BP News - 2006

News summaries from company press releases and from unaffiliated news agencies are provided below. The summaries are sorted by month and are further categorized as upstream news, downstream news, and business/finance news.

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January

• Upstream news:

- The Azerbaijan International Operating Company (AIOC), operated by BP, announced the start-up of oil production from the West Azeri platform – Azeri Project Phase 2, as part of the Azeri-Chirag-Gunashli (ACG) field development, in the Azerbaijan sector of the Caspian Sea. Located in approximately 118 metres of water 100km east of Baku, West Azeri (WA) production began from the first of three pre-drilled production wells on Friday 30th December. Transiting the subsea pipeline to shore, WA oil production reached Sangachal on Tuesday, the January 3rd. Production will increase through 2006 as the other pre-drilled wells are brought online, prior to further platform drilling commencing later this year. On plateau the WA facility will add 300 000 barrels per day in addition to the plateau rate of 340 000 barrels of oil per day from Central Azeri.

• Downstream news:

• Business/Finance news:

- Trading update aimed at providing estimates regarding revenue and trading conditions experienced by BP in the fourth quarter ending December 31, 2005, and estimates of identified non-operating items expected to be included in that quarter’s result. The fourth quarter margin, price, realisation, cost, production and other data referred to below are currently provisional, some being drawn from figures applicable to the first month or so of the quarter. All such data are subject to change and may differ quite considerably from the final numbers that will be reported on February 7, 2006. This trading update is produced in order to provide greater disclosure to investors and potential investors of currently expected outcomes, and to ensure that they all receive equal access to the same information at the same time. Overall BP production in 4Q’05 is expected to be around 4,010 mboed. BP’s Texas City Refinery was shut down as a result of Hurricane Katrina throughout 4Q’05. Total refinery throughputs in 4Q’05 were significantly lower as a result. Storm-related supply disruptions also reduced volumes in a number of our US-based businesses. The overall impact of the profits foregone as a result of the closure of Texas City and Hurricane Katrina are expected to be in excess of $400m in 4Q’05 relative to 3Q’05.

- Russian oil company TNK-BP details its long-awaited plan to begin melding its more than dozen subsidiaries into one overarching company; plan sets TNK-BP's value at no less than $18.5 billion; shareholders in British-Russian joint venture have been awaiting details of restructuring; they will have choice of swapping their shares for new stock in umbrella company, or being bought out of TNK-BP.

February

• Upstream news:

- BP announced that it is to fund a $9.4 million project by The Energy and Resources Institute (TERI) in the Indian state of Andhra Pradesh to demonstrate the feasibility of producing biodiesel from Jatropha Curcas, a non-edible oil bearing crop. The project, which is expected to take 10 years, will cultivate around 8,000 hectares of land currently designated as wasteland with Jatropha and install all the equipment necessary – seed crushing, oil extraction and processing - to produce 9 million litres of biodiesel per annum.

• Downstream news:

- BP announced that it has signed a memorandum of understanding with Brass LNG in Nigeria to purchase two million tonnes a year of liquefied natural gas (LNG). The deal, which is expected to be concluded later this year, will cover a 20 year period, starting in 2010. The LNG will be delivered by Brass and used by BP to supply multiple markets in the Atlantic basin.

- BP and Edison Mission Group (EMG), a subsidiary of Edison International, today announced that they are planning a new $1 billion hydrogen-fueled power plant in California that would generate clean electricity with minimal carbon dioxide (CO2) emissions. The first-of-its-kind plant would be located alongside BP’s Carson refinery, about 20 miles south of Los Angeles, and would be capable of producing 500 megawatts (MW) of low-carbon generation, enough power to serve 325,000 Southern California homes.

- BP forecourts in the UK could soon be smelling of roses or other perfume scent if a trial of having hand wet-wipes available for customers near petrol pumps is successful. BP is the first petrol company in the country to carry out such a trial to get rid of the problem of dirty smelly hands after filling up your car.

• Business/Finance news:

- Royal Dutch/Shell Group reduces its proven oil and gas reserves by additional 10 percent, rattling investors yet again and increasing speculation that company will ultimately have to buy better-performing rival to compete with peers like Exxon Mobil and BP; company reports net income of $4.48 billion in fourth quarter, more than double $1.9 billion it earned in quarter year earlier.

- BP's fourth quarter replacement cost profit was $4,432 million compared with $3,504 million a year ago, an increase of 26%. For the year, replacement cost profit was $19,314 million compared with $15,432 million, up 25%. * The fourth quarter result includes a net non-operating charge of $553 millon compared with a net non-operating charge of $1,261 million in the fourth quarter of 2004. In addition, the fourth quarter 2005 result for the Refining and Marketing and Gas, Power and Renewables segments reflects significant volatility arising under IFRS fair value accounting. Furthermore, the Refining and Marketing result includes a significant charge in respect of planned restructuring actions. For the year, the net non-operating charge was $1,754 million compared with a net charge of $1,072 million for the year 2004. * The fourth quarter trading environment was stronger than a year ago with higher oil and gas realizations and higher refining and retail marketing margins but with lower olefins margins. * Net cash provided by operating activities for the quarter and year was $4.2 billion and $26.7 billion, respectively, compared with $5.2 billion and $23.4 billion a year ago. * The sale of Innovene to INEOS completed on 16 December 2005. * The ratio of net debt to net debt plus equity was 17% compared with 22% a year ago.

