BP 20-F 2007
Documents found in this filing:
(Exact name of Registrant as specified in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
1 St Jamess Square
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):
Indicate by check mark which financial statement item the registrant has elected to follow.
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Unless the context indicates otherwise, the following terms have the meanings shown below:
Oil and natural gas reserves
Proved undeveloped reserves Proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units are claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Under no circumstances are estimates of proved undeveloped reserves attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir.
ADR American depositary receipt.
ADS American depositary share.
Amoco The former Amoco Corporation and its subsidiaries.
Atlantic Richfield Atlantic Richfield Company and its subsidiaries.
Associate An entity over which the group has significant influence and that is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of an entity without having control or joint control over those policies.
Barrel 42 US gallons.
b/d Barrels per day.
BP, BP group or the group BP p.l.c. and its subsidiaries.
Burmah Castrol Burmah Castrol plc and its subsidiaries.
Cent or c One-hundredth of the US dollar.
The company BP p.l.c.
Dollar or $ The US dollar. EU European Union.
Gas Natural gas.
Hydrocarbons Crude oil and natural gas.
IFRS International Financial Reporting Standards.
Joint venture A contractual arrangement between the group and other venturers that undertake an economic activity that is subject to joint control. Joint control exists only where the strategic financial and operating decisions relating to the activity require the unanimous consent of the venturers.
Jointly controlled asset A joint venture where the venturers have a direct ownership interest in and jointly control the assets of the venture.
Jointly controlled entity A joint venture that involves the establishment of a company, partnership or other entity to engage in economic activity that the group jointly controls with fellow venturers.
Liquids Crude oil, condensate and natural gas liquids.
LNG Liquefied natural gas.
London Stock Exchange or LSE London Stock Exchange plc.
LPG Liquefied petroleum gas.
mb/d thousand barrels per day.
mboe/d thousand barrels of oil equivalent per day.
mmBtu million British thermal units.
mmcf/d million cubic feet per day.
MTBE Methyl tertiary butyl ether.
NGLs Natural gas liquids.
OPEC Organisation of Petroleum Exporting Countries.
Ordinary shares Ordinary fully paid shares in BP p.l.c. of 25c each.
Pence or p One-hundredth of a pound sterling.
Pound, sterling or £ The pound sterling.
Preference shares Cumulative First Preference Shares and Cumulative Second Preference Shares in BP p.l.c. of £1 each.
PSA Production-sharing agreement.
SEC The United States Securities and Exchange Commission.
Subsidiary An entity that is controlled by the BP group. Control is the power to govern the financial and operating policies of an entity so as to obtain the benefits from its activities.
Tonne 2,204.6 pounds.
UK United Kingdom of Great Britain and Northern Ireland.
UK GAAP Generally Accepted Accounting Practice in the UK.
US or USA United States of America.
US GAAP Generally Accepted Accounting Principles in the US.
earned by the discontinued operations, in this case the Innovene operations, on sales to the continuing operations be eliminated on consolidation from the discontinued operations and attributed to the continuing operations and vice versa. This adjustment has two offsetting elements: the net margin on crude refined by Innovene, as substantially all crude for its refineries was supplied by BP and most of the refined products manufactured by Innovene were taken by BP; and the margin on sales of feedstock from BPs US refineries to Innovenes manufacturing plants. The profits attributable to individual segments are not affected by this adjustment. This representation does not indicate the profits earned by continuing or Innovene operations, as if they were standalone entities, for past periods or those likely to be earned in future periods. Under US GAAP, Innovene operations would not be classified as discontinued operations due to BPs continuing customer/supplier arrangements with Innovene. For a full description of the differences between IFRS and US GAAP, see Financial statements Note 53 on page 169.
Production and net proved
oil and natural gas reserves
During 2006, 329 million barrels of oil and natural gas, on an oil equivalent* basis (mmboe), were added to BPs proved reserves for subsidiaries (excluding purchases and sales).
After allowing for production, which amounted to 963mmboe, BPs proved
reserves for subsidiaries were 13,163mmboe at 31 December 2006. These proved
reserves are mainly located in the US (44%), Rest of Americas (20%), Asia Pacific
(10%), Africa (9%) and the UK (8%).
possibly, nationalization, expropriation, cancellation or non-renewal of contract rights. We buy, sell and trade oil and gas products in certain regulated commodity markets. The oil industry is also subject to the payment of royalties and taxation, which tend to be high compared with those payable in respect of other commercial activities, and operates in certain tax jurisdictions that have a degree of uncertainty relating to the interpretation of, and changes to, tax law. As a result of new laws and regulations or other factors, we could be required to curtail or cease certain operations, or we could incur additional costs.
