BP holds a 44% interest in the Pertamina-operated
Tanjung IV PSA, and a 45% operating interest in each of the Kapuas I, II and
III PSAs. After conducting site visits and further evaluation BP has decided
to exit the Kapuas I, II and III CBM PSAs and will transfer its working interest
to its partner in each PSA, subject to approval.
In China, BP’s upstream activities in the country include production from
the China National Offshore Oil Corporation (CNOOC) operated Yacheng
offshore gas field (BP 34.3%) as well as deepwater exploration in the
South China Sea’s Block 42/05 (BP 40.82%) and Block 43/11 (BP
40.82%). In December 2012 BP announced the sale of its interest in
Yacheng gas field to Kuwait Foreign Petroleum Exploration Company (see
Disposals on page 66).
In Azerbaijan, BP is the largest foreign investor and operates two PSAs,
Azeri-Chirag-Gunashli (ACG) and Shah Deniz, and also holds other
exploration leases. BP is expecting to progress the sanctioned Chirag
Oil project by starting up the West Chirag production and drilling platform
in late 2013.
t In 2012 further EU and US regulations concerning restrictive measures
against Iran were issued. These further measures clarified that they do
not apply to Naftiran Intertrade Co. Ltd (NICO), a Shah Deniz project
participant, and as such NICO and Shah Deniz continue to operate in full
compliance with EU and US law. For further information see Further
note on certain activities on page 45.
t In June 2012 the Shah Deniz consortium announced it was considering
two export routes for gas sales to Europe. The Nabucco West project
was selected as the single pipeline option for the potential export of
Shah Deniz Stage 2 gas to Central Europe. The Trans-Adriatic Pipeline
(TAP) was selected as the potential route for export of Stage 2 gas to
Italy. The Shah Deniz consortium will continue to work with the owners
of both pipeline options and potential gas purchasers to agree transit
and marketing terms before selecting the final option and concluding
the related gas sales agreements ahead of the Shah Deniz final
investment decision planned for mid-2013. Development of the South
East Europe Pipeline (SEEP) project will cease.
t In September 2012 BP was offered 12% equity in the Trans-Anatolian
gas pipeline (TANAP) by SOCAR, which acts as a project operator and
its majority shareholder. In late December 2012 BP (together with Total
and Statoil) agreed with SOCAR the main principles for its participation
in the TANAP project, the key terms for the TANAP GTA for Shah Deniz
Stage 2 gas, as well as a framework for technical co-operation on the
project. By the end of 2012 significant progress was also achieved in
resolving other outstanding commercial issues with SOCAR including
the Shah Deniz Stage 2 gas marketing entity and the South Caucasus
Pipeline (SCP) expansion.