- BP has replaced its annual production for the 13th consecutive year, chief executive Lord Browne announced today. He said the company had replenished reserves by 100 per cent on a UK reporting basis and 95 per cent under SEC rules which take account of year-end prices, giving it a proven reserve base of over 18 billion barrels of oil and gas equivalent at end-2005. On top of proven reserves, BP also added nearly 2 billion new barrels to its non-proven resource base last year, taking it to a total of 41 billion barrels, of which the company expects to convert some 11 billion barrels into proven reserves by 2010.

- Billionaire Boone Pickens, taking advantage of temporary tax break, gives $165 million to tiny charity set up to benefit golf program at Oklahoma State University; money is held for less than an hour and then invested in BP Capital Management, hedge fund controlled by Pickens; lawyers say ploy appears to be legal, but critics say Pickens is manipulating charity for personal gain of top philanthropists in 2005.

- The board of BP p.l.c. announces that Mr. Michael Wilson has stood down as a non-executive director with immediate effect. Mr Wilson has been appointed as Ambassador of Canada to the United States of America, a post which he will take up in early March. Mr. Wilson joined the BP board in 1998 at the time of the merger with Amoco having served on the Amoco board since 1993.

March

• Upstream news:

- Cannonball, the first platform to be designed and constructed in Trinidad and Tobago, produced its first gas on Sunday March 12, 2006. BP Trinidad and Tobago’s US$250 million facility is expected to be brought up to full production rates over the next few weeks when gas output will be about 800 mmscf/d (140 mboed), about 25 per cent of the company’s overall production. The Cannonball wells will be high rate gas producers, and will be among the most productive wells in BP’s worldwide portfolio. Cannonball is located 35 kilometres off the coast of Galeota Point, Mayaro in water depths of 231 feet.

• Downstream news:

- BP has successfully received a one-year extension to the hydrogen demonstration project they have undertaken in association with Transport for London. Under the nine-city CUTE programme, BP provides hydrogen for three London buses at its retail site in Hornchurch. The programme – currently the largest hydrogen bus trial in the world – was due to end in January 2006. However, following the success of the trial in London and other cities, the European Union has agreed to part-fund the programme for another 12 months. Seven cities will take part in the extension.

- BP, the operator of the Forties Pipeline System (FPS), issued guidance on the effect that introduction of oil from the Nexen-operated Buzzard field into the FPS would be expected to have on Forties Blend crude oil when Buzzard begins production. Oil from the Buzzard field will be exported through the Forties Pipeline System and so become a constituent of Forties Blend crude, affecting its hydrocarbon characteristics. Buzzard is expected to begin production late in 2006 and build up to peak production of approximately 210,000 barrels a day in 2007. As a result of the introduction of Buzzard crude into the FPS, it is expected that the API of Forties Blend crude in 2007 will be some 2.9 degrees lower than currently and 3.5 degrees lower in 2010, when it would be expected to have an API of around 41 degrees, similar to the gravity the Blend had in 1997. Over the same period to 2010, the sulphur level of Forties Blend would be expected to rise to around 0.56% wt.

• Business/Finance news:

- The largest oil spill to occur on the tundra of Alaska's North Slope has deposited up to 267,000 gallons of thick crude oil over two acres in the sprawling Prudhoe Bay production facilities.

- An oil spill this month in Alaska, the largest ever on the North Slope, has raised new concerns among state and federal regulators about whether BP has been properly maintaining its aging network of wells, pumps and pipelines that crisscross the tundra.

- Pres Vladimir V Putin kicks off Year of Russia in China celebration by bringing entourage of 1,000 people to Beijing, including executives of top Russian oil and natural gas companies; deal is announced for two gas pipelines that will skirt Mongolia; each will carry 30 billion to 40 billion cubic meters of gas; Kovytka field, owned 62 percent by BP's joint venture in Russia, TNK-BP, holds 1.9 trillion cubic meters of proven natural gas; less progress is made on plan for separate pipeline sought by China to deliver oil to China from Siberia; Russia intends to double trade with China to more than $60 billion in 2010 from $29 billion last year.

- BPA, a BP/Shell jv based in Hemel Hempstead UK, has been awarded one of the prestigious Royal Society for the Prevention of Accidents (RoSPA) President’s Occupational Health & Safety Awards for their 2005 performance. The President’s award is given on achieving 10 successive annual gold awards.

- BP Australia announced it has signed two contracts and a Memorandum of Understanding to provide to consumers over 200 million litres of biofuels per annum by 2008. The announcement signals the early delivery by a single company of over half of the Federal Government's national target of 350 million litres.

April

• Upstream news:

• Downstream news:

- BP confirmed that it is proceeding with its project for a major increase in purified terephthalic acid (PTA) production capacity at its Geel, Belgium, plant and also announced that it has recently completed a significant increase in the plant's paraxylene (PX) production capacity. The planned debottleneck of PTA production at Geel will increase capacity by more than 350,000 tonnes a year, making the total PTA production capacity of the Geel site some 1.4 million tonnes a year.