Ethical misconduct and non-compliance
Financial control risks
Liabilities and provisions
Drilling and production
variety of factors, including unexpected drilling conditions, pressure or irregularities in geological formations, equipment failures or accidents, adverse weather conditions and compliance with governmental requirements.
and performance management
Major project delivery
systems, security and continuity
Business continuity and disaster recovery
Acquisitions and disposals
In 2005, there
were no significant acquisitions. Disposal proceeds were $11,200 million,
which included net cash proceeds from the sale of Innovene to INEOS of $8,304
million after selling costs, closing adjustments and liabilities. Innovene
represented the majority of the Olefins and Derivatives business. Additionally,
disposal proceeds included proceeds from the sale of the groups interest
in the Ormen Lange field in Norway.
of BP-PetroChina Petroleum
Company Limited. Located in Guangdong,
one of the most developed provinces in China, the 30-year dual-branded joint
venture is intended to acquire, build, operate and manage 500 service stations
in the province within three years of establishment. The initial investment
in both joint ventures amounted to $106 million. (See
Refining and Marketing on page 27 for further details.)
Our activities are divided among existing profit centres our operations in Alaska, Egypt, Latin America (including Argentina, Bolivia, Colombia and Venezuela), Middle East (including Abu Dhabi, India, Sharjah and Pakistan), North America Gas (onshore US and Canada) and the North Sea (UK, Netherlands and Norway); and new profit centres our operations in Asia Pacific (Australia, Vietnam, Indonesia and China), Azerbaijan, North Africa (Algeria), Angola, Trinidad and the deepwater Gulf of Mexico; and Russia/Kazakhstan (this includes our operations in TNK-BP, Sakhalin and LukArco).
Reserves and production
reserves base undergoes central review every
two years and more than 90% is reviewed every four years.
ratio is expressed in oil equivalent terms and includes changes resulting from revisions to previous estimates, improved recovery, extensions, discoveries and other additions, excluding the impact of sales and
purchases of reserves-in-place and excluding reserves related to equity-accounted entities. The proved reserves replacement ratio, including sales and purchases of reserves-in-place but excluding equity-accounted entities, was 11% (2005 40% and 2004
64%). By their nature, there is always some risk involved in the ultimate development and production of reserves, including but not limited to final regulatory approval, the installation of new or additional infrastructure as well as changes in oil
and gas prices and the continued availability of additional development capital.
developed reserves replacement ratio (including
both sales and purchases of reserves-in-place) was 70% (2005 63% and 2004
The following tables show BPs estimated net proved reserves as at 31 December 2006.
The following tables show BPs production by major field for 2006, 2005 and 2004.
Rest of Europe
The changes in sales and other operating revenues are explained in more detail below.
The Refining and Marketing segment includes a portfolio of businesses, namely Refining, Retail, Lubricants, Business-to-Business Marketing and Aromatics and Acetyls. Our strategy is to continue our focused investment in key assets and market positions. We aim to improve the quality and capability of our manufacturing portfolio. Over the past five years, this has been taking place through upgrades of existing conversion units at several of our facilities and investment in new clean fuels units at the Castellón refinery in Spain, the Kwinana refinery in Australia and all our US refineries (excluding the Carson refinery, which was already producing a full slate of clean fuels). Over the next five years, our refining
Texas city refinery
and other management and operational behaviours and processes at the Texas City refinery.
Report of the BP US Refineries Independent Safety Review Panel
course of its review, it saw no information
to suggest that anyone from BPs board members to its hourly workers
acted in anything other than good faith.
Other refinery investigations
The following table summarizes the BP groups interests in refineries and crude distillation capacities at 31 December 2006.
The following table outlines by region the volume of crude oil and feedstock processed by BP for its own account and for third parties. Corresponding BP refinery capacity utilization data is summarized.
BPs 2006 refinery throughput declined as a result of increased turnaround activity during the year. In the US, the year-on-year decline was as a result of the full shutdown of the Texas City refinery in September 2005 and the subsequent maintenance programme that led to a partial and phased start-up during 2006.
The following table sets out marketing sales by major product group.
