BP (BP)

Rest of Americas

        Canada

—

In Canada, our natural gas and liquids production was 71 mboe/d in 2004, a decrease of 17% compared to 2003. The year-on-year reduction in production is mainly due to natural field decline, shut-in gas production and non-core asset sales. The Alberta Energy and Utilities Board ordered the industry to shut in production from certain shallow gas fields overlaying bitumen deposits in northeastern Alberta with effect from September 1, 2003. In December, 2004 the Alberta Government put in place a compensation scheme for companies, including BP, impacted by the shut-in order.



—

On March 16, 2005, BP and Chevron sold Central Alberta Midstream, their jointly owned midstream gas processing business, to SemCAMS Midstream Company, a wholly owned subsidiary of SemGroup, L.P.

        Trinidad

—

In Trinidad, natural gas production volumes increased by 13%, to 1,919 mmbcf/d in 2004. The increase was principally driven by the successful startup of the Atlas Methanol plant with its first production in the third quarter of 2004. A full year of sales to Atlantic LNG Train 3 and the improvements made to operating efficiency levels of the existing Trains 1, 2 and 3 also contributed to this increase. Liquids production declined by 15 mb/d (20%), to 59 mb/d in 2004 owing to various operational factors.



—

Work on Cannonball, our next field development, continues on target. This is Trinidad's first major offshore construction project executed locally. Cannonball will provide gas deliverability for Atlantic LNG Train 4 (BP 37.8%), with expected production of 500 mmscf/d from two wells and first gas targeted for the fourth quarter of 2005.



—

The Atlas Methanol Plant (BP 36.9%) operated by Methanex, came onstream in June 2004. BP Trinidad and Tobago supplied 100% of the gas feedstock requirement, averaging 156 mmscf/d in the final quarter of 2004.

        Venezuela

—

In Venezuela, three of the four base assets are reactivation projects (projects that are expected to continue and improve exploitation in mature fields) consisting of two operated properties, Boqueron and Desarollo Zulia Occidental (DZO), and one non-operated property, Jusepin, under risk service agreements to produce oil for the state oil company, Petroleos de Venezuela S.A. (PDVSA). During 2003, we executed a sale and purchase agreement to sell DZO and

36

Boqueron to Perenco. In the first quarter of 2004, the sales agreement lapsed and we will now retain these fields. We had previously reported an exceptional loss on disposal of $217 million in respect of these assets, which has now been reversed. As a result of the lapse of the agreement, an impairment charge of $186 million was recognized in the first quarter of 2004. A fourth asset, Cerro Negro, is a non-operated property that is a heavy oil project from which production is sold directly by BP.

—

In October 2004, the royalty rate for Cerro Negro increased from 1% to 16.67% as a result of the Government's decision to end the fiscal relief granted for the Orinoco belt heavy oil strategic associations. In 2005, proposals have been made by the government to raise royalty to 30% and increase income tax to 50% from 34%, and discussions have begun between the national tax authorities and foreign oil companies, including BP, in respect of taxes on previous production.

        Colombia

—

In Colombia, BP's net production averaged 58 mboe/d. Main production comes from the Cusiana, Cupiagua and Cupiagua South Fields with increasing new production from the Cupiagua extension into the Recetor Association Contract and the Floreña and Pauto fields in the Piedemonte Association contract.



—

During 2004, BP started building the upgrade of the existing gas processing facilities (BP 24.8%) from 40 to 180 mmscf/d of capacity to supply the domestic market. The project is expected to be completed by the end of 2005.

        Argentina and Bolivia

—

In Argentina and Bolivia, activity is conducted through Pan American Energy (PAE), in which BP holds a 60% interest, and which is accounted for by the equity method. In 2004, total production of 129 mboe/d represented an increase of 10% over 2003, with oil increasing by 7% and gas by 13%. The main increase in oil production came from the continued focus on drilling and waterfloods in Golfo San Jorge in Argentina, where oil production was 56 mb/d compared to 52 mb/d in 2003. The field is now producing at its highest level since inception in 1958 and further expansion programmes are planned. PAE also has interests in gas pipelines, electricity generation plants and other midstream infrastructure assets.



—

In Bolivia in May 2005, a new hydrocarbons law established a new production tax of 32% in addition to the existing 18% royalty. Foreign oil and gas companies are required to sign new contracts conforming with the new law.