- BP held a ground breaking ceremony in Taicang, east China’s Jiangsu province, to celebrate the start of the construction of its dedicated industrial lubricants blending facility in China. With an initial investment of US$22 million, BP will own and operate the largest, most efficient and flexible industrial lubricant facility in China and in the wider BP when it is commissioned by end 2006.

- The ‘Vanora’, the second new double-hulled BP lube oil barge for the Dutch market, was named and put into service at a ceremony in Rotterdam. Built and owned by BP Shipping, Vanora is chartered to BP Marine along with her sister barge the ‘Victoria’, which was delivered in October 2005. The two new ships replace three smaller single-hulled barges delivering 50,000 tonnes of bulk lube oils to a wide range of seagoing customers, from coastal vessels to large container ships, in and around Rotterdam port.

• Business/Finance news:

- BP in the first quarter ended March 31, 2006. Overall BP production in 1Q’06 is expected to be around 4,025 mboed. Excluding volumes from TNK-BP operations, production in 1Q’06 is expected to be around 3,035 mboed, versus 2,995 mboed in 4Q’05. This increase primarily reflects the progressive return of production impacted by Hurricanes Katrina and Rita. BP’s Texas City Refinery remained shut-down to the end of 1Q’06. A phased recommissioning began at the end of March. * BP's first quarter replacement cost profit was $5,265 million, compared with $5,491 million a year ago, a decrease of 4%. Excluding non-operating items, the result increased by 7% on a year ago; on a per share basis this represents an increase of 12%. * The first quarter result included a net non-operating charge of $17 million compared with a net non-operating gain of $542 million in the first quarter of 2005. * The first quarter trading environment was generally stronger than a year ago with higher oil and gas realizations and similar overall marketing margins, but with slightly lower realized refining margins. * Net cash provided by operating activities for the quarter was $8.9 billion compared with $9.4 billion a year ago. * The ratio of net debt to net debt plus equity was 16% compared with 18% a year ago. * The quarterly dividend, to be paid in June, is 9.375 cents per share ($0.5625 per ADS) compared with 8.50 cents per share a year ago, an increase of 10%. In sterling terms, the quarterly dividend is 5.251 pence per share, compared with 4.450 pence per share a year ago, an increase of 18%. During the quarter, the company repurchased 349 million of its own shares at a cost of $4 billion.

May

• Upstream news:

- Sociedade Nacional de Combustíveis de Angola (Sonangol) and BP Exploration (Angola) Limited announced the ‘Urano’ oil discovery in ultra-deepwater Block 31, offshore Angola. Urano is the tenth successful discovery that BP has drilled in Block 31, following Plutão, Saturno, Marte, Venus, Palas, Ceres, Juno, Astraea and Hebe. Urano was drilled by the Jack Ryan drill ship, in a water depth of 1,938m, some 345 kilometres northwest of Luanda and reached a total depth of 4,578 metres below sea level. This is the first discovery in Block 31 where the exploration well has been drilled through salt to access the oil bearing sandstone reservoir beneath.

- BP announced that it intends to market for sale its exploration and production (E&P) and gas infrastructure business in the Netherlands, comprising its onshore and offshore production assets and its Piek Gas Installatie (PGI) at Alkmaar. The business will be offered as an ongoing, fully staffed operation and BP does not expect any redundancies as a result of the sale. BP's Dutch E&P/gas infrastructure business has a staff of around 120 employees and long term contractors. It operates assets both onshore and offshore in the Netherlands and had net gas production of around 1.8 million cubic metres a day (62 million cubic feet a day) in 2005.

• Downstream news:

• Business/Finance news:

- BP has selected CT TyMetrix, Inc. (“CTT”) and Interwoven, Inc. (“Interwoven”) as its preferred suppliers to create a global data flow and information management system for its in-house legal department. The two information technology companies have been brought together with Huron Consulting Group (“Huron”) to analyse business processes and integrate workflow, e-billing, document management, and information retrieval systems among its 750 legal staff spread over 50 locations.

June

• Upstream news:

- BP announced that the In Amenas gas project, a joint development with Sonatrach, the Algerian state energy company, and Statoil of Norway has commenced gas production. In Amenas, the largest wet gas joint development project in Algeria, is located approximately 850 kilometres south of Hassi Messaoud, in the south-east of the country. The project includes development of four primary gas fields plus gas gathering and processing facilities. The first of three production trains was started on May 27 followed by a period of final commissioning and testing. Production will build over the next two months to approximately 9 billion cubic metres a year of gas (25 million cubic metres/870 million cubic feet per day) and some 50-60,000 barrels per day of liquids.

• Downstream news:

- BP, operator of the Baku-Tblisi-Ceyhan (BTC) pipeline, announced that the first cargo of oil transported through the pipeline from Azerbaijan has been exported from the Ceyhan marine terminal on the Turkish Mediterranean coast. The loading followed the completion of the testing, commissioning and filling of the BTC pipeline along its entire 1,768-kilometre route across Azerbaijan, Georgia and Turkey, from the Sangachal terminal on the Caspian coast near Baku to the Ceyhan terminal. A total of 10 million barrels of oil from the Azeri-Chirag-Gunashli (ACG) fields in the Azerbaijani sector of the Caspian Sea were required to complete the filling of the pipeline, which began in May 2005.