Our aim is to increase total margin by focusing on both volumes and margin per unit. We do this by growing our customer base, both in existing and new markets, by attracting new customers
and by covering a wider geographic area. We also work to improve the efficiency of our operations through upgrading our transactional and operational processes, reducing costs and improving our product mix. In addition, we recognize that our
customers are demanding a wider choice of fuels, particularly fuels that are cleaner and more efficient. Through our integrated refining and marketing operations, we believe we are better able to meet these customer demands.
Each of these brands carries a very strong offer and we also aim to share best practices between them. Since 2003, we upgraded our fuel offer with the introduction of Ultimate gasoline and diesel products. In 2006, we
launched Utimate in South Africa and Russia and now market Ultimate in 15 countries.
Our retail network is largely concentrated in Europe and the US, with established operations in Australasia and southern and eastern Africa. We are developing networks in China with joint venture partners.
At 31 December
2006, BPs worldwide network consisted of more than 24,000 locations branded
BP, Amoco, ARCO and Aral, compared with approximately 25,000 in the previous
year. We continue to improve the efficiency of our retail asset network and
increase the consistency of our site offer through a process of regular review.
In 2006, we sold 513 company-owned sites to dealers and jobbers who continue
to operate these sites under the BP brand. We also divested an additional 301
company-owned sites (including all company-owned sites in the Czech Republic)
to third parties.
operations with 151 sites in Ningbo in 2005, with a further 72 sites in Shaoxing being transferred into the joint venture in 2006. The joint venture plans to build, operate and manage a network of 500 sites in Hangzhou, Ningbo and Shaoxing within Zhejiang province.
one of the leading importers of LPG into the Chinese market, where we continued to grow our retail LPG business. LPG Marketing Product sales in 2006 were approximately 71 thousand barrels per day.
Aromatics and acetyls
The following table shows BPs Aromatics and Acetyls production capacity at 31 December 2006. This production capacity is based on the original design capacity of the plants plus expansions.
In addition to the plans for a second PTA plant at the BP Zhuhai Chemical Company Limited site in Guandong province, China, described previously, the following portfolio activity took place in the Aromatics and Acetyls business during the year:
Supply and trading
and the Far East. Over-the-counter contracts include a variety of options, forwards and swaps. These swaps price in relation to a wider set of grades than those traded through the exchanges, where counterparties
contract for differences between, for example, fixed and floating prices. The contracts we use are described in more detail below. Additionally, physical crude can be traded forward by using specific over-the-counter contracts pricing in reference
to Brent and West Texas Intermediate grades. Over-the-counter crude forward sales contracts are used by BP to buy and sell the underlying physical commodity, as well as to act as a risk management and trading instrument.
Regional and specialist vessels
Time charter vessels
Spot charter vessels
The changes in sales and other operating revenues are explained in more detail below.
We seek to maximize the value of our gas by targeting high-value customer segments in selected markets and to optimize supply around our physical and contractual rights to assets.
Marketing and trading activities are focused on the relatively open and deregulated natural gas and power markets of North America, the UK and the most liquid trading locations in continental Europe. Some long-term natural gas contracting activity
is included within the Exploration and Production business segment because of the nature of the gas markets when the long-term sales contracts were agreed.
BP and those contractually accessed through agreements with third parties such as pipelines and terminals.
Liquefied natural gas
In south-east China, the Dapeng LNG import and regasification terminal and Trunkline Project (BP 30%) in Guangdong province received its first commissioning cargo during May 2006 and
commenced commercial operations in September. LNG for the terminal is supplied under a long-term contract signed with Australia LNG in October 2002 that involves deliveries from the North West Shelf project (BP 16.7% infrastructure and oil
reserves/15.8% gas and condensate reserves).
Natural gas liquids
Research, technology and engineering
a $0.3 million fine and agreeing, among other things, to upgrade its flare system.
Climate change programmes
$500 million over the next 10 years. Our low-carbon power business, BP Alternative Energy, continued to expand its activities with the purchase of US wind developers Orion Energy, LLC, and Greenlight Energy Inc. and the formation of a strategic alliance with Clipper Windpower, to develop jointly more than 2 gigawatts of wind projects in the US.
Maritime oil spill regulations
with P&I Clubs in the International Group of P&I Clubs, so benefiting from those Clubs pooling and reinsurance arrangements. All BP Shippings managed and time-chartered vessels will participate in
STOPIA and TOPIA.
US regional review
Under the Comprehensive Environmental Response, Compensation, and Liability Act (also known as CERCLA or Superfund), waste generators, site owners, facility operators and certain other
parties are strictly liable for part or all of the cost of addressing sites contaminated by spills or waste disposal regardless of fault or the amount of waste sent to a site. Additionally, each state has laws similar to CERCLA.
personnel and the submission of plans for approval and inspection by government agencies.
