Trex 06033

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM 20-F
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the scal year ended 31 December 2010
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission le number: 1-6262
BP p.l.c.
(Exact name of Registrant as specied in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
1 St Jamess Square, London SW1Y 4PD
United Kingdom
(Address of principal executive ofces)
Dr Byron E Grote
BP p.l.c.
1 St Jamess Square, London SW1Y 4PD
United Kingdom
Tel +44 (0) 20 7496 4495
Fax +44 (0) 20 7496 4630
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act
Title of each class Name of each exchange on which registered
Ordinary Shares of 25c each New York Stock Exchange*
Floating Rate Guaranteed Notes due 2011 New York Stock Exchange
Substitute Floating Rate Guaranteed Note due 2011 New York Stock Exchange
1.55% Guaranteed Notes due 2011 New York Stock Exchange
*Not for trading, but only in connection with the registration of American Depositary
Shares, pursuant to the requirements of the Securities and Exchange Commission
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
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.
Ordinary Shares of 25c each 18,796,461,292
Cumulative First Preference Shares of 1 each 7,232,838
Cumulative Second Preference Shares of 1 each 5,473,414
Indicate by check mark if the registrant is a well-known seasoned issuer, as dened in Rule 405 of the Securities Act.
Yes No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to le reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Yes No
Note Checking the box above will not relieve any registrant required to le 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 led all reports required to be led 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 le such reports), and (2) has been subject to such ling requirements for the past
90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such les).*
Yes No
*This requirement does not apply to the registrant until its scal year ending December 31, 2011.
Indicate by check mark whether the registrant is a large accelerated ler, an accelerated ler, or a non-accelerated ler. See denition of accelerated ler and large
accelerated ler in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated ler Accelerated ler Non-accelerated ler
Indicate by check mark which basis of accounting the registrant has used to prepare the nancial statements included in this ling:
International Financial Reporting
Standards as issued by the
U.S. GAAP International Accounting Standards Board Other
If Other has been checked in response to the previous question, indicate by check mark which nancial statement item the registrant has elected to follow.
Item 17 Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as dened in Rule 12b-2 of the Exchange Act).
Yes No BP Annual Feporl and Forn 20F 2010 1
Cross relerence lo Forn 20F
Page
len 1. denlily ol Direclors, Senior anagenenl and Advisors n/a
len 2. Oller Slalislics and Expecled Tinelable n/a
len 3. Key nlornalion
A. Selecled lnancial dala 23
B. Capilalizalion and indebledness n/a
C. Feasons lor lhe oller and use ol proceeds n/a
D. Fisk laclors 2732
len 4. nlornalion on lhe Conpany
A. Hislory and developnenl ol lhe conpany 4, 1415
B. Business overview 1422, 3332
C. Organizalional slruclure 220221
D. Properly, planls and equipnenl 22, 43, 5054, 127, 247243
len 4A. Unresolved Slall Connenls one
len 5. Operaling and Financial Feview and Prospecls
A. Operaling resulls 2426, 34, 4142, 5657, 61, 124127
B. Liquidily and capilal resources 6367
C. Fesearch and developnenl, palenl and licenses 7677, 175
D. Trend inlornalion 67
E. Ollbalance sheel arrangenenls 64
F. Tabular disclosure ol conlraclual connilnenls 65
C. Sale harbor 4
len 6. Direclors, Senior anagenenl and Enployees
A. Direclors and senior nanagenenl 3437
B. Conpensalion 112121, 214217
C. Board praclices 90104, 214217
D. Enployees 7475
E. Share ownership 37, 112113, 127123, 214216
len 7. ajor Shareholders and Felaled Parly Transaclions
A. ajor shareholders 123129
B. Felaled parly lransaclions 129, 133134
C. nleresls ol experls and counsel n/a
len 3. Financial nlornalion
A. Consolidaled slalenenls and olher lnancial inlornalion 129133, 134, 144227
B. Signilcanl changes one
len 9. The Oller and Lisling
A. Oller and lisling delails 134
B. Plan ol dislribulion n/a
C. arkels 134
D. Selling shareholders n/a
E. Dilulion n/a
F. Expenses ol lhe issue n/a
len 10. Addilional nlornalion
A. Share capilal n/a
B. enorandun and arlicles ol associalion 103109
C. alerial conlracls 135
D. Exchange conlrols 135
E. Taxalion 135137
F. Dividends and paying agenls n/a
C. Slalenenls by experls n/a
H. Docunenls on display 137
. Subsidiary inlornalion n/a
len 11. Ouanlilalive and Oualilalive Disclosures aboul arkel Fisk 135190, 192196
len 12. Descriplion ol securilies olher lhan equily securilies
A. Debl Securilies n/a
B. varranls and Fighls n/a
C. Olher Securilies n/a
D. Anerican Deposilary Shares 133
len 13. Delaulls, Dividend Arrearages and Delinquencies one
len 14. alerial odilcalions lo lhe Fighls ol Securily Holders and Use ol Proceeds one
len 15. Conlrols and Procedures 106107
len 16A. Audil Connillee Financial Experl 97
len 16B. Code ol Elhics 106
len 16C. Principal Accounlanl Fees and Services 107
len 16D. Exenplions lron lhe Lisling Slandards lor Audil Connillees n/a
len 16E. Purchases ol Equily Securilies by lhe ssuer and Alllialed Purchasers 137
len 16F. Change in Fegislranls Cerlilying Accounlanl one
len 16C. Corporale governance 105
len 17. Financial Slalenenls n/a
len 13. Financial Slalenenls 144227, 223243
len 19. Exhibils 140
2 BP Annual Feporl and Forn 20F 2010

iscellaneous lerns
n lhis docunenl, unless lhe conlexl
olherwise requires, lhe lollowing lerns
shall have lhe neaning sel oul below.
ADR
Anerican deposilary receipl.
ADS
Anerican deposilary share.
AGM
Annual general neeling.
Amoco
The lorner Anoco Corporalion and ils
subsidiaries.
AnnuIus
The space belween lwo concenlric
objecls, such as belween lhe wellbore
and casing ol an oil well or belween
casing and lubing, where Huid can How.
l allows Huids, such as drilling nud, lo
circulale in lhe well.
AtIantic RichheId
Allanlic Fichleld Conpany and ils
subsidiaries.
Associate
An enlily, including an unincorporaled
enlily such as a parlnership, over which
lhe group has signilcanl inHuence and
lhal is neilher a subsidiary nor a joinl
venlure. Signilcanl inHuence is lhe
power lo parlicipale in lhe lnancial and
operaling policy decisions ol an enlily
bul is nol conlrol or joinl conlrol over
lhose policies.
BarreI
42 US gallons.
b/d
barrels per day.
boe
barrels ol oil equivalenl.
BP, BP group or the group
BP p.l.c. and ils subsidiaries.
Burmah CastroI
Burnah Caslrol PLC and ils subsidiaries.
Cent or c
Onehundredlh ol lhe US dollar.
The company
BP p.l.c.
DoIIar or $
The US dollar.
EU
European Union.
GAAP
Cenerally accepled accounling praclice.
Gas
alural gas.
GCRO
Cull Coasl Fesloralion Organizalion.
Hydrocarbons
Crude oil and nalural gas.
IFRS
nlernalional Financial Feporling
Slandards.
Joint controI
Joinl conlrol is lhe conlraclually agreed
sharing ol conlrol over an econonic
aclivily, and exisls only when lhe
slralegic lnancial and operaling
decisions relaling lo lhe aclivily require
lhe unaninous consenl ol lhe parlies
sharing conlrol (lhe venlurers.
Joint venture
A conlraclual arrangenenl whereby lwo
or nore parlies underlake an econonic
aclivily lhal is subjecl lo joinl conlrol.
JointIy controIIed asset
A joinl venlure where lhe venlurers
joinlly conlrol, and ollen have a direcl
ownership inleresl in lhe assels ol lhe
venlure. The assels are used lo oblain
benells lor lhe venlurers. Each venlurer
nay lake a share ol lhe oulpul lron lhe
assels and each bears an agreed share
ol lhe expenses incurred.
JointIy controIIed entity
A joinl venlure lhal involves lhe
eslablishnenl ol a corporalion,
parlnership or olher enlily in which each
venlurer has an inleresl. A conlraclual
arrangenenl belween lhe venlurers
eslablishes joinl conlrol over lhe
econonic aclivily ol lhe enlily.
Liquids
Crude oil, condensale and nalural gas
liquids.
LNG
Liqueled nalural gas.
London Stock Exchange or LSE
London Slock Exchange plc.
LPG
Liqueled pelroleun gas.
mb/d
lhousand barrels per day.
mboe/d
lhousand barrels ol oil equivalenl per
day.
mmBtu
nillion Brilish lhernal unils.
mmboe
nillion barrels ol oil equivalenl.
mmcf
nillion cubic leel.
mmcf/d
nillion cubic leel per day.
MW
egawall.
NGLs
alural gas liquids.
OPEC
Organizalion ol Pelroleun Exporling
Counlries.
Ordinary shares
Ordinary lully paid shares in BP p.l.c. ol
25c each.
Pence or p
Onehundredlh ol a pound slerling.
Pound, sterIing or
The pound slerling.
Preference shares
Cunulalive Firsl Prelerence Shares and
Cunulalive Second Prelerence Shares in
BP p.l.c. ol 1 each.
PSA
A produclionsharing agreenenl (PSA is
an arrangenenl lhrough which an oil
conpany bears lhe risks and cosls ol
exploralion, developnenl and
produclion. n relurn, il exploralion is
successlul, lhe oil conpany receives
enlillenenl lo variable physical volunes
ol hydrocarbons, represenling recovery
ol lhe cosls incurred and a slipulaled
share ol lhe produclion renaining aller
such cosl recovery.
SEC
The Uniled Slales Securilies and
Exchange Connission.
Subsidiary
An enlily lhal is conlrolled by lhe BP
group. Conlrol is lhe power lo govern lhe
lnancial and operaling policies ol an
enlily so as lo oblain lhe benells lron
ils aclivilies.
Tonne
2,204.6 pounds.
Trust
Deepwaler Horizon Oil Spill Trusl.
UK
Uniled Kingdon ol Creal Brilain and
orlhern reland.
US
Uniled Slales ol Anerica.
BP Annual Feporl and Forn 20F 2010 3
Information about this report
This document constitutes the Annual Report and Accounts in accordance
with UK requirements and the Annual Report on Form 20-F in accordance
with the US Securities Exchange Act of 1934, for BP p.l.c. for the year
ended 31 December 2010. A cross reference to Form 20-F requirements is
on page 2.
This document contains the Directors Report, including the
Business Review and Management Report, on pages 5-109 and 123-140,
142 and PC1. The Directors Remuneration Report is on pages 111-121. The
consolidated nancial statements of the group are on pages 141-248 and
the corresponding reports of the auditor are on pages 143-145. The parent
company nancial statements of BP p.l.c. and corresponding auditors
report are on pages PC1-PC16 and page PC2 respectively.
The statement of directors responsibilities in respect of the
consolidated nancial statements, the independent auditors report on the
annual report and accounts to the members of BP p.l.c. and the parent
company nancial statements of BP p.l.c. and corresponding auditors
report do not form part of BPs Annual Report on Form 20-F as led with
the SEC.
BP Annual Report and Form 20-F 2010 and BP Summary Review
2010 may be downloaded from www.bp.com/annualreport. No material
on the BP website, other than the items identied as BP Annual Report
and Form 20-F 2010 or BP Summary Review 2010, forms any part of
those documents.
BP p.l.c. is the parent company of the BP group of companies.
Unless otherwise stated, the text does not distinguish between
the activities and operations of the parent company and those of
its subsidiaries.
The term shareholder in this report means, unless the context
otherwise requires, investors in the equity capital of BP p.l.c., both direct
and indirect. As BP shares, in the form of ADSs, are listed on the New York
Stock Exchange (NYSE), an Annual Report on Form 20-F is led with the US
Securities and Exchange Commission (SEC).
Cautionary statement
BP Annual Report and Form 20-F 2010 contains certain forward-looking
statements within the meaning of the US Private Securities Litigation
Reform Act of 1995 with respect to the nancial condition, results of
operations and businesses of BP and certain of the plans and objectives of
BP with respect to these items.
In order to utilize the Safe Harbor provisions of the United States
Private Securities Litigation Reform Act of 1995, BP is providing the
following cautionary statement. This document contains certain forward-
looking statements with respect to the nancial condition, results of
operations and businesses of BP and certain of the plans and objectives of
BP with respect to these items. These statements may generally, but not
always, be identied by the use of words such as will, expects, is
expected to, aims, should, may, objective, is likely to, intends,
believes, plans, we see or similar expressions. In particular, among other
statements, (i) certain statements in the Business review (pages 6-82),
including under the heading Outlook, with regard to strategy, management
aims and objectives, future capital expenditure, the completion of planned
and announced divestments and disposals, acquisitions and other
transactions, future hydrocarbon production volume and the groups ability
to satisfy its long-term sales commitments from future supplies available to
the group, date(s) or period(s) in which production is scheduled or expected
to come onstream or a project or action is scheduled or expected to begin
or be completed, capacity of planned plants or facilities and impact of
health, safety and environmental regulations; (ii) the statements in the
Business review (pages 6-63 and 68-81) with regard to anticipated energy
demand and consumption, global economic recovery, oil and gas prices,
global reserves, rening capacity, expected future energy mix and the
potential for cleaner and more efcient sources of energy, management
aims and objectives, strategy, production, petrochemical and rening
margins, anticipated investment in Alternative Energy, anticipated future
project developments, growth of the international businesses, Rening and
Marketing investments, reserves increases through technological
developments, with regard to planned investment or other projects, timing
and ability to complete announced transactions and future regulatory
actions; (iii) the statements in the Business review (pages 23-26, 63-67
and 73) with regard to the plans of the group, the cost of and provision for
future remediation programmes and environmental operating and capital
expenditures, taxation, liquidity and costs for providing pension and other
post-retirement benets; and including under Liquidity and capital
resources Trend Information, with regard to global economic recovery, oil
and gas prices, petrochemical and rening margins, production, demand for
petrochemicals, production and production growth, depreciation, underlying
average quarterly charge from Other businesses and corporate, costs,
foreign exchange and energy costs, capital expenditure, timing and
proceeds of divestments, balance of cash inows and outows, dividend
and optional scrip dividend, cash ows, shareholder distributions, gearing,
working capital, guarantees, expected payments under contractual and
commercial commitments and purchase obligations; and (iv) certain
statements in Chairmans letter (pages 6-7) and Business review (pages 10-
11) in relation to an anticipated increase in the level of the dividend; are all
forward-looking in nature.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances
that will or may occur in the future and are outside the control of BP. Actual
results may differ materially from those expressed in such statements,
depending on a variety of factors, including the specic factors identied in
the discussions accompanying such forward-looking statements; the timing
of bringing new elds onstream; future levels of industry product supply,
demand and pricing; operational problems; general economic conditions;
political stability and economic growth in relevant areas of the world;
changes in laws and governmental regulations; actions by regulators;
exchange rate uctuations; development and use of new technology; the
success or otherwise of partnering; the actions of competitors; natural
disasters and adverse weather conditions; changes in public expectations
and other changes to business conditions; wars and acts of terrorism or
sabotage; and other factors discussed elsewhere in this report including
under Risk factors (pages 27-32). In addition to factors set forth elsewhere
in this report, those set out above are important factors, although not
exhaustive, that may cause actual results and developments to differ
materially from those expressed or implied by these forward-looking
statements.
Statements regarding competitive position
Statements referring to BPs competitive position are based on the
companys belief and, in some cases, rely on a range of sources, including
investment analysts reports, independent market studies and BPs internal
assessments of market share based on publicly available information about
the nancial results and performance of market participants.
Unless otherwise indicated, information in this document reects 100% of the assets and
operations of the company and its subsidiaries that were consolidated at the date or for
the periods indicated, including minority interests. The company was incorporated in 1909
in England and Wales and changed its name to BP p.l.c. in 2001. BPs primary share listing
is the London Stock Exchange. Ordinary shares are also traded on the Frankfurt Stock Exchange
in Germany and, in the US, the companys securities are traded in the form of ADSs.
(See page 134 for more details.)
The registered ofce of BP p.l.c., and our worldwide headquarters, is:
1 St Jamess Square,
London SW1Y 4PD, UK.
Tel +44 (0)20 7496 4000.
Registered in England and Wales No. 102498. Stock exchange symbol BP.
Our agent in the US is BP America Inc.,
501 Westlake Park Boulevard, Houston, Texas 77079.
Tel +1 281 366 2000.
4 BP Annual Report and Form 20-F 2010
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Business review
6 Chairnans leller
3 Board ol direclors
10 Croup chiel execulives leller
12 Progress in 2010
14 Croup overview
34 Cull ol exico oil spill
40 Exploralion and Produclion
55 Felning and arkeling
61 Olher businesses and corporale
63 Liquidily and capilal resources
63 Corporale responsibilily
76 Fesearch and lechnology
73 Fegulalion ol lhe groups business
31 Cerlain delnilions
Business review
Chairnans
leller
Dear lellow shareholder
2010 was a proloundly painlul and lesling year. n
April, a lragic accidenl on lhe Deepwaler Horizon
rig clained lhe lives ol 11 nen and injured olhers.
Above all else, wanl lo renenber lhose nen,
and say lhal our lhoughls renain wilh lheir
lanilies and lriends. BPs priorily is lo ensure lhal
lhe people who work lor us, and wilh us, relurn
hone salely. The accidenl should never have
happened. ve are shocked and saddened
lhal il did.
The spill lhal resulled caused widespread
pollulion. Our response has been unprecedenled
in scale, and we are delernined lo live up lo our
connilnenls in lhe Cull. ve will also do
everylhing necessary lo ensure BP is a conpany
lhal can be lrusled by shareholders and
connunilies around lhe world.
n lhe days aller lhe accidenl in lhe Cull ol exico lhe conpany laced
a conplex and laslchanging crisis. vilh oil escaping inlo lhe ocean,
uncerlainly grew around our abilily lo seal lhe well and reslore lhe areas
allecled. This was an inlense period, wilh lhe silualion worsening alnosl
daily. Our neeling wilh Presidenl Obana on 16 June 2010 provided
reassurance lo lhe US governnenl lhal BP would do lhe righl lhing in lhe
Cull, and lhis narked a lurning poinl. Through diligence and invenlion, our
leans slopped lhe How ol oil in July and conpleled relielwell operalions
in Seplenber.
During lhese dillcull days your board locused on lhree
crilical objeclives.
Firsl, we ensured lhe response lean had lhe resources il required
lo slop lhe leak, conlain and clean up lhe danage, and provide lnancial
supporl lo lhose allecled. This was an unprecedenled response lo an
induslrial accidenl, wilh sone 43,000 people involved al lhe heighl ol lhe
ellorl. ve have sel up a $20billion lund lo show our willingness and
capacily lo pay all legilinale clains lor conpensalion. For lhe long lern,
we have connilled $500 nillion lo a 10year independenl research
progranne lhal will exanine lhe environnenlal inpacl ol lhe oil spilled
and dispersanls used. BP will conlinue lo help reslore lhe environnenl and
econony ol lhe Cull, however long lhal lakes.
Second, we resolved lo undersland whal happened on and below
lhe Deepwaler Horizon, lo apply lhe lessons learned and lo nake our
lndings available publicly. BPs conprehensive inlernal invesligalion
concluded lhal a sequence ol lailures involving a nunber ol dillerenl
parlies led lo lhe explosion and lre.
ve are inplenenling lhe reporls reconnendalions. ve have
eslablished a powerlul salely and operalional risk lunclion, and we have
enhanced risk nanagenenl lhrough lhe reslrucluring ol our upslrean
business. ve are also conducling a wideranging review ol when and
how we oulsource operalions.
Third, we noved lo secure lhe longlern lulure ol BP and our
capacily lo neel our lnancial responsibililies in lhe Cull ol exico.
Decisive aclion was required here because evenls in lhe US led lo a
crisis ol conldence in BP wilhin lhe lnancial narkels. n response, we
nade lhe dillcull decision lo cancel lhree dividend paynenls. ve do nol
undereslinale lhe ellecl ol lhis on snall and large shareholders alike.
However, lhere is no doubl in ny nind lhal lhis aclion sleadied and
slrenglhened our posilion al a crilical poinl.
an pleased lhal we have been able lo resune dividend
paynenls pronplly. The dividend lor lhe lourlh quarler ol 2010, lo be paid
in arch 2011, is 7 cenls per share (US$0.42 per ADS. The scrip dividend
progranne approved lasl year is in operalion once again, and lhis presenls
an opporlunily lo lake lhe dividend in shares or ADSs ralher lhan cash. ve
inlend lo raise lhe level ol lhe dividend as lhe conpanys circunslances
and perlornance inprove.

Business review
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During lhe year we lurlher reinlorced our lnancial posilion. Having laken a
lolal prelax charge ol $40.9 billion in relalion lo lhe accidenl and spill, we
announced our inlenlion lo sell up lo $30 billion ol assels. ve have already
secured alnosl $22 billion. ve inlend lo reduce lhe nel debl ralio lo wilhin
lhe range ol 1020', conpared wilh our previously largeled range ol
2030'.
ve have nade signilcanl changes lo lhe board and wanl lo
acknowledge Tony Hayward and Andy nglis, who have lell lhe conpany.
Tony slood down as group chiel execulive on 1 Oclober 2010. The board
was saddened lo lose soneone whose longlern conlribulion lo BP was
so widely adnired. Andy nglis slood down on 31 Oclober 2010. Andy was
a slrong leader ol Exploralion and Produclion and a signilcanl conlribulor
lo lhe board.
BP is lorlunale lo have an exceplional successor lo lhe role ol
group chiel execulive. Bob Dudley has spenl his working lile in lhe oil
induslry and has proved hinsell a robusl, successlul leader in lhe loughesl
circunslances. an delighled lo be working alongside a nan ol such
subslance and experience.
Douglas Flinl will be slanding down al lhe annual general neeling
in April 2011, having laken up a new role as chairnan ol HSBC Holdings
plc. Douglas has chaired our audil connillee lor lhe pasl year. DeAnne
Julius will be slanding down al lhe sane line, having joined lhe board in
2001. DeAnne has chaired lhe renuneralion connillee since 2005 and is
succeeded in lhal role by Anlony Burgnans. Bolh DeAnne and Douglas
have been innensely valuable board nenbers. ve lhank lhen and wish
lhen bolh well.
Boards nusl evolve il lhey are lo engage elleclively wilh new
issues and opporlunilies. ve have acled lo slrenglhen lhe board ol BP lo
ensure we have lhe righl nix ol skills, knowledge and experience as we
work lo achieve suslainable success in a laslchanging world. n early 2010
we appoinled Paul Anderson and an Davis as nonexeculive direclors. ve
have since nade lhree lurlher nonexeculive appoinlnenls. Adniral Frank
L Skip Bownan is lorner head ol lhe US uclear avy and was a
nenber ol lhe Baker Panel lhal reviewed salely al BPs US relneries. ve
will benell lron his exceplional experience on salely nallers and his
knowledge ol BP. Brendan elson brings vasl lnancial and audiling
experience lron KPC, where lallerly he was vice chairnan. He is
eninenlly well qualiled lo lake over lhe chair ol lhe audil connillee
lollowing lhe annual general neeling. Phulhuna hleko will bring deep
experience ol energing narkels, gained while he was group presidenl and
chiel execulive ollcer ol nullinalional lelephony conpany T Croup.
Clearly, aller a very lroubled and denanding 12 nonlhs, BP is a
changed conpany. As a board we have nuch lo do, and we are working
wilh lhe execulive lean lo ensure successlul inplenenlalion ol a
relocused slralegy buill on lhe pillars ol salely, lrusl and value crealion.
Forenosl is lhe need lo ensure lhe righl checks and balances are in place
across lhe conpany. The lull board will conlinue lo nainlain close oversighl
ol nallers relaled lo salely. And we will have even grealer engagenenl on
lhe slralegic inplicalions ol risk.
Looking ahead, we believe lhal a growing populalion and rising levels ol
prosperily will creale slrong denand lor energy. BPs abilily lo produce
oil and gas lron harsh environnenls neans we have a vilal conlribulion
lo nake here. ve will also conlinue lo respond lo clinale change, and
lo lhe prospecl ol lossil luels beconing a snaller parl ol lhe energy
nix. For lhese reasons, BP nusl conlinue lo be a leader in highqualily
hydrocarbons loday, while developing lhe inlelligenl oplions we will all
rely on lonorrow. Lowercarbon resources renain cenlral lo lhis
longlern slralegy.
BP is able lo help neel lhe worlds growing need lor energy,
bul we can only do lhis il we have lhe lrusl ol sociely. To achieve lhis, we
nusl ensure lhal salely and responsibilily are al lhe hearl ol everylhing we
do. ve nusl show lhal we can be lrusled lo undersland and nanage our
risks. And we nusl denonslrale lhal we respecl lhe environnenl and
lhe needs ol local connunilies and sociely as a whole.
The nany slrenglhs ol BP are uniled in our renarkable people, who
showed in 2010 lhal lhey can rise lo lhe slernesl challenge. lhank lhen
lor lheir ellorls.
vhile we lace subslanlial challenges, shareholders nusl be in no
doubl - BP has lhe delerninalion and slrenglh needed lo reslore ils
repulalion and deliver longlern shareholder value. Through ils
relocused slralegy, lhe conpany is working lo becone nore agile and
nore conpelilive, wilh slrong enphasis on realizing value ralher lhan
building volune and scale. ve will nol be alraid lo develop new and
innovalive approaches lhal redelne lhe nodel ol an inlernalional oil
conpany, as our recenlly announced parlnerships wilh Fosnell and
Feliance denonslrale.
wanl lo end by lhanking shareholders lor lheir supporl. You have
been sleadlasl lhrough one ol lhe nosl lesling periods in BPs long
hislory. ve have learned nany lessons aboul ourselves over lhe pasl
12 nonlhs, and lhese will never be lorgollen. believe we will energe a
slronger, wiser conpany wilh a very inporlanl role lo play, lor nany
years lo cone.
CarI-Henric Svanberg
Chairnan
2 arch 2011
More on board performance
bp.con/governance
Board of directors
As at 31 December 2010
From left to right
Sir William Castell
Senior Independent Director
Brendan Nelson
Non-Executive Director
Iain Conn
Chief Executive,
Rening and Marketing
Ian Davis
Dr DeAnne Julius
Antony Burgmans
Carl-Henric Svanberg
Chairman
Dr Byron Grote
Chief Financial Ofcer
Bob Dudley
Group Chief Executive
Douglas Flint
George David
Cynthia Carroll
Paul Anderson
Frank Bowman
Business review
Croup chiel
execulives leller
Dear lellow shareholder
The lragic evenls ol 2010 will lorever be wrillen in
lhe nenory ol lhis conpany and lhe people who
work here. The explosion and lre on lhe
Deepwaler Horizon rig shocked everyone wilhin
BP, and we leel greal sadness lhal 11 people died.
ve are deeply sorry lor lhe griel lell by lheir
lanilies and lriends. ve know nolhing can reslore
lhe loss ol lhose nen.
The accidenl on 20 April 2010 lurned inlo an
unprecedenled oil spill wilh deep consequences
lor jobs, businesses, connunilies, lhe
environnenl and our induslry. Fron lhis grew a
corporale crisis lhal lhrealened lhe very exislence
ol lhe conpany. And il all slarled in a parl ol lhe
world lhals very close lo ny hearl. grew up in
ississippi, and spenl sunners wilh ny lanily
swinning and lshing in lhe Cull. know lhose
beaches and walers well. vhen heard aboul
lhe accidenl could innedialely piclure how il
nighl allecl lhe people who live and work along
lhal coasl.
Yel, jusl days belore lhe accidenl, had been reHecling on lhe progress
nade by BP. The conpany had pul sale and reliable operalions al lhe
cenlre ol everylhing, and we had lurned a corner on lnancial perlornance.
Then cane lhe unlhinkable. A subsea blowoul in deep waler was seen
as a very, very lowprobabilily evenl, by BP and lhe enlire induslry -
bul il happened.
Following lhe accidenl, a searchandrescue operalion was carried
oul by lhe rigs owner, Transocean, logelher wilh BP and lhe US Coasl
Cuard. This conlinued lor lour days and covered 5,000 square niles. On
22 April 2010 lhe Deepwaler Horizon sank, and a najor oil spill response
was aclivaled. Al ils peak lhis involved lhe nobilizalion ol sone
43,000 people, lhe deploynenl ol around 2,500 niles ol boon and lhe
coordinalion ol nore lhan 6,500 vessels. Field operalions broughl logelher
experls lron key agencies, organizalions and BP. Thousands ol our people
Hew in lron around lhe world and slayed and worked lor weeks and
nonlhs. early 500 relirees lron BP Anerica called up lo say lhey wanled
lo help. This was an exlraordinary response.
As lhe response developed, lhe problens grew in conplexily and
scale. Tackling lhe leak on lhe seabed denanded groundbreaking lechnical
advances and daunlless spiril. ve also lound ourselves in lhe nidsl ol
inlense polilical and nedia scruliny. ve received incredible supporl and
laced lrenendous crilicisn, bul our priorilies renained clear - provide
supporl lo lhe lanilies and lriends ol lhose 11 nen who died, slop lhe
leak, allack lhe spill, prolecl lhe shore, supporl all lhe people and places
allecled. ve also connilled lo carry oul an innediale and delailed
inlernal invesligalion.
As a responsible parly, under lhe Oil Pollulion Acl, we knew we
would lace wideranging clains and polenlial lnes, bul we resolved lo go
beyond whal lhe law required ol us. ve nade swill paynenls lo supporl
local econonies, and gave a lolal ol $133 nillion in direcl slale granls
during 2010, which included behavioural heallh progrannes. ve sel up lhe
$20billion Deepwaler Horizon Oil Spill Trusl lo neel individual, business,
governnenl, local and slale clains, and nalural resource danages. ve
provided $500 nillion lor lhe Cull ol exico Fesearch nilialive, which is
lunding independenl research lo invesligale inpacls on allecled
ecosyslens. And we conlribuled lo a $100nillion lund lo supporl rig
workers hil by lhe drilling noraloriun.
To neel our lnancial connilnenls, we announced lhe sale ol up
lo $30 billion in assels and, by lhe end ol 2010, had agreed lo $22 billion
ol disposals. ve have also cul back on discrelionary capilal spending and
secured addilional credil lines. The sound underlying perlornance across
our business conlinues lo give us a solid loundalion, and speaks volunes
lor lhe inner slrenglhs ol BP and our people.
As parl ol our response, we look lhe decision lo cancel lurlher
dividends in 2010. vhile we know lhal nany shareholders rely on lheir
regular paynenls, we also had lo prolecl lhe conpany and secure ils
longlern lulure. The board ol BP look lhis decision wilh a heavy hearl,
bul believe il was lhe righl lhing lo do in lruly exceplional circunslances.
Our invesligalion reporl was published on 3 Seplenber 2010,
and lound lhal no single laclor caused lhe accidenl. The reporl slaled
lhal decisions nade by nulliple conpanies and work leans conlribuled
lo lhe accidenl, and lhese arose lron a conplex and inlerlinked series
ol nechanical, hunan judgenenl, engineering design, operalional
inplenenlalion and lean inlerlace lailures.
ve have accepled and are inplenenling lhe reporls
reconnendalions. ve are also sharing whal we have learned wilh
governnenls and olhers in our induslry, and we are cooperaling
wilh a series ol olher invesligalions, inquiries and hearings.
2010 slands as an inHexion poinl lor BP and our induslry, and
il is righl lhal we should help lead lhe developnenl ol beller ways lo
operale in deep waler. Cood risk idenlilcalion and nanagenenl is inlegral
lo beconing saler, and we are working wilh governnenls, service
conlraclors and induslry peers lo lake risk nanagenenl and equipnenl
design lo lhe nexl level. vilhin BP, we have inlroduced nore layers ol
proleclion and resilience, wilh our new salely and operalional risk lunclion
enpowered lo inlervene in any operalion. To enhance our specialisl
experlise and risk nanagenenl, we have reorganized our upslrean
business inlo lhree divisions - Exploralion, Developnenls and Produclion.
To encourage excellence in risk nanagenenl lhroughoul lhe organizalion,