- DuPont bio-based science and BP fuels technology expertise will bring next generation biofuels to market. BP and DuPont announce the creation of a partnership to develop, produce and market a next generation of biofuels to help meet increasing global demand for renewable transport fuels. BP and DuPont have been working together since 2003 to develop advanced biofuels with properties that can help overcome the limitations of existing biofuels. That work has now progressed to the point where they are able to bring the first jointly developed product to market. The companies' joint strategy is to deliver advanced biofuels that will provide improved options for expanding energy supplies and accelerate the move to renewable transportation fuels which lower overall greenhouse gas emissions. The first product to market will be biobutanol, which will be introduced in the United Kingdom as a gasoline bio-component. Initial introduction is targeted in the UK in 2007 where BP and DuPont are working with British Sugar, a subsidiary of Associated British Foods plc, to convert the country's first ethanol fermentation facility to produce biobutanol. Additional global capacity will be introduced as market conditions dictate and a feasibility study in conjunction with British Sugar is already underway to examine the possibility of constructing larger facilities in the UK.

- Cairo, Egypt: The Egyptian Natural Gas Holding Corporation (EGAS), BP, SEGAS and Eni signed a framework agreement marking a major step forward for the development of the second liquefied natural gas (LNG) export train at the Damietta site on the Egyptian Mediterranean Coast. The agreement puts in place the commercial framework needed to move the project forward to a final investment agreement. It is planned that the project will be supplied by BP and Eni from new gas discoveries offshore in the Nile Delta. As part of the development of these resources for the new LNG plant a comparable amount of gas will be developed for supply to the domestic market in Egypt.

- BP held a ceremony at Zhuhai to celebrate the start of construction of China's largest and most efficient PTA (Purified Terephthalic Acid) unit. The new unit will be an expansion of BP Zhuhai, an existing joint venture between BP and Fu Hua Group, and will employ BP's latest state-of-art technology. When commissioned at the end of 2007, it will be the world's largest single train PTA unit with a capacity of 900,000 tonnes per year, and will bring the combined capacity from Zhuhai site to 1.4 million tonnes per annum.

- BP announced that it has decided to sell its Coryton Refinery in Essex, UK. BP announced today that it has decided to sell its Coryton Refinery in Essex, UK which processes 172,000 barrels of crude oil a day.

- BP joined its partners at a ceremony to mark the start of operations at China’s first liquefied natural gas (LNG) import and regasification terminal at Shengzhen, Guangdong province. An initial cargo of 57,000 tonnes of LNG was shipped to the partly BP-owned Guangdong Dapeng LNG import terminal at the end of May, one month ahead of schedule, from the North West Shelf Venture in Australia in which BP is also a partner. The second cargo, of 62,000 tonnes of LNG, arrived at the terminal prior to today’s ceremony.

- GOOGLE PAYMENT SERVICE Google is introducing a service that will let users make purchases from online stores using payment and shipping information they keep on file with Google.

• Business/Finance news:

- Last year was another dramatic period in global energy markets with energy prices rising to new highs while dramatic weather impacts both strengthened energy consumption and weakened production. Although markets continued to work efficiently and there was no shortage of physical supplies, energy security became a major worldwide concern among both producing and consuming nations.

- As part of its continuing drive to find longer term commercial alternatives to oil and gas, BP is to fund radical research aimed at probing the emerging secrets of bioscience and applying them to the production of new and cleaner energy, principally fuels for road transport. The company plans to spend $500 million over the next ten years to establish a dedicated biosciences energy research laboratory attached to a major academic centre in the US or UK, the first facility of its kind in the world.

- Robert A. Malone has been appointed Chairman and President of BP America, Inc. and will serve as BP’s chief representative in the United States. Mr. Malone will be based in Houston, where BP business units are involved in oil and gas exploration and production, refining, chemicals, supply and trading , pipeline operations, shipping, and alternative energy. Houston is home to nearly 7,000 BP employees.

- BP and The California Institute of Technology have teamed up in a multi-million dollar research program that could open the door to a radical new way of producing solar cells, making the cost of solar electricity more competitive and increasing current efficiency levels. The program was announced at the Photovoltaics Summit 2006 in San Diego. For an initial five year period, BP and Caltech will explore a concept based on growing silicon by creating arrays of nanorods rather than by casting ingots and cutting wafers, which is the current conventional way of producing solar cells. Nanorods are small cylinders of silicon that can be 100 times smaller than a human hair and would be tightly packed in an array like bristles in a brush. A solar cell based on an array of nanorods will be able to efficiently absorb light along the length of the rods by collecting the electricity generated by sunlight more efficiently than a conventional solar cell.

July

• Upstream news:

- BP and its partner, Maersk Oil North Sea UK Limited, announced the approval of FEED (Front End Engineering and Design) for the Harding Area Gas Project. The project, which comprises a new gas processing platform bridge-linked to the existing Harding platform, will have the potential to process and export gas at rates of up to 400 million standard cubic feet of gas per day (mmscfd). The project would also involve the subsea tie-back of the Devenick field and a gas export pipeline to connect the new gas platform to the existing Brae gas transmission pipeline.