European Union regional review
concentration of fine particles (PM 2.5 particulate matter less than 2.5 microns diameter) in ambient air. The Thematic Strategy outlines EU-wide objectives to reduce the health and environmental impacts of air
quality and a wide range of measures to be taken. These measures include: the ambient air quality proposal mentioned above; revisions to the National Emissions Ceilings Directive; new emission limits for light and heavy duty diesel vehicles; new
controls on smaller combustion plant; and further control of evaporative losses from vehicle refuelling at service stations.
The Water Framework Directive requires member states to develop programmes of measures and start implementing them by 2012, the principal objective being to ensure that all
water bodies covered by the directive attain at least good quality by 2015. For an individual plant which, for instance, abstracts water or discharges effluent into water, the implications of the directive will depend on local
circumstances (including the extent to which the activity might prejudice attaining good quality for a water body) and on the individual member states approach to developing and implementing the relevant programme of measures. The
Water Framework Directive also draws together and provides for the replacement (with new directives) of a number of other directives relating to water quality, such as those on groundwater and discharge of dangerous substances.
Group operating results
Sales and other operating revenues
Profit attributable to BP shareholders
$591 million respectively. Financial statements Note 5 on page 103 provides further financial information for Innovene.
(See Environmental expenditure on page 47 for more information on environmental charges.)
The primary additional factors reflected in profit attributable to BP shareholders for the year ended 31 December 2006 compared with a year ago were higher oil realizations, higher retail
margins (although this was partially offset by a deterioration in other marketing margins), higher refining margins, including the benefit of supply optimization, and higher contributions from the operating businesses in the Gas, Power and
Renewables segment, offset by the ongoing impact following the Texas City refinery shutdown, lower gas realizations, lower production volumes, higher costs and volatility arising under IFRS fair value accounting.
Capital expenditure and acquisitions
Capital expenditure and acquisitions in 2006, 2005 and 2004 amounted to $17,231 million, $14,149 million and $16,651 million respectively. There were no significant acquisitions in 2006 or 2005. Acquisitions during 2004 included $1,354 million for including TNKs interest in Slavneft within TNK-BP and $1,355 million for the acquisition of Solvays interests in BP Solvay Polyethylene Europe and BP Solvay Polyethylene North America. Excluding acquisitions and asset exchanges, capital expenditure for 2006 was $16,910 million compared with $13,938 million in 2005 and $13,810 million in 2004. In 2006, this included $1 billion in respect of our investment in Rosneft.
Finance costs and other finance expense
base. The decrease in 2005 compared with 2004 primarily reflected a reduction in net pension finance costs. This was primarily due to a higher expected return on investment driven by a higher pension fund asset value at the start of 2005 compared with the start of 2004, while the expected long-term rate of return was similar.
Exploration and Production
Sales and other operating revenues for 2006 were $53 billion, compared with $47 billion in 2005 and $35 billion in 2004. The increase in 2006 primarily reflected an increase of around $6 billion related
to higher liquids and gas realizations, partially offset by a decrease of around $1 billion due to lower volumes of subsidiaries. The increase in 2005 primarily reflected an increase of around $13 billion related to higher liquids and gas
realizations, partially offset by a decrease of around $1 billion due to slightly lower volumes of subsidiaries.
of assets (primarily gains from the sales of our interest in the Shenzi discovery in the Gulf of Mexico in the US and interests in the North Sea offset by a loss on the sale of properties in the Gulf of Mexico shelf), net fair value gains of $515 million on embedded derivatives (these embedded derivatives are fair valued at each period end with the resulting gains or losses taken to the income statement) and a net impairment credit of $203 million (comprised of a $340 million credit for reversals of previously booked impairments partially offset by a charge of $109 million against intangible assets relating to properties in Alaska, and other
individually insignificant impairments), and was after inventory holding losses of $18 million and charges for legal provisions of $335 million.
$1,950 million due higher costs, reflecting the impacts of sector-specific inflation, increased integrity spend and revenue investments. Additionally, BPs share of the TNK-BP result was higher by around
$500 million, primarily reflecting higher disposal gains.
