BP 2012 Annual Report Download - page 85

Business review: BP in more depth
Business review: BP in more depth
BP Annual Report and Form 20-F 2012
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Our carbon capture and storage expertise is helping our businesses
understand and manage their CO2 emissions, and to monitor CO2 storage
opportunities, such as the In Salah gas field where we have injected
almost 4 million tonnes of CO2 since 2004. Presently, CO2 injection at the
storage site is suspended while the In Salah Gas joint venture partners
(BP, Sonatrach and Statoil) evaluate the large body of data acquired during
the first phase of operation.
Shipping
We transport our products across oceans, around coastlines and along
waterways, using a combination of BP-operated, time-chartered and
spot-chartered vessels. All vessels conducting BP activities are subject to
our health, safety, security and environmental requirements. The primary
purpose of our shipping and chartering activities is the transportation of
our hydrocarbon products. In addition, we may use surplus capacity to
transport third-party products.
International fleet
At the end of 2012, we had 52 international vessels (37 medium-size
crude and product carriers, three very large crude carriers, one North Sea
shuttle tanker, eight LNG carriers and three LPG carriers). All these ships
are double-hulled. Of the eight LNG carriers, BP manages one on behalf
of a joint venture in which it is a participant.
In December 2012 BP announced it had signed a contract with STX
Offshore and Shipbuilding to build 13 new tankers in Korea. The first of
these will be delivered in late 2014.
Regional and specialist vessels
In Alaska, we retain a fleet of four double-hulled vessels. Outside the
US, we had 14 specialist vessels (two double-hulled lubricants oil barges
and four offshore support vessels each one complete with two
autonomous rescue and recovery crafts).
Time-charter vessels
At the end of 2012 BP had 111 hydrocarbon-carrying vessels above
600 deadweight tonnes on time-charter, all of which are double-hulled.
The quality and safety performance of these vessels is assured through
BP’s Time Charter Assurance Programme.
Spot-charter vessels
BP spot-charters vessels, typically for single voyages. These vessels are
always assessed against BP’s marine assurance requirements prior
to each use.
Other vessels
BP uses various craft such as tugs, crew boats and seismic vessels in
support of the group’s business. We also use sub-600 deadweight tonne
barges to carry hydrocarbons on inland waterways.
Maritime security issues
At a strategic level, BP avoids known areas of pirate attack or armed
robbery; where this is not possible for operational reasons and we
consider it safe to do so, we will continue to transit vessels through these
areas, subject to the adoption of heightened security measures.
2012 has seen continuing pirate activity in the Gulf of Aden, the Indian
Ocean (up to approximately 200 miles west of the Indian coast) and the
Arabian Sea. It should however be noted that pirate activity has reduced
considerably compared with previous years. This decrease in activity is
due principally to more robust intervention by the various navies operating
in this region and to greater adoption of protective measures by vessels
transiting these waters.
At present, we follow available military and government agency advice
and are participating in protective group transits through the Gulf of
Aden Internationally Recommended Transit Corridor. BP uses the
protective measures recommended in the international shipping
industry guide BMP 4 – Best Management Practices for Protection
against Somalia Based Piracy, jointly published by industry bodies,
including Oil Companies International Marine Forum and supported by
military operations in the region.
We continue to monitor other areas where cargo piracy is known to occur,
for example West Africa and the South China Sea.
Treasur y
Treasury manages the financing of the group centrally, ensuring liquidity
sufficient to meet group requirements and manages key financial risks
including interest rate, foreign exchange, pension and financial institution
credit risk. From locations in the UK, the US and the Asia Pacific region,
Treasury provides the interface between BP and the international financial
markets and supports the financing of BP’s projects around the world.
Treasury trades foreign exchange and interest rate products in the
financial markets, hedging group exposures and generating incremental
value through optimizing and managing cash flows. Trading activities are
underpinned by the compliance, control and risk management
infrastructure common to all BP trading activities. For further information,
see Financial statements – Note 26 on page 220.
Insurance
The group generally restricts its purchase of insurance to situations where
this is required for legal or contractual reasons. Losses are borne as they
arise, rather than being spread over time through insurance premiums
with attendant transaction costs. This approach was reviewed
following the Deepwater Horizon oil spill but the group concluded that
it will continue with its current approach of not generally purchasing
insurance cover.