- BP announced that it has been awarded three offshore blocks in Pakistan’s offshore Indus Delta. At a signing ceremony at the Ministry of Petroleum, the company said BP will explore blocks U, V and W covering an area of 21,000 km2 for oil and gas reserves, with the right to operate any commercially viable discoveries.

• Downstream news:

- The official inauguration of the Turkish section of the Baku-Tbilisi-Ceyhan (BTC) oil export pipeline, the new Ceyhan marine export terminal and the full BTC pipeline export system was held at the Ceyhan terminal on the Mediterranean coast of Turkey.

• Business/Finance news:

- BP Second Quarter 2006 Trading Update. Overall BP production in 2Q’06 is expected to be around 4,010 mboed. Excluding volumes from TNK-BP operations, production in 2Q’06 is expected to be around 3,010 mboed, versus 3,041 mboed in 1Q’06. This reduction primarily reflects the impact of divestments. BP’s net share of production from TNK-BP is expected to be approximately 1,000 mboed, versus 994 mboed in 1Q’06.

- The energy company BP said that its oil and gas output fell for the fourth consecutive quarter and that a refinery explosion in Texas last year would cost it $500 million more than it had anticipated.

- Clipper Windpower and BP Alternative Energy announced that they have entered into a strategic alliance for a long-term turbine supply agreement and the joint development of five of Clipper’s wind energy projects in the USA. The five wind projects, with an anticipated total generating capacity of 2,015 MW, are located in New York, Texas, and South Dakota. Under the long-term supply agreement, BP has secured a mix of firm and contingent orders of up to 2,250 MW of additional Clipper turbines in its global wind portfolio.

- BP and GE announced their intention to jointly develop and deploy hydrogen power projects that dramatically reduce emissions of the greenhouse gas carbon dioxide from electricity generation. The world will continue to make extensive use of fossil fuels, such as natural gas and coal, for power generation for the foreseeable future, but technology now allows this to be done more cleanly by creating hydrogen from fossil fuels while capturing and sequestering the carbon as carbon dioxide in deep geological formations. To facilitate this advancement, BP and GE will collaborate on power, carbon capture and sequestration technologies.

- BP announced that it has decided to pursue a sale of its 47.41% equity interest in Samsung Petrochemical Co., Ltd. (SPC), its joint venture with Samsung located in South Korea. SPC is one of the leading producers of purified terephthalic acid (PTA) in Asia with a total production capacity in excess of 1.8 million tonnes per year. PTA is the preferred raw material used to manufacture polyester.

- The board of BP announced that Sir William Castell has been appointed as a non-executive director with immediate effect.

- A pioneer in silicon casting for solar photovoltaic cell applications, BP Solar has developed a new silicon growth process that significantly increases cell efficiency over traditional multi-crystalline-based solar cells. The new technique, named Mono2TM, enhances BP Solar’s technological expertise in the silicon growth and wafering arenas where silicon ingots and wafering technology are key to future growth. Solar cells made with these wafers, in combination with other BP Solar advances in cell process technology, will be able to produce in excess of five to eight percent more power than solar cells made with conventional processes. This translates into an equivalent module power increase and hence a substantial cost reduction at the installed system level.

- BP announced an acceleration of actions to improve the operational integrity and monitoring of its US businesses. The company said it would add a further $1 billion to the $6 billion already earmarked over the next four years to upgrade all aspects of safety at its US refineries and to repair and replace infield pipelines in Alaska.

- BP's second quarter replacement cost profit was $6,118 million, compared with $4,981 million a year ago, an increase of 23%. For the half year, replacement cost profit was $11,383 million compared with $10,472 million, up 9%. * The second quarter result included a net non-operating gain of $6 million compared with a net non-operating charge of $822 million in the second quarter of 2005. For the half year, the net non-operating charge was $11 million compared with a net non-operating charge of $280 million for the first half of 2005. * The second quarter trading environment was generally stronger than a year ago with higher oil and gas realizations and higher refining margins but with lower overall marketing margins. * Net cash provided by operating activities for the quarter and half year was $9.1 billion and $18.1 billion compared with $6.7 billion and $16.1 billion a year ago. * The ratio of net debt to net debt plus equity was 15%.

- Ending rampant speculation here, Lord Browne, chief executive of BP, the giant energy group, said unequivocally that he would leave the company at the end of 2008, after reaching BP's mandatory retirement age of 60.

- Prime Minister Tony Blair and Governor Arnold Schwarzenegger join international business leaders to hold frank and far-reaching discussions on global partnership approach to reducing greenhouse gas emissions. The Climate and Energy Roundtable is being convened by The Climate Group, the only nonprofit organization working internationally to bring business and government together to solve global warming. The event is being hosted by BP at their facility at the Port of Long Beach.