Refining and Marketing
Sales and other operating revenues for 2006 was $233 billion, compared with $213 billion in 2005 and $171 billion in 2004. The increase in 2006 compared with 2005 was principally due to an increase of
around $23 billion in marketing, spot and term sales of refined products. This was due to higher prices of $25 billion, partially offset by lower volumes of $2 billion. Additionally, sales of crude oil, spot and term contracts increased
by $2 billion, reflecting higher prices of $6 billion and lower volumes of $4 billion, and other sales decreased by $5 billion, primarily due to lower volumes. The increase in 2005 compared with 2004 was principally due to an
increase of around $31 billion in marketing, spot and term sales of refined products. This reflected higher prices of $39 billion and a positive foreign exchange impact due to a weaker dollar of $1 billion, partially offset by lower
volumes of $9 billion. Additionally, sales of crude oil, spot and term contracts increased by $15 billion due to higher prices of $13 billion and higher volumes of $2 billion and other sales decreased by $3 billion, primarily due
to lower volumes.
The primary additional factors reflected in profit before interest and tax for the year ended 31 December 2006 compared with the year ended 31 December 2005 were a positive impact from
IFRS fair value accounting (compared with a negative impact in 2005), contributing around $500 million, and lower costs associated with rationalization programmes of around $320 million. In addition, refining margins, including the benefits
of supply optimization, were higher by some $400 million and retail margins were higher by around $600 million, although this was partially offset by a deterioration of around $150 million in other marketing margins. These factors were
offset by a reduction of around $1.1 billion due to the impact of the progressive recommissioning of Texas City during the year. Efficiency programmes delivered lower operating costs although the savings have been offset by higher turnaround and
integrity management spend.
Gas, Power and Renewables
The changes in sales and other operating revenues are explained in more detail below.
Sales and other operating revenues for 2006 was $24 billion, compared with $26 billion in 2005. Gas marketing sales declined by $3.8 billion, reflecting a decrease of $4.2 billion related to lower
volumes, partially offset by an increase of $0.4 billion related to higher prices. Other sales (including NGLs marketing) increased by $1.8 billion due to higher prices. Sales and other operating revenues were $26 billion in 2005,
compared with $24 billion in 2004. Gas marketing sales increased by $1.7 billion as price increases of $2.1 billion more than offset lower volumes of $0.4 billion. Other sales (including NGLs marketing) remained flat, reflecting
$0.1 billion related to higher prices and $0.1 billion to lower volumes. Gas marketing sales volumes declined in 2005 and 2006 primarily due to customer portfolio changes and, in 2005, production loss caused by hurricanes in the Gulf of
Profit before interest and tax for the year ended 31 December 2005 was $1,172 million, including inventory holding gains of $95 million, compensation of $265 million received
on the cancellation of an intra-group gas supply contract and net gains of $55 million primarily on the disposal of BPs interest in the Interconnector pipeline and a power plant in the UK, and was after net fair value losses of $346
million on embedded derivatives and a credit of $6 million related to new, and revisions to existing, environmental and other provisions.
Other businesses and corporate
Other businesses and corporate comprises Finance, the groups aluminium asset, its investments in PetroChina and Sinopec (both divested in early 2004), interest income and costs relating to corporate activities
worldwide. Following the sale of Innovene to INEOS in 2005, three equity-accounted entities (Shanghai SECCO Petrochemical Company Limited in China and Polyethylene Malaysia Sdn Bhd and Ethylene Malaysia Sdn Bhd, both in Malaysia) previously reported
in Other businesses and corporate were transferred to Refining and Marketing, effective 1 January 2006.
The loss before interest and tax for the year ended 31 December 2005 was $1,237 million, including a net gain on disposal of $38 million, and was after a net charge of $278
million relating to new, and revisions to existing, environmental and other provisions and the reversal of environmental provisions no longer required, a charge of $134 million in respect of the separation of the Olefins and Derivatives business
and net fair value losses of $13 million on embedded derivatives.
Operating and capital expenditure on the prevention, control, abatement or elimination of air, water and solid waste pollution is often not incurred as a separately identifiable transaction. Instead, it forms part of a
larger transaction that includes, for example, normal maintenance expenditure. The figures for environmental operating and capital expenditure in the table are therefore estimates, based on the definitions and guidelines of the American Petroleum
Provisions for environmental remediation are made when a clean-up is probable and the amount reasonably determinable. Generally, their timing coincides with commitment to a formal plan of
action or, if earlier, on divestment or on closure of inactive sites.