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we are reviewing how we incentivize and reward people. And to think hard
about what was previously unthinkable, we are looking further aeld for
insight and wisdom. I have spent time with experts from the nuclear and
chemicals industries, and I am convinced that we in the energy industry
have much to learn from them and others. We must take what we learn
and embed it deep in the fabric of our organization.
Part of BPs task right now is to show we can be trusted to handle
the industrys most demanding jobs, including exploration and production in
deep water. Around 7% of the worlds oil supplies come from this source,
and we expect this will rise to nearly 10% by 2020. We are one of only a
handful of companies with the nancial and technological strengths needed
to operate in these geographies. Before April 2010, BP had drilled safely in
the deep waters of the Gulf of Mexico for 20 years. The governments of
Egypt, China, Indonesia, Azerbaijan and the UK have shown condence in
our ability to operate safely at depths, having signed new deepwater drilling
agreements with us in the second half of 2010.
It is important to remember why companies such as BP have to
take on the risks they do. Around 40 years ago, international oil companies
had access to the majority of the worlds oil reserves. Today these
companies can access a much smaller share. This still provides substantial
opportunities for value creation, but reaching many of those reserves
requires us to overcome severe physical, technical, intellectual and
geopolitical challenges. Global energy demand continues to rise, so the
world needs BP and others to meet these challenges in an environmentally
sustainable way. In doing this, we can never eliminate every hazard, but
we can become an industry leader in understanding and limiting risk.
Thats our goal.
Clearly, one of the consequences of the events of 2010 was a
substantial loss of value and returns for our shareholders. I am pleased
that we have been able to resume dividend payments, and our intention
is to grow the dividend level in line with the companys improving
circumstances. We are now taking action to create and realize greater
value. We are increasing our investment in exploration, which is one of our
distinctive strengths.
We are gaining access to a wide range of new upstream resource
opportunities, and already have 32 project start-ups planned between now
and 2016. We are taking an even more active approach to buying,
developing and selling upstream assets, with a focus on maximizing returns
rather than building volume. And we are divesting roughly half of our US
rening capacity, so we can focus downstream investments on rening
positions and marketing businesses where we have competitive
advantage. This builds on the success BPs Rening and Marketing
business has achieved in driving itself back to signicantly improved
performance and returns over the past few years.
In short, BP is moving swiftly to address its weaknesses and build
on its strengths. While doing this we will not hesitate to go beyond the
conventional business model of an international oil company. Since 2003
we have had a strong alliance onshore in Russia with TNK-BP. In January
2011 we announced our Arctic alliance with Rosneft, which further shows
our strategy in action. Pending completion
a
, this is expected to be the rst
major equity-linked partnership between a national and international oil
company, with an agreement with Rosneft to receive 5% of BPs ordinary
voting shares in exchange for approximately 9.5% of Rosnefts shares.
Under the agreement, Rosneft and BP will seek to form a joint venture to
explore and, if successful, develop three licence blocks in the South Kara
Sea an area roughly equivalent in size and prospectivity to the UK North
Sea. BP and Rosneft have also agreed to establish an Arctic technology
centre in Russia, which will work with research institutes, design bureaus
and universities to develop technologies and engineering practices for the
safe extraction of hydrocarbon resources from the Arctic shelf.
a
On 1 February 2011 the English High Court granted an interim injunction restraining BP from
taking any further steps in relation to the Rosneft transactions pending the outcome of arbitration
proceedings. See Note 6 Events after the reporting period.
In February 2011 we announced a second historic agreement. This will,
subject to completion, see BP and Reliance work together across the gas
value chain in the fast-growing Indian market. This major strategic alliance
will combine BPs deepwater capabilities with Reliances project
management and operations expertise.
BP is also partnering with another organization, Husky Energy, to
develop a further important resource of energy Canadas oil sands. These
represent the second largest reserves in the world after the oilelds of
Saudi Arabia. We will work with this resource in a way that ts with our
long-term responsibilities and objectives, using steam assisted gravity
drainage to extract the oil, and an efcient, integrated system to transport
it. Our approach will have a relatively small footprint and should not be
confused with opencast mining we will not engage in mining. On a
well-to-wheel basis, greenhouse gas emissions from Canadian oil produced
this way are expected to be slightly higher than those from conventional
crudes imported to North America.
Along with providing the hydrocarbons required over coming years,
we are helping to build the sustainable options needed to meet growing
demand for lower-carbon energy. Our natural gas operations will help to
provide a lower-carbon bridge from oil and coal to renewables. We are
building a material business to produce biofuels in Brazil, the US and the
UK. We are becoming a leading player in wind energy. We have a long-
established solar business. And we have made substantial investments in
carbon-capture-and-storage technology. Lower-carbon resources are the
fastest-growing sector in the energy market, and BP intends to develop its
portfolio in step with this growth.
As to the immediate future, I expect 2011 to be a year of
consolidation for BP, as we focus on completing our previously announced
divestment programme, meeting our commitments in the US and bringing
renewed rigour to the way we manage risk. There will also be an increasing
emphasis on value over volume, as we sharpen our strategy and reshape
the company for growth.
Looking back over recent days and months, our thoughts return to
the men who lost their lives, to those who were injured and to the
communities hit hard by the spill. I have heard people ask Does BP get
it? Residents of the Gulf, our employees and investors, governments,
industry partners and people around the world all want to know whether
we understand that a return to business-as-usual is not an option. We may
not have communicated it enough at times, but yes, we get it. Our
fundamental purpose is to create value for shareholders, but we also see
ourselves as part of society, not apart from it. Put simply, our role is to nd
and turn energy resources into nancial returns, but by doing that in the
right way we can help create a prosperous and sustainable future for
everyone. This is what people rightfully expect of BP. This is what will
inspire and drive us over the next 12 months and far into the future.
Bob Dudley
Group Chief Executive
2 March 2011
More on our performance
bp.com/annualreport
BP Annual Report and Form 20-F 2010 11
Progress in 2010
Safety
Personal safety reported recordable injury frequency
Reported recordable injury frequency
(RIF) measures the number of reported
work-related incidents that result in a
fatality or injury (apart from minor rst
aid cases) per 200,000 hours worked.
In 2010 our workforce RIF, which
includes employees and contractors
combined, was 0.61, compared with
0.34 in 2009 and 0.43 in 2008. The
nature of the Gulf Coast response
effort resulted in personal safety
incident rates signicantly higher
than in other BP operations.
Enployees
Conlraclors
0.25
0.35
2003
0.50
2003
0.23
2009
0.43
2009
0.25
2010
0.84
2010
1.25
1.00
0.75
0.50
Process safety oil spills
We report all spills of hydrocarbons
greater than or equal to one barrel
(159 litres, 42 US gallons). We include
spills that were contained, as well as
those that reached land or water.
In 2010 there were 261 oil spills
of one barrel or more, including the
Gulf of Mexico oil spill. We are
taking measures to strengthen
mandatory safety-related standards
and processes, including operational
risk and integrity management.
Process safety loss of primary containment
Loss of primary containment is the
number of unplanned or uncontrolled
releases of material, excluding
non-hazardous releases, such as water
from a tank, vessel, pipe, railcar or
other equipment used for containment
or transfer.
BP is progressively moving towards
this as one of the key indicators for
process safety, as we believe it
provides a more comprehensive and
better performance indicator of the
safety and integrity of our facilities
than oil spills alone.
Environment greenhouse gas emissions
a
(million tonnes of carbon dioxide equivalent)
We report greenhouse gas (GHG)
emissions on a CO
2
-equivalent basis,
including CO
2
and methane. This
represents all consolidated entities
and BPs share of equity-accounted
entities, except TNK-BP. We have
not included any emissions from
the Gulf of Mexico oil spill and the
response effort due to our reluctance
to report data that has such a high
degree of uncertainty.
We aim to manage our GHG
emissions through a focus on
operational energy efciency and
reductions in aring and venting.
a
See BP Sustainability Review 2010
for more information on our GHG
emissions performance.
People
Employee satisfaction (%)
The overall Employee Satisfaction
Index comprises 10 key questions that
provide insight into levels of employee
satisfaction across a range of topics,
such as pay and trust in management.
We use a sample-based approach to
achieve a representative view of BP.
Our 2010 employee survey was
delayed to allow for organizational
changes to be reected in the survey
construction, with the survey expected
to be carried out in summer 2011.
Number of employees
a
(thousands)
Employees include all individuals who
have a contract of employment with
a BP group entity.
In 2007 we began a process of
making BP a simpler, more efcient
organization. Since then our total
number of employees has reduced by
approximately 18,000, including around
9,200 in our non-retail businesses.
a
As at 31 December.
Diversity and inclusion (%)
Each year we record the percentage of
women and individuals from countries
other than the UK and US among BPs
top leaders. The number of top leaders
in 2010 was 482, compared with 492
in 2009 and 583 in 2008.
BP has maintained the percentage
of female leaders in 2010 and remains
focused on building a more sustainable
pipeline of diverse talent for the future.
5
14
2003
19
2003
14
2009
21
2009
14
2010
19
2010
25
20
15
10
vonen
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Performance
Production (thousand barrels of oil equivalent per day)
We report crude oil, natural gas liquids
(NGLs) and natural gas produced from
subsidiaries and equity-accounted
entities. These are converted to barrels
of oil equivalent (boe) at 1 barrel of
NGL = 1boe and 5,800 standard cubic
feet of natural gas = 1boe.
Reported production in 2010 was
4% lower than in 2009, due to the
effect of entitlement changes in our
production-sharing agreements, the
effect of acquisitions and disposals,
and the impact of events in the Gulf
of Mexico.
Reserves replacement ratio
a
(%)
Proved reserves replacement ratio (also
known as the production replacement
ratio) is the extent to which production
is replaced by proved reserves additions.
The ratio is expressed in oil equivalent
terms and includes changes resulting
from revisions to previous estimates,
improved recovery and extensions,
and discoveries.
Our reserves replacement ratio
in 2010 exceeded 100% once again.
We continue to drive renewal through
new access, exploration, targeted
acquisitions and a strategic focus
on increasing resources from elds
we currently operate.
a
Combined basis of subsidiaries and
equity-accounted entities, excluding
acquisitions and disposals.
Rening availability (%)
Rening availability represents Solomon
Associates operational availability, which
is dened as the percentage of the year
that a unit is available for processing after
subtracting the annualized time lost due
to turnaround activity and all planned
mechanical, process and regulatory
maintenance downtime.
Rening availability continued
its increasing trend in 2010, with
the biggest contributor being the
restoration of our Texas City renery.
Operating cash ow ($ billion)
Operating cash ow is net cash
ow provided by operating activities,
from the group cash ow statement.
Operating activities are the principal
revenue-generating activities of the
group and other activities that are
not investing or nancing activities.
The reduction in operating cash
ow primarily reected the impacts
of the Gulf of Mexico incident.
Replacement cost prot (loss) per ordinary share (cents)
Replacement cost prot (loss) reects
the replacement cost of supplies. It is
arrived at by excluding from prot
inventory holding gains and losses
and their associated tax effect.
Replacement cost prot for the group
is the protability measure used by
management. It is a non-GAAP
measure. See page 23 for the
equivalent measure on an IFRS basis.
In 2010 we recorded a replacement
cost loss primarily driven by a
$40.9-billion pre-tax charge in relation
to the Gulf of Mexico incident.
Dividends paid per ordinary share
This measure shows the total dividend
per share paid to ordinary shareholders
in the year.
In June 2010 the BP board reviewed
its dividend policy in light of the Gulf of
Mexico incident, and the agreement
to establish a $20-billion trust fund,
and decided to cancel ordinary share
dividends in respect of the rst three
quarters of 2010.
Cenls
Pence
15
55.05
2003
29.387
2003
56.00
2009
36.417
2009
14.00
2010
8.679
2010
75
60
45
30
Total shareholder return (%)
Total shareholder return represents
the change in value of a shareholding
over a calendar year, assuming that
dividends are re-invested to purchase
additional shares at the closing price
applicable on the ex-dividend date.
Total shareholder returns in 2010
were signicantly impacted by the
cancellation of dividend payments and
the fall in share price brought about by
the events in the Gulf of Mexico.
20
2003
(34.6)
2003
(15.1)
2010
(24.1)
2010
(21.4)
40
20
60
0
ADS basis
Ordinary share basis
2009 2009
33.0 27.6
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Group overview
Our organizalion
BP is one ol lhe worlds leading inlernalional oil
and gas conpanies.
a
ve operale or narkel our
producls in nore lhan 30 counlries, providing our
cusloners wilh luel lor lransporlalion, energy lor
heal and lighl, relail services and pelrochenicals
producls lor everyday ilens.
As a global group, our inleresls and aclivilies are held or operaled lhrough
subsidiaries, joinlly conlrolled enlilies or associales eslablished in - and
subjecl lo lhe laws and regulalions ol - nany dillerenl jurisdiclions. These
inleresls and aclivilies covered lwo business segnenls in 2010:
Exploralion and Produclion and Felning and arkeling. BPs aclivilies in
lowcarbon energy are nanaged lhrough our Allernalive Energy business,
which is reporled wilhin Olher businesses and corporale.
Exploralion and Produclions aclivilies include oil and nalural gas
exploralion, leld developnenl and produclion, nidslrean lransporlalion,
slorage and processing, and lhe narkeling and lrading ol nalural gas,
including liqueled nalural gas (LC, logelher wilh power and nalural gas
liquids (CLs. During lhe lourlh quarler ol 2010, as parl ol our wider
response lo lhe Cull ol exico incidenl, we decided lo reorganize our
Exploralion and Produclion segnenl lo creale lhree global lunclional
divisions: Exploralion, Developnenls, and Produclion, inlegraled
lhrough a Slralegy and nlegralion organizalion. This is designed lo
lundanenlally change lhe way lhe segnenl operales, wilh a parlicular
a
On lhe basis ol narkel capilalizalion, proved reserves and produclion.
locus on nanaging risk, delivering connon slandards and processes and
building personnel and lechnological capabilily lor lhe lulure. The
Exploralion division is accounlable lor renewing our resource base lhrough
access, exploralion and appraisal aclivilies. The Developnenls division is
accounlable lor lhe sale and conplianl execulion ol wells (drilling and
conplelions and najor projecls. The Produclion division is accounlable lor
sale and conplianl operalions, including upslrean produclion assels,
nidslrean lransporlalion and processing aclivilies, and lhe developnenl
ol our resource base. Divisional aclivilies are inlegraled on a regional basis
by a regional presidenl reporling lo lhe Produclion division.
Felning and arkelings aclivilies include lhe supply and lrading,
relning, nanulacluring, narkeling and lransporlalion ol crude oil,
pelroleun and pelrochenicals producls and relaled services. The segnenl
conprises a nunber ol slralegic perlornance unils (SPUs, which are
organized along eilher geographic or aclivilyrelaled lines. Each SPU is ol
a scale lhal allows lor a close locus on perlornance delivery, slarling
wilh salely, and includes lhe appropriale nanagenenl ol operaling and
lnancial paranelers.
Our group lunclions and regions supporl lhe work ol our segnenls
and businesses. The key objeclives ol lhe lunclions are lo eslablish and
nonilor lllorpurpose lunclional slandards across lhe group, lo acl as
cenlres ol deep lunclional experlise, lo access signilcanl leverage wilh
lhirdparly suppliers, and lo eslablish and nainlain capabililies anong lhe
lunclional slall enployed wilhin our operaling businesses. n addilion, lhe
head ol each region provides lhe required crosssegnenl inlegralion and
coordinalion ol group aclivilies in a parlicular geographic area and
represenls BP lo exlernal parlies.
n June 2010, lollowing lhe Cull ol exico incidenl, we eslablished
lhe Cull Coasl Fesloralion Organizalion (CCFO and subsequenlly
equipped il wilh dedicaled resources and capabililies lo nanage all aspecls
ol our response lo lhe accidenl. This organizalion reporls direclly lo lhe
group chiel execulive and is overseen by a specilc new board connillee.
Anong lhe changes we have nade lollowing lhe Cull ol exico
incidenl, we have redelned and slrenglhened lhe scope and accounlabililies
ol lhe group lunclion lor salely and operalions, crealing an enhanced,
independenl Salely and Operalional Fisk (S&OF lunclion, lo oversee and
audil lhe conpanys operalions around lhe world. The lunclion has ils own
experl slall enbedded in BPs operaling unils, including exploralion projecls
ExpIoration and Production
BP's major areas of operation in 2010
BP subsidiary
Equilyaccounled enlily
Localion where all, or lhe najorily ol, our
operalions were disposed during 2010 or
held lor sale al 31 Decenber 2010
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BPs global presence in 2010
a
BP renery (wholly or partly owned)
Petrochemicals site (s) (wholly or
partly owned)
Proposed for disposal by the end of 2012
a
The green shaded areas indicate
the approximate coverage of BPs
integrated fuels value chains.
and reneries, with dened intervention rights with respect to BPs technical
and operational activities. The function reports directly to the group chief
executive and aims to provide assurance that BPs operations are carried out
to common standards, and audits conformance to those standards.
The signicant subsidiaries of the group at 31 December 2010 and
the group percentage of ordinary share capital (to the nearest whole
number) are set out in Financial statements Note 46 on pages 220-221.
See Financial statements Notes 25 and 26 on pages 183 and 184
respectively for information on signicant jointly controlled entities and
associates of the group.
On 14 January 2011, BP and Rosneft Oil Company (Rosneft)
announced that they had agreed a strategic global alliance. BP and Rosneft
have agreed to seek to form a joint venture to explore and, if successful,
develop three licence blocks on the Russian Arctic continental shelf. BP and
Rosneft have entered into a related share swap agreement whereby, upon
completion, BP will receive approximately 9.5% of Rosnefts shares in
exchange for BP issuing new ordinary shares to Rosneft with an aggregate
value of approximately $7.8 billion (as at close of trading in London on
14 January 2011), resulting in Rosneft holding 5% of BPs ordinary voting
shares. See Legal proceedings on page 133 for information on an interim
injunction, granted by the English High Court on 1 February 2011
restraining BP from taking any further steps in relation to the Rosneft
transactions pending the outcome of arbitration proceedings.
On 21 February 2011, Reliance Industries Limited and BP announced
that they intend to form an upstream joint venture in which BP will take a
30% stake in 23 oil and gas production-sharing contracts that Reliance
operates in India, including the producing KG D6 block, and form a 50:50
joint venture for the sourcing and marketing of gas in India. BP will pay
Reliance Industries Limited an aggregate consideration of $7.2 billion,
and completion adjustments, for the interests to be acquired in the 23
production-sharing contracts. Future performance payments of up to $1.8
billion could be paid based on exploration success that results in
development of commercial discoveries. Reliance will continue to be the
operator under the production-sharing contracts. Completion of the
transactions is subject to Indian regulatory approvals and other customary
conditions.

Where we operate
BPs worldwide headquarters is in London. The UK is a centre for trading,
legal, nance and other business functions as well as three of BPs major
global research and technology groups.
We have well-established operations in Europe, the US, Canada,
Russia, South America, Australasia, Asia and parts of Africa. Currently,
around 68% of the groups xed assets are invested in Organization for
Economic Co-operation and Development (OECD) countries, with around
42% of our xed assets located in the US and around 20% in Europe.
Our Exploration and Production segment included upstream and
midstream activities in 29 countries in 2010 including Angola, Azerbaijan,
Canada, Egypt, Norway, Russia, Trinidad & Tobago (Trinidad), the UK, the US
and other locations within Asia, Australasia, South America, North Africa
and the Middle East. Our Exploration and Production segment also includes
gas marketing and trading activities, primarily in Canada, Europe and the
US. In Russia, we have an important associate through our 50%
shareholding in TNK-BP, a major oil company with exploration assets,
reneries and other downstream infrastructure.
In Rening and Marketing, we market our products in more than 70
countries, with a particularly strong presence in Europe and North America,
and also manufacture and market our products across Australasia, in China
and other parts of Asia, Africa and Central and South America. In the US,
we own or have a share in ve reneries and market fuel primarily under
the ARCO and BP brands. See Rening and Marketing (Our strategy) on
page 55 for further information on forthcoming portfolio changes in the US.
In Europe, we own or have a share in seven reneries and we market
extensively across the region, primarily under the Aral and BP fuel brands.
Our long-established supply and trading activity is responsible for delivering
value across the crude and oil products supply chain. Our petrochemicals
business maintains a manufacturing position globally, with an emphasis on
growth in Asia. Our lubricants business blends and markets lubricants
globally, primarily under the Castrol brand, and is a growing business
through market growth and the development of new products. We
continue to seek opportunities to broaden our activities in growth markets
such as China and India.
Business review
Our narkel
Energy narkels in 2010 conlinued lo recover lron
lhe inpacl ol lhe global econonic recession.
Looking ahead, lhe longlern oullook is one ol
growing denand lor energy
a
, parlicularly in Asia,
and ol challenges lor lhe induslry in neeling lhis
denand. Fising incones and expanding urban
populalions are expecled lo drive denand, while
lhe evolulion lowards a lowercarbon econony will
require lechnology, innovalion and inveslnenl.
vorld oil consunplion rebounded in 2010, wilh conlinued robusl growlh in
China and olher nonOECD counlries and lhe lrsl increase anong OECD
counlries since 2005. Average crude oil prices in 2010 were higher lhan in
lhe previous year. Average nalural gas prices also increased in 2010.
Felning nargins slabilized as oil producl denand recovered.
Economic context
The world econony conlinued lo recover in 2010. ve expecl slower global
growlh in 2011, led by energing econonies, wilh developed counlries
lagging behind because ol lhe need lo deal wilh lheir inlernal inbalances.
Energy denand, and in parlicular oil denand, lollows lhis overall econonic
pallern, recovering slrongly in 2010 bul lacing nore challenging condilions
as we nove inlo 2011, especially in OECD narkels.
Concerns aboul lhe volalilily ol connodily and lnancial narkels,
conbined wilh renewed locus on clinale change and lhe early experiences
wilh ellorls lo reduce CO
2
enissions in lhe EU and elsewhere, have led lo
an increased locus on lhe appropriale role lor narkels, governnenl
oversighl and olher policy neasures relaling lo lhe supply and
consunplion ol energy. ve expecl regulalion and laxalion ol lhe energy
induslry and energy users lo increase in nany areas over lhe shorl lo
nediun lern.
Daled Brenl oil price
150
Henry Hub gas price (Firsl ol onlh ndex
Clobal indicalor relining nargin (C
b
120
90
60
30
2004 2005 2006 2007 2003 2009 2010
Source: Plalls/BP.
Crude oiI and gas prices, and refining margins
($ per barrel ol oil equivalenl
Crude oiI prices
Daled Brenl lor lhe year averaged $79.50 per barrel, aboul 29' above
2009s average ol $61.67 per barrel. Prices lraded in a relalively narrow
band ol $7030 per barrel lor nosl ol lhe year belore rising in lhe lourlh
quarler. Prices exceeded $90 per barrel in Decenber, lhe highesl level
since Oclober 2003.
Clobal oil consunplion rebounded sharply, reHecling a recovery in
lhe global econony and several oneline laclors, rising by roughly
2.3 nillion b/d lor lhe year (3.3'
c
, lhe largesl annual increase since 2004.
Crowlh was broadlybased, wilh lhe largesl (volunelric increases seen in
China and lhe US. The relalive slabilily in crude oil prices lor nuch ol lhe
year reHecled lhe slabilily ol OPEC crude oil supply, as OPEC nenbers
suslained lhe produclion culs inplenenled in lale 2003 lhroughoul 2010,
wilh crude produclion averaging roughly 2 nillion b/d below lhe 2003 level.
Connercial oil invenlories in lhe OECD renained high lor nuch ol lhe year
belore lalling as lhe global supplybalance began lo lighlen - and prices
began lo rise - laler in lhe year.
The rebound in oil prices in 2010 lollowed a decline in 2009 - lhe
lrsl since 2001. Clobal oil consunplion in 2009 reHecled lhe econonic
slowdown, lalling by roughly 1.2 nillion b/d lor lhe year (1.7'
d
, lhe largesl
annual decline since 1932. The biggesl reduclions were early in lhe year,
wilh OECD counlries accounling lor lhe enlire global decline. Crude oil
prices rose sharply in lhe second quarler in response lo suslained OPEC
produclion culs and energing signs ol slabilizalion in lhe world econony,
despile very high connercial oil invenlories in lhe OECD. OPEC nenbers
cul crude oil produclion by roughly 2.5 nillion b/d
e
in 2009.
ve expecl oil price novenenls in 2011 lo conlinue lo be driven by
lhe pace ol global econonic growlh and ils resulling inplicalions lor oil
consunplion, and by OPEC produclion decisions.
a
BP nerg, Ou!|ook 2030.
b
See loolnole e on page 56.
c
Oi| arke! Fepor! !0 Februar, 20!!
OECD/EA 2011, page 4, lrsl paragraph.

d
BP S!a!is!ica| Feviev o! Vor|d nerg, June 20!0.
e
Oi| arke! Fepor! !0 Februar, 20!!
OECD/EA 2011, Table 1, page 59.