August

• Upstream news:

- BP America Inc., announced an oil discovery on an exploration well which tested the Kaskida prospect in the Gulf of Mexico. The well, located on Keathley Canyon block 292, is in about 5,860 feet of water and is about 250 miles southwest of New Orleans. Kaskida was drilled to a total depth of approximately 32,500 feet in the lower tertiary and encountered 800 net feet of hydrocarbon-bearing sands. The well is operated by BP Exploration & Production Inc., a wholly owned subsidiary of BP America Inc., with a 55 percent working interest, and includes co-owners Anadarko Petroleum Corporation with a 25 percent working interest, and Devon Energy Corporation with a 20 percent working interest. The lease was acquired at federal OCS Lease Sale 187 in August 2003.

• Downstream news:

• Business/Finance news:

- BP Exploration Alaska, Inc. has begun an orderly and phased shutdown of the Prudhoe Bay oil field following the discovery of unexpectedly severe corrosion and a small spill from a Prudhoe Bay oil transit line. Shutting down the field will take days to complete. Over time, these actions will reduce Alaska North Slope oil production by an estimated 400,000 barrels per day. The decision follows the receipt on Friday, August 4 of data from a smart pig run completed in late July. Analysis of the data revealed 16 anomalies in 12 locations in an oil transit line on the eastern side of the oil field. In response to the inspection data, BP conducted follow up inspections of anomalies where corrosion-related wall thinning appeared to exceed BP criteria for continued operation. It was during these follow up inspections that BP personnel discovered a leak and small spill estimated at 4 to 5 barrels. * The spill has been contained and the clean up effort is underway. The pipeline was shutdown at 6:30 am Sunday morning. BP has notified state and federal officials of the decision and will work closely with the U.S. Department of Transportation and the Alaska Department of Environmental Conservation, among others. BP operates 22 miles of oil transit pipeline at Prudhoe Bay. Smart pigging inspection has been completed over about 40 percent of that length. BP previously announced plans to replace a three-mile segment of pipeline following inspections conducted after a large spill discovered on March 2, 2006.

- PIPELINE LEAK SENDS OIL HIGHER -- BP began shutting down the nation's largest oil field after an inspection detected heavy corrosion and a small leak in a critical pipeline in its Alaskan Prudhoe Bay operation. The emergency drove already-high world crude oil prices to just under $77 a barrel.

- This statement was made by Bob Malone, Chairman and President of BP America, Inc., at a press conference in Anchorage, Alaska. "We deeply regret that it has been necessary to take this drastic action of an orderly and planned shutdown of the Prudhoe Bay oil field. "On behalf of the BP Group, I apologize for the impact it is having on the nation and the State of Alaska...

- Energy Secretary Samuel W. Bodman said that the country was prepared to cope with the temporary loss of 400,000 barrels of oil a day from Alaska and that the loss might not be that large.

- BP Exploration Alaska, Inc. announced that it will continue production of oil from the western side of the Prudhoe Bay oil field. Current production is 150,000 barrels per day, including natural gas liquids, and is expected to increase to 200,000 barrels per day as Gathering Center 1 ramps up to full production after completion of a planned maintenance shutdown. BP will complete the installation of 16 miles of new oil transit line at Prudhoe Bay by early next year. The company continues to evaluate interim options for restoring production from the eastern side of the field, subject to the approval of the U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration. The decision to continue production from the western half of the field was taken after close consultation with federal and state regulatory agencies, review of more than 1400 ultrasonic inspections conducted on a key five-mile section of pipeline and a decision to begin round-the-clock visual and infrared surveillance of the line. BP will continue ultrasonic inspection of the western transit line and plans to complete additional inspections in coming weeks. The company will evaluate test results on a daily basis to determine if repairs are required or if continued operation of the line is appropriate. BP plans to run maintenance and smart pigs through the pipeline before the end of November after installing a pig launcher at Gathering Center 1.

- RENEWED concern about terrorist strikes and a spike in energy prices threatened to flatten airlines, just as they had pulled themselves off the canvas and staggered back to profitability. The British authorities arrested 24 men and accused them of planning to use liquid bombs in a coordinated attack.

- WALKING through an airport earlier this week, I happened to spot a BP advertisement. You know the kind I'm talking about: the letters BP in lower-case type -- making them somehow warmer and fuzzier -- above a yellow and green sun, and the words ''beyond petroleum.''

- BP took the decision to continue production from the Prudhoe Bay western operating area (WOA), following review of new inspection data of pipelines in this area and after extensive consultations with state and federal regulators. Current production is about 150,000 barrels of oil and natural gas liquids per day. That production will increase to about 200,000 barrels per day as Gathering Center 1 ramps up to full production after completion of a planned maintenance shutdown. BP has now completed 2,200 ultrasonic inspections in the WOA since March and will continue round-the-clock visual and infrared surveillance of the line to assure continued safe operations. Overnight, the cleanup team continued oil recovery efforts in the Flow Station 2 transit line spill in the East Operating Area. More than 17 barrels of oil have been recovered, and the process is continuing. The team is now using water flood techniques to lift remaining amounts of oil from the tundra. This involves booming off the area immediately surrounding the spill, then pumping in water from a nearby lake to flood the area. Oil is then recovered as it floats on the water. This process will be repeated several times today to maximize the amount of oil that is recovered. Ten metal sleeves will be required over sections of EOA pipeline showing corrosion damage. Seven of those have now been installed, with three remaining sleeves to be delivered and installed today. BP, to date, has purchased more than 4.5 million barrels of crude on the global market to help cover the shortfall in Prudhoe Bay output. Additional crude oil and refined products will be acquired as necessary.