Net cash provided by operating activities for the year ended 31 December 2006 was $28,172 million, compared with $26,721 million for the equivalent period of 2005, reflecting a decrease in working capital requirements of $4,817 million, an increase in profit before
taxation from continuing operations of $3,721 million and an increase in dividends from jointly controlled entities and associates of $1,662 million, partially offset by an increase in income taxes paid of $4,705 million and a higher net
credit for impairment and gain/loss on sale of businesses and fixed assets of $2,095 million.
associates of $634 million. This was partially offset by an increase in income taxes paid of $2,640 million, an increase of $1,320 million in working capital requirements, an increase in earnings from
jointly controlled entities and associates of $1,263 million, a higher net credit for impairment and gain/loss on sale of businesses and fixed assets of $775 million, an increase in interest paid of $429 million and an increase in the
net operating charge for pensions and other post-retirement benefits, less contributions of $351 million.
Net cash used in financing activities was $19,071 million in 2006 compared with $23,303 million in 2005 and $12,835 million in 2004. The lower outflow in 2006 reflects a net
increase in short term debt of $5,330 million, a decrease in repayments of long-term financing of $1,165 million and higher proceeds from long-term financing of $1,356 million, partially offset by an increase in the net repurchase of
share of $3,836 million. The higher outflow in 2005 compared with 2004 reflects an increase in the net repurchase of ordinary share capital of $4,107, higher repayments of long-term financing of $2,616 million, a net decrease of
$1,433 million in short-term debt, and increases in equity dividends paid to BP shareholders of $1,318 million and to minority interest of $794 million.
Acquisitions made for cash were more than offset by divestments. Net investment over the same period has averaged $7.7 billion per year. Dividends to BP shareholders, which grew on average by 14.9% per year in dollar terms, used $21 billion. Net repurchase of shares was $34 billion, which includes $35 billion in respect of our share buyback programme less proceeds from share issues. Finally, cash was used to strengthen the financial condition of certain of our pension funds. In the last three years, $1.9 billion has been contributed to funded pension plans.
for 2007 is expected to remain broadly the same as in 2006 after allowing
for the impact on 2007 of divestments made in 2006. This estimate is based
on the groups asset portfolio at 1 January 2007, expected start-ups
in 2007 and Brent at $60/bbl, before any 2007 disposal effects and before
any effects of prices above $60/bbl on volumes in PSAs.
on page 9 and Risk factors on pages 8-9, which describe the risks and uncertainties that may cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. The company provides no commitment to update the forward-looking statements or to publish financial projections for forward-looking statements in the future.
Financing the groups
or longer. At 31 December 2006, the amount drawn down against the DIP was $7,893 million.
Off-balance sheet arrangements
The group has issued third-party guarantees under which amounts outstanding at 31 December 2006 are summarized below. Some guarantees outstanding are in respect of borrowings of jointly controlled entities and associates noted above.
At 31 December 2006, contracts had been placed for authorized future capital expenditure estimated at $9,773 million. Such expenditure is expected to be financed largely by cash flow from operating activities.
The following table summarizes the nature of the groups unconditional purchase obligations.
The following table summarizes the groups capital expenditure commitments at 31 December 2006 and the proportion of that expenditure for which contracts have been placed. For jointly controlled assets, the net BP share is included in the amounts shown. The group expects its total capital expenditure excluding acquisitions to be around $18 billion in 2007.
Oil and natural gas accounting
Oil and natural gas reserves
The 2006 movements in proved reserves are reflected in the tables showing movements in oil and gas reserves by region in Financial statements Supplementary information on oil and natural gas on pages 194-195.
Recoverability of asset carrying values
Provisions and contingencies
largest asset removal obligations facing BP relate to the removal and disposal of oil and natural gas platforms and pipelines around the world. The estimated discounted costs of dismantling and removing these
facilities are accrued on the installation of those facilities, reflecting our legal obligations at that time. A corresponding asset of an amount equivalent to the provision is also created within property, plant and equipment. This asset is
depreciated over the expected life of the production facility or pipeline. Most of these removal events are many years in the future and the precise requirements that will have to be met when the removal event actually occurs are uncertain. Asset
removal technologies and costs are constantly changing, as well as political, environmental, safety and public expectations. Consequently, the timing and amounts of future cash flows are subject to significant uncertainty. Changes in the expected
future costs are reflected in both the provision and tangible asset.
In particular, provisions for environmental clean-up and remediation costs are based on current legal and constructive requirements, technology, price levels and expected plans for
remediation. Actual costs and cash outflows can differ from estimates because of changes in laws and regulations, public expectations, prices, discovery and analysis of site conditions and changes in clean-up technology.
Pensions and other post-retirement benefits
The pension assumptions at 31 December 2006 and 2005 are summarized below.