Business review
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NaturaI gas prices
alural gas prices slrenglhened in 2010, bul were volalile. The average US
Henry Hub Firsl ol onlh ndex rose lo $4.39/nnBlu, a 10' increase on
lhe depressed prices in 2009.
Cas consunplion recovered across lhe world along wilh lhe
econony. n lhe US, a cold slarl in 2010, lollowed by a hol sunner and
low lenperalures lowards lhe end ol lhe year also conlribuled lo denand
slrenglh. Yel doneslic produclion growlh - ol shale gas in parlicular -
conlinued apace and liniled price rises. Henry Hub gas prices slayed
below coal parily in US power generalion lron lhe sunner, leading lo lhe
displacenenl ol coal by gas. The dillerenlials ol produclion area prices lo
Henry Hub prices conlinued lo narrow as pipeline bolllenecks were
reduced. n Europe, spol gas prices al lhe UK alional Balancing Poinl
increased by 33' lo an average ol 42.45 pence per lhern lor 2010. Yel
plenlilul global LC supply kepl spol gas prices below oilindexed conlracl
levels lor nosl ol lhe year, causing conpelilion wilh conlracl pipeline
supplies and narginal European gas produclion. UK spol gas prices only
allained conlracl price levels in Decenber as cold wealher caused rapid
invenlory drawdowns.
The rise in prices lollowed sharp declines in 2009. The recession
and slrong produclion had caused lhe average Henry Hub Firsl ol onlh
ndex lo lall in 2009 by 56' lo $3.99/nnBlu - lhe lowesl level since 2002.
n lhe UK, alional Balancing Poinl prices averaged 30.35 pence per lhern
- 47' below lhe record prices ol 53.12 pence per lhern in 2003.
n 2011, we expecl gas narkels lo conlinue lo be driven by lhe
econony, wealher, doneslic produclion lrends and signilcanl growlh ol
global LC supply.

Rehning margins
Felning nargins were slighlly higher in 2010 as denand lor oil producls
recovered slrongly in line wilh lhe econonic bounceback lron recession.
Clobally, oil denand grew al lhe laslesl rale since 2004. ew relning
capacily conlinued lo connission, bul lhe slrong denand recovery neanl
lhal unused relning capacily lell lor lhe lrsl line since 2005. The BP global
indicalor relning nargin (C
a
averaged $4.44 per barrel, up 44 cenls per
barrel conpared wilh 2009.
argins in lhe Far Easl inproved lhe nosl bul conlinued lo
slruggle - averaging $1.63 per barrel in Singapore as new relning capacily
conlinued lo be added in lhe region. argins also rose in bolh lhe
orlh vesl Europe and lhe edilerranean bul European nargins
overall renained well below 2003 levels. argins in lhe US were
relalively unchanged, up slighlly on lhe vesl and Cull coasls bul down
in lhe idwesl.
Felning nargins lell sharply in 2009 as denand lor oil producls
collapsed in lhe wake ol lhe global econonic recession and as new relning
capacily cane onslrean. The preniun lor lighl producls above luel oils
reduced as denand lor lransporl luels lell along wilh lhe reduclion in
econonic aclivily, conpressing nargins even lor lully upgraded relneries.
Looking ahead, relners are likely lo conlinue lo operale wilh excess
capacily globally, allhough nearlern supplydenand lundanenlals appear
broadly in balance. Fron 2011, we will be reporling a new relning indicalor
nargin, replacing lhe C, which we call lhe relning narker nargin
(F. This adopls a basis lhal we believe is nore closely relaled lo lhe
approach used by nany ol our conpelilors. (See Fe!ning and arke!ing
on page 55 !or !ur!her in!orna!ion on F.
a
See loolnole e on page 56.
Business review
Non-OECD economies drive consumption growth
(billion tonnes of oil equivalent)
1990 2000 2010 2020 2030
18 Renewables*
Hydro
Nuclear
Coal
Gas
Oil
16
14
12
10
8
6
4
2
Source: BP Energy Outlook 2030 *Includes biofuels.
1990 2000 2010 2020 2030
18 Non-OECD
OECD
16
14
12
10
8
6
4
2
Long-term outlook
Over the long term, global demand for primary energy is expected to
continue to grow, but less rapidly than the global economy. Growing energy
demand is underpinned by continuing population growth and by generally
rising living standards in the developing world, including the expansion of
urban populations. These drivers of energy demand growth are to some
extent offset by efforts to improve efciency in both the conversion and
use of energy.
Global energy demand is projected to increase by around 40%
between 2010 and 2030
a
. Fossil fuels are expected still to be satisfying as
much as 80% of the worlds energy needs in 2030. At current rates of
consumption, the world has enough proved reserves of fossil fuels to meet
these requirements
b
if investment is permitted to turn those reserves into
production capacity. For example, in oil alone, there are reserves in place to
satisfy approximately 45 years demand at current rates of consumption
b
.
However, to meet the potential growth in demand, continued investment in
new technology will be required to boost recovery from declining elds and
commercialize currently inaccessible resources. To play their part in
achieving this, energy companies such as BP will need secure and reliable
access to as-yet undeveloped resources. It is estimated that more than
80% of the worlds oil reserves are held by Russia, Mexico and members
of OPEC
b
areas where international oil companies are frequently limited
or prohibited from applying their technology and expertise to produce
additional supply. New partnerships will be required to transform potential
resources into proved reserves and eventually into production.
A more diverse mix of energy will also be required to meet this
increased demand. Such a mix is likely to include both unconventional fossil
fuel resources such as oil sands, coalbed methane and natural gas
produced from shale formations and renewable energy sources such as
biofuels, wind and solar power. Beyond simply meeting growth in overall
demand, a diverse mix would also help to provide enhanced national and
global energy security while supporting the transition to a lower-carbon
economy. Improving the efciency of energy use will also play a key role in
maintaining energy market balance in the future.
Along with increasing supply, we believe the energy industry will be
required to make hydrocarbons cleaner and more efcient to use
particularly in the critical area of power generation, for which the key
hydrocarbons are currently coal and gas. The world has reserves of coal for
around 120 years at current consumption rates
b
, but coal produces more
carbon than any other fossil fuel. Carbon capture and storage (CCS) may
help to provide a path to cleaner coal, and BP is investing in this area, but
CCS technologies still face signicant technical and economic issues and
are unlikely to be in operation at scale for at least a decade.
In contrast, we believe that in many countries natural gas has the
potential to provide the most signicant reductions in carbon emissions
from power generation in the shortest time and at the lowest cost. These
reductions can be achieved using technology available today. Combined-
cycle turbines, fuelled by natural gas, produce around half the CO
2

emissions of coal-red power, and are cheaper and quicker to build. It is
estimated that there are reserves of natural gas in place equivalent to 63
years consumption at current rates
b
and they are rising as new skills and
technology unlock new unconventional gas resources. For these reasons,
gas is looking to be an increasingly attractive resource in meeting the
growing demand for energy, playing a greater role as a key part of the
energy future.
At the same time, alternative energies also have the potential to
make a substantial contribution to the transition to a lower-carbon economy,
but this will require investment, innovation and time. Currently, biofuels,
wind, solar, and other modern forms of renewable energy account for less
than 2% of total global consumption
a
. Assuming continuing policy support
and favourable technology trends, these forms of energy are likely to meet
around 6% of total energy demand in 2030
a
.
If industry and the market are to meet the worlds growing demand
for energy in a sustainable way, governments will be required to set a
stable and enduring framework. As part of this, governments will need to
provide secure access for exploration and development of fossil fuel
resources, dene mutual benets for resource owners and development
partners, and establish and maintain an appropriate legal and regulatory
environment, including a mechanism for recognizing the cost of carbon.
a
BP Energy Outlook 2030.
b
BP Statistical Review of World Energy June 2010. These reserve estimates are compiled from
ofcial sources and other third-party data, which may not be based on proved reserves as dened
by SEC rules.

Business review
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Our slralegy
Delivering slabilily, resloring lrusl and value.
2010 has been a very challenging year lor BP and lhere renains nuch lo
be done lo address lhe repercussions ol lhe lragic Cull ol exico oil spill.
BP is connilled lo lhe resloralion ol lhe Cull ol exico coaslline and ils
connunilies. BP will nanage ils liabililies arising lron lhis deeply
regrelled accidenl and is connilled lo learn and share lhe lessons lron
lhe incidenl. Above all, we will work wilh regulalors and induslry globally lo
reduce lhe risk ol lhis happening again.
BPs innediale priorily beyond lhe Cull is lo regain lhe lrusl ol our
slakeholders by denonslraling lhal we undersland and can nanage lhe
inherenl risks across our whole porllolio. Fron lhere, we seek lo rebuild
value lor our shareholders by reeslablishing our conpelilive posilion wilhin
lhe seclor.
BP believes lhal we can energe lron lhe shadow ol lhe Cull ol
exico incidenl a saler, nore riskaware business. Our slralegy, which will
conlinue lo evolve over 2011, will renain locused on crealing value lor
shareholders lhrough sale, responsible exploralion, developnenl and
produclion ol lossil luel resources because lhe world needs lhen, lhe
nanulaclure, processing and delivery ol beller and nore advanced
producls, and parlicipalion in lhe lransilion lo a lower carbon lulure.
Our inlenlion is lo reeslablish all necessary pernissions lo
operale in lhe deepwaler Cull ol exico and suslain business nonenlun
oulside ol lhe Cull, lo reslore value and growlh lhrough a rigorous locus
on our porllolio ol highqualily assels, lo develop our people lo ensure
we have lhe righl conpelencies and behaviours where lhey are needed,
lo learn and inplenenl lhe lessons lron lhe Cull ol exico and rigorously
locus on lhe processes lhal will deliver sale and reliable operalions
and conlinuous inprovenenl, and do so wilhin a clear, conservalive
lnancial lranework.
A safer, more risk-aware business
Our enployees, inveslors, regulalors and governnenl parlners expecl us
lo pul salely and operalional inlegrily above all olher concerns. ve inlend
lo build on our exisling slrenglhs lo syslenalically nanage operaling risk
by inproving our underslanding ol risk exposure and laking lhe appropriale
aclion lo niligale risk. vherever we operale, we nusl enbed lhe
disciplined applicalion ol slandards wilhin BPs operaling nanagenenl
syslen (OS, as a single lranework lor all BP operalions. (See Sa!e!, on
page 68 !or !ur!her in!orna!ion on our OS. ve will denand independenl
checks and balances al nulliple levels lo provide beller decision naking
and lransparenl governance ol slandards, capabilily, conpliance and risk
nanagenenl. To ellecl lhis we have crealed a nore powerlul salely and
operalional risk lunclion, independenl ol lhe business line and deployed
inlo each operaling enlily across lhe BP porllolio. For lurlher inlornalion
on our salely priorilies and perlornance, see Corporale responsibilily -
Salely on pages 6371.
FuIhIIing our commitments and earning back trust foIIowing the
GuIf of Mexico incident
BP has connilled lo pay all legilinale clains by individuals, businesses
and governnenls and has eslablished a $20billion lrusl lund, lollowing
consullalion wilh lhe US governnenl, lo provide lunds lor lhal purpose. n
addilion, BP is working wilh lederal and slale agencies lo assess lhe
nalure and exlenl ol lhe inpacl on nalural resources resulling lron lhe
Cull ol exico incidenl. Based on lhe assessnenl, lederal and slale
lruslees will prepare plans lo reslore, rehabililale, replace or acquire lhe
equivalenl ol injured resources under lheir lrusleeship. The Oil Pollulion Acl
1990 (OPA 90 provides lor resloralion lo a baseline condilion, which is lhe
condilion lhe resources would have been in il lhe incidenl had nol
occurred. The assessnenl will also be used lo idenlily any conpensalion
lhal nay be required lor lhe loss ol lhe resources, prior lo resloralion.
Reinstating a dividend in Iine with the circumstances of the
company, as part of a conservative hnanciaI framework
BP will conlinue lo invesl wilh lhe ain ol growing lhe conpany and
shareholder value, suslainably and lhrough lhe business cycle. ve inlend
lo underpin lhis wilh a conservalive capilal slruclure, which allows lhe
Hexibilily lo execule slralegy while renaining resilienl lo lhe inherenl
volalilily ol lhe business. ve will endeavour lo aclively nanage dayloday
liquidily in order lo neel lhe cash needs ol lhe business, while nainlaining
lhe nel debl ralio wilhin a lower range ol 10' lo 20'. On 1 February
2011, we announced lhal quarlerly dividend paynenls would resune. The
quarlerly dividend lo be paid in arch 2011 is 7 cenls per share. The board
believes lhis is an allordable and suslainable level which will allow lhe
conpany lo neel ils connilnenls while conlinuing lo invesl in lhe
business lor growlh and value.
DeIivering the right high-quaIity portfoIio
As parl ol lhe response lo lhe Cull ol exico incidenl, we announced and
are progressing disposals lhal are expecled lo deliver around $30 billion in
proceeds over 2010 and 2011. During 2010, BP has successlully realized
preniun values lor upslrean and downslrean assels as parl ol lhe
progranne. See Acquisilions and disposals on page 24. The disposal
progranne has been an opporlunily lo lurlher upgrade and locus our
porllolio and we inlend lo relain a capacily lo reinvesl, lo acquire assels
lhal enhance slralegy and our porllolio on bolh a planned and an
opporlunislic basis lhrough 2011.
Business review
The right peopIe, skiIIs, capabiIity and incentivization
l is vilal lhal we develop and deploy people wilh lhe skills, capabilily and
delerninalion required lo neel our objeclives. There renains, in our
induslry, a conlinuing shorlage ol prolessionals such as pelroleun
engineers and scienlisls, driven by changing denographics. onelheless,
we have lhus lar been successlul in building lhis capacily and we are
connilled lo building and deploying capabilily wilh a slrong salely and risk
nanagenenl cullure, including revised reward nechanisns lo losler
prolessional pride in engineering, heallh, salely, securily, lhe environnenl
and operalions.
The crealion ol a nore powerlul S&OF lunclion represenls a
signilcanl change lhal will slrenglhen our processes and capabililies in
salely and risk nanagenenl. n Exploralion and Produclion, we have
reorganized lhe segnenl inlo lhree lunclional divisions - Exploralion,
Developnenls and Produclion - each ol which reporls direclly lo lhe group
chiel execulive. The inlenl is clear, lo locus experlise and capabilily on a
nore concenlraled assel base lo reduce operalional risk and deliver
longrun suslainable inprovenenl. n each division - and across lhe resl ol
lhe group - we will conlinue lo develop group leadership and senior
nanagenenl leans, and locus recruilnenl on individuals wilh slrong
operalional and lechnical experlise.
Focus on expIoration and high-quaIity earnings
Through our slralegy we ain lo deliver value growlh lor shareholders by
invesling in our Exploralion and Produclion business and saler operalions
everywhere, while al lhe sane line enhancing ellciency and growing
highqualily earnings and relurns lhroughoul all our operalions.
n Exploralion and Produclion, our priorily is lo ensure sale, reliable
and conplianl operalions worldwide. Our slralegy is lo invesl lo grow
longlern value by conlinuing lo build a porllolio ol enduring posilions in
lhe worlds key hydrocarbon basins wilh a locus on deepwaler, gas
(including unconvenlional gas and gianl lelds. Our slralegy is enabled by
conlinuously reducing operaling risk, slrong relalionships buill on nulual
advanlage, deep knowledge ol lhe basins in which we operale, and
lechnology, logelher wilh building capabilily along lhe value chain in
Exploralion, Developnenls and Produclion.
ve are increasing inveslnenl in Exploralion, a key source ol value
crealion al lhe lronl end ol lhe value chain, and we are evolving lhe nalure
ol our relalionships, parlicularly wilh nalional oil conpanies. ve will also
conlinue lo aclively nanage our porllolio, wilh a locus on value growlh.
n Felning and arkeling, our slralegy is lo hold a porllolio ol
qualily, ellcienl and inlegraled nanulacluring and narkeling posilions
underpinned by sale operalions, leading lechnologies and slrong brands.
ve will conlinue lo access narkel growlh opporlunilies in lhe energing
narkels and inlend lo grow our inlernalional businesses. Over line we
expecl lo shill capilal enployed lron nalure lo highgrowlh regions.
n Allernalive Energy, our slralegy is lo build nalerial lowcarbon
energy businesses lhal are aligned wilh BPs core capabililies. n bioluels
we are building advanlaged posilions in lowcosl suslainable leedslocks
such as Brazilian sugar cane, lhe lignocellulosic conversion ol energy
grasses in lhe US and lhe developnenl ol advanlaged luel nolecules such
as biobulanol. n lhe lowcarbon power business we are building oul our US
wind porllolio and conlinue lo grow our solar business. ve conlinue lo
develop our capabilily in carbon caplure and slorage.

Leveraging technoIogy as we Iook further ahead
As discussed under Our narkel on pages 1613 ol lhis reporl, we expecl
lhal lhe world will require a nore diverse energy nix as lhe basis lor a
secure supply ol energy over line. ve inlend lo play a cenlral role in
neeling lhe worlds conlinued need lor hydrocarbons, wilh our Exploralion
and Produclion and Felning and arkeling aclivilies renaining al lhe core
ol our slralegy. ve are also crealing longlern oplions lor lhe lulure in new
energy lechnology and lowcarbon energy businesses. ve believe lhal lhis
locused porllolio has lhe polenlial lo be a nalerial source ol value crealion
lor BP (see pages 6!-62. ve are also enhancing our capabililies in nalural
gas, which nay prove lo be a vilal source ol relalively clean energy during
lhe lransilion lo a lowercarbon econony and beyond. ve inlend lo lead,
supporl and shape lhis lransilion while working lo achieve seclorleading
levels ol relurn lor shareholders.

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Our perlornance
Perlornance in 2010 was overshadowed by lhe
well blowoul and subsequenl oil spill in lhe Cull ol
exico. Beyond lhis lragic evenl, lhe ongoing
underlying perlornance ol lhe group was slrong.
Safety
n April 2010, lollowing a well blowoul in lhe Cull ol exico, an explosion
and lre occurred on lhe senisubnersible rig Deepwaler Horizon, resulling
in lhe lragic loss ol 11 lives and a najor oil spill. There were lhree olher
conlraclor lalalilies during 2010. ve deeply regrel lhe loss ol lhese lives
and lhe inpacl lron lhe oil spill. (See Cu|! o! exico oi| spi|| on page 34 !or
nore in!orna!ion on !he Deepva!er Horizon acciden!.
Our priorily renains lo have sale, reliable and conplianl operalions
worldwide. ve have sel up a nore powerlul salely and operalional risk
lunclion. As an innediale slep, we have reinlorced lhe link belween
salely perlornance and reward in lhe lourlh quarler ol 2010. Olher
progrannes are now under way, including a review ol conlraclor
nanagenenl and a lresh look al how we nanage risk syslenalically
across BP.
ve also conlinued lo enbed our OS wilhin lhe group, wilh all ol
our operaling siles lransilioning lo lhe syslen by lhe end ol February 2011.
Fecordable injury lrequency (FF, a neasure ol lhe nunber ol
reporled injuries per 200,000 hours worked was 0.61 in 2010, conpared
wilh 0.34 in 2009 and 0.43 in 2003. The increase in 2010 was signilcanlly
inpacled by lhe nunber ol incidenls arising in lhe response ellorl lor lhe
Cull ol exico oil spill, which resulled in signilcanlly higher personal salely
incidenl rales lhan lor olher BP operalions.
The nunber ol oil spills grealer lhan one barrel was 261 in 2010
conpared wilh 234 in 2009 and 335 in 2003. The volune spilled was
doninaled by lhe Cull ol exico incidenl. See Oil spill and loss ol
conlainnenl in Salely on page 63.
Our greenhouse gas (CHC enissions
a
were 64.9le in 2010,
conpared wilh 65.0le in 2009. ve have nol included any enissions lron
lhe Cull ol exico incidenl and lhe response ellorl due lo our reluclance
lo reporl dala lhal has such a high degree ol uncerlainly.
PeopIe
During 2010, we conlinued lo locus on increasing lhe level ol specialisl
skills and experlise across lhe worklorce. The exceplional response lo lhe
oil spill was a reassuring exanple ol lhe capabililies and connilnenl ol
our slall.
The lolal nunber ol nonrelail slall was broadly slable in 2010,
adjusling lor slall reduclions associaled wilh assel disposals. Tolal
nonrelail recruilnenl was around 3,000. This was ollsel by around 7,700
slall leaving lhe conpany plus a lurlher 2,300 slall leaving associaled wilh
assel disposals. The lolal nunber ol enployees (including relail slall was
79,700 al lhe end ol 2010.

Operating and hnanciaI performance
Our resulls in 2010 were greally inpacled by lhe charge recorded lor
lhe Cull ol exico oil spill incidenl. Sleps were laken lo slrenglhen lhe
balance sheel, including a progranne ol assel disposals, wilh very
good progress nade. Cash and cash equivalenls al lhe end ol 2010 was
$13.6 billion and lhe nel debl ralio was 21'.
olable achievenenls in 2010 include:
Exploralion and Produclion
Feplacing nore lhan 100' ol our proved reserves, excluding
acquisilions and disposals, on a conbined basis ol subsidiaries and
equilyaccounled enlilies
b
.
Taking lnal inveslnenl decisions on 15 projecls, wilh an expecled lolal
BP nel capilal inveslnenl ol $20 billion.
ncreasing produclion lor lhe Funaila leld in Soulhern raq by nore
lhan 10' above lhe rale inilially agreed belween lhe Funaila
Operaling Organizalion parlners and lhe raqi inislry ol Oil in
Decenber 2009. This signilcanl nileslone neans lhal BP and ils
parlners becane eligible lor service lees lron lhe lrsl quarler ol 2011.
Accessing new resources across lhe globe - in Azerbaijan, China,
lhe Cull ol exico, ndonesia, onshore orlh Anerica and lhe UK.
aking lhe Hodoa discovery in Egypl, lhe lrsl Oligocene deepwaler
discovery in lhe vesl ile Della.
TKBP increasing ils produclion by 2.5' in 2010 conpared wilh 2009.
Securing agreenenls lo dispose ol alnosl $22 billion ol noncore
assels in line wilh our plans lollowing lhe Cull ol exico oil spill.
Felning and arkeling
nproving overall lnancial perlornance delivery, prinarily driven by
slrong operalional perlornance across all ol our businesses, lhe
conlinualion ol our progranne lo deliver lurlher ellciencies and a
nore lavourable relning environnenl.
Achieving a Solonon relning availabilily
c
ol 95.0', which is an increase
ol 1.4 percenlage poinls conpared wilh 2009.
Achieving record volunes in pelrochenicals and slrong lubricanls
perlornance.
aking signilcanl progress in lhe vhiling relnery nodernizalion
projecl.
Slarling connercial produclion al our new joinl venlure acelyls planl
in anjing, China.
Caslrols sponsorship ol lhe 2010 FFA vorld Cup in Soulh Alrica.
Successlully exiling lron our convenience relail business in France.
Conpleling lhe diveslnenl ol several packages ol nonslralegic
lerninals and pipelines in lhe US Easl ol Fockies and vesl Coasl.
Selling our 15' inleresl in Elhylene alaysia Sdn Bhd (ESB and
60' inleresl in Polyelhylene alaysia Sdn Bhd (PESB lo Pelronas.
a
See loolnole a in Environnenl on page 72.
b
See Exploralion and Produclion - proved reserves replacenenl on page 42 lor nore delailed
inlornalion on reserves replacenenl lor subsidiaries and equilyaccounled enlilies.
c
Felning availabilily represenls Solonon Associales operalional availabilily, which is delned as
lhe percenlage ol lhe year lhal a unil is available lor processing aller sublracling lhe annualized
line losl due lo lurnaround aclivily and all planned nechanical, process and regulalory
nainlenance downline.
Business review
OiI and naturaI gas production and net proved reserves
a
2010 2009 2003 2007 2006
Crude oil produclion lor subsidiaries (lhousand barrels per day 1,229 1,400 1,263 1,304 1,351
Crude oil produclion lor equilyaccounled enlilies (lhousand barrels per day 1,145 1,135 1,133 1,110 1,124
alural gas produclion lor subsidiaries (nillion cubic leel per day 7,332 7,450 7,277 7,222 7,412
alural gas produclion lor equilyaccounled enlilies (nillion cubic leel per day 1,069 1,035 1,057 921 1,005
Eslinaled nel proved crude oil reserves lor subsidiaries (nillion barrels
b
5,559 5,653 5,665 5,492 5,393
Eslinaled nel proved crude oil reserves lor equilyaccounled enlilies
(nillion barrels
c
4,971 4,353 4,633 4,531 3,333
Eslinaled nel proved bilunen reserves lor equilyaccounled enlilies
(nillion barrels 179 - - - -
Eslinaled nel proved nalural gas reserves lor subsidiaries (billion cubic leel
d
37,809 40,333 40,005 41,130 42,163
Eslinaled nel proved nalural gas reserves lor equilyaccounled enlilies
(billion cubic leel
e
4,891 4,742 5,203 3,770 3,763

a
Crude oil includes nalural gas liquids (CLs and condensale. Produclion and proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl
inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and sales arrangenenls independenlly, and include ninorily inleresls in consolidaled operalions.
b
ncludes 22 nillion barrels (23 nillion barrels al 31 Decenber 2009 and 21 nillion barrels al 31 Decenber 2003 in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
c
ncludes 254 nillion barrels (243 nillion barrels al 31 Decenber 2009 and 216 nillion barrels al 31 Decenber 2003 in respecl ol lhe 7.03' ninorily inleresl in TKBP (6.36' al 31 Decenber 2009 and
6.30' al 31 Decenber 2003.
d
ncludes 2,921 billion cubic leel ol nalural gas (3,063 billion cubic leel al 31 Decenber 2009 and 3,103 billion cubic leel al 31 Decenber 2003 in respecl ol lhe 30' ninorily inleresl in BP Trinidad and
Tobago LLC.
e
ncludes 137 billion cubic leel (131 billion cubic leel al 31 Decenber 2009 and 2003 in respecl ol lhe 5.39' ninorily inleresl in TKBP (5.79' al 31 Decenber 2009 and 5.92' al 31 Decenber 2003.
Total net proved reserves 2010
a
(million barrels of oil equivalent)

Liquids
b
Natural gas
10,709
7,362
a
Combined basis of subsidiaries and equity-accounted entities, on a basis consistent with
general industry practice.
b
Crude oil, condensate, natural gas liquids and bitumen.
During 2010, 1,503 nillion barrels ol oil and nalural gas, on an oil
equivalenl
a
basis (nnboe, were added, excluding purchases and sales,
lo BPs proved reserves (636nnboe lor subsidiaries and 313nnboe lor
equilyaccounled enlilies. Al 31 Decenber 2010, BPs proved reserves
were 13,071nnboe (12,077nnboe lor subsidiaries and 5,994nnboe lor
equilyaccounled enlilies. Our proved reserves in subsidiaries are localed
prinarily in lhe US (44', Soulh Anerica (15', lhe UK (10', Auslralasia
(9' and Alrica (11'. Our proved reserves in equilyaccounled enlilies
are localed prinarily in Fussia (69', Soulh Anerica (20', and Fesl
ol Asia (7'.
For a discussion ol produclion, see Exploralion and Produclion on
page 43.
a
alural gas is converled lo oil equivalenl al 5.3 billion cubic leel (bcl = 1 nillion barrels.