- FOR some men, it's cars, a sports team or watching ''The Godfather'' over and over. For me, it's oil companies. They fascinate me. Their size, their power, their reach. So I was particularly interested in the recent news about BP shutting down the nation's largest oil field.

- BP announced that it has purchased Greenlight Energy, Inc., a US-based developer of wind power generation projects. The purchase will allow BP to accelerate its plans to develop a leading wind power business in North America. BP has acquired all the shares of Greenlight Energy for a consideration of some $98 million, excluding working capital and tax adjustments.

- UK’s first mainstream scheme to "neutralise" the CO2 emissions caused by driving. UK drivers can now neutralise the CO2 emissions caused by their driving through targetneutral, a non-profit making partnership initiative from BP that launches.

- BP introduced targetneutral.com, a program that enables drivers in Britain to determine how much carbon dioxide pollution they helped create, and to offset it by supporting green energy initiatives. The goal is to make drivers ''CO2 neutral.'' The idea is not new.

- BP, the giant oil company, acknowledged that federal investigators were looking into possible trading irregularities in oil and gasoline markets. The company said that it was ''aware of investigations'' by the federal authorities and was cooperating with them.

September

• Upstream news:

- BP announced that it has reached agreement to acquire acreage interests from Chevron in the UK Central North Sea containing the Arundel and Kidd discoveries and further exploration potential. As a result of this deal, which is subject to DTI approval, BP will increase its interest in License P103 (Block 16/23 South) and entering License P240 (Block 16/22 Arundel). BP will also become Operator of both blocks upon completion of the transaction. These interests will be acquired in exchange for 2.2% of BP's interest in the Alba field which will be reduced from 15.5% down to 13.3%.

• Downstream news:

- BP and Gazprom Marketing & Trading, the UK subsidiary of energy giant OAO Gazprom, announced today that they had reached an agreement for BP to supply a number of liquefied natural gas (LNG) cargoes which Gazprom Marketing & Trading will market in the Atlantic Basin. The cargoes, which will be sourced from within BP's portfolio, will be supplied over the period 2006 and early 2007 and transported in LNG ships chartered by BP to Gazprom Marketing & Trading. Gazprom Marketing & Trading will specify the delivery points in accordance with its marketing needs.

- Midwest investment at Whiting, Indiana refinery also brings potential to add about 1.7 million gallons per day of motor fuels BP announced that it has entered the final planning stage of a $3 billion investment in Canadian heavy crude oil processing at its Whiting Refinery located in northwest Indiana. BP America Inc. said the company intends to reconfigure its Whiting Refinery so most of its feedstock can be heavy Canadian crude oil. Reconfiguring the refinery also has the potential to increase its production of motor fuels by about 15 percent, which is about 1.7 million additional gallons of gasoline and diesel per day.

• Business/Finance news:

- BP America retains independent corrosion experts to review Alaska corrosion management program. BP America Chairman and President Bob Malone announced that he has retained three eminent corrosion experts to independently review and make recommendations for improving the corrosion inspection, monitoring and prevention program in place at Prudhoe Bay and in other BP-operated Alaska oil fields. This action follows the August 6 decision to halt production from the eastern side of the Prudhoe Bay field following the discovery of unexpected corrosion in an oil transit line. BP Exploration Alaska, Inc. (BPXA) halted production to avert the potential for an oil spill. Earlier in the year, an estimated 5,000 barrels leaked from a pipeline in similar service on the western side of the field.

- Following a series of tests carried out over the past four months that revealed metallurgical failure in components of the subsea system, BP announced that it plans to retrieve and rebuild all the sea-bed production equipment from its Thunder Horse field in the deepwater Gulf of Mexico. BP said the problem became evident when it conducted pre-commissioning tests by pumping water through the system to establish system integrity. The equipment passed all the normal industry standard tests and regulatory requirements. But when the company carried out more prolonged and rigorous testing, as an additional safety precaution, a failure occurred on a subsea weld. As a consequence of the failure, BP said it had decided to retrieve both the damaged sea-bed manifold and a second manifold for further examination and onshore testing. The second manifold displayed a similar failure during testing last week. In view of these failures, BP said it would now retrieve and replace all the subsea components it believes could be at risk. This work will be done over the course of the next year and the company said it does not expect production from Thunder Horse to begin before the middle of 2008.

- BP Exploration (Alaska) Inc. said it will re-start a portion of the Eastern Operating Area of Prudhoe Bay in order to run cleaning pigs and conduct an in-line inspection of the crude oil transit line using a “smart pig.” The eastern portion of Prudhoe Bay was shut down on Aug. 10 following discovery of a spill caused by isolated pitting corrosion on Aug. 6. The company, working closely with the U.S. Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration, has determined that the line can be returned to service. Three of the four flow stations currently on warm stand-by will be returned to full production.

- Gazprom, the natural gas operator, has benefited handsomely from its position as the monopoly supplier of Russian natural gas to Europe. Now the Kremlin-backed energy company may get a similar role in Asia. This year Gazprom surpassed BP and Shell to become the second-largest energy company in the world.