Rest of Americas

        Canada

—

In Canada, our natural gas and liquids production was 71 mboe/d in 2004, a decrease of 17% compared to 2003. The year-on-year reduction in production is mainly due to natural field decline, shut-in gas production and non-core asset sales. The Alberta Energy and Utilities Board ordered the industry to shut in production from certain shallow gas fields overlaying bitumen deposits in northeastern Alberta with effect from September 1, 2003. In December, 2004 the Alberta Government put in place a compensation scheme for companies, including BP, impacted by the shut-in order.



—

On March 16, 2005, BP and Chevron sold Central Alberta Midstream, their jointly owned midstream gas processing business, to SemCAMS Midstream Company, a wholly owned subsidiary of SemGroup, L.P.

        Trinidad

—

In Trinidad, natural gas production volumes increased by 13%, to 1,919 mmbcf/d in 2004. The increase was principally driven by the successful startup of the Atlas Methanol plant with its first production in the third quarter of 2004. A full year of sales to Atlantic LNG Train 3 and the improvements made to operating efficiency levels of the existing Trains 1, 2 and 3 also contributed to this increase. Liquids production declined by 15 mb/d (20%), to 59 mb/d in 2004 owing to various operational factors.



—

Work on Cannonball, our next field development, continues on target. This is Trinidad's first major offshore construction project executed locally. Cannonball will provide gas deliverability for Atlantic LNG Train 4 (BP 37.8%), with expected production of 500 mmscf/d from two wells and first gas targeted for the fourth quarter of 2005.



—

The Atlas Methanol Plant (BP 36.9%) operated by Methanex, came onstream in June 2004. BP Trinidad and Tobago supplied 100% of the gas feedstock requirement, averaging 156 mmscf/d in the final quarter of 2004.

        Venezuela

—

In Venezuela, three of the four base assets are reactivation projects (projects that are expected to continue and improve exploitation in mature fields) consisting of two operated properties, Boqueron and Desarollo Zulia Occidental (DZO), and one non-operated property, Jusepin, under risk service agreements to produce oil for the state oil company, Petroleos de Venezuela S.A. (PDVSA). During 2003, we executed a sale and purchase agreement to sell DZO and

35

Boqueron to Perenco. In the first quarter of 2004, the sales agreement lapsed and we will now retain these fields. We had previously reported an exceptional loss on disposal of $217 million in respect of these assets, which has now been reversed. As a result of the lapse of the agreement, an impairment charge of $186 million was recognized in the first quarter of 2004. A fourth asset, Cerro Negro, is a non-operated property that is a heavy oil project from which production is sold directly by BP.

—

In October 2004, the royalty rate for Cerro Negro increased from 1% to 16.67% as a result of the Government's decision to end the fiscal relief granted for the Orinoco belt heavy oil strategic associations. In 2005, proposals have been made by the government to raise royalty to 30% and increase income tax to 50% from 34%, and discussions have begun between the national tax authorities and foreign oil companies, including BP, in respect of taxes on previous production.

        Colombia

—

In Colombia, BP's net production averaged 58 mboe/d. Main production comes from the Cusiana, Cupiagua and Cupiagua South Fields with increasing new production from the Cupiagua extension into the Recetor Association Contract and the Floreña and Pauto fields in the Piedemonte Association contract.



—

During 2004, BP started building the upgrade of the existing gas processing facilities (BP 24.8%) from 40 to 180 mmscf/d of capacity to supply the domestic market. The project is expected to be completed by the end of 2005.

        Argentina and Bolivia

—

In Argentina and Bolivia, activity is conducted through Pan American Energy (PAE), in which BP holds a 60% interest, and which is accounted for by the equity method. In 2004, total production of 129 mboe/d represented an increase of 10% over 2003, with oil increasing by 7% and gas by 13%. The main increase in oil production came from the continued focus on drilling and waterfloods in Golfo San Jorge in Argentina, where oil production was 56 mb/d compared to 52 mb/d in 2003. The field is now producing at its highest level since inception in 1958 and further expansion programmes are planned. PAE also has interests in gas pipelines, electricity generation plants and other midstream infrastructure assets.



—

In Bolivia in May 2005, a new hydrocarbons law established a new production tax of 32% in addition to the existing 18% royalty. Foreign oil and gas companies are required to sign new contracts conforming with the new law.