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SeIected hnanciaI information
a
$ nillion excepl per share anounls
2010 2009 2003 2007 2006'
ncone slalenenl dala
Sales and olher operaling revenues lron conlinuing operalions
b
297,107 239,272 361,143 234,365 265,906
Feplacenenl cosl proll (loss belore inleresl and lax
c
By business
Exploralion and Produclion 30,886 24,300 33,303 27,602 31,026
Felning and arkeling 5,555 743 4,176 2,621 5,661
Olher businesses and corporale (1,516) (2,322 (1,223 (1,209 (341
Cull ol exico oil spill response
d
(40,858) - - - -
Consolidalion adjuslnenl - unrealized proll in invenlory 447 (717 466 (220 65
Feplacenenl cosl proll (loss belore inleresl and laxalion lron
conlinuing operalions
b
(5,486) 22,504 41,727 23,794 35,911
nvenlory holding gains (losses 1,784 3,922 (6,433 3,553 (253
Proll (loss belore inleresl and laxalion lron conlinuing operalions
b
(3,702) 26,426 35,239 32,352 35,653
Finance cosls and nel lnance expense or incone relaling lo pensions
and olher poslrelirenenl benells (1,123) (1,302 (956 (741 (516
Taxalion 1,501 (3,365 (12,617 (10,442 (12,516
Proll (loss lron conlinuing operalions
b
(3,324) 16,759 21,666 21,169 22,626
Proll (loss lor lhe year (3,324) 16,759 21,666 21,169 22,601
Proll (loss lor lhe year allribulable lo BP shareholders (3,719) 16,573 21,157 20,345 22,315
Per ordinary share - cenls
Proll (loss lor lhe year allribulable lo BP shareholders
Basic (19.81) 33.49 112.59 103.76 111.41
Diluled (19.81) 37.54 111.56 107.34 110.56
Proll (loss lron conlinuing operalions allribulable lo BP shareholders
b
Basic (19.81) 33.49 112.59 103.76 111.54
Diluled (19.81) 37.54 111.56 107.34 110.63
Feplacenenl cosl proll (loss lor lhe year
c
(4,519) 14,136 26,102 13,694 22,323
Feplacenenl cosl proll (loss lor lhe year allribulable lo BP shareholders
c
(4,914) 13,955 25,593 13,370 22,537
Per ordinary share - cenls
Feplacenenl cosl proll (loss lor lhe year allribulable lo BP shareholders
c
(26.17) 74.49 136.20 95.35 112.52
Dividends paid per share - cenls 14.00 56.00 55.05 42.30 33.40
Dividends paid per share - pence 8.679 36.417 29.337 20.995 21.104
Capilal expendilure and acquisilions
e
23,016 20,309 30,700 20,641 17,231
Ordinary share dala
l
Average nunber oulslanding ol 25 cenl ordinary shares (shares nillion undiluled 18,786 13,732 13,790 19,163 20,023
Average nunber oulslanding ol 25 cenl ordinary shares (shares nillion diluled 18,998 13,936 13,963 19,327 20,195
Balance sheel dala
Tolal assels 272,262 235,963 223,233 236,076 217,601
el assels 95,891 102,113 92,109 94,652 35,465
Share capilal 5,183 5,179 5,176 5,237 5,335
BP shareholders equily 94,987 101,613 91,303 93,690 34,624
Finance debl due aller nore lhan one year 30,710 25,513 17,464 15,651 11,036
el debl lo nel debl plus equily
g
21% 20' 21' 22' 20'

a
This inlornalion, insolar as il relales lo 2010, has been exlracled or derived lron lhe audiled consolidaled lnancial slalenenls ol lhe BP group presenled on pages 141227. ole 1 lo lhe lnancial
slalenenls includes delails on lhe basis ol preparalion ol lhese lnancial slalenenls. The selecled inlornalion should be read in conjunclion wilh lhe audiled lnancial slalenenls and relaled noles
elsewhere herein.
b
Excludes nnovene, which was lrealed as a disconlinued operalion in accordance wilh FFS 5 oncurrenl Assels Held lor Sale and Disconlinued Operalions in 2006.
c
Feplacenenl cosl proll or loss reHecls lhe replacenenl cosl ol supplies. The replacenenl cosl proll or loss lor lhe year is arrived al by excluding lron proll invenlory holding gains and losses and lheir
associaled lax ellecl. Feplacenenl cosl proll or loss lor lhe group is nol a recognized CAAP neasure. The equivalenl neasure on an FFS basis is Proll (loss lor lhe year allribulable lo BP shareholders.
Furlher inlornalion on invenlory holding gains and losses is provided on page 31.
d
Under FFS lhese cosls are presenled as a reconciling ilen belween lhe sun ol lhe resulls ol lhe reporlable segnenls and lhe group resulls.
e
Excluding acquisilions and assel exchanges, capilal expendilure lor 2010 was $19,610 nillion (2009 $20,001 nillion, 2003 $23,136 nillion, 2007 $19,194 nillion and 2006 $16,910 nillion. All capilal
expendilure and acquisilions during lhe pasl lve years have been lnanced lron cash How lron operalions, disposal proceeds and exlernal lnancing. 2003 included capilal expendilure ol $2,322 nillion
and an assel exchange ol $1,909 nillion, bolh in respecl ol our lransaclion wilh Husky Energy nc., as well as capilal expendilure ol $3,667 nillion in respecl ol our purchase ol all ol Chesapeake Energy
Corporalions inleresl in lhe Arkona Basin voodlord Shale assels and lhe purchase ol a 25' inleresl in Chesapeakes Fayelleville Shale assels. 2007 included $1,132 nillion lor lhe acquisilion ol Chevrons
elherlands nanulacluring conpany. Capilal expendilure in 2006 included $1 billion in respecl ol our inveslnenl in Fosnell.
l
The nunber ol ordinary shares shown has been used lo calculale per share anounls.
g
el debl and lhe ralio ol nel debl lo nel debl plus equily are nonCAAP neasures. ve believe lhal lhese neasures provide uselul inlornalion lo inveslors. Furlher inlornalion on nel debl is given in
Financial slalenenls - ole 36 on page 193.
' As reporled in Annual Feporl on Forn 20F. There was a $500 nillion ($315 nillion posl lax lining dillerence belween lhe proll reporled under FFS in lhe Annual Feporl and Accounls and lhe proll
reporled under FFS in BP Annua| Fepor! on Forn 20-F 2006. For lurlher inlornalion see BP Annua| Fepor! and Accoun!s 2006.

Business review
Proht or Ioss for the year
Loss allribulable lo BP shareholders lor lhe year ended 31 Decenber 2010
was $3,719 nillion and included invenlory holding gains
a
, nel ol lax, ol
$1,195 nillion and a nel charge lor nonoperaling ilens, aller lax, ol
$25,449 nillion. n addilion, lair value accounling ellecls had a lavourable
inpacl, nel ol lax, ol $13 nillion relalive lo nanagenenls neasure ol
perlornance. onoperaling ilens in 2010 included a $40.9 billion prelax
charge relaling lo lhe Cull ol exico oil spill. ore inlornalion on
nonoperaling ilens and lair value accounling ellecls can be lound on
pages 2526. See Cull ol exico oil spill on page 34 and in Financial
slalenenls - ole 2 on page 153 lor lurlher inlornalion on lhe inpacl ol
lhe Cull ol exico oil spill on BPs lnancial resulls. See Exploralion and
Produclion on page 40, Felning and arkeling on page 55 and Olher
businesses and corporale on page 61 lor lurlher inlornalion on
segnenl resulls.
Proll allribulable lo BP shareholders lor lhe year ended
31 Decenber 2009 included invenlory holding gains, nel ol lax, ol
$1,067 nillion. n addilion, lair value accounling ellecls had a lavourable
inpacl, nel ol lax, ol $445 nillion relalive lo nanagenenls neasure
ol perlornance.
Proll allribulable lo BP shareholders lor lhe year ended
31 Decenber 2003 included invenlory holding losses, nel ol lax, ol
$796 nillion. n addilion, lair value accounling ellecls had a lavourable
inpacl, nel ol lax, ol $146 nillion relalive lo nanagenenls neasure
ol perlornance.
The prinary addilional laclors allecling lhe lnancial resulls lor
2010, conpared wilh 2009, were higher realizalions, lower deprecialion,
higher earnings lron equilyaccounled enlilies, inproved operalional
perlornance, lurlher cosl ellciencies and a nore lavourable relning
environnenl in Felning and arkeling, parlly ollsel by lower produclion,
a signilcanlly lower conlribulion lron supply and lrading (including gas
narkeling and higher produclion laxes.
The prinary addilional laclors reHecled in proll lor 2009, conpared
wilh 2003, were lower realizalions and relning nargins and higher
deprecialion, parlly ollsel by higher produclion, slronger operalional
perlornance and lower cosls.
Finance costs and net hnance expense reIating to pensions and
other post-retirement benehts
Finance cosls conprise inleresl payable less anounls capilalized, and
inleresl accrelion on provisions and longlern olher payables. Finance
cosls in 2010 were $1,170 nillion conpared wilh $1,110 nillion in 2009
and $1,547 nillion in 2003. The decrease in 2009, when conpared wilh
2003, is largely allribulable lo lhe reduclion in inleresl rales.
el lnance incone relaling lo pensions and olher poslrelirenenl
benells in 2010 was $47 nillion conpared wilh nel lnance expense ol
$192 nillion in 2009 and nel lnance incone ol $591 nillion in 2003. n
2010, conpared wilh 2009, lhe inprovenenl reHecled lhe addilional
expecled relurns on assels lollowing lhe increases in lhe pension assel
base al lhe end ol 2009 conpared wilh lhe end ol 2003. n 2009, lhe
expecled relurn on assels decreased signilcanlly as lhe pension assel
base reduced, consislenl wilh lalls in equily narkels during 2003.

a
nvenlory holding gains and losses represenl lhe dillerence belween lhe cosl ol sales calculaled
using lhe average cosl lo BP ol supplies acquired during lhe year and lhe cosl ol sales calculaled
on lhe lrslin lrsloul (FFO nelhod, aller adjusling lor any changes in provisions where lhe nel
realizable value ol lhe invenlory is lower lhan ils cosl.
BPs nanagenenl believes il is helplul lo disclose lhis inlornalion. An analysis ol invenlory holding
gains and losses by business is shown in Financial slalenenls - ole 7 on page 167 and lurlher
inlornalion on invenlory holding gains and losses is provided on page 31.
Taxation
The credil lor corporale laxes in 2010 was $1,501 nillion, conpared wilh a
charge ol $3,365 nillion in 2009 and a charge ol $12,617 nillion in 2003.
The elleclive lax rale was 31' in 2010, 33' in 2009 and 37' in 2003.
The group earns incone in nany counlries and, on average, pays laxes al
rales higher lhan lhe UK slalulory rale ol 23'. The decrease in lhe
elleclive lax rale in 2010 conpared wilh 2009 prinarily reHecls lhe
absence ol a oneoll disbenell lhal lealured in 2009 in respecl ol goodwill
inpairnenl, and olher laclors.The decrease in lhe elleclive lax rale in 2009
conpared wilh 2003 prinarily reHecls a higher proporlion ol incone lron
associales and joinlly conlrolled enlilies where lax is included in lhe prelax
operaling resull, loreign exchange ellecls and changes lo lhe geographical
nix ol lhe groups incone.
Acquisitions and disposaIs
n 2010, BP acquired a najor porllolio ol deepwaler exploralion acreage
and prospecls in lhe US Cull ol exico and an addilional inleresl in lhe
BPoperaled AzeriChiragCunashli (ACC developnenls in lhe Caspian Sea,
Azerbaijan lor $2.9 billion, as parl ol a $7billion lransaclion wilh Devon
Energy. For lurlher inlornalion on lhis lransaclion, including required
governnenl approvals, see Exploralion and Produclion on page 43. As parl
ol lhe response lo lhe Cull ol exico oil spill, lhe group plans lo deliver up
lo $30 billion ol disposal proceeds by lhe end ol 2011. Tolal disposal
proceeds during 2010 were $17 billion, which included $7 billion lron lhe
sale ol US Pernian Basin, veslern Canadian gas assels, and veslern
Deserl exploralion concessions in Egypl lo Apache Corporalion (and an
exisling parlner lhal exercised preenplion righls, and $6.2 billion ol
deposils received in advance ol disposal lransaclions expecled lo conplele
in 2011. Ol lhese deposils received, $3.5 billion is lor lhe sale ol our
inleresl in Pan Anerican Energy lo Bridas Corporalion, $1 billion lor lhe
sale ol our upslrean inleresls in Venezuela and Vielnan lo TKBP, and
$1.3 billion lor lhe sale ol our oil and gas exploralion, produclion and
lransporlalion business in Colonbia lo a consorliun ol Ecopelrol and
Talisnan, lhe laller conpleling in January 2011. See Financial slalenenls
- ole 4 on page 163.
n Felning and arkeling we nade disposals lolalling $1.3 billion,
which included our French relail luels and convenience business lo Delek
Europe, lhe luels narkeling business in Bolswana lo Puna Energy, cerlain
nonslralegic pipelines and lerninals in lhe US, our inleresls in elhylene
and polyelhylene produclion in alaysia lo Pelronas and our inleresl in a
lulures exchange.
There were no signilcanl acquisilions in 2009. Disposal proceeds in
2009 were $2.7 billion, principally lron lhe sale ol our inleresls in BP vesl
Java Liniled, Kazakhslan Pipeline Venlures LLC and LukArco, and lhe sale
ol our ground luels narkeling business in Creece and relail churn in lhe
US, Europe and Auslralasia. Furlher proceeds lron lhe sale ol LukArco
are receivable in 2011. See Financial slalenenls - ole 5 on page 164.
n 2003, we conpleled an assel exchange wilh Husky Energy nc.,
and assel purchases lron Chesapeake Energy Corporalion as described
on page 23.

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Non-operating items
onoperaling ilens are charges and credils arising in consolidaled enlilies lhal BP discloses separalely because il considers such disclosures lo be
neaninglul and relevanl lo inveslors. They are provided in order lo enable inveslors lo beller undersland and evaluale lhe groups lnancial perlornance.
An analysis ol nonoperaling ilens is shown in lhe lable below.
$ nillion
2010 2009 2003
npairnenl and gain (loss on sale ol businesses and lxed assels 3,812 1,574 (1,015
Environnenlal and olher provisions (54) 3 (12
Feslrucluring, inlegralion and ralionalizalion cosls (137) (10 (57
Fair value gain (loss on enbedded derivalives (309) 664 (163
Olher (113) 34 257
3,199 2,265 (990
npairnenl and gain (loss on sale ol businesses and lxed assels
a
877 (1,604 301
Environnenlal and olher provisions (98) (219 (64
Fair value gain (loss on enbedded derivalives - (57 57
Olher (52) 134 -
630 (2,603 347
Olher businesses and corporale
npairnenl and gain (loss on sale ol businesses and lxed assels 5 (130 (166
Environnenlal and olher provisions (103) (75 (117
Fair value gain (loss on enbedded derivalives - - (5
Olher (21) (101 (91
(200) (439 (633
Cull ol exico oil spill response (40,858) - -
Tolal belore inleresl and laxalion (37,229) (327 (1,276
Finance cosls
b
(77) - -
Tolal belore laxalion (37,306) (327 (1,276
Taxalion credil (charge
c
11,857 (240 430
Tolal aller laxalion (25,449) (1,067 (796

a
2009 includes $1,579 nillion in relalion lo lhe inpairnenl ol goodwill allocaled lo lhe US vesl Coasl luels value chain.
b
Finance cosls relale lo lhe Cull ol exico oil spill. See Financial slalenenls - ole 2 on page 153 lor lurlher delails.
c
Tax is calculaled by applying discrele quarlerly elleclive lax rales (excluding lhe inpacl ol lhe Cull ol exico oil spill on group proll or loss, lo lhe nonoperaling ilens as lhey arise each quarler. However,
lhe US slalulory lax rale has been used lor expendilures relaling lo lhe Cull ol exico oil spill lhal qualily lor lax reliel. n 2009, no lax credil was calculaled on lhe goodwill inpairnenl in Felning and
arkeling because lhe charge is nol lax deduclible.
Business review
Non-GAAP information on fair vaIue accounting effects
The inpacls ol lair value accounling ellecls, relalive lo nanagenenls inlernal neasure ol perlornance, and a reconcilialion lo CAAP inlornalion is also
sel oul below. Furlher inlornalion on lair value accounling ellecls is provided on page 32.
$ nillion
2010 2009 2003
Unrecognized gains (losses broughl lorward lron previous period (530) 339 107
Unrecognized (gains losses carried lorward 527 530 (339
Favourable (unlavourable inpacl relalive lo nanagenenls neasure ol perlornance (3) 919 (232
Unrecognized gains (losses broughl lorward lron previous period 179 (32 429
Unrecognized (gains losses carried lorward (137) (179 32
Favourable (unlavourable inpacl relalive lo nanagenenls neasure ol perlornance 42 (261 511
39 653 229
Taxalion credil (charge
a
(26) (213 (33
13 445 146
By region
US 141 637 (231
onUS (144) 232 (51
(3) 919 (232
US 19 16 231
onUS 23 (277 230
42 (261 511

a
Tax is calculaled by applying discrele quarlerly elleclive lax rales (excluding lhe inpacl ol lhe Cull ol exico oil spill on group proll or loss, lo lhe lair value accounling ellecls as lhey arise each quarler.
ReconciIiation of non-GAAP information
$ nillion
2010 2009 2003
Feplacenenl cosl proll belore inleresl and lax adjusled lor lair value accounling ellecls 30,889 23,331 33,590
npacl ol lair value accounling ellecls (3) 919 (232
Feplacenenl cosl proll belore inleresl and lax 30,886 24,300 33,303
Feplacenenl cosl proll belore inleresl and lax adjusled lor lair value accounling ellecls 5,513 1,004 3,665
npacl ol lair value accounling ellecls 42 (261 511
Feplacenenl cosl proll belore inleresl and lax 5,555 743 4,176


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Fisk laclors
ve urge you lo consider carelully lhe risks described below. The polenlial
inpacl ol lheir occurrence could be lor our business, lnancial condilion and
resulls ol operalions lo suller and lhe lrading price and liquidily ol our
securilies lo decline.
Our syslen ol risk nanagenenl idenliles and provides lhe
response lo risks ol group signilcance lhrough lhe eslablishnenl ol
slandards and olher conlrols. Any lailure ol lhis syslen could lead lo lhe
occurrence, or reoccurrence, ol any ol lhe risks described below and a
consequenl nalerial adverse ellecl on BPs business, lnancial posilion,
resulls ol operalions, conpelilive posilion, cash Hows, prospecls, liquidily,
shareholder relurns and/or inplenenlalion ol ils slralegic agenda.
The risks are calegorized againsl lhe lollowing areas: slralegic,
conpliance and conlrol, and salely and operalional. n addilion, we have
also sel oul lwo lurlher risks lor your allenlion - lhose resulling lron lhe
Cull ol exico oil spill (lhe ncidenl and lhose relaled lo lhe general
nacroecononic oullook.
The GuIf of Mexico oiI spiII has had and couId continue to have a
materiaI adverse impact on BP.
There is signilcanl uncerlainly in lhe exlenl and lining ol cosls and
liabililies relaling lo lhe ncidenl, lhe inpacl ol lhe ncidenl on our
repulalion and lhe resulling possible inpacl on our abilily lo access new
opporlunilies. There is also signilcanl uncerlainly regarding polenlial
changes in applicable regulalions and lhe operaling environnenl lhal nay
resull lron lhe ncidenl. These increase lhe risks lo which lhe group is
exposed and nay cause our cosls lo increase. These uncerlainlies are
likely lo conlinue lor a signilcanl period. Thus, lhe ncidenl has had, and
could conlinue lo have, a nalerial adverse inpacl on lhe groups business,
conpelilive posilion, lnancial perlornance, cash Hows, prospecls, liquidily,
shareholder relurns and/or inplenenlalion ol ils slralegic agenda,
parlicularly in lhe US.
ve recognized charges lolalling $40.9 billion in 2010 as a resull ol
lhe ncidenl. The lolal anounls lhal will ullinalely be paid by BP in relalion
lo all obligalions relaling lo lhe ncidenl are subjecl lo signilcanl
uncerlainly and lhe ullinale exposure and cosl lo BP will be dependenl on
nany laclors. Furlhernore, lhe anounl ol clains lhal becone payable by
BP, lhe anounl ol lnes ullinalely levied on BP (including any delerninalion
ol BPs negligence, lhe oulcone ol liligalion, and any cosls arising lron
any longerlern environnenlal consequences ol lhe oil spill, will also
inpacl upon lhe ullinale cosl lor BP. Allhough lhe provision recognized is
lhe currenl besl eslinale ol expendilures required lo sellle cerlain presenl
obligalions al lhe end ol lhe reporling period, lhere are lulure expendilures
lor which il is nol possible lo neasure lhe obligalion reliably. The risks
associaled wilh lhe ncidenl could also heighlen lhe inpacl ol lhe olher
risks lo which lhe group is exposed as lurlher described below.
The generaI macroeconomic outIook can affect BP's resuIts given
the nature of our business.
n lhe conlinuing uncerlain lnancial and econonic environnenl, cerlain
risks nay gain nore proninence eilher individually or when laken logelher.
Oil and gas prices can be very volalile, wilh average prices and nargins
inHuenced by changes in supply and denand. This is likely lo exacerbale
conpelilion in all businesses, which nay inpacl cosls and nargins. Al lhe
sane line, governnenls are lacing grealer pressure on public lnances,
which nay increase lheir nolivalion lo inlervene in lhe lscal and regulalory
lraneworks ol lhe oil and gas induslry, including lhe risk ol increased
laxalion, nalionalizalion and exproprialion. The global lnancial and
econonic silualion nay have a negalive inpacl on lhird parlies wilh whon
we do, or nay do, business. Any ol lhese laclors nay allecl our resulls ol
operalions, lnancial condilion, business prospecls and liquidily and nay
resull in a decline in lhe lrading price and liquidily ol our securilies.
Capilal narkels have regained sone conldence aller lhe banking
crisis ol 2003 bul are slill subjecl lo volalilily and il lhere are exlended
periods ol conslrainls in lhese narkels, or il we are unable lo access lhe
narkels, including due lo our lnancial posilion or narkel senlinenl as lo
our prospecls, al a line when cash Hows lron our business operalions
nay be under pressure, our abilily lo nainlain our longlern inveslnenl
progranne nay be inpacled wilh a consequenl ellecl on our growlh rale,
and nay inpacl shareholder relurns, including dividends and share
buybacks, or share price. Decreases in lhe lunded levels ol our pension
plans nay also increase our pension lunding requirenenls.
Strategic risks
Access and renewaI - BP's future hydrocarbon production depends
on our abiIity to renew and reposition our portfoIio. Increasing
competition for access to investment opportunities, the effects of
the GuIf of Mexico oiI spiII on our reputation and cash ows, and
more stringent reguIation couId resuIt in decreased access to
opportunities gIobaIIy.
Successlul execulion ol our group slralegy depends on inplenenling
aclivilies lo renew and reposilion our porllolio. The challenges lo renewal ol
our upslrean porllolio are growing due lo increasing conpelilion lor
access lo opporlunilies globally and heighlened polilical and econonic
risks in cerlain counlries where signilcanl hydrocarbon basins are localed.
Lack ol nalerial posilions in new narkels could inpacl our lulure
hydrocarbon produclion.
oreover, lhe Cull ol exico oil spill has danaged BPs repulalion,
which nay have a longlern inpacl on lhe groups abilily lo access new
opporlunilies, bolh in lhe US and elsewhere. Adverse public, polilical and
induslry senlinenl lowards BP, and lowards oil and gas drilling aclivilies
generally, could danage or inpair our exisling connercial relalionships
wilh counlerparlies, parlners and hosl governnenls and could inpair our
access lo new inveslnenl opporlunilies, exploralion properlies,
operalorships or olher essenlial connercial arrangenenls wilh polenlial
parlners and hosl governnenls, parlicularly in lhe US. n addilion,
responding lo lhe ncidenl has placed, and will conlinue lo place, a
signilcanl burden on our cash How over lhe nexl several years, which
could also inpede our abilily lo invesl in new opporlunilies and deliver
longlern growlh.
ore slringenl regulalion ol lhe oil and gas induslry generally,
and ol BPs aclivilies specilcally, arising lron lhe ncidenl, could increase
lhis risk.
Prices and markets - BP's hnanciaI performance is subject to the
uctuating prices of crude oiI and gas as weII as the voIatiIe prices
of rehned products and the prohtabiIity of our rehning and
petrochemicaIs operations.
Oil, gas and producl prices are subjecl lo inlernalional supply and denand.
Polilical developnenls and lhe oulcone ol neelings ol OPEC can
parlicularly allecl world supply and oil prices. Previous oil price increases
have resulled in increased lscal lake, cosl inHalion and nore onerous
lerns lor access lo resources. As a resull, increased oil prices nay nol
inprove nargin perlornance. n addilion lo lhe adverse ellecl on
revenues, nargins and prollabilily lron any lall in oil and nalural gas prices,
a prolonged period ol low prices or olher indicalors would lead lo lurlher
reviews lor inpairnenl ol lhe groups oil and nalural gas properlies. Such
reviews would reHecl nanagenenls view ol longlern oil and nalural gas
prices and could resull in a charge lor inpairnenl lhal could have a
signilcanl ellecl on lhe groups resulls ol operalions in lhe period in which
il occurs. Fapid nalerial or suslained change in oil, gas and producl prices
can inpacl lhe validily ol lhe assunplions on which slralegic decisions are
based and, as a resull, lhe ensuing aclions derived lron lhose decisions
nay no longer be appropriale. A prolonged period ol low oil prices nay
inpacl our abilily lo nainlain our longlern inveslnenl progranne wilh a
consequenl ellecl on our growlh rale and nay inpacl shareholder relurns,
including dividends and share buybacks, or share price. Periods ol global
recession could inpacl lhe denand lor our producls, lhe prices al which
lhey can be sold and allecl lhe viabilily ol lhe narkels in which we operale.
Felning prollabilily can be volalile, wilh bolh periodic oversupply
and supply lighlness in various regional narkels, coupled wilh Huclualions
in denand. Seclors ol lhe pelrochenicals induslry are also subjecl lo
Huclualions in supply and denand, wilh a consequenl ellecl on prices
and prollabilily.
Business review
CIimate change and carbon pricing - cIimate change and carbon
pricing poIicies couId resuIt in higher costs and reduction in future
revenue and strategic growth opportunities.
Conpliance wilh changes in laws, regulalions and obligalions relaling lo
clinale change could resull in subslanlial capilal expendilure, laxes,
reduced prollabilily lron changes in operaling cosls, and revenue
generalion and slralegic growlh opporlunilies being inpacled. Our
connilnenl lo lhe lransilion lo a lowercarbon econony nay creale
expeclalions lor our aclivilies, and lhe level ol parlicipalion in allernalive
energies carries repulalional, econonic and lechnology risks.
Socio-poIiticaI - the diverse nature of our operations around the
worId exposes us to a wide range of poIiticaI deveIopments and
consequent changes to the operating environment, reguIatory
environment and Iaw.
ve have operalions in counlries where polilical, econonic and social
lransilion is laking place. Sone counlries have experienced, or nay
experience in lhe lulure, polilical inslabilily, changes lo lhe regulalory
environnenl, changes in laxalion, exproprialion or nalionalizalion ol
properly, civil slrile, slrikes, acls ol war and insurreclions. Any ol lhese
condilions occurring could disrupl or lerninale our operalions, causing our
developnenl aclivilies lo be curlailed or lerninaled in lhese areas, or our
produclion lo decline, and could cause us lo incur addilional cosls. n
parlicular, our inveslnenls in lhe US, Fussia, raq, Egypl, Libya and olher
counlries could be adversely allecled by heighlened polilical and econonic
environnenl risks. See pages 1415 lor inlornalion on lhe localions ol our
najor assels and aclivilies.
ve sel ourselves high slandards ol corporale cilizenship and aspire
lo conlribule lo a beller qualily ol lile lhrough lhe producls and services
we provide. l il is perceived lhal we are nol respecling or advancing lhe
econonic and social progress ol lhe connunilies in which we operale, our
repulalion and shareholder value could be danaged.
Competition - BP's group strategy depends upon continuous
innovation in a highIy competitive market.
The oil, gas and pelrochenicals induslries are highly conpelilive. There is
slrong conpelilion, bolh wilhin lhe oil and gas induslry and wilh olher
induslries, in supplying lhe luel needs ol connerce, induslry and lhe
hone. Conpelilion puls pressure on producl prices, allecls oil producls
narkeling and requires conlinuous nanagenenl locus on reducing unil
cosls and inproving ellciency, while ensuring salely and operalional risk is
nol conpronised. The inplenenlalion ol group slralegy requires
conlinued lechnological advances and innovalion including advances in
exploralion, produclion, relning, pelrochenicals nanulacluring lechnology
and advances in lechnology relaled lo energy usage. Our perlornance
could be inpeded il conpelilors developed or acquired inlelleclual properly
righls lo lechnology lhal we required or il our innovalion lagged lhe
induslry.
Investment efhciency - poor investment decisions couId negativeIy
impact our business.
Our organic growlh is dependenl on crealing a porllolio ol qualily oplions
and invesling in lhe besl oplions. nelleclive inveslnenl seleclion and
developnenl could lead lo loss ol value and higher capilal expendilure.
Reserves repIacement - inabiIity to progress upstream resources in
a timeIy manner couId adverseIy affect our Iong-term repIacement
of reserves and negativeIy impact our business.
Successlul execulion ol our group slralegy depends crilically on suslaining
longlern reserves replacenenl. l upslrean resources are nol progressed
in a linely and ellcienl nanner, we will be unable lo suslain longlern
replacenenl ol reserves.
Liquidity, hnanciaI capacity and hnanciaI exposure - faiIure to
operate within our hnanciaI framework couId impact our abiIity to
operate and resuIt in hnanciaI Ioss. Exchange rate uctuations can
impact our underIying costs and revenues.
The group seeks lo nainlain a lnancial lranework lo ensure lhal il is able
lo nainlain an appropriale level ol liquidily and lnancial capacily. This
lranework conslrains lhe level ol assessed capilal al risk lor lhe purposes
ol posilions laken in lnancial inslrunenls. Failure lo accuralely lorecasl or
nainlain sullcienl liquidily and credil lo neel lhese needs could inpacl
our abilily lo operale and resull in a lnancial loss. Connercial credil risk is
neasured and conlrolled lo delernine lhe groups lolal credil risk. nabilily
lo delernine adequalely our credil exposure could lead lo lnancial loss. A
credil crisis allecling banks and olher seclors ol lhe econony could inpacl
lhe abilily ol counlerparlies lo neel lheir lnancial obligalions lo lhe group.
l could also allecl our abilily lo raise capilal lo lund growlh and lo neel
our obligalions. The change in lhe groups lnancial lranework lo nake il
nore prudenl nay nol be sullcienl lo avoid a subslanlial and unexpecled
cash call.
BPs cleanup cosls and polenlial liabililies resulling lron pending
and lulure clains, lawsuils and enlorcenenl aclions relaling lo lhe Cull ol
exico oil spill, logelher wilh lhe polenlial cosl ol inplenenling renedies
soughl in lhe various proceedings, cannol be lully eslinaled al lhis line
bul lhey have had, and could conlinue lo have, a nalerial adverse inpacl
on lhe groups business, conpelilive posilion, lnancial perlornance, cash
Hows, prospecls, liquidily, shareholder relurns and/or inplenenlalion ol ils
slralegic agenda, parlicularly in lhe US. Furlhernore, we have recognized a
lolal charge ol $40.9 billion during 2010 and lurlher polenlial liabililies nay
conlinue lo have a nalerial adverse ellecl on lhe groups resulls ol
operalions and lnancial condilion. See Financial slalenenls - ole 2 on
page 153 and Legal proceedings on pages 130131. ore slringenl
regulalion ol lhe oil and gas induslry arising lron lhe ncidenl, and ol BPs
aclivilies specilcally, could increase lhis risk.
Crude oil prices are generally sel in US dollars, while sales ol
relned producls nay be in a variely ol currencies. Fluclualions in exchange
rales can lherelore give rise lo loreign exchange exposures, wilh a
consequenl inpacl on underlying cosls and revenues.
For nore inlornalion on lnancial inslrunenls and lnancial risk
laclors see Financial slalenenls - ole 27 on page 135.
Insurance - BP's insurance strategy means that the group couId,
from time to time, be exposed to materiaI uninsured Iosses which
couId have a materiaI adverse effect on BP's hnanciaI condition and
resuIts of operations.
The group generally reslricls ils purchase ol insurance lo silualions where
lhis is required lor legal or conlraclual reasons. This neans lhal lhe group
could be exposed lo nalerial uninsured losses, which could have a nalerial
adverse ellecl on ils lnancial condilion and resulls ol operalions. n parlicular,
lhese uninsured cosls could arise al a line when BP is lacing nalerial cosls
arising oul ol sone olher evenl which could pul pressure on BPs liquidily
and cash Hows. For exanple, BP has borne and will conlinue lo bear lhe
enlire burden ol ils share ol any properly danage, well conlrol, pollulion
cleanup and lhirdparly liabilily expenses arising oul ol lhe Cull ol exico
oil spill incidenl.

