BP Annual Report and Form 20-F 2011 - Company Reporting

Notes on financial statements5. Disposals and impairment continuedExploration and ProductionDuring 2011, the Exploration and Production segment recognized impairment losses of $1,443 million. The main elements were a $555-millionimpairment loss relating to a number of our interests in the Gulf of Mexico, caused by an increase in the decommissioning provision as a result of furtherassessments of the regulations relating to idle infrastructure and a decrease in our assumption of the discount rate for provisions; the $393-millionwrite-down of our interest in the Fayetteville shale gas asset in the US, triggered by a decrease in value by reference to a sale transaction by a partner ofits interest in the same asset; and the $153-million write-down of our interest in the proposed Denali gas pipeline in Alaska, resulting from a decision notto proceed with the project. There were several other impairment losses amounting to $342 million in total that were not individually significant. Theseimpairment losses were partly offset by reversals of impairment of certain of our interests in the Gulf of Mexico and Egypt amounting to $146 million intotal, triggered by an increase in our assumption of long-term oil prices.During 2010, the Exploration and Production segment recognized impairment losses of $1,259 million. The main elements were the $501-millionwrite-down of assets in the Gulf of Mexico, triggered by an increase in the decommissioning provision as a result of new regulations in the US relatingto idle infrastructure; impairments of oil and gas properties in the Gulf of Mexico and onshore North America of $310 million and $80 million respectively,as a result of decisions to dispose of assets at a price lower than the assets’ carrying values; a $341-million write-down of accumulated costs in Sakhalin,Russia, triggered by a change in the outlook on the future recoverability of the investment; and several other individually insignificant impairment lossesamounting to $27 million in total.During 2009, the Exploration and Production segment recognized impairment losses of $118 million. The main elements were the write-down ofour $42-million investment in the East Shmidt interest in Russia, triggered by a decision to not proceed to development; a $62-million charge associatedwith our nErgize gas scheduling system; and several other individually insignificant impairment losses amounting to $14 million.Refining and MarketingDuring 2011, the Refining and Marketing segment recognized impairment losses of $599 million. Impairment losses of $398 million related to assetsclassified as held for sale. Other impairment losses were also recognized relating to retail churn in Europe and other minor asset disposals amounting to$201 million in total.During 2010, the Refining and Marketing segment recognized impairment losses amounting to $144 million relating to retail churn in Europe andother minor asset disposals. These losses were largely offset by the reversal of a previously recognized impairment loss of $141 million relating to theinvestment in our jointly controlled entity China American Petrochemical Company resulting from a change in market conditions.During 2009, an impairment loss of $1,579 million was recognized against the goodwill allocated to the US West Coast fuels value chain (FVC). Thegoodwill was originally recognized at the time of the ARCO acquisition in 2000. The prevailing weak refining environment, together with a review of futuremargin expectations in the FVC, led to a reduction in the expected future cash flows. Other impairment losses were also recognized by the segment on anumber of assets which amounted to $255 million.Other businesses and corporateDuring 2011, 2010 and 2009, Other businesses and corporate recognized impairment losses totalling $58 million, $113 million and $189 millionrespectively related to various assets in the Alternative Energy business.Financial statementsBP Annual Report and Form 20-F 2011 199