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

Business reviewaccess advantageous pricing differences between locations, time periodsand arbitrage between markets. Natural gas futures and options are tradedthrough exchanges, while over-the-counter (OTC) options and swaps areused for both gas and power transactions through bilateral and/or centrallyclearedarrangements. Futures and options are primarily used to tradethe key index prices, such as Henry Hub, while swaps can be tailored toprice with reference to specific delivery locations where gas and powercan be bought and sold. OTC forward contracts have evolved in boththe US and UK markets, enabling gas and power to be sold forward in avariety of locations and future periods. These contracts are used both toOil and gas disclosuresThe following tables provide additional data and disclosures in relation to our oil and gas operations.Average sales price per unit of productionEuropeRest ofEuropesell production into the wholesale markets and as trading instruments tobuy and sell gas and power in future periods. Storage and transportationcontracts allow the group to store and transport gas, and transmit powerbetween these locations. The group has developed a risk governanceframework to manage and oversee the financial risks associated with thistrading activity, which is described in Note 26 to the Financial statementson pages 217-222. The group’s trading activities in natural gas are managedby the integrated supply and trading function.The range of contracts that the group enters into is described inCertain definitions – commodity trading contracts, on page 111.NorthAmericaRest ofNorthAmerica bSouthAmerica$ per unit of production aAfrica Asia Australasia TotalgroupaverageUKUSRussiaAverage sales price cSubsidiaries2011Liquids d 107.83 106.89 96.34 – 86.60 104.37 – 111.10 101.22 101.29Gas 7.91 13.15 3.34 – 3.60 5.24 – 4.73 9.13 4.692010Liquids d 76.33 81.09 70.79 48.26 71.01 74.87 – 78.80 75.81 73.41Gas 5.44 7.16 3.88 4.20 2.80 4.11 – 4.05 7.01 3.972009Liquids d 62.19 60.73 53.68 30.77 52.48 57.40 – 61.27 57.22 56.26Gas 4.68 7.62 3.07 3.53 2.50 3.61 – 3.30 5.25 3.25Equity-accounted entities e2011Liquids d – – – – 73.51 – 84.39 8.11 – 71.35Gas – – – – 2.31 – 2.23 12.21 – 2.402010Liquids d – – – – 61.60 – 60.39 6.72 – 52.81Gas – – – – 1.97 – 1.91 7.83 – 2.042009Liquids d – – – – 51.01 – 47.27 5.59 – 41.93Gas – – – – 1.90 – 1.51 5.25 – 1.68Rest ofAsiaBusiness review: BP in more deptha Units of production are barrels for liquids and thousands of cubic feet for gas.b Producing assets now largely divested.c Realizations include transfers between businesses.d Crude oil and natural gas liquids.e It is common for equity-accounted entities’ agreements to include pricing clauses that require selling a significant portion of the entitled production to local governments or markets at discounted prices.Average production cost per unit of productionEuropeRest ofEuropeNorthAmericaRest ofNorthAmerica bSouthAmerica$ per unit of production aAfrica Asia Australasia TotalgroupaverageUKUSRussiaThe average productioncost per unit of production aSubsidiaries2011 21.59 18.23 12.09 – 3.20 10.82 – 8.65 3.05 10.082010 12.79 9.76 8.10 15.78 2.48 7.52 – 4.59 2.03 6.772009 12.38 10.72 7.26 14.45 2.20 6.05 – 4.35 1.60 6.39Equity-accounted entities2011 – – – – 9.04 – 5.68 2.70 – 5.582010 – – – – 6.32 – 5.04 2.61 c – 4.83 c2009 – – – – 6.12 – 4.63 2.52 c – 4.50 ca Units of production are barrels for liquids and thousands of cubic feet for gas. Amounts do not include ad valorem and severance taxes.b Producing assets now largely divested.cA minor amendment has been made to comparative periods.Rest ofAsiaBP Annual Report and Form 20-F 2011 89