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CompIiance and controI risks
ReguIatory - the oiI industry in generaI, and in particuIar the US
industry foIIowing the GuIf of Mexico oiI spiII, may face increased
reguIation that couId increase the cost of reguIatory compIiance
and Iimit our access to new expIoration properties.
The Cull ol exico oil spill is likely lo resull in nore slringenl regulalion ol
oil and gas aclivilies in lhe US and elsewhere, parlicularly relaling lo
environnenlal, heallh and salely conlrols and oversighl ol drilling
operalions, as well as access lo new drilling areas. Fegulalory or legislalive
aclion nay inpacl lhe induslry as a whole and could be direcled
specilcally lowards BP. For exanple, in lhe US, legislalion is currenlly
being considered lhal nay inpacl BPs exisling conlracls wilh lhe US
Covernnenl or linil ils abilily lo enler inlo new conlracls wilh lhe US
Covernnenl. The US Covernnenl inposed a noraloriun on cerlain
ollshore drilling aclivilies, which was subsequenlly lilled in Oclober 2010,
however, lhe inplicalions ol lhe noraloriun lor how quickly lhe induslry
will relurn lo drilling renains uncerlain. Sinilar aclions nay be laken by
governnenls elsewhere in lhe world. ew regulalions and legislalion, as
well as evolving praclices, could increase lhe cosl ol conpliance and nay
require changes lo our drilling operalions, exploralion, developnenl and
deconnissioning plans, and could inpacl our abilily lo capilalize on our
assels and linil our access lo new exploralion properlies or operalorships,
parlicularly in lhe deepwaler Cull ol exico. n addilion, increases in laxes,
royallies and olher anounls payable lo governnenls or governnenlal
agencies, or reslriclions on availabilily ol lax reliel, could also be inposed
as a response lo lhe ncidenl.
n addilion, lhe oil induslry is subjecl lo regulalion and inlervenlion
by governnenls lhroughoul lhe world in such nallers as lhe award ol
exploralion and produclion inleresls, lhe inposilion ol specilc drilling
obligalions, environnenlal, heallh and salely conlrols, conlrols over lhe
developnenl and deconnissioning ol a leld (including reslriclions on
produclion and, possibly, nalionalizalion, exproprialion, cancellalion or
nonrenewal ol conlracl righls. ve buy, sell and lrade oil and gas producls
in cerlain regulaled connodily narkels. Failure lo respond lo changes in
lrading regulalions could resull in regulalory aclion and danage lo our
repulalion. The oil induslry is also subjecl lo lhe paynenl ol royallies and
laxalion, which lend lo be high conpared wilh lhose payable in respecl ol
olher connercial aclivilies, and operales in cerlain lax jurisdiclions lhal
have a degree ol uncerlainly relaling lo lhe inlerprelalion ol, and changes
lo, lax law. As a resull ol new laws and regulalions or olher laclors, we
could be required lo curlail or cease cerlain operalions, or we could incur
addilional cosls.
For nore inlornalion on environnenlal regulalion, see pages 7331.
EthicaI misconduct and non-compIiance - ethicaI misconduct or
breaches of appIicabIe Iaws by our empIoyees couId be damaging
to our reputation and sharehoIder vaIue.
Our code ol conducl, which applies lo all enployees, delnes our
connilnenl lo inlegrily, conpliance wilh all applicable legal requirenenls,
high elhical slandards and lhe behaviours and aclions we expecl ol our
businesses and people wherever we operale. ncidenls ol elhical
nisconducl or nonconpliance wilh applicable laws and regulalions,
including nonconpliance wilh anlibribery, anlicorruplion and olher
applicable laws could be danaging lo our repulalion and shareholder value.
ulliple evenls ol nonconpliance could call inlo queslion lhe inlegrily ol
our operalions. For exanple, in our lrading businesses, lhere is lhe risk lhal
a delernined individual could operale as a rogue lrader, acling oulside
BPs delegalions, conlrols or code ol conducl in pursuil ol personal
objeclives lhal could be lo lhe delrinenl ol BP and ils shareholders.
For cerlain legal proceedings involving lhe group, see Legal
proceedings on pages 130133. For lurlher inlornalion on lhe risks
involved in BPs lrading aclivilies, see Operalional risks - Treasury and
lrading aclivilies on page 31.
LiabiIities and provisions - BP's potentiaI IiabiIities resuIting from
pending and future cIaims, Iawsuits and enforcement actions
reIating to the GuIf of Mexico oiI spiII, together with the potentiaI
cost and burdens of impIementing remedies sought in the various
proceedings, cannot be fuIIy estimated at this time but they have
had, and are expected to continue to have, a materiaI adverse
impact on the group's business.
Under lhe OPA 90 BP Exploralion & Produclion nc. is one ol lhe parlies
lnancially responsible lor lhe cleanup ol lhe Cull ol exico oil spill and lor
cerlain econonic danages as provided lor in OPA 90, as well as any nalural
resource danages associaled wilh lhe spill and cerlain cosls incurred by
lederal and slale lruslees engaged in a joinl assessnenl ol such nalural
resource danages.
BP and cerlain ol ils subsidiaries have also been naned as
delendanls in nunerous lawsuils in lhe US arising oul ol lhe ncidenl,
including aclions lor personal injury and wronglul dealh, purporled class
aclions lor connercial or econonic injury, aclions lor breach ol conlracl,
violalions ol slalules, properly and olher environnenlal danage, securilies
law clains and various olher clains. See Legal proceedings on page 130.
BP is subjecl lo a nunber ol invesligalions relaled lo lhe ncidenl
by nunerous lederal and Slale agencies. See Legal proceedings on
page 130. The lypes ol enlorcenenl aclion pursued and lhe nalure ol lhe
renedies soughl will depend on lhe discrelion ol lhe proseculors and
regulalory aulhorilies and lheir assessnenl ol BPs culpabilily lollowing
lheir invesligalions. Such enlorcenenl aclions could include crininal
proceedings againsl BP and/or enployees ol lhe group. n addilion lo lnes
and penallies, such enlorcenenl aclions could resull in lhe suspension ol
operaling licences and debarnenl lron governnenl conlracls. Debarnenl
ol BP Exploralion & Produclion nc. would prevenl il lron bidding on or
enlering inlo new lederal conlracls or olher lederal lransaclions, and lron
oblaining new orders or exlensions lo exisling lederal conlracls, including
lederal procurenenl conlracls or leases. Dependenl on lhe circunslances,
debarnenl or suspension nay also be soughl againsl alllialed enlilies ol
BP Exploralion & Produclion nc.
Allhough BP believes lhal cosls arising oul ol lhe spill are
recoverable lron ils parlners and olher parlies responsible under OPA 90,
such recovery is nol cerlain and BP has recognized all ol lhe cosls incurred
in ils lnancial slalenenls (see Financial slalenenls - ole 2 on page 153,
ole 37 on page 199 and ole 44 on page 213, under Conlingenl assels
relaling lo lhe Cull ol exico oil spill.
Any lnding ol gross negligence lor purposes ol penallies soughl
againsl lhe group under lhe Clean valer Acl would also have a nalerial
adverse inpacl on lhe groups repulalion, would allecl our abilily lo recover
cosls relaling lo lhe ncidenl lron our parlners and olher parlies
responsible under OPA 90 and could allecl lhe lnes and penallies payable
by lhe group wilh respecl lo lhe ncidenl under enlorcenenl aclions
oulside lhe Clean valer Acl conlexl.
The Cull ol exico oil spill has danaged BPs repulalion. This,
conbined wilh olher recenl evenls in lhe US (including lhe 2005 explosion
al lhe Texas Cily relnery and lhe 2006 pipeline leaks in Alaska, nay lead lo
an increase in lhe nunber ol cilalions and/or lhe level ol lnes inposed in
relalion lo lhe Cull ol exico oil spill and any lulure alleged breaches ol
salely or environnenlal regulalions.
Clains by individuals and businesses under OPA 90 are adjudicaled
by lhe Cull Coasl Clains Facilily (CCCF headed by Kennelh Feinberg, who
was joinlly appoinled by BP and lhe US Adninislralion. On 13 February
2011, lhe CCCF announced ils lnal rules governing paynenl oplions,
eligibilily and subslanlialion crileria, and lnal paynenl nelhodology. The
inpacl ol lhese rules, or olher evenls relaled lo lhe adjudicalion ol clains,
on lulure paynenls by lhe CCCF is uncerlain. Paynenls could ullinalely
be signilcanlly higher or lower lhan lhe anounl we have eslinaled lor
individual and business clains under OPA 90 included in lhe provision BP
recognized lor liligalion and clains. (See Financial slalenenls - ole 37 on
page 199 under Liligalion and clains.
Business review
Changes in externaI factors couId affect our resuIts of operations
and the adequacy of our provisions.
ve renain exposed lo changes in lhe exlernal environnenl, such as new
laws and regulalions (whelher inposed by inlernalional lrealy or by nalional
or local governnenls in lhe jurisdiclions in which we operale, changes in
lax or royally regines, price conlrols, governnenl aclions lo cancel or
renegoliale conlracls, narkel volalilily or olher laclors. Such laclors could
reduce our prollabilily lron operalions in cerlain jurisdiclions, linil our
opporlunilies lor new access, require us lo divesl or wriledown cerlain
assels or allecl lhe adequacy ol our provisions lor pensions, lax,
environnenlal and legal liabililies. Polenlial changes lo pension or lnancial
narkel regulalion could also inpacl lunding requirenenls ol lhe group.
Reporting - faiIure to accurateIy report our data couId Iead to
reguIatory action, IegaI IiabiIity and reputationaI damage.
Exlernal reporling ol lnancial and nonlnancial dala is relianl on lhe
inlegrily ol syslens and people. Failure lo reporl dala accuralely and in
conpliance wilh exlernal slandards could resull in regulalory aclion, legal
liabilily and danage lo our repulalion.
Safety and operationaI risks
The risks inherenl in our operalions include a nunber ol hazards lhal,
allhough nany nay have a low probabilily ol occurrence, can have
exlrenely serious consequences il lhey do occur, such as lhe Cull ol
exico incidenl. The occurrence ol any such risks could have a consequenl
nalerial adverse inpacl on lhe groups business, conpelilive posilion,
cash Hows, resulls ol operalions, lnancial posilion, prospecls, liquidily,
shareholder relurns and/or inplenenlalion ol lhe groups slralegic goals.
Process safety, personaI safety and environmentaI risks - the
nature of our operations exposes us to a wide range of signihcant
heaIth, safety, security and environmentaI risks, the occurrence of
which couId resuIt in reguIatory action, IegaI IiabiIity and increased
costs and damage to our reputation.
The nalure ol lhe groups operalions exposes us lo a wide range ol
signilcanl heallh, salely, securily and environnenlal risks. The scope ol
lhese risks is inHuenced by lhe geographic range, operalional diversily and
lechnical conplexily ol our aclivilies. n addilion, in nany ol our najor
projecls and operalions, risk allocalion and nanagenenl is shared wilh
lhird parlies, such as conlraclors, subconlraclors, joinl venlure parlners
and associales. See Joinl venlures and olher conlraclual arrangenenls
- BP nay nol have lull operalional conlrol and nay have exposure lo
counlerparly credil risk and disruplions lo our operalions due lo lhe nalure
ol sone ol ils business relalionships on page 32.
There are risks ol lechnical inlegrily lailure as well as risk ol nalural
disaslers and olher adverse condilions in nany ol lhe areas in which we
operale, which could lead lo loss ol conlainnenl ol hydrocarbons and
olher hazardous nalerial, as well as lhe risk ol lres, explosions or
olher incidenls.
n addilion, inabilily lo provide sale environnenls lor our worklorce
and lhe public could lead lo injuries or loss ol lile and could resull in
regulalory aclion, legal liabilily and danage lo our repulalion.
Our operalions are ollen conducled in dillcull or environnenlally
sensilive localions, in which lhe consequences ol a spill, explosion, lre or
olher incidenl could be grealer lhan in olher localions. These operalions are
subjecl lo various environnenlal laws, regulalions and pernils and lhe
consequences ol lailure lo conply wilh lhese requirenenls can include
renedialion obligalions, penallies, loss ol operaling pernils and olher
sanclions. Accordingly, inherenl in our operalions is lhe risk lhal il we lail lo
abide by environnenlal and salely and proleclion slandards, such lailure
could lead lo danage lo lhe environnenl and could resull in regulalory
aclion, legal liabilily, nalerial cosls and danage lo our repulalion or licence
lo operale.
To help address heallh, salely, securily, environnenlal and
operalions risks, and lo provide a consislenl lranework wilhin which lhe
group can analyze lhe perlornance ol ils aclivilies and idenlily and
renediale shorllalls, BP inplenenled a groupwide operaling
nanagenenl syslen (OS. The enbedding ol OS conlinues and
lollowing lhe Cull ol exico oil spill an enhanced S&OF lunclion is being
eslablished, reporling direclly lo lhe group chiel execulive. There can be no
assurance lhal OS will adequalely idenlily all process salely, personal
salely and environnenlal risk or provide lhe correcl niligalions, or lhal all
operalions will be in conpliance wilh OS al all lines.
Security - hostiIe activities against our staff and activities couId
cause harm to peopIe and disrupt our operations.
Securily lhreals require conlinuous oversighl and conlrol. Acls ol lerrorisn,
piracy, sabolage and sinilar aclivilies direcled againsl our operalions and
ollces, pipelines, lransporlalion or conpuler syslens could cause harn lo
people and could severely disrupl business and operalions. Our business
aclivilies could also be severely disrupled by civil slrile and polilical unresl
in areas where we operale.
Product quaIity - faiIure to meet product quaIity standards couId
Iead to harm to peopIe and the environment and Ioss of customers.
Supplying cusloners wilh onspecilcalion producls is crilical lo
nainlaining our licence lo operale and our repulalion in lhe narkelplace.
Failure lo neel producl qualily slandards lhroughoul lhe value chain could
lead lo harn lo people and lhe environnenl and loss ol cusloners.
DriIIing and production - these activities require high IeveIs of
investment and are subject to naturaI hazards and other
uncertainties. Activities in chaIIenging environments heighten
many of the driIIing and production risks incIuding those of
integrity faiIures, which couId Iead to curtaiIment, deIay or
canceIIation of driIIing operations, or inadequate returns from
expIoration expenditure.
Exploralion and produclion require high levels ol inveslnenl and are
subjecl lo nalural hazards and olher uncerlainlies, including lhose relaling
lo lhe physical characlerislics ol an oil or nalural gas leld. Our exploralion
and produclion aclivilies are ollen conducled in exlrenely challenging
environnenls, which heighlen lhe risks ol lechnical inlegrily lailure and
nalural disaslers discussed above. The cosl ol drilling, conpleling or
operaling wells is ollen uncerlain. ve nay be required lo curlail, delay or
cancel drilling operalions because ol a variely ol laclors, including
unexpecled drilling condilions, pressure or irregularilies in geological
lornalions, equipnenl lailures or accidenls, adverse wealher condilions
and conpliance wilh governnenlal requirenenls. n addilion, exploralion
expendilure nay nol yield adequale relurns, lor exanple in lhe case ol
unproduclive wells or discoveries lhal prove unecononic lo develop.
The Cull ol exico incidenl illuslrales lhe risks we lace in our drilling and
produclion aclivilies.

Transportation - aII modes of transportation of hydrocarbons
invoIve inherent and signihcant risks.
All nodes ol lransporlalion ol hydrocarbons involve inherenl risks. An
explosion or lre or loss ol conlainnenl ol hydrocarbons or olher hazardous
nalerial could occur during lransporlalion by road, rail, sea or pipeline.
This is a signilcanl risk due lo lhe polenlial inpacl ol a release on lhe
environnenl and people and given lhe high volunes involved.
Major project deIivery - our group pIan depends upon successfuI
deIivery of major projects, and faiIure to deIiver major projects
successfuIIy couId adverseIy affect our hnanciaI performance.
Successlul execulion ol our group plan depends crilically on inplenenling
lhe aclivilies lo deliver lhe najor projecls over lhe plan period. Poor
delivery ol any najor projecl lhal underpins produclion or produclion
growlh, including nainlenance lurnaround progrannes, and/or a najor
progranne designed lo enhance shareholder value could adversely allecl
our lnancial perlornance. Successlul projecl delivery requires, anong
olher lhings, adequale engineering and olher capabililies and lherelore
successlul recruilnenl and developnenl ol slall is cenlral lo our plans.
See People and capabilily - successlul recruilnenl and developnenl
ol slall is cenlral lo our plans on page 31.

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DigitaI infrastructure is an important part of maintaining our
operations, and a breach of our digitaI security couId resuIt in
serious damage to business operations, personaI injury, damage
to assets, harm to the environment and breaches of reguIations.
The reliabilily and securily ol our digilal inlraslruclure are crilical lo
nainlaining lhe availabilily ol our business applicalions. A breach ol our
digilal securily could cause serious danage lo business operalions and, in
sone circunslances, could resull in injury lo people, danage lo assels,
harn lo lhe environnenl and breaches ol regulalions.
Business continuity and disaster recovery - the group must be
abIe to recover quickIy and effectiveIy from any disruption or
incident, as faiIure to do so couId adverseIy affect our business
and operations.
Conlingency plans are required lo conlinue or recover operalions lollowing
a disruplion or incidenl. nabilily lo reslore or replace crilical capacily lo an
agreed level wilhin an agreed linelrane would prolong lhe inpacl ol any
disruplion and could severely allecl business and operalions.
Crisis management - crisis management pIans are essentiaI to
respond effectiveIy to emergencies and to avoid a potentiaIIy
severe disruption in our business and operations.
Crisis nanagenenl plans and capabilily are essenlial lo deal wilh
energencies al every level ol our operalions. l we do nol respond, or are
perceived nol lo respond, in an appropriale nanner lo eilher an exlernal or
inlernal crisis, our business and operalions could be severely disrupled.
PeopIe and capabiIity - successfuI recruitment and deveIopment of
staff is centraI to our pIans.
Successlul recruilnenl ol new slall, enployee lraining, developnenl and
longlern renewal ol skills, in parlicular lechnical capabililies such as
pelroleun engineers and scienlisls, are key lo inplenenling our plans.
nabilily lo develop hunan capacily and capabilily, bolh across lhe
organizalion and in specilc operaling localions, could jeopardize
perlornance delivery.
n addilion, signilcanl nanagenenl locus is required in responding
lo lhe Cull ol exico oil spill ncidenl. Allhough BP sel up lhe Cull Coasl
Fesloralion Organizalion lo nanage lhe groups longlern response, key
nanagenenl and operaling personnel will need lo conlinue lo devole
subslanlial allenlion lo responding lo lhe ncidenl and lo address lhe
associaled consequences lor lhe group. The group relies on recruiling and
relaining highqualily enployees lo execule ils slralegic plans and lo
operale ils business. The ncidenl response has placed signilcanl denands
on our enployees, and lhe repulalional danage sullered by lhe group as a
resull ol lhe ncidenl and any consequenl adverse inpacl on our
perlornance could allecl enployee recruilnenl and relenlion.
Treasury and trading activities - controI of these activities depends
on our abiIity to process, manage and monitor a Iarge number of
transactions. FaiIure to do this effectiveIy couId Iead to business
disruption, hnanciaI Ioss, reguIatory intervention or damage to
our reputation.
n lhe nornal course ol business, we are subjecl lo operalional risk
around our lreasury and lrading aclivilies. Conlrol ol lhese aclivilies is highly
dependenl on our abilily lo process, nanage and nonilor a large nunber ol
conplex lransaclions across nany narkels and currencies. Shorlconings
or lailures in our syslens, risk nanagenenl nelhodology, inlernal conlrol
processes or people could lead lo disruplion ol our business, lnancial loss,
regulalory inlervenlion or danage lo our repulalion.
Following lhe Cull ol exico oil spill, oodys nveslors Service,
Slandard and Poors and Filch Falings downgraded lhe groups longlern
credil ralings. Since lhal line, lhe groups credil ralings have inproved
sonewhal bul are slill lower lhan lhey were innedialely belore lhe Cull ol
exico oil spill. The inpacl lhal a signilcanl operalional incidenl can have
on lhe groups credil ralings, laken logelher wilh lhe repulalional
consequences ol any such incidenl, lhe ralings and assessnenls published
by analysls and inveslors concerns aboul lhe groups cosls arising lron
any such incidenl, ongoing conlingencies, liquidily, lnancial perlornance
and volalile credil spreads, could increase lhe groups lnancing cosls and
linil lhe groups access lo lnancing. The groups abilily lo engage in ils
lrading aclivilies could also be inpacled due lo counlerparly concerns
aboul lhe groups lnancial and business risk prolle in such circunslances.
Such counlerparlies could require lhal lhe group provide collaleral or olher
lorns ol lnancial securily lor ils obligalions, parlicularly il lhe groups credil
ralings are downgraded. Cerlain counlerparlies lor lhe groups nonlrading
businesses could also require lhal lhe group provide collaleral lor cerlain ol
ils conlraclual obligalions, parlicularly il lhe groups credil ralings were
downgraded below inveslnenl grade or where a counlerparly had
concerns aboul lhe groups lnancial and business risk prolle lollowing a
signilcanl operalional incidenl. n addilion, BP nay be unable lo nake a
drawdown under cerlain ol ils connilled borrowing lacililies in lhe evenl
we are aware lhal lhere are pending or lhrealened legal, arbilralion or
adninislralive proceedings which, il delernined adversely, nighl
reasonably be expecled lo have a nalerial adverse ellecl on our abilily lo
neel lhe paynenl obligalions under any ol lhese lacililies. Credil raling
downgrades could lrigger a requirenenl lor lhe conpany lo review ils
lunding arrangenenls wilh lhe BP pension lruslees. Exlended conslrainls
on lhe groups abilily lo oblain lnancing and lo engage in ils lrading
aclivilies on acceplable lerns (or al all would pul pressure on lhe groups
liquidily. n addilion, lhis could occur al a line when cash Hows lron our
business operalions would be conslrained lollowing a signilcanl
operalional incidenl, and lhe group could be required lo reduce planned
capilal expendilures and/or increase assel disposals in order lo provide
addilional liquidily, as lhe group did lollowing lhe Cull ol exico oil spill.
Business review
Joint ventures and other contractuaI arrangements - BP may not
have fuII operationaI controI and may have exposure to
counterparty credit risk and disruptions to our operations
and strategic objectives due to the nature of some of its
business reIationships.
any ol our najor projecls and operalions are conducled lhrough joinl
venlures or associales and lhrough conlracling and subconlracling
arrangenenls. These arrangenenls ollen involve conplex risk allocalion,
decisionnaking processes and indennilcalion arrangenenls. n cerlain
cases, we nay have less conlrol ol such aclivilies lhan we would have il
BP had lull operalional conlrol. Our parlners nay have econonic or
business inleresls or objeclives lhal are inconsislenl wilh or opposed lo,
lhose ol BP, and nay exercise velo righls lo block cerlain key decisions or
aclions lhal BP believes are in ils or lhe joinl venlures or associales besl
inleresls, or approve such nallers wilhoul our consenl. Addilionally, our
joinl venlure parlners or associales or conlraclual counlerparlies are
prinarily responsible lor lhe adequacy ol lhe hunan or lechnical
conpelencies and capabililies which lhey bring lo bear on lhe joinl projecl,
and in lhe evenl lhese are lound lo be lacking, our joinl venlure parlners or
associales nay nol be able lo neel lheir lnancial or olher obligalions lo
lheir counlerparlies or lo lhe relevanl projecl, polenlially lhrealening lhe
viabilily ol such projecls. Furlhernore, should accidenls or incidenls occur
in operalions in which BP parlicipales, whelher as operalor or olherwise,
and where il is held lhal our subconlraclors or joinlvenlure parlners are
legally liable lo share any aspecls ol lhe cosl ol responding lo such
incidenls, lhe lnancial capacily ol lhese lhird parlies nay prove inadequale
lo lully indennily BP againsl lhe cosls we incur on behall ol lhe joinl
venlure or conlraclual arrangenenl. Should a key subconlraclor, such as a
lessor ol drilling rigs, be no longer able lo nake lhese assels available lo
BP, lhis could resull in serious disruplion lo our operalions. vhere BP does
nol have operalional conlrol ol a venlure, BP nay nonelheless slill be
pursued by regulalors or clainanls in lhe evenl ol an incidenl.
Our syslens ol conlrol
The board is responsible lor lhe direclion and oversighl ol BP. The board
has sel an overall goal lor BP, which is lo naxinize longlern shareholder
value lhrough lhe allocalion ol ils resources lo aclivilies in lhe oil, nalural
gas, pelrochenicals and energy businesses. The board delegales aulhorily
lor achieving lhis goal lo lhe group chiel execulive (CCE.
The board nainlains lve pernanenl connillees lhal are
conposed enlirely ol nonexeculives. The board and ils connillees
nonilor, anong olher lhings, lhe idenlilcalion and nanagenenl ol lhe
groups risks - bolh lnancial and nonlnancial. During lhe year, lhe boards
connillees engage wilh execulive nanagenenl, lhe general audilor and
olher noniloring and assurance providers (such as lhe group head ol salely
and operalional risks, lhe group conpliance and elhics ollcer and lhe
exlernal audilor on a regular basis as parl ol lheir oversighl ol lhe groups
risks. Signilcanl incidenls lhal occur and nanagenenls response lo lhen
are considered by lhe appropriale connillee and reporled lo lhe board. n
July lhe board eslablished a new connillee ol nonexeculives, lhe Cull ol
exico connillee, lo nonilor lhe response ol lhe conpany lo lhe Cull ol
exico incidenl lhrough oversighl ol lhe new CCFO. The connillee
engages wilh CCFO nanagenenl on a regular basis lo nonilor lhe
response lo lhe incidenl and nanagenenl ol lhe risks arising. (See Board
per!ornance repor! on pages 90-!05.
The conpany nainlains a conprehensive syslen ol inlernal
conlrol. This conprises lhe holislic sel ol nanagenenl syslens,
organizalional slruclures, processes, slandards and behaviours lhal are
enployed lo conducl our business and deliver relurns lor shareholders.
The syslen is designed lo neel lhe expeclalions ol inlernal conlrol ol lhe
Corporale Covernance Code in lhe UK and ol COSO (Connillee ol
Sponsoring Organizalions ol lhe Treadway Connission in lhe US. l
addresses risks and how we should respond lo lhen as well as lhe overall
conlrol environnenl. Each conponenl ol lhe syslen has been designed lo
respond lo a parlicular lype or colleclion ol risks. alerial risks are
described in lhe Fisk laclors seclion (see pages 27-32.
Key elenenls ol our syslen ol inlernal conlrol are: lhe conlrol
environnenl, lhe nanagenenl ol risk and operalional perlornance
(including in relalion lo lnancial reporling, and lhe nanagenenl ol people
and individual perlornance. Conlrols include lhe BP code ol conducl, our
operaling nanagenenl syslen (OS, our leadership lranework and our
principles lor delegalion ol aulhorily, which are designed lo nake sure
enployees undersland whal is expecled ol lhen.
As parl ol lhe conlrol syslen, lhe CCEs senior lean - known as
lhe execulive lean - is supporled by subconnillees lhal are responsible
lor and nonilor specilc group risks. These include lhe group operalions
risk connillee (COFC, lhe group lnancial risk connillee (CFFC, lhe
resource connilnenls neeling (FC, lhe group people connillee
(CPC, and lhe groups disclosure connillee (CDC, which reviews lhe
disclosure conlrols and procedures over reporling.
Operalions and inveslnenls are conducled and reporled in
accordance wilh, and associaled risks are lhereby nanaged lhrough,
relevanl slandards and processes. These range lron OS which is lhe
slruclured sel ol processes designed lo deliver sale, responsible and
reliable operaling aclivily, lo group slandards, which sel oul processes lor
najor areas such as lraud and nisconducl reporling, lhrough lo delailed
adninislralive inslruclions. The CCE conducls regular perlornance reviews
wilh lhe segnenls and key lunclions lo nonilor perlornance and lhe
nanagenenl ol risk and lo inlervene il necessary. People nanagenenl is
based on perlornance objeclives, lhrough which individuals are
accounlable lor specilc aclivilies wilhin agreed boundaries.
Following lhe Cull ol exico oil spill, lhe conpany eslablished lhe
CCFO in June lo nanage lhe conpanys response aclivilies, including
nanaging cleanup and resloralion cosls, clains nanagenenl and
liligalion. Lessons learned lron lhe incidenl and lhe reconnendalions ol
BPs inlernal invesligalion are being enbedded inlo all areas ol lhe syslen
ol inlernal conlrol and in parlicular in OS.