October

• Upstream news:

- On behalf of the field owners, BP has awarded a contract to Heerema Marine Contractors for the offshore removal and onshore recycling and disposal of the North West Hutton installation, located some 130km north east of the Shetland Islands. Heerema will be the prime contractor for this work which will also involve a range of specialist subsea, engineering, and waste handling companies. The North West Hutton topsides and jacket will be removed by heavy lift vessel and taken to the Able yard on Teesside for recycling and disposal. BP estimates that around 97% of the material recovered will be recycled. The contract awarded represents the largest remaining element of the total North West Hutton decommissioning project. Work already completed includes the well abandonment and topsides clean up phases carried out after the field ceased production at the end of 2002. This will leave pipeline decommissioning, debris clearance and site inspection as the final elements to be completed after removal of the installation. BP estimates that the UK content of the whole project will be around 80% – representing the amount of work carried out by companies based in the UK, many in Aberdeen.

- Sociedade Nacional de Combustíveis de Angola (Sonangol) and BP Exploration (Angola) Limited today announced the ‘Titania’ oil discovery in ultra-deepwater Block 31, offshore Angola. Titania is the eleventh discovery that BP has drilled in Block 31. The well is located 23 kilometres northwest of the Hebe discovery, announced in Q4 2005. Titania was drilled by the Jack Ryan drill ship, in a water depth of 2,152 metres, some 385 kilometres northwest of Luanda, and reached a total depth of 5,339 metres below sea level. This is the second discovery in Block 31 where the exploration well has been drilled through salt to access the oil-bearing sandstone reservoir beneath. The Azerbaijan International Operating Company (AIOC), operated by BP, announced the start-up of oil production from the East Azeri platform four months ahead of schedule. East Azeri completes Phase 2 of the Azeri-Chirag-Gunashli (ACG) field development in the Azerbaijan sector of the Caspian Sea. Phase 3, which will develop the Deep Water Gunashli area of ACG, remains on schedule to commence production in 2008. East Azeri (EA) is located in 150m water depth on the east side of the Azeri field. Production on this platform began from the first of eight pre-drilled wells on October 21. It will take about two weeks for the first oil from EA to reach the Sangachal Terminal via a new subsea pipeline to shore. Production will increase through mid-2007 as the other pre-drilled wells are brought online, prior to platform drilling commencing. On plateau, the EA facility will produce 260,000 barrels per day bringing total Azeri production, including West and Central Azeri, to over 800,000 barrels per day.

• Downstream news:

• Business/Finance news:

- BP Third Quarter 2006 Trading Update. Overall BP production in 3Q’06 is expected to be around 3,800 thousand barrels of oil equivalent per day (mboed). Excluding volumes from TNK-BP operations, production in 3Q’06 is expected to be around 2,850 mboed, versus 3,019 mboed in 2Q’06. This reduction reflects the impact of divestments, maintenance and operational downtime. BP’s net share of production from TNK-BP is expected to be approximately 950 mboed, versus 999 mboed in 2Q’06, with the reduction reflecting divestments. * BP's third quarter replacement cost profit was $6,975 million, compared with $4,410 million a year ago, an increase of 58%. For the nine months, replacement cost profit was $18,358 million compared with $14,882 million, up 23%. * The third quarter result included a net non-operating gain of $1,225 million compared with a net non-operating charge of $921 million in the third quarter of 2005. This includes significant gains on upstream asset disposals. For the nine months, the net non-operating gain was $1,214 million compared with a net non-operating charge of $1,201 million for the nine months of 2005. * Compared with a year ago, the third quarter trading environment reflected higher oil realizations and higher retail margins but lower refining margins and lower gas realizations. * Net cash provided by operating activities for the quarter and nine months was $5.1 billion and $23.2 billion compared with $6.4 billion and $22.5 billion a year ago. * The ratio of net debt to net debt plus equity was 16%.

November

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- Oil company BP said that it was replacing the head of its Alaskan unit after inadequate maintenance led to leaky pipelines, partial shutdown of the largest U.S. oil field and an investor lawsuit. Doug Suttles, president of London-based BP's operations on the Russian island of Sakhalin, will become president of BP Exploration (Alaska) Inc. on Jan. 1, taking over from Steve Marshall, company spokesman Daren Beaudo said in a telephone interview.

- BP is to roll out its BP Connect/Wild Bean Café brands to its dealer network in a franchise arrangement following a successful trial at two sites earlier this year. Ten sites are expected to be converted by end of the first three months of next year in the North West and Midlands with others following. By the end of 2010, BP hopes to develop a network of 150 Connect franchise sites along with a further 100 company owned Connects coming on stream.

- BP Solar unveiled its plans for a $70 million expansion project at its North American headquarters in Frederick, MD. The expansion will result in nearly doubling the facility's current casting and sizing capacity to approximately 150 MW. The company projects that 70 new jobs will be created. Other plans include an upgrade of the interior of the facility by employing sustainable design components. Initial engineering feasibility studies into the project have already been completed and the company will now carry out detailed front-end engineering design work. This expansion will make BP Solar's Frederick facility the largest fully integrated plant in North America.

December

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