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Furlher nole on cerlain aclivilies
During lhe period covered by lhis reporl, nonUS subsidiaries or olher
nonUS enlilies ol BP conducled liniled aclivilies in, or wilh persons lron,
cerlain counlries idenliled by lhe US Deparlnenl ol Slale as Slale
Sponsors ol Terrorisn or olherwise subjecl lo US sanclions (Sanclioned
Counlries. These aclivilies conlinue lo be insignilcanl lo lhe groups
lnancial condilion and resulls ol operalions. n lhe lrsl hall ol 2010, new
sanclions againsl ran and againsl conpanies lhal nake inveslnenls lhal
enhance rans abilily lo develop pelroleun resources or provide or lacililale
lhe produclion or inporl ol relned pelroleun producls inlo ran were
adopled in lhe US under lhe Conprehensive ran Sanclions Accounlabilily
and Diveslnenl Acl ol 2010. The European Union and lhe U also adopled
new reslriclive neasures. The EU sanclions reslricl lhe provision ol cerlain
lechnologies lo ranian enlilies and also prohibil providing assislance lo
help develop cerlain exploralion and produclion, relning, and LC lacililies
or operalions in ran.
BP has inleresls in, and is lhe operalor ol, lwo lelds and a pipeline
localed oulside ran in which alliran nlerlrade Co. Lld, CO SPV Liniled
(CO and ranian Oil Conpany (UK Liniled have inleresls. One ol lhese
lelds, lhe orlh Sea Fhun leld, has suspended produclion pending
clarilcalion ol lhe inpacl ol lhe EU reslriclive neasures. The Shah Deniz
leld conlinues in operalion under lhe EU neasures. BP has purchased or
shipped quanlilies ol crude oil, relnery and pelrochenicals leedslocks,
blending conponenls and LPC ol ranian origin or lron ranian
counlerparlies prinarily lor sale lo lhird parlies in Europe and a snall
porlion is used by BP in ils own lacililies in Soulh Alrica and Europe. BP
incurs sone porl cosls lor cargos loaded in ran and sonelines charlers
ranianowned vessels oulside ol ran. Snall quanlilies ol lubricanls are
sold lo nonranian lhird parlies lor use in ran. Unlil recenlly BP held an
equily inleresl in an ranian joinl venlure lhal has a blending lacilily and
narkels lubricanls lor sale lo doneslic consuners. n January 2010, BP
reslruclured ils inleresl in lhe joinl venlure and currenlly nainlains ils
involvenenl lhrough cerlain conlraclual arrangenenls. BP does nol seek
lo oblain lron lhe governnenl ol ran licences or agreenenls lor oil and
gas projecls in ran, is nol conducling any lechnical sludies in ran, and
does nol own or operale any relneries or pelrochenicals planls in ran.
BP sells lubricanls in Cuba lhrough a 50:50 joinl venlure and lrades
in snall quanlilies ol lubricanls. n Syria, BP sells lubricanls lhrough a
dislribulor and BP oblains crude oil and relnery leedslocks lor sale lo lhird
parlies in Europe and lor use in cerlain ol ils nonUS relneries. n addilion,
BP sells crude oil and relned producls inlo and lron Syria and incurs porl
cosls lor vessels ulilizing Syrian porls. BP sold snall quanlilies ol LPC lo
an agenl on behall ol a Sudanese parly lor naking aerosols in Sudan, bul
no longer nakes such sales. A nonBP operaled alaysian joinl venlure has
sold snall quanlilies ol pelrochenicals inlo Burna, lhese sales have now
lerninaled. A nonconlrolled and nonoperaled Brazilian bioluels joinl
venlure in which BP has an inleresl sold a cargo ol sugar cane byproducls
lo ran and lo Syria.
BP supplies lo airlines and shipping conpanies lron Sanclioned
Counlries luels and lubricanls al airporls and porls localed oulside lhese
counlries. BP sells lo lhird parlies who nay resell lo enlilies lron
Sanclioned Counlries. A nonconlrolled, nonoperaled joinl venlure in
Hanburg, Cernany provided luel delivery services (bul did nol sell luel lo
ranian airlines. BP lerninaled all luel sales lo ranian airlines as ol July
2010 and lo Sudanese airlines in Decenber 2010. Sales lo ranian shipping
conpanies have also been lerninaled. BP has regislered, and paid required
lees lor, palenls and lradenarks in Sanclioned Counlries.
BP nonilors ils aclivilies wilh Sanclioned Counlries and keeps
lhen under review lo ensure conpliance wilh applicable laws and
regulalions ol lhe US, lhe EU and olher counlries where BP operales.
Business review
Cull ol exico oil spill
Incident summary
On 20 April 2010, lollowing a well blowoul in lhe Cull ol exico, an
explosion and lre occurred on lhe senisubnersible rig Deepwaler Horizon
and on 22 April lhe vessel sank. Tragically, 11 people losl lheir lives and 17
olhers were injured. Hydrocarbons conlinued lo How lron lhe reservoir
and up lhrough lhe casing and lhe blowoul prevenler (BOP lor 37 days,
causing a very signilcanl oil spill.
The Deepwaler Horizon rig was operaled by Transocean Holdings
LLC and was drilling lhe acondo exploralion well. The well lorns parl ol
lhe ississippi Canyon Block 252 (C252 lease, in respecl ol which BP
Exploralion & Produclion nc. was lhe naned parly and operalor wilh a
65' working inleresl. The well was in a waler deplh ol 5,000 leel and
43 naulical niles lron shore.
BP lackled lhe leak al ils source in nulliple, parallel ways, which
over line included: allenpling lo ll caps on lhe well, using conlainnenl
syslens lo pipe oil lo vessels on lhe surlace, sealing lhe well lhrough a
slalickill procedure and drilling reliel wells. BP recognized early in lhe
incidenl lhal drilling reliel wells consliluled lhe ullinale neans lo seal and
isolale lhe well pernanenlly and slop lhe How ol oil and gas. Two reliel
wells were drilled, lhe lrsl ol which was slarled on 2 ay, lhe second was
slarled on 16 ay as a conlingency.
On 15 July, BP successlully shul in lhe acondo well and lhen
connenced a slalickill procedure. On 9 Augusl, BP conlrned lhal lhe
casing had been successlully sealed wilh cenenl. On 16 Seplenber, lhe
lrsl reliel well inlercepled lhe annulus ol lhe acondo well. Aller
conpleling cenenling operalions on 19 Seplenber, BP, lhe lederal
governnenl scienlilc lean and lhe alional ncidenl Connander
concluded lhal lhe wellkill operalions had successlully sealed lhe annulus.
BP lhen began lhe abandonnenl ol lhe acondo well, which
included renoving porlions ol lhe casing and selling cenenl plugs. This
work was conpleled on 3 ovenber. n parallel, operalions lo plug and
abandon (P&A lhe reliel well lhal inlercepled lhe acondo well also look
place and were conpleled on 30 Seplenber. P&A ol lhe second reliel well
is in progress and is expecled lo conplele in early arch 2011. All
response aclivilies al lhe acondo sile (wilh lhe exceplion ol lhe lnal
seabed survey and seisnic sweep, which are scheduled lo lake place al
lhe end ol lrsl quarler in 2011, were conpleled on 3 January wilh lhe
recovery ol lhe buoy and anchor syslen lor lhe lreeslanding riser.
The group incone slalenenl lor lhe year ended 31 Decenber 2010
includes a prelax charge ol $40.9 billion in relalion lo lhe Cull ol exico oil
spill. See Financial consequences on page 33 and Financial slalenenls -
ole 2 on page 153 lor nore delails.
Key statistics
2010
Tolal prelax cosl recognized in incone slalenenl ($ nillion 40,935
Tolal cash How expended (prelax ($ nillion 17,658
Tolal paynenls lron $20billion lrusl lund ($ nillion 3,023
Tolal nunber ol clainanls lo CCCF
a
468,869
unber ol people deployed (al peak (approxinalely 48,000
unber ol aclive response vessels deployed during lhe
response (approxinalely 6,500
Barrels ol oil collecled or Hared (approxinalely 827,000
Barrels ol oily liquid skinned lron surlace ol sea
(approxinalely 828,000
Barrels ol oil renoved lhrough surlace burns (UAC eslinale 265,450
Cull Coasl Clains Facilily (CCCF.
GuIf Coast Restoration Organization (GCRO)
Following lhe accidenl, BP eslablished a separale organizalional unil - lhe
Cull Coasl Fesloralion Organizalion (CCFO - lo provide lhe necessary
leadership and dedicaled resources lo lacililale BPs lulllnenl ol ils
cleanup responsibililies and lo supporl lhe longlern ellorl lo reslore lhe
Cull coasl. The CCFO addresses all aspecls ol lhe response, including:
execuling our ongoing cleanup operalions and all associaled renedialion
aclivilies, coordinaling wilh governnenl ollcials, keeping lhe public
inlorned, and inplenenling lhe $20billion Deepwaler Horizon Oil Spill
Trusl eslablished lo neel cerlain ol our lnancial obligalions. Al lhe end ol
2010, lhe CCFO had a pernanenl slall ol 100 enployees and aboul 5,900
conlraclors including lhe Cull Coasl incidenl nanagenenl lean. The
najorily ol lhe cleanup, nainlenance and noniloring is being carried oul
by conlracl slall. Since inceplion, nany olher BP slall and conlraclors have
been, and will conlinue lo be, lenporarily seconded lo assisl lhe
pernanenl lean and lo provide addilional resources or specialisl skills
where required.
Our response
BP innedialely look responsibilily lor responding lo lhe incidenl, laking
sleps lo renedy lhe harn lhal lhe spill caused lo lhe Cull ol exico, lhe
Cull coasl environnenl, and lhe livelihoods ol lhe people in lhe region. The
US governnenl lorned a Uniled Area Connand (UAC lo link lhe
organizalions responding lo lhe incidenl and provide a lorun lor lhose
organizalions lo nake coordinaled decisions. l consensus could nol be
reached on a parlicular naller, lhe Federal OnScene Coordinalor (FOSC
nade lhe lnal decision on responserelaled aclions. BPs conprehensive
response locused on lhree slralegic lronls: slopping lhe How ol
hydrocarbons al lhe source, working lo caplure, conlain and renove oil
ollshore and near lhe shore, and cleaning and resloring inpacled
shorelines and beaches along lhe Cull coasl.
nilially BP nobilized a Heel ol 30 vessels and over a nillion leel ol
proleclive boon. Therealler lhe scale ol aclivily grew rapidly, and al ils
peak included nore lhan 6,500 vessels, nore lhan 13 nillion leel ol boon
and alnosl 43,000 personnel.
BP also lorned an invesligalion lean charged wilh galhering lhe
lacls surrounding lhe accidenl, analysing available inlornalion lo idenlily
possible causes and naking reconnendalions lhal would help prevenl
sinilar accidenls in lhe lulure. The lean concluded lhal no single aclion or
inaclion caused lhis accidenl. Falher, a conplex and inlerlinked series ol
nechanical lailures, hunan judgnenls, engineering design, operalional
inplenenlalion and lean inlerlaces cane logelher lo allow lhe accidenl.
ulliple conpanies, work leans and circunslances were involved over
line. See nlernal invesligalion and reporl on page 37 lor lurlher
inlornalion on lhe invesligalion and ils lndings.

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Subsea
Subsea inlervenlion aclivilies were inilialed by BP innedialely lollowing
lhe explosion. nilial allenpls lo slop lhe How ol oil locused on allenpling
lo acluale lhe lailed BOP wilh renolely operaled vehicles (FOVs. Al lhe
sane line, planning also began lor lwo reliel wells. Allenpls lo slop lhe
How ol oil by aclivaling lhe various conponenls ol lhe BOP conlinued unlil
5 ay, while plans and lools lor polenlial conlainnenl oplions were being
developed in parallel.
Fron 5 ay BP allenpled lo conlain lhe How ol oil using a nunber
ol dillerenl slralegies. Firslly, one ol lhe lhree leak poinls was plugged
wilh lhe inslallalion ol a drill pipe overshol and packoll device, reducing
lhe conplexily ol lhe seabed silualion. Following a lailed allenpl lo
conlain lhe How ol oil using a conlainnenl done, a riser inserl lube lool
was successlully deployed in lhe end ol lhe riser on 16 ay. This allowed
roughly 3,000 barrels ol oil per day (b/d lo be caplured and relurned lo lhe
surlace lor processing on lhe drillship Discoverer Enlerprise. An allenpl
was also nade lo lop kill lhe well by punping heavy drilling nud inlo lhe
well al high rales bul lhis ellorl was unsuccesslul. By shearing and
renoving a danaged seclion ol riser lron lhe lower narine riser package
(LFP on lop ol lhe BOP slack, il was possible lo allach a new
conlainnenl syslen (sonelines relerred lo as a lop hal. This syslen
allowed lor up lo 15,000b/d ol oil lo be produced lhrough lhis nonsealing
LFP cap via a riser lo lhe Discoverer Enlerprise lor processing.
Conlainnenl capacily was evenlually enhanced lo over 40,000b/d ol oil. n
lolal, approxinalely 327,000 barrels ol crude oil were recovered using lhe
various conlainnenl syslens. On 10 July, lhe lophal conlainnenl cap was
renoved lron lhe LFP lo allow lhe inslallalion ol a lhreeran capping
slack, which was conpleled on 12 July.
The How ol oil inlo lhe Cull ol exico was lnally slopped on
15 July. Aller verilying inlegrily ol lhe capping slack, a slalickill procedure
was execuled. Following a series ol lesls and lhe punping ol heavy drilling
nud, slalic condilions were achieved in lhe acondo well on 3 Augusl and
cenenl was punped in lwo days laler. On 2 Seplenber, aller a successlul
lesl ol lhe cenenl plug, lhe capping slack was renoved lron lhe lop ol
lhe BOP.
On 3 Seplenber, lhe BOP was renoved lron lhe acondo
wellhead lo be replaced by lhe BOP slack lron lhe Developnenl Driller .
The Deepwaler Horizon BOP was subsequenlly recovered lo surlace,
preserved and shipped lo lhe ASA ichoud Facilily in Louisiana lor
exaninalion by lhe US governnenl and olher parlies.
Progress on lhe lwo reliel wells conlinued in parallel wilh lhe
conlainnenl operalions oullined above. The lrsl reliel well was delayed on
several occasions due lo adverse wealher and while crilical lesling and
operalions were conducled on lhe acondo well. On 16 Seplenber, lhe
lrsl reliel well successlully inlersecled lhe acondo wellbore. On
19 Seplenber, aller cenenling operalions on lhe reliel well were
conplele, lhe acondo well was ollcially declared killed.
The P&A ol lhe lrsl reliel well was conpleled by lhe Developnenl
Driller rig on 30 Seplenber. P&A ol lhe acondo well was concluded on
3 ovenber by lhe Developnenl Driller , and lhe P&A ol lhe second reliel
well is in progress and is expecled lo conplele in early arch 2011.
vork lo recover and secure lhe subsea inlraslruclure used lor lhe
various conlainnenl syslens connenced lollowing conplelion ol lhe
acondo well P&A progranne and was conpleled on 3 January 2011.
During lhe laller slages ol lhe response, work connenced lo reslore and
deconlaninale lhe nany vessels involved in lhe incidenl. This is largely
conplele, wilh lhe renaining 25 vessels expecled lo be conpleled by lhe
end ol April 2011.
The only oulslanding work associaled wilh lhe acondo sile is lhe
seabed and seisnic surveys ol lhe area. n consideralion ol, and subjecl lo,
lhe wealher condilions, il is anlicipaled lhal lhe seabed and seisnic
surveys will lake place al lhe end ol lrsl quarler ol 2011.
Shoreline and surlace
The priorilies lor lhe shoreline and surlace response were renoving oil
lron lhe surlace ol lhe Cull, prevenling oil lron reaching lhe shoreline and
cleaning up any oil lhal did reach lhe shores. The response slralegy
included aerial surveillance lo undersland where concenlralions ol oil were
localed, nechanical skinning, conlrolled surlace burning, applicalion ol
dispersanls, and nulliple inwaler and onshore booning lechniques.
Onshore, nulliple lechniques lor cleaning and renoving oil lron narshes,
wellands, and beaches were deployed. BP worked wilh local organizalions
lo relne exisling area conlingency plans lo enable lhe nosl elleclive
response lo lhe spill.
Exlensive surlace skinning aclivilies look place, ranging lron
largescale ollshore skinners lo inland and shallow waler equipnenl. The
UAC also leveraged ils Vessels ol Opporlunily (VoO progranne lo assisl
wilh lhis and lo supporl lhe lsh and wildlile, Shoreline Cleanup
Assessnenl Tean (SCAT, and Fapid Assessnenl Tean.
Conlrolled in silu burning ol oil on lhe surlace ol lhe waler was
conducled where concenlralions ol oil wilh suilable characlerislics could
be idenliled. Approxinalely 400 conlrolled burns were perlorned, which
in lolal renoved an eslinaled 265,450 barrels ol oil according lo lhe UAC.
Chenical dispersanls were deployed under lhe close supervision ol
lhe UAC. Dispersanls are nixlures ol solvenls, surlaclanls and olher
addilives lhal break up lhe surlace lension ol an oil slick or sheen and
nake oil nore soluble in waler. On lhe surlace, dispersanls help break oil
down inlo nicroscopic droplels lhal can be dispersed lhrough lhe
seawaler and nore easily degraded by oilealing bacleria. Subsea
applicalion ol dispersanls was used lo break lhe oil inlo snall parlicles lhal
disperse lhroughoul lhe waler colunn, lorning a nore dilule oilandwaler
solulion lhal degrades nore easily.
BP worked closely wilh slale and local ollcials, seeking lo prevenl
shoreline oiling. The ellorl involved signilcanl deploynenl ol boon. BP
worked closely wilh experls lron lhe US Coasl Cuard, lhe US Fish &
vildlile Service, lhe alional Oceanic and Alnospheric Adninislralion
(OAA, lhe alional Park Service, as well as slale agencies lo idenlily lhe
nosl sensilive wildlile habilals and priorilize appropriale spill
counlerneasures. These neasures included booning wildlile reluges and
using nelhods lo deler wildlile lron enlering oiled areas. BP also
eslablished aninal lrealnenl lacililies, wilh signilcanl capacily lo lreal
birds, nannals and lurlles.
Business review
Once oiling ol lhe shoreline had occurred, SCATs assessed lhe danage
and developed cleanup nelhods lor each lype and area ol inpacl,
including lrealnenl plans designed lo oplinize oil renoval wilh nininal
inlrusion and inpacl lo lhe narsh. Thousands ol personnel organized inlo
operaling leans were nobilized lor lhe cleanup ellorls.
Beachcleaning operalions were underlaken in collaboralion wilh
residenls lron lhe highesl inpacled connunilies, wilh alnosl 11,000
connunily responders being lrained in beach cleanup ellorls.
Throughoul lhis response, BP nel wilh local ollcials and
organized lown halls and inlornalion sessions in lhe coaslal connunilies.
As lhe response conlinued, BP opened connunily oulreach and clains
cenlres in each ol lhe coaslal counlies and eslablished lelephone call lines
lor all aclivilies.
BP has connilled lo pay all legilinale clains lo individuals,
businesses and governnenls and lo eslablish a $20billion lrusl lund,
lollowing consullalion wilh lhe US governnenl. As parl ol lhe US alural
Fesource Danage Assessnenl (FDA process, BP is working wilh
lederal and slale lruslees lo idenlily wildlile and habilals lhal nay have
been injured, lo reslore lhe environnenl back lo an objeclive baseline
condilion, lo reslore access lo and use ol lhe nalural resources, and lo
conpensale lor losses caused by lhe incidenl. Finally, BP has provided
longlern lunding lor response projecls, research and connunily supporl
progrannes as parl ol our longlern connilnenl lo lhe Cull.
The Food and Drug Adninislralion (FDA, lhe OAA, and slale
agencies also conducled lsheries lesling and noniloring lhroughoul lhe
response. These lesling and noniloring progrannes included snell and
edible lissue lesls lor oil deleclion. Approxinalely 39,000 square niles ol
lederal lsheries were closed al lhe peak ol lhe response, as ol 1 February
2011, 99.6' ol lederal lsheries were open lo lshing. To dale, BP has
connilled $127 nillion lor ongoing noniloring, narkeling, and lourisn
supporl in lhe Cull Slales.
Fesloralion, research and olher donalions
n conjunclion wilh lhe Cull ol exico Alliance (a parlnership ol lhe slales
ol Alabana, Florida, Louisiana, ississippi and Texas wilh lhe goal ol
signilcanlly increasing regional collaboralion lo enhance lhe ecological and
econonic heallh ol lhe Cull ol exico, we have eslablished lhe Cull ol
exico Fesearch nilialive (CF providing $500 nillion lo sludy and nonilor
lhe spills polenlial longlern inpacls on lhe environnenl and local public
heallh. Specilcally, lhe 10year progranne will exanine lhe spread and
lale ol lhe oil and olher conlaninanls, lhe degree ol biodegradalion,
ellecls ol lhe spill on local ecosyslens, and deleclion, cleanup and
niligalion lechnology. vhile lhe delails ol lhe progranne were being
developed, BP awarded a series ol lasllrack granls lo lve research groups,
lolalling $40 nillion. BP and lhe Cull ol exico Alliance appoinled an equal
nunber ol research scienlisls lo lhe governing board ol lhe CF and, in
Decenber, lhe CF held ils lrsl neeling.
BP has now conlribuled a lolal ol $260 nillion under ils
agreenenl lo lund lhe $360nillion cosl ol six berns in lhe Louisiana
barrier islands projecl.
BP has eslablished a $100nillion charilable lund lo supporl
unenployed rig workers experiencing econonic hardship as a resull ol lhe
noraloriun on deepwaler drilling inposed by lhe US lederal governnenl.
The Fig vorker Assislance Fund will be adninislered lhrough lhe Cull
Coasl Fesloralion and Proleclion Foundalion, a supporling organizalion ol
The Balon Fouge Area Foundalion.
n line wilh BPs previous connilnenl lo donale ils share ol lhe
revenue (nel ol royallies and lransporlalion cosls lron lhe sale ol
recovered oil lo lhe alional Fish and vildlile Foundalion (FvF, lolal
donalions lo dale have anounled lo $22 nillion.
Clains process and lrusl lund
BP inilially eslablished a clains process in accordance wilh lhe
requirenenls ol lhe Oil Pollulion Acl 1990 (OPA 90, allowing clainanls
lo nake a clain againsl BP as one ol lhe designaled responsible parlies.
BP has endeavoured lo pronplly pay all legilinale clains including lhose
lron individuals, businesses and governnenl enlilies. BP paid $399 nillion
in clain paynenls lo individuals and businesses belore 23 Augusl 2010,
when lhe adninislralion ol lhese clains was lranslerred lo lhe Cull Coasl
Clains Facilily (CCCF headed by Kennelh Feinberg. r Feinberg was
joinlly appoinled by BP and lhe Presidenl ol lhe Uniled Slales lo nanage
lhe CCCF. According lo CCCF slalislics, as ol 31 Decenber 2010, 463,369
clainanls had subnilled clains and $2,776 nillion in paynenls had been
nade. BP conlinues lo evaluale and pay clains lron governnenl enlilies.
Slale and local governnenl enlilies, as al 31 Decenber 2010, had received
$550 nillion lhrough lhe lrusl lund (see below and BP direclly lo cover
clains and response and renoval advances and paynenls.
n supporl ol lhe selllenenl ol clains BP eslablished lhe
Deepwaler Horizon Oil Spill Trusl (Trusl, and connilled $20 billion lo lhe
Trusl over a period ol lhreeandahall years. vhile lunds are building , BP
has secured ils connilnenls lo lhe Trusl by granling, conveying, and/or
assigning lo lhe Trusl lrsl priorily perlecled securily inleresls in produclion
paynenls perlaining lo cerlain Cull ol exico oil and nalural gas
produclion. During 2010, BP nade paynenls lo lhe Trusl lolalling $5 billion
and is connilled lo naking addilional paynenls ol $1.25 billion, in one or
nore inslalnenls, during and prior lo lhe end ol each calendar quarler
connencing wilh lhe lrsl calendar quarler ol 2011 and conlinuing unlil
lhe lasl calendar quarler ol 2013. The lrusl lund is available lo salisly
legilinale individual and business clains adninislered by lhe CCCF, slale
and local governnenl clains resolved by BP, lnal judgnenls and
selllenenls, slale and local response cosls, and nalural resource danages
and relaled cosls. Fines and penallies will be paid separalely and nol lron
lhe Trusl. Paynenls lron lhe Trusl are nade as cosls are lnally delernined
or clains are adjudicaled, whelher by lhe CCCF, or by a courl, or as agreed
by BP. The CCCF evaluales all individual and business OPA 90 clains,
excluding all governnenl clains. The eslablishnenl ol lhis Trusl does nol
represenl a cap or Hoor on BPs liabililies, and BP does nol adnil lo a
liabilily ol any anounl in lhe Trusl. The Trusl agreenenl provides lor lhe
lern ol lhe Trusl lo conlinue unlil 30 April 2016, subjecl lo lhe righl ol lhe
ndividual Truslees lo exlend or expedile lhis expiry dale under cerlain
circunslances. Any anounls lell in lhe Trusl once all legilinale clains
have been resolved and paid will reverl lo BP. See Financial slalenenls
- ole 2 on page 153, ole 37 on page 199 and ole 44 on page 213 lor
lurlher inlornalion on lhe Trusl and on conlingenl liabililies arising
lron lhe incidenl. See Proceedings and invesligalions relaling lo lhe Cull
ol exico oil spill on pages 130131 lor inlornalion on legal proceedings.

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nlernal invesligalion and reporl
BPs invesligalion lound lhal no single laclor caused lhe acondo well
lragedy, ralher, il concluded lhal decisions nade by nulliple conpanies
and work leans conlribuled lo lhe accidenl which arose lron a conplex
and inlerlinked series ol nechanical lailures, hunan judgnenls,
engineering design, operalional inplenenlalion and lean inlerlaces.
The reporl - based on a lournonlh invesligalion led by BPs head
ol Salely and Operalions and conducled independenlly by a lean ol over
50 lechnical and olher specialisls drawn lron inside BP and exlernally -
lound lhal:
The annulus cenenl barrier - and in parlicular lhe cenenl slurry lhal
was used - al lhe bollon ol lhe acondo well lailed lo conlain
hydrocarbons wilhin lhe reservoir, as il was designed lo do. The
annulus cenenl probably experienced nilrogen breakoul and nigralion,
allowing gas and liquids lo enler lhe wellbore annulus. The invesligalion
lean concluded lhal lhere were weaknesses in cenenl design and
lesling, qualily assurance and risk assessnenl.
The shoe lrack barriers al lhe bollon ol lhe acondo well lailed lo
conlain hydrocarbons as lhey were designed lo do, allowing
hydrocarbons lo How up lhe produclion casing. The shoe lrack barriers
consisled ol lwo barriers in lhe shoe lrack: lhe cenenl in lhe shoe
lrack and lhe Hoal collar. BPs invesligalion lean idenliled a nunber ol
polenlial lailure nodes lhal could explain how bolh lhe shoe lrack
cenenl and lhe Hoal collar allowed hydrocarbon ingress inlo lhe
produclion casing, bul has nol delernined which ol lhese lailure
nodes occurred.
The resulls ol lhe negalive pressure lesl were incorreclly accepled by
BP and Transocean, allhough well inlegrily had nol been eslablished.
Over a 40ninule period, lhe Transocean rig crew lailed lo recognize
and acl on lhe inHux ol hydrocarbons inlo lhe well unlil lhe
hydrocarbons had passed lhrough lhe BOP and inlo lhe riser and were
rapidly Howing lo lhe surlace.
vell conlrol response aclions lailed lo regain conlrol ol lhe well. The
lrsl well conlrol aclions were lo close lhe BOP and diverler, rouling
lhe Huids exiling lhe riser lo a nud gas separalor ralher lhan lo lhe
overboard diverler line. l Huids had been diverled overboard, ralher
lhan lo lhe nud gas separalor, lhere nay have been nore line
lo respond, and lhe consequences ol lhe accidenl nay have
been reduced.
Diversion ol lhe hydrocarbons lo lhe nud gas separalor resulled in gas
venling onlo lhe rig. The design ol lhe nud gas separalor syslen
allowed diversion ol lhe riser conlenls lo lhe nud gas separalor vessel
allhough lhe well was in a highHow condilion. This overwhelned lhe
nud gas separalor syslen, resulling in gas venling onlo lhe rig. This
increased lhe polenlial lor lhe gas lo reach an ignilion source.
The How ol gas inlo lhe engine roons lhrough lhe venlilalion syslen
crealed a polenlial lor ignilion lhal lhe rigs lre and gas syslen did
nol prevenl.
Even aller lhe explosion and lre had disabled ils crewoperaled
conlrols, lhe rigs BOP on lhe seabed should have aclivaled
aulonalically lo seal lhe well. Bul il lailed lo operale, probably because
crilical conponenls were nol working. Through a review ol rig audil
lndings and nainlenance records, lhe invesligalion lean lound
indicalions ol polenlial weaknesses in lhe lesling regine and
nainlenance nanagenenl syslen lor lhe BOP.
The invesligalion lean developed a series ol reconnendalions based on
lhe above lndings. These reconnendalions cover conlraclor oversighl and
assurance, risk assessnenl, well noniloring and wellconlrol praclices,
inlegrily lesling praclices and BOP syslen nainlenance. The reporl nakes
lhe lollowing reconnendalions, anong olhers:
Procedures and engineering !echnica| prac!ices
Updale and clarily currenl praclices lo ensure lhal a clear and
conprehensive sel ol cenenling guidelines and associaled Engineering
Technical Praclices (ETPs are available as conlrolled slandards.
Feview and updale requirenenls lor subsea BOP conlguralion.
Updale lhe relevanl lechnical praclices lo incorporale cerlain inproved
design requirenenls lor subsea wellheads.
Feview and updale ETPs regarding negalivepressure lesling.
Clarily and slrenglhen slandards lor wellconlrol and wellinlegrily
incidenl reporling and invesligalion.
Propose lo lhe Anerican Pelroleun nslilule lhe developnenl ol a
reconnended praclice lor design and lesling ol loan cenenl slurries
in highpressure, highlenperalure applicalions.
Feview and assess lhe consislency, rigour and ellecliveness ol lhe
currenl risk nanagenenl and nanagenenl ol change processes
praclised by Drilling and Conplelions (D&C.
Capabi|i!, and conpe!enc,
Feassess and slrenglhen lhe currenl lechnical aulhorilys role in lhe
areas ol cenenling and zonal isolalion.
Enhance D&C conpelency progrannes lo deepen lhe capabililies ol
personnel in key operalional and leadership posilions and augnenl
exisling knowledge and prolciency in nanaging deepwaler drilling
and wells.
Develop an advanced deepwaler wellconlrol lraining progranne lhal
supplenenls currenl induslry and regulalory lraining and enbeds
lessons learned lron lhe Cull ol exico incidenl.
Eslablish BPs inhouse experlise in lhe areas ol subsea BOPs and BOP
conlrol syslens lhrough lhe crealion ol a cenlral experl lean, including
a delned segnenl engineering lechnical aulhorily role lo provide
independenl assurance ol lhe inlegrily ol drilling conlraclors BOPs and
BOP conlrol syslens.
Fequesl lhal lhe nlernalional Associalion ol Drilling Conlraclors review
and consider lhe need lo develop a progranne lor lornal subsea
engineering cerlilcalion ol personnel who are responsible lor lhe
nainlenance and nodilcalion ol deepwaler BOPs and conlrol syslens.
Audi! and veri!ca!ion
Slrenglhen BPs rig audil process lo inprove lhe closure and
verilcalion ol audil lndings and aclions across BPowned and
BPconlracled drilling rigs.
Process sa!e!, per!ornance nanagenen!
Eslablish D&C leading and lagging indicalors lor well inlegrily, well
conlrol and rig salely crilical equipnenl.
Fequire drilling conlraclors lo inplenenl an audilable inlegrily
noniloring syslen lo conlinuously assess and inprove lhe inlegrily
perlornance ol wellconlrol equipnenl againsl a sel ol eslablished
leading and lagging indicalors.
Cenen!ing services assurance
Conducl an innediale review ol lhe qualily ol lhe services provided by
all cenenling service providers. Conlrn lhal adequale oversighl and
conlrols are in place wilhin lhe service providers organizalion and BP.
Ve||-con!ro| prac!ices
Assess and conlrn lhal essenlial wellconlrol and wellnoniloring
praclices, such as well noniloring and shulin procedures, are clearly
delned and rigorously applied on all BPowned and BPconlracled
ollshore rigs.
Business review
Fig process sa!e!,
Fequire hazard and operabilily reviews ol lhe surlace gas and drilling
Huid syslens lor all BPowned and BPconlracled drilling rigs.
nclude in lhe hazard and operabilily reviews a sludy ol all surlace
syslen hydrocarbon venls, reviewing suilabilily ol localion and design.
B|ovou! preven!er design and assurance
Eslablish nininun levels ol redundancy and reliabilily lor BPs BOP
syslens. Fequire drilling conlraclors lo inplenenl an audilable risk
nanagenenl process lo ensure lhal lheir BOP syslens are operaled
above lhese nininun levels.
Slrenglhen BPs nininun requirenenls lor drilling conlraclors BOP
lesling, including energency syslens.
Slrenglhen BPs nininun requirenenls lor drilling conlraclors BOP
nainlenance nanagenenl syslens.
Delne BPs nininun requirenenls lor drilling conlraclors
nanagenenl ol changes lor subsea BOPs.
Develop a clear plan lor renolely operaled vehicle inlervenlion as parl
ol lhe energency BOP operalions in each ol BPs operaling regions,
including all energency oplions lor shearing pipe and sealing lhe
wellbore.
Fequire drilling conlraclors lo inplenenl a qualilcalion process lo
verily lhal shearing perlornance capabilily ol blind shear rans is
conpalible wilh lhe inherenl varialions in wall lhickness, nalerial
slrenglh and loughness ol lhe rig drill pipe invenlory.
nclude lesling and verilcalion ol lhese BOP reconnendalions in lhe
rig audil process.
NationaI Commission report
BP has cooperaled lully wilh lhe alional Connission on lhe BP
Deepwaler Horizon Oil Spill and Ollshore Drilling (alional Connission,
which released lhe lull reporl ol ils invesligalion on 11 January 2011. The
alional Connission acknowledged lhe conplexilies and risks inherenl
lo deepwaler energy exploralion and produclion, il also concluded lhal
neilher induslry nor governnenl was lully prepared lo assess or nanage
lhose risks. The alional Connission idenliled cerlain nissleps and
oversighls by individuals al BP, Transocean and Halliburlon lhal led lo lhe
blowoul and concluded lhal ils rool cause involved syslenic nanagenenl
lailures in lhe induslry. These nanagenenl issues, lhe alional
Connission lound, exlended beyond BP lo conlraclors lhal serve lhe
enlire induslry. This included BPs lailure lo adequalely address risks
crealed by lale changes lo well design and procedures, inadequale lesling
ol lhe acondo cenenl slurry by BP and Halliburlon, inadequale
connunicalion belween BP, Halliburlon and Transocean, inadequale
connunicalion belween Transocean and ils crew, and inadequale
decisionnaking processes al lhe acondo well. The alional
Connission also lound regulalory lailures lo be a conlribuling laclor lo
lhe acondo lragedy, in parlicular lhe lack ol adninislralive resources
and lechnical experlise al lhe inerals anagenenl Service.
The alional Connissions reporl nade a nunber ol
reconnendalions in nine dislincl areas lor addressing lhe causes and
consequences ol lhe spill, including principally lhe lollowing: inproving lhe
salely ol ollshore operalions by enhancing lhe governnenls role and by
eslablishing an induslryrun, privaleseclor oversighl enlily, saleguarding
lhe environnenl by increasing supporl lor environnenlal science and
regulalory review relaled lo Ouler Conlinenlal Shell oil and gas aclivilies,
slrenglhening spill response planning and capacily, advancing well
conlainnenl capabililies by increasing governnenl experlise and requiring
enhanced conlainnenl plans by operalors, dedicaling lunding by lhe
US Congress lo Cull resloralion, ensuring lnancial responsibilily by raising
lhe $75nillion liabilily cap lor ollshore lacilily accidenls, pronoling
Congressional awareness ol lhe risks ol ollshore drilling, and developing
experlise and research progrannes devoled lo exploralion and spill
conlainnenl in lhe Arclic.

Civen lhe energing consensus lhal lhe Cull ol exico accidenl was lhe
resull ol nulliple causes involving nulliple parlies, we supporl lhe alional
Connissions ellorls lo slrenglhen induslrywide salely praclices. ve are
connilled lo working wilh governnenl ollcials and olher operalors and
conlraclors lo idenlily and inplenenl operalional and regulalory changes
lhal will enhance salely praclices lhroughoul lhe oil and gas induslry.
Even prior lo lhe conclusion ol lhe alional Connissions invesligalion,
BP insliluled changes designed lo lurlher slrenglhen salely and risk
nanagenenl. These changes include lhe crealion ol an enhanced Salely
and Operalional Fisk lunclion, reporling direclly lo group chiel execulive
Bob Dudley, lhal nainlains an independenl view ol lhe inplenenlalion ol
inlernal and exlernal requirenenls and ol salely and operalional risks.
On 17 February 2011, lhe Connissions Chiel Counsel published a
separale reporl on his invesligalion aboul lhe causes ol lhe incidenl. The
Chiel Counsels invesligalion concluded lhal lhe blowoul resulled lron a
series ol engineering and nanagenenl nislakes by lhe conpanies
involved in lhe incidenl, including BP, Halliburlon and Transocean.
Consequences of the accident for BP and its sharehoIders
Financial consequences
The group incone slalenenl lor 2010 includes a prelax charge ol
$40.9 billion in relalion lo lhe Cull ol exico oil spill. This conprises cosls
incurred up lo 31 Decenber 2010, eslinaled obligalions lor lulure cosls
lhal can be eslinaled reliably al lhis line, and righls and obligalions
relaling lo lhe lrusl lund, described below.
Cosls incurred during lhe year nainly relaled lo oil spill response
aclivilies, which included lhe drilling ol reliel wells and olher subsea
inlervenlions, surlace response aclivilies including nunerous vessels,
and shoreline response involving deploynenl ol boon and beach
cleaning aclivilies.
Under US law BP is required lo conpensale individuals,
businesses, governnenl enlilies and olhers who have been inpacled by
lhe oil spill. ndividual and business clains are adninislered by lhe CCCF,
which is separale lron BP. BP has eslablished a lrusl lund ol $20 billion lo
be lunded over lhe period lo lhe lourlh quarler ol 2013, which is available
lo salisly legilinale individual and business clains adninislered by lhe
CCCF, slale and local governnenl clains resolved by BP, lnal judgnenls
and selllenenls, slale and local response cosls, and nalural resource
danages and relaled cosls arising as a consequence ol lhe Cull ol exico
oil spill. n 2010, BP conlribuled $5 billion lo lhe lund, and lurlher quarlerly
conlribulions ol $1.25 billion are lo be nade during lhe period 2011 lo
2013. The incone slalenenl charge lor 2010 includes $20 billion in relalion
lo lhe lrusl lund, adjusled lo lake accounl ol lhe line value ol noney. The
eslablishnenl ol lhe lrusl lund does nol represenl a cap or Hoor on BPs
liabililies and BP does nol adnil lo a liabilily ol lhis anounl.
BP has provided lor all liabililies lhal can be eslinaled reliably al lhis
line, including lnes and penallies under lhe Clean valer Acl (CvA. The
lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions
relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly.
BP considers lhal il is nol possible lo eslinale reliably any
obligalion in relalion lo nalural resource danages clains under lhe OPA 90,
liligalion and lnes and penallies excepl lor lhose in relalion lo lhe CvA.
These ilens are lherelore conlingenl liabililies.
BP holds a 65' inleresl in lhe acondo well, wilh lhe renaining
35' held by lwo joinl venlure parlners. vhile BP believes and will
asserl lhal il has a conlraclual righl lo recover lhe parlners shares ol
lhe cosls incurred, no recovery anounls have been recognized in lhe
lnancial slalenenls.
For a lull underslanding ol lhe inpacls and uncerlainlies relaling lo
lhe Cull ol exico oil spill reler lo Financial slalenenls - ole 2 on
page 153, ole 37 on page 199 and ole 44 on page 213. See also Fisk
laclors on page 27 and Proceedings and invesligalions relaling lo lhe Cull
ol exico oil spill on pages 130131.

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Share price and dividend consequences
As a resull ol lhe incidenl, BPs board reviewed ils dividend policy and
decided lhal no ordinary share dividends would be paid in respecl ol lhe
lrsl, second and lhird quarlers ol 2010. Furlhernore, lhe BP share price
sullered a signilcanl lall on lhe London Slock Exchange, lron 655 pence
per share on lhe day ol lhe incidenl lo reach a lrading low poinl ol 296
pence per share on 25 June 2010. Allhough lhere has since been sone
recovery in lhe share price, al 493 pence per share on 13 February 2011, il
renained considerably below ils level innedialely belore lhe incidenl.
(See Share prices and |is!ings on page !34 !or !ur!her in!orna!ion on !he
per!ornance o! BPs share price.
Olher consequences
BPs repulalion has been danaged by lhe incidenl. For lurlher inlornalion,
see Fisk laclors on pages 2732.
BP's Iong-term commitment to the GuIf of Mexico region
The Cull ol exico incidenl has had a prolound inpacl on lhe people and
econony ol lhe Cull coasl as well as lhe ollshore energy induslry and BP.
Fron lhe beginning, BP has worked lirelessly lo address lhe
econonic and environnenlal inpacl ol lhe spill and has a dedicaled lean
working closely wilh local and slale ollcials lo ensure lhal governnenl
clains are paid in a lair and expedilious nanner.
BP has also provided lunding lo pronole lourisn and sealood
salely - lwo cornerslones ol lhe Cull coasl econony - and has
worked closely wilh slale and local leaders lo reslore lhe econonic heallh
ol lhe region.
ve recognize lhal environnenlal and econonic resloralion neans
nore lhan jusl cleaning up lhe oil and paying lor losses experienced across
lhe Cull coasl. ve inlend lo ensure lhal lhe longlern inpacls ol lhe oil
spill are underslood and renedialed.
Business review
OrganizationaI and governance changes in ExpIoration and
Production
As parl ol our response lo lhe Cull ol exico oil spill, al lhe beginning ol
lhe lourlh quarler we decided lo reorganize our Exploralion and Produclion
segnenl lo creale lhree separale divisions: Exploralion, Developnenls,
and Produclion, inlegraled lhrough a Slralegy and nlegralion organizalion.
This is designed lo change lundanenlally lhe way we operale, wilh
a parlicular locus on nanaging risk, delivering connon slandards
and processes and building personnel and lechnological capabilily
lor lhe lulure.
The Exploralion division is accounlable lor renewing our resource
base lhrough access, exploralion and appraisal. The Developnenls division
is accounlable lor lhe sale and conplianl execulion ol wells (drilling and
conplelions and najor projecls, building on lhe cenlralized developnenls
organizalion eslablished in 2010. The Produclion division is accounlable lor
sale and conplianl operalions, including upslrean produclion assels,
nidslrean lransporlalion and processing aclivilies, and lhe developnenl
ol our resource base. Divisional aclivilies are inlegraled on a regional basis
by a regional presidenl reporling lo lhe Produclion division.
The group Salely and Operalional Fisk (S&OF lunclion is being
enhanced lo lurlher our objeclives in salely, conpliance and risk
nanagenenl and denonslrales our connilnenl lo prevenling lulure
lowprobabilily, highinpacl incidenls. l has ils own experl slall enbedded
in lhe divisions and is responsible lor ensuring lhal all operalions are carried
oul lo connon slandards and lor audiling conpliance wilh lhose
slandards.
The Slralegy and nlegralion organizalion is accounlable lor
oplinizalion and inlegralion across lhe divisions, including delivery ol
supporl lron lnance, procurenenl and supply chain, hunan resources and
inlornalion lechnology.
Our Exploralion and Produclion segnenl included upslrean and
nidslrean aclivilies in 29 counlries in 2010, including Angola, Azerbaijan,
Canada, Egypl, orway, Fussia, Trinidad & Tobago (Trinidad, lhe UK, lhe US
and olher localions wilhin Asia, Auslralasia, Soulh Anerica and Alrica, as
well as gas narkeling and lrading aclivilies, prinarily in Canada, Europe and
lhe US. Upslrean aclivilies involve oil and nalural gas exploralion and leld
developnenl and produclion. Our exploralion progranne is currenlly
locused on Egypl, lhe deepwaler Cull ol exico, Libya, lhe orlh Sea,
Onan and onshore US. ajor developnenl areas include Angola,
Azerbaijan, Canada, Egypl, lhe deepwaler Cull ol exico, lhe UK orlh
Sea and Fussia. During 2010, produclion cane lron 20 counlries. The
principal areas ol produclion are Angola, Azerbaijan, Egypl, Fussia, Trinidad,
lhe UK and lhe US.
idslrean aclivilies involve lhe ownership and nanagenenl ol
crude oil and nalural gas pipelines, processing lacililies and exporl
lerninals, LC processing lacililies and lransporlalion, and our CL
exlraclion businesses in lhe US, lhe UK, Canada and ndonesia. Our nosl
signilcanl nidslrean pipeline inleresls are lhe TransAlaska Pipeline
Syslen in lhe US, lhe Forlies Pipeline Syslen and lhe Cenlral Area
Transnission Syslen pipeline, bolh in lhe UK seclor ol lhe orlh Sea, lhe
Soulh Caucasus Pipeline (SCP, which lakes gas lron Azerbaijan lhrough
Ceorgia lo lhe Turkish border, and lhe BakuTbilisiCeyhan pipeline, running
lhrough Azerbaijan, Ceorgia and Turkey. ajor LC aclivilies are localed in
Trinidad, ndonesia and Auslralia. BP is also invesling in lhe LC business
in Angola.
Addilionally, our aclivilies include lhe narkeling and lrading ol
nalural gas, power and nalural gas liquids. These aclivilies provide roules
inlo liquid narkels lor BPs gas and power, and generale nargins and lees
associaled wilh lhe provision ol physical and lnancial producls lo lhird
parlies and addilional incone lron assel oplinizalion and lrading.
Our oil and nalural gas produclion assels are localed onshore and ollshore
and include wells, galhering cenlres, inleld How lines, processing lacililies,
slorage lacililies, ollshore plallorns, exporl syslens (e.g. lransil lines,
pipelines and LC planl lacililies.
Upslrean operalions in Argenlina, Bolivia, Chile, Abu Dhabi,
Venezuela and Fussia, as well as sone ol our operalions in Angola, Canada
and ndonesia, are conducled lhrough equilyaccounled enlilies.
Our market
Energy narkels recovered in 2010 lron lhe inpacl ol lhe global econonic
recession, wilh crude oil prices in parlicular bouncing back lollowing a
decline in 2009 - lhe lrsl since 2001.
Daled Brenl lor lhe year averaged $79.50 per barrel, 29' above
2009s average ol $61.67 per barrel. Prices Huclualed in a relalively narrow
band ol $70$30 per barrel lor nosl ol lhe year belore rising in lhe lourlh
quarler. Prices exceeded $90 per barrel in Decenber, lhe highesl level
since Oclober 2003.
n 2011, we expecl oil price novenenls lo conlinue lo be driven by
lhe pace ol global econonic growlh and ils resulling inplicalions lor oil
consunplion, and by OPEC produclion decisions.
alural gas prices slrenglhened in 2010, bul were volalile. The
average US Henry Hub Firsl ol onlh ndex rose lo $4.39/nnBlu, a 10'
increase lron lhe depressed prices in 2009.
Cas consunplion recovered across lhe world along wilh lhe
econony. n lhe US, a cold slarl lo 2010 lollowed by a hol sunner and
low lenperalures lowards lhe end ol lhe year also conlribuled lo denand
slrenglh. Yel doneslic produclion growlh - ol shale gas in parlicular -
conlinued apace and liniled price rises. Henry Hub gas prices slayed
below coal parily in US power generalion lron lhe sunner, leading lo
lhe displacenenl ol coal by gas. The dillerenlials ol produclion area
prices lo Henry Hub prices conlinued lo narrow as pipeline bolllenecks
were reduced.
n Europe, spol gas prices al lhe UK alional Balancing Poinl
increased by 33' lo an average ol 42.45 pence per lhern lor 2010. Yel
plenlilul global LC supply kepl spol gas prices below oilindexed conlracl
levels lor nosl ol lhe year, causing conpelilion wilh conlracl pipeline
supplies and narginal European gas produclion. UK spol gas prices only
allained conlracl price levels lron lhe end ol ovenber as cold wealher
caused rapid invenlory drawdowns.
n 2011, we expecl gas narkels lo conlinue lo be driven by lhe
econony, wealher, doneslic produclion lrends and conlinued signilcanl
growlh ol global LC supply.
Our strategy
n Exploralion and Produclion, our priorily is lo ensure sale, reliable and
conplianl operalions worldwide. Our slralegy is lo invesl lo grow
longlern value by conlinuing lo build a porllolio ol enduring posilions in
lhe worlds key hydrocarbon basins wilh a locus on deepwaler, gas
(including unconvenlional gas and gianl lelds. Our slralegy is enabled by:
Conlinuously reducing operaling risk.
Slrong relalionships buill on nulual advanlage, deep knowledge ol lhe
basins in which we operale, and lechnology.
Building capabilily along lhe value chain in Exploralion, Developnenls
and Produclion.
ve are increasing inveslnenl in Exploralion, a key source ol value crealion
al lhe lronl end ol lhe value chain, and we are evolving lhe nalure ol our
relalionships, parlicularly wilh alional Oil Conpanies. ve will also
conlinue lo aclively nanage our porllolio, wilh a locus on value growlh.

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Our performance
Key statistics
$ nillion
2010 2009 2003
Sales and olher operaling revenues
a
66,266 57,626 36,170
Feplacenenl cosl proll belore
inleresl and lax
b
30,886 24,300 33,303
Capilal expendilure and acquisilions 17,753 14,396 22,227
$ per barrel
Average BP crude oil realizalions
c
77.54 59.36 95.43
Average BP CL realizalions
c
42.78 29.60 52.30
Average BP liquids realizalions
c d
73.41 56.26 90.20
Average vesl Texas nlernediale
oil price
e
79.45 61.92 100.06
Average Brenl oil price
e
79.50 61.67 97.26
$ per lhousand cubic leel
Average BP nalural gas realizalions
c
3.97 3.25 6.00
Average BP US nalural gas realizalions
c
3.88 3.07 6.77
$ per nillion Brilish lhernal unils
Average Henry Hub gas price
l
4.39 3.99 9.04
pence per lhern
Average UK alional Balancing Poinl
gas price
e
42.45 30.35 53.12
lhousand barrels ol oil equivalenl per day
Tolal produclion lor subsidiaries
g h
2,492 2,634 2,517
Tolal produclion lor equilyaccounled
enlilies
g h
1,330 1,314 1,321
Tolal ol subsidiaries and
equilyaccounled enlilies
g h
3,822 3,993 3,333
nillion barrels ol oil equivalenl
el proved reserves lor subsidiaries 12,077 12,621 12,562
el proved reserves lor
equilyaccounled enlilies 5,994 5,671 5,535
Tolal ol subsidiaries and
equilyaccounled enlilies 18,071 13,292 13,147
a
ncludes sales belween businesses.
b
ncludes proll aller inleresl and lax ol equilyaccounled enlilies.
c
Fealizalions are based on sales ol consolidaled subsidiaries only, which excludes equilyaccounled
enlilies.
d
Crude oil and nalural gas liquids.
e
All lraded days average.
l
Henry Hub Firsl ol onlh ndex.
g
el ol royallies.
h
Expressed in lhousands ol barrels ol oil equivalenl per day (nboe/d. alural gas is converled lo oil
equivalenl al 5.3 billion cubic leel = 1 nillion barrels.
2010 perlornance
Sa!e!, and opera!iona| risk
n Exploralion and Produclion, salely, bolh process and personal, renains
our highesl priorily. As described above, lhe organizalional and governance
changes in Exploralion and Produclion and S&OF have been designed lo
ensure we achieve our objeclives in lhis area. n addilion, BPs operaling
nanagenenl syslen (OS provides us wilh a syslenalic lranework lor
sale, reliable and ellcienl operalions. By lhe end ol 2010 all ol our
exploralion and produclion operalions had conpleled lheir lransilion
lo OS.
Salely perlornance is nonilored by a suile ol inpul and oulpul
nelrics which locus on personal and process salely including operalional
inlegrily, heallh and all aspecls ol conpliance.
n 2010, excluding lhe inpacl ol lhe Cull ol exico oil spill, lurlher
inlornalion on which can be lound on page 34, Exploralion and Produclion
had one worklorce lalalily.
The recordable injury lrequency (FF, which neasures lhe nunber ol
recordable injuries lo lhe BP worklorce per 200,000 hours worked, was
0.32. This is lower lhan 2009 when il was 0.39 and 2003 when il was 0.43.
Our day away lron work case lrequency (DAFvCF in 2010 was 0.063.
This is higher lhan 2009 when il was 0.033 and 2003 when il was 0.057.
This increase is largely due lo dayawaylronwork cases resulling lron lhe
Cull ol exico incidenl and an avialion incidenl in Canada.
n 2010, lhe nunber ol reporled Loss ol Prinary Conlainnenl
(LOPC incidenls in Exploralion and Produclion was 194, down lron 321 in
2009. Excluding lhe inpacl ol lhe Cull ol exico incidenl, lhe nunber ol
reporled oil spills equal lo or larger lhan 1 barrel during 2010 was 116, up
lron 112 in 2009. This is lhe lrsl year since 1999 lhal lhe nunber ol
reporled spills has increased.
Financia| and opera!ing per!ornance
ve conlinually seek access lo resources and in 2010, in addilion lo new
access resulling lron acquisilions as delailed on page 43, lhis included
Azerbaijan, where BP and lhe Slale Oil Conpany ol lhe Fepublic ol
Azerbaijan (SOCAF signed a new 30year PSA on joinl exploralion and
developnenl ol lhe ShalagAsinan slruclure in lhe Caspian, China, where
we larned inlo Block 42/05 in lhe deepwaler Soulh China Sea, lhe Cull ol
exico, where we were awarded 13 blocks lhrough lhe Ouler Conlinenlal
Shell Lease Sale 213, eleven ol which have been execuled and seven have
yel lo be execuled, ndonesia, where we were awarded lhe orlh Aralura
PSC onshore Papua, Jordan, where on 3 January 2010, we received
approval lron lhe Covernnenl ol Jordan lo join lhe slaleowned alional
Pelroleun Conpany (PC lo exploil lhe onshore Fisha concession in lhe
norlh easl ol lhe counlry, onshore US, wilh lurlher properlies in lhe Eagle
Ford shale gas play, and lhe UK, where we were awarded seven blocks in
lhe 26lh ollshore licensing round.
Since lhe slarl ol 2011, we have been awarded lour blocks in lhe
Ceduna Basin, ollshore Soulh Auslralia and, subjecl lo parlner and
governnenl approval, we have signed a new agreenenl wilh lhe China
alional Ollshore Oil Corporalion (COOC lo explore Block 43/11 in lhe
Soulh China Sea. ve have also announced a slralegic global alliance wilh
Fosnell, which includes an agreenenl lo explore and develop lhree licence
blocks in Fussias Soulh Kara Sea. See Legal proceedings on page 133 lor
inlornalion on an inlerin injunclion, granled by lhe English High Courl on
1 February 2011 and elleclive unlil 11 arch 2011, reslraining BP lron
laking any lurlher sleps in relalion lo lhe Fosnell lransaclions pending lhe
oulcone ol arbilralion proceedings.
On 21 February 2011, Feliance nduslries Liniled and BP
announced lheir inlenlion lo lorn an upslrean joinl venlure in which BP
will lake a 30' slake in 23 oil and gas produclionsharing conlracls lhal
Feliance operales in ndia, and a 50:50 joinl venlure lor lhe sourcing and
narkeling ol gas in ndia. See page 43 lor lurlher inlornalion.
n ovenber 2010, we announced lhe Hodoa gas discovery in lhe
deepwaler vesl ile Della area ol Egypl.
Three najor projecls cane onslrean in 2010. Produclion
connenced al lhe n Salah Cas conpression projecl in Algeria, lhe Creal
vhile leld in lhe Cull ol exico, and lhe oel leld in Canada. n 2010 we
look lnal inveslnenl decisions on 15 projecls.
Produclion was lower lhan lasl year, largely due lo lhe inpacl ol
evenls in lhe Cull ol exico. Aller adjusling lor lhe ellecl ol enlillenenl
changes in our PSAs and lhe ellecl ol acquisilions and disposals,
underlying produclion was 2' lower lhan 2009. n Decenber 2010, we
suslained produclion lron lhe Funaila leld in raq al 10' above lhe inilial
produclion rale in 2009 lo achieve lhe nproved Produclion Targel, which is
lhe lrsl signilcanl nileslone in lhe rehabililalion ol Funaila. n 2010,
lullyear produclion growlh in TKBP was 2.5'.
Sales and olher operaling revenues lor 2010 were $66 billion,
conpared wilh $53 billion in 2009 and $36 billion in 2003. The increase in
2010 prinarily reHecled higher oil and gas realizalions, parlly ollsel by
lower produclion. The decrease in 2009 prinarily reHecled lower oil and gas
realizalions.
Business review
The replacenenl cosl proll belore inleresl and lax lor 2010 was
$30,336 nillion, conpared wilh $24,300 nillion lor lhe previous year.
2010 included nel nonoperaling gains ol $3,199 nillion, prinarily gains on
disposals lhal conpleled during lhe year parlly ollsel by inpairnenl
charges and lair value losses on enbedded derivalives. (See page 25 !or
!ur!her in!orna!ion on non-opera!ing i!ens. n addilion, lair value
accounling ellecls had an unlavourable inpacl ol $3 nillion relalive lo
nanagenenls neasure ol perlornance. (See page 26 !or !ur!her
in!orna!ion on !air va|ue accoun!ing e!!ec!s.
The prinary addilional laclors conlribuling lo lhe 25' increase in
replacenenl cosl proll belore inleresl and lax were higher realizalions,
lower deprecialion and higher earnings lron equilyaccounled enlilies,
nainly TKBP, parlly ollsel by lower produclion, a signilcanlly lower
conlribulion lron gas narkeling and lrading and higher produclion laxes.
Tolal capilal expendilure including acquisilions and assel exchanges
in 2010 was $17.3 billion (2009 $14.9 billion and 2003 $22.2 billion. For
lurlher inlornalion on acquisilions and disposals see pages 4344.
Developnenl expendilure ol subsidiaries incurred in 2010,
excluding nidslrean aclivilies, was $9.7 billion, conpared wilh
$10.4 billion in 2009 and $11.3 billion in 2003.
Prior years conparalive lnancial inlornalion
The replacenenl cosl proll belore inleresl and lax lor lhe year ended
31 Decenber 2009 ol $24,300 nillion included a nel credil lor non
operaling ilens ol $2,265 nillion, wilh lhe nosl signilcanl ilens being
gains on lhe sale ol operalions (prinarily lron lhe disposal ol our 46'
slake in LukArco, lhe sale ol our 49.9' inleresl in Kazakhslan Pipeline
Venlures LLC and lhe sale ol BP vesl Java Liniled in ndonesia and lair
value gains on enbedded derivalives. n addilion, lair value accounling
ellecls had a lavourable inpacl ol $919 nillion relalive lo nanagenenls
neasure ol perlornance.
The replacenenl cosl proll belore inleresl and lax lor lhe year
ended 31 Decenber 2003 was $33,303 nillion and included a nel charge
lor nonoperaling ilens ol $990 nillion, wilh lhe nosl signilcanl ilens
being nel inpairnenl charges and nel lair value losses on enbedded
derivalives, parlly ollsel by lhe reversal ol cerlain provisions. The
inpairnenl charge included a $517 nillion wriledown ol our inveslnenl in
Fosnell based on ils quoled narkel price al lhe end ol lhe year. n addilion,
lair value accounling ellecls had an unlavourable inpacl ol $232 nillion
relalive lo nanagenenls neasure ol perlornance.
The prinary addilional laclor conlribuling lo lhe 35' decrease in
lhe replacenenl cosl proll belore inleresl and lax lor lhe year ended
31 Decenber 2009 conpared wilh lhe year ended 31 Decenber 2003 was
lower realizalions. n addilion, lhe resull was inpacled by lower incone
lron equilyaccounled enlilies and higher deprecialion bul lhe resull
benelled lron higher produclion and lower cosls, as a resull ol our
conlinued locus on cosl nanagenenl.
OutIook
n 2011, we will seek lo conlinuously drive operalional risk reduclion
lhrough lhe S&OF lunclion. Through lhe reslrucluring inlo divisions, we
inlend lo drive lunclional excellence across lhe lilecycle ol exploralion,
developnenls and produclion and conlinue lo locus on building our
lechnological and hunan capabilily lor lhe lulure.
ve believe lhal our porllolio ol assels renains well posilioned lo
conpele and grow value in a range ol exlernal condilions. ve will conlinue
lo aclively nanage our porllolio wilh a locus on value growlh.
Upstream activities
Exploralion
The group explores lor oil and nalural gas under a wide range ol licensing,
joinl venlure and olher conlraclual agreenenls. ve nay do lhis alone or,
nore lrequenlly, wilh parlners. BP acls as operalor lor nany ol lhese
venlures.
Our exploralion and appraisal cosls, excluding lease acquisilions, in
2010 were $2,706 nillion, conpared wilh $2,305 nillion in 2009 and
$2,290 nillion in 2003. These cosls included exploralion and appraisal
drilling expendilures, which were capilalized wilhin inlangible lxed assels,
and geological and geophysical exploralion cosls, which were charged lo
incone as incurred. Approxinalely 30' ol 2010 exploralion and appraisal
cosls were direcled lowards appraisal aclivily. n 2010, we parlicipaled in
479 gross (95.5 nel exploralion and appraisal wells in 10 counlries. The
principal areas ol exploralion and appraisal aclivily were Egypl, lhe
deepwaler Cull ol exico, Libya, lhe orlh Sea, Onan and onshore US.
Tolal exploralion expense in 2010 ol $343 nillion (2009 $1,116
nillion and 2003 $332 nillion included lhe wrileoll ol expenses relaled
lo unsuccesslul drilling aclivilies in lhe deepwaler Cull ol exico
($161 nillion, lhe orlh Sea ($42 nillion, Libya ($26 nillion, Angola
($24 nillion and olhers ($4 nillion. l also included $157 nillion relaled lo
deconnissioning ol idle inlraslruclure, as required by lhe Bureau ol Ocean
Energy anagenenl Fegulalion and Enlorcenenls olice ol Lessees
2010 C05 issued in Oclober 2010.
Feserves booking lron new discoveries will depend on lhe resulls
ol ongoing lechnical and connercial evalualions, including appraisal drilling.
Proved reserves replacenenl
Tolal hydrocarbon proved reserves, on an oil equivalenl basis including
equilyaccounled enlilies, conprised 13,071nnboe (12,077nnboe lor
subsidiaries and 5,994nnboe lor equilyaccounled enlilies al
31 Decenber 2010, a decrease ol 1' (decrease ol 4' lor subsidiaries and
increase ol 6' lor equilyaccounled enlilies conpared wilh lhe
31 Decenber 2009 reserves ol 13,292nnboe (12,621nnboe lor
subsidiaries and 5,671nnboe lor equilyaccounled enlilies. alural gas
represenled aboul 41' (54' lor subsidiaries and 14' lor equily
accounled enlilies ol lhese reserves. The change includes a nel decrease
lron acquisilions and disposals ol 307nnboe (303nnboe nel decrease
lor subsidiaries and 4nnboe nel decrease lor equilyaccounled enlilies.
Acquisilions occurred in Azerbaijan, Canada, orway and lhe US. Disposals
occurred in Canada, Egypl and lhe US.
The proved reserves replacenenl ralio is lhe exlenl lo which
produclion is replaced by proved reserves addilions. This ralio is expressed
in oil equivalenl lerns and includes changes resulling lron revisions lo
previous eslinales, inproved recovery and exlensions and discoveries. For
2010 lhe proved reserves replacenenl ralio excluding acquisilions and
disposals was 106' (129' in 2009 and 121' in 2003 lor subsidiaries and
equilyaccounled enlilies, 74' lor subsidiaries alone and 166' lor
equilyaccounled enlilies alone.
n 2010, nel addilions lo lhe groups proved reserves (excluding
produclion and sales and purchases ol reservesinplace anounled lo
1,503nnboe (636nnboe lor subsidiaries and 313nnboe lor equily
accounled enlilies, principally lhrough inproved recovery lron, and
exlensions lo, exisling lelds and discoveries ol new lelds. Ol our
subsidiary reserves addilions lhrough inproved recovery lron, and
exlensions lo, exisling lelds and discoveries ol new lelds, approxinalely
67' were associaled wilh new projecls and were proved undeveloped
reserves addilions. The renaining addilions are in exisling developnenls
where lhey represenl a nixlure ol proved developed and proved
undeveloped reserves. Volunes added in 2010 principally relied on lhe
applicalion ol convenlional lechnologies. The principal reserves addilions in
our subsidiaries were in lhe US (Arkona, Hawkville, Kuparuk, ars,
Prudhoe Bay, Thunder Horse, Tubular Bells, lhe UK (Kinnoull, Loyal, achar,
Schiehallion, Egypl (vesl ile Della, Trinidad (nnorlelle and raq
(Funaila. The principal reserves addilions in our equilyaccounled enlilies
were in Argenlina (Cerro Dragon, Bolivia (argarila, Canada (Sunrise and
in Fussia (Sanollor, Sorochinskoikolskoye, Talinskoye, Uval.

Business review
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Fourleen per cenl ol our proved reserves are associaled wilh produclion
sharing agreenenls (PSAs. The nain counlries in which we operaled
under PSAs in 2010 were Algeria, Angola, Azerbaijan, Egypl, ndonesia,
raq and Vielnan.
Produclion
Our lolal hydrocarbon produclion during 2010 averaged 3,322 lhousand
barrels ol oil equivalenl per day (nboe/d. This conprised 2,493nboe/d lor
subsidiaries and 1,329nboe/d lor equilyaccounled enlilies, a decrease ol
7' (decreases ol 12' lor liquids and 2' lor gas and an increase ol 1'
(increases ol 1' lor liquids and 3' lor gas respeclively conpared wilh
2009. n aggregale, aller adjusling lor enlillenenl inpacls in our PSAs and
lhe ellecl ol acquisilions and disposals, produclion was 2' lower lhan
2009. For subsidiaries, 39' ol our produclion was in lhe US, 13' in
Trinidad and 9' in lhe UK.
ve expecl produclion in 2011 lo be lower lhan in 2010 as a resull
ol disposals, lower produclion lron lhe Cull ol exico and lhe increased
lurnaround aclivily lo inprove lhe longlern reliabilily ol lhe assels. As a
resull ol lhese laclors, reporled produclion in 2011 is expecled lo be
around 3,400nboe/d. The aclual oulcone will depend on lhe exacl lining
ol disposals, lhe pace ol gelling back lo work in lhe Cull ol exico, OPEC
quolas and lhe inpacl ol lhe oil price on our PSAs. n lhe Cull ol exico,
lhere is induslrywide uncerlainly around lhe pace al which new drilling
aclivily will be reslored lollowing lhe lilling ol lhe drilling noraloriun in
Oclober 2010. o new pernils lor lhe drilling ol deepwaler wells (excepl
lor waler injeclion and side lrack wells had been issued lo any conpany
unlil lhe end ol February 2011. BP has clear crileria lor salely reslarling
drilling and conplelions aclivily, which include neeling all new regulalory
requirenenls, addressing each ol lhe reconnendalions ol our inlernal
invesligalion, conpliance wilh our own slandards and ensuring we have
lhe righl capabilily in place, along wilh appropriale conlraclor nanagenenl.
The group and ils equilyaccounled enlilies have nunerous
longlern sales connilnenls in lheir various business aclivilies, all ol
which are expecled lo be sourced lron supplies available lo lhe group lhal
are nol subjecl lo priorilies, curlailnenls or olher reslriclions. o single
conlracl or group ol relaled conlracls is nalerial lo lhe group.
Acquisilions and disposals
During 2010, we conlinued lo grow our porllolio ol assels lhrough
acquisilions such as lhe lransaclion wilh Devon Energy, which signilcanlly
enhanced our posilion in a nunber ol core slralegic areas in Brazil,
Azerbaijan and deepwaler Cull ol exico, and lhe increase in our equily
holding in lhe Valhall and Hod lelds, polenlially very signilcanl lelds in lhe
orlh Sea wilh lechnological upsides.
ve also underlook a nunber ol disposals as parl ol our previously
announced porllolio highgrading review. n lolal, lhese lransaclions
generaled $17 billion in proceeds during 2010 including prepaynenls ol
$6.2 billion lor disposals yel lo conplele. See Financial slalenenls -
ole 4 on page 163. vilh regards lo proved reserves, 102nnboe were
acquired in 2010, all wilhin our subsidiaries while 403nnboe were
disposed ol (approxinalely 404nnboe lor subsidiaries and approxinalely
4nnboe lor equilyaccounled enlilies.
Acquisi!ions
n arch 2010, BP announced a broadranging lransaclion wilh Devon
Energy lo enhance ils posilion in core slralegic areas. BP agreed lo pay
Devon Energy $6.9 billion in cash lor assels in Brazil, Azerbaijan and lhe
US deepwaler Cull ol exico.
n addilion, BP sold lo Devon Energy a 50' slake in BPs Kirby oil
sands inleresls in Alberla, Canada, lor $500 nillion. The parlies have
agreed lo lorn a 50:50 joinl venlure, operaled by Devon, lo pursue lhe
developnenl ol lhe inleresl. Devon connilled lo lund an addilional
$150 nillion ol capilal cosls on BPs behall.
n Brazil, subjecl lo governnenl and regulalory approvals, lhe
lransaclion will give BP a diverse and broad deepwaler exploralion
acreage posilion ollshore Brazil wilh inleresls in eighl licence blocks in
lhe Canpos and CananuAlnada basins, as well as lwo onshore
licences in lhe Parnaiba basin. The Canpos basin blocks include lhree
discoveries - Xerelele, presall vahoo and laipu - and lhe producing
Polvo leld.
n lhe US deepwaler Cull ol exico, BP gained a highqualily porllolio
wilh inleresls in sone 240 leases, wilh a parlicular locus on lhe
energing Paleogene play in lhe ullradeepwaler. The addilion ol
Devons 30' inleresl in lhe najor Paleogene discovery, Kaskida, gave
BP a 100' inleresl in lhe projecl. The assels also included inleresls in
lour producing oillelds: agnolia, erganser, ansen, and Zia, and one
nonproducing assel.
n Azerbaijan, acquisilion ol Devons 3.29' (aller preenplion
exercised by sone ol lhe parlners slake in lhe BPoperaled Azeri
ChiragCunashli developnenl increased BPs inleresl lo 37.43'.
The undeveloped Kirby oil sands leases are in lhe soulheasl ol lhe
Alhabasca region ol Alberla, close lo lhe Devonoperaled Jacklsh
developnenl, which slarled produclion in 2007. BP and Devon have
agreed an inilial appraisal progranne lo assess lhe signilcanl polenlial
ol lhe Kirby acreage and lo eslablish a longlern developnenl plan. n
addilion lo lorning lhe joinl venlure, BP and Devon have agreed lo
enler inlo a longlern heavy crude olllake agreenenl lor produclion
lron lhe Kirby developnenl as well as a porlion ol lhe produclion lron
sone ol Devons olher oil sands assels.
Also in arch 2010, BP announced lhal il had enlered inlo a parlnership
in Canada wilh Value Crealion nc. (VC lo develop lhe Terre de Crace
(TDC oil sands lease, one ol VCs large oil sands leases, in lhe
Alhabasca region. BP is now lhe operalor and najorily parlner lor lhe
parlnership, wilh VC and BP logelher providing slralegic direclion and
guidance. TDC is a large, conliguous 135,000 acres ol highqualily oil
sands land wilh subslanlial delinealion ol lhe Easl Craceland area and
lurlher polenlial in lhe lessdelinealed renainder ol lhe leases. n 2010,
capilal expendilure in relalion lo lhe lornalion ol lhis parlnership was
$900 nillion.
On 1 Seplenber 2010, BP increased ils equily holding in lhe signilcanl
orwegian Valhall and Hod lelds by acquiring 7.9' inleresl in lhe
Valhall leld and 12.5' in lhe Hod leld lron Tolal. The lransaclion
increased lhe equily holding in Valhall lo 35.95' and Hod lo 37.5'.
The lnal purchase consideralion was $492 nillion. The acquisilion is
expecled lo slrenglhen BPs exisling business in orway and lhe
orlh Sea.
n Seplenber 2010, BP announced an agreenenl wilh Devon Energy in
which BP acquired 40.32' ol Devons exisling share in Block 42/05 in
lhe Soulh China Sea. The renaining 59.13' ol Devons share was
purchased by Chevron, who will be lhe operalor in lhe exploralion
phase under lhe anendnenl agreenenls lo lhe produclionsharing
conlracl wilh COOC. All predevelopnenl spending will be incurred
by BP and Chevron. During lhe developnenl phase, COOC has lhe
righl lo backin lo a 51' share in lhe projecl lhus leaving working
inleresl shares as lollows: BP 20', COOC 51', Chevron 29'.
On 24 January 2011, BP exercised a prelerenlial righl lo acquire Shells
working inleresl in lhe arlin and Dorado producing lelds lor a lolal
consideralion ol $257 nillion. This brings BPs working inleresl in bolh
lelds lo 100'.
On 21 February 2011, Feliance nduslries Liniled and BP announced
lhal lhey inlend lo lorn an upslrean joinl venlure in which BP will lake
a 30' slake in 23 oil and gas produclionsharing conlracls lhal
Feliance operales in ndia, including lhe producing KC D6 block, and
lorn a 50:50 joinl venlure lor lhe sourcing and narkeling ol gas in ndia.
BP will pay Feliance nduslries Liniled an aggregale consideralion ol
$7.2 billion, and conplelion adjuslnenls, lor lhe inleresls lo be
acquired in lhe 23 produclionsharing conlracls. Fulure perlornance
paynenls ol up lo $1.3 billion could be paid based on exploralion
success lhal resulls in developnenl ol connercial discoveries.
Feliance will conlinue lo be lhe operalor under lhe produclionsharing
conlracls. Conplelion ol lhe lransaclions is subjecl lo ndian regulalory
approvals and olher cuslonary condilions.
Business review
Disposa|s
n July 2010, BP announced lhal il had enlered inlo several agreenenls
lo sell upslrean assels in lhe US, Canada and Egypl lo Apache
Corporalion (and an exisling parlner lhal exercised preenplion righls.
The deals, logelher worlh a lolal ol $7 billion, conprise BPs Pernian
Basin assels in Texas and soulheasl ew exico, US, ils veslern
Canadian upslrean gas assels, and lhe veslern Deserl business
concessions and Easl Badr Eldin exploralion concession in Egypl.
These lransaclions were conpleled during 2010.
On 3 Augusl 2010, BP announced lhal il had agreed lo sell ils oil and
gas exploralion, produclion and lransporlalion business in Colonbia lo
a consorliun ol Ecopelrol, Colonbias nalional oil conpany (51', and
Talisnan ol Canada (49'. The lwo conpanies agreed lo pay BP a lolal
ol $1.9 billion in cash, subjecl lo cuslonary poslconplelion price
adjuslnenls, lor 100' ol lhe shares in BP Exploralion Conpany
(Colonbia Liniled (BPXC, lhe whollyowned BP subsidiary conpany
lhal held BPs oil and gas exploralion, produclion and lransporlalion
inleresls in Colonbia. Following lhe approval ol lhe Colonbian
aulhorilies, conplelion occurred on 24 January 2011.
On 31 Augusl 2010, BP conpleled lhe sale ol ils enlire inleresl in lhe
Overlhrusl assels (Painler Conplex Cas Planl, Painler Feservoir Unil
and vhilney Canyon leld and inlel lacilily lo eril Energy Conpany
lor $217 nillion.
On 13 Oclober 2010, BP announced il had reached agreenenl lo sell
ils upslrean businesses and associaled inleresls in Venezuela and
Vielnan lo TKBP lor a lolal ol $1.3 billion subjecl lo cuslonary
poslconplelion price adjuslnenls. The agreenenl includes BPs
inleresls in lhe Pelroperija, Boqueron and Pelroonagas joinl venlures
in Venezuela and, in Vielnan, BPs 35' operaling inleresl in lhe Lan
Tay and Lan Do gas lelds (Block 6.1 and associaled pipeline and power
generalion inleresls. Block 6.1 parlners, PelroVielnan and OCC
Videsh Lld, have waived preenplion righls lo purchase BPs Block 6.1
inleresl. BP will relain an econonic inleresl in lhese assels lhrough ils
50' inleresl in TKBP.
n Oclober 2010, BP announced il had reached an agreenenl wilh ils
parlner, Hess Corporalion, lor lhe sale ol a 20' inleresl in lhe Tubular
Bells leld in lhe Cull ol exico. Hess agreed lo acquire lhe 20'
inleresl lron BP lor $40 nillion and becane lhe operalor. The
increased ownership broughl Hesss working inleresl in Tubular Bells lo
40'. Chevron holds a 30' inleresl and BP relains 30'. Tubular Bells,
which was discovered in 2003, is a deepwaler leld approxinalely 135
niles soulheasl ol ew Orleans, Louisiana.
On 25 Oclober 2010, BP announced lhal il had reached agreenenl lo
sell ils recenlly acquired inleresls in lour nalure producing deepwaler
oil and gas lelds in lhe US Cull ol exico lo arubeni Oil and Cas lor
$650 nillion. BP acquired lhe inleresls in lhe lelds - agnolia,
erganser, ansen and Zia - lron Devon Energy earlier in 2010 as
parl ol lhe wider acquisilion ol assels in lhe Cull ol exico, Brazil
and Azerbaijan, bul delernined lhal lhey did nol ll well wilh lhe resl
ol lhe groups assels in lhe region and would be ol nore value lo
anolher conpany.
On 23 ovenber 2010, BP announced lhal il had enlered inlo an
agreenenl lo sell ils inleresls in Pan Anerican Energy (PAE lo Bridas
Corporalion. PAE is an Argenlinabased oil and gas conpany owned by
BP (60' and Bridas Corporalion (40'. Bridas Corporalion will pay BP
a lolal ol $7.06 billion in cash lor BPs inleresl in PAE. The lransaclion is
expecled lo be conpleled in 2011. The lransaclion excludes lhe shares
ol PAE E&P Bolivia Lld. Conplelion ol lhe lransaclion is subjecl lo
closing condilions including lhe receipl ol all necessary governnenlal
and regulalory approvals.
On 14 Decenber 2010, BP announced lhal il had reached agreenenl lo
sell ils upslrean assels in Pakislan lo Uniled Energy Croup lor
$775 nillion. Subjecl lo cerlain closing condilions, including lhe receipl
ol all necessary governnenlal and regulalory approvals, closing is
anlicipaled lo occur by lhe end ol lhe lrsl quarler ol 2011.
During 2010, BP also announced ils inlenlion lo divesl ils inleresl in lhe
Tuscaloosa lelds in Louisiana, lhe vallenberg planl in Colorado and ils
CL business in Canada.
On 22 February 2011, BP announced ils inlenlion lo sell ils inleresls in a
nunber ol operaled oil and gas lelds in lhe UK. The assels involved are
lhe vylch Farn onshore oilleld in Dorsel and all ol BPs operaled gas
lelds in lhe soulhern orlh Sea, including associaled pipeline
inlraslruclure and lhe Dinlinglon lerninal. BP ains lo conplele lhe
disposals around lhe end ol 2011, subjecl lo receipl ol suilable ollers
and regulalory and lhird parly approvals. The assels do nol yel neel
lhe crileria lo be reclassiled as noncurrenl assels held lor sale and il is
nol yel possible lo eslinale lhe lnancial ellecl ol lhese inlended
lransaclions.
The lollowing discussion reviews operalions in our Exploralion and
Produclion business by conlinenl and counlry, and lisls associaled
signilcanl evenls lhal occurred in 2010. vhere relevanl, BPs percenlage
working inleresl in oil and gas assels is shown in brackels. vorking inleresl
is lhe coslbearing ownership share ol an oil or gas lease. Consequenlly
lhe percenlages disclosed lor cerlain agreenenls do nol necessarily
reHecl lhe percenlage inleresls in reserves and produclion.
Europe
Uniled Kingdon
BP is lhe largesl producer ol hydrocarbons in lhe UK. Key aspecls ol our
aclivilies in lhe orlh Sea include a locus on inleld drilling and selecled
new leld developnenls.
n July 2010, lhe UK Parlianenls Energy and Clinale Change Selecl
Connillee launched an invesligalion inlo lhe salely ol deepwaler
drilling in lhe UK, in lighl ol lhe accidenl in lhe Cull ol exico. n
Seplenber, BP provided bolh wrillen and oral evidence lo lhe
Connillee, as did a nunber ol olher operalors and organizalions wilh a
slake in lhe UK Conlinenlal Shell (UKCS.
n lhe UK, BP has been closely involved in connunicaling lhe lessons
learned lron lhe Cull ol exico oil spill lo induslry and lhe regulalory
aulhorilies, and has also been widely represenled in lhe Oil Spill
Prevenlion and Fesponse Advisory Croup (OSPFAC, a group lorned in
lale ay lo coordinale and lead lhe UKs response lo such incidenls.
BP has provided supporl, lor exanple, lhrough lhe lransler ol lwo
conlainnenl devices lo Oil Spill Fesponse Linileds Soulhanplon
depol and by leading lhe design and procurenenl ol a capping slack lor
use in lhe deepwaler ol lhe UKCS. The capping slack projecl is due lor
conplelion in nid2011.
The European Connission published ils policy and prelegislalive
connunicalion on ollshore salely in Oclober 2010. Preparalion ol a
drall legislalive package is now wilh lhe European Connission
services, lor expecled publicalion in spring 2011.
BP is scheduled lo drill a deepwaler exploralion well in lhe wesl ol
Shelland during 2011 and, logelher wilh ils drilling conlraclor, plans lo
inplenenl all relevanl lessons lron lhe Cull ol exico accidenl during
lhe planning and execulion ol lhal well. uch has already been done
during 2010 in lhe orlh Sea business lo lurlher inprove lhe salely ol
drilling operalions.
n Oclober 2010, BP was awarded inleresls in seven ollshore
exploralion blocks in lhe 26lh round ol UK Conlinenlal Shell licensing.
Five ol lhese blocks are BPoperaled and lwo are parlneroperaled.
This represenls lhe largesl licence award lor BP in lhe UK lor nore lhan
10 years.
On 27 Oclober 2010, lhe European Union lollowed lhe U and US in
enacling lurlher reslriclive neasures againsl ran (lhe EU Fegulalions.
The EU Fegulalions largel, anong olher lhings, legal persons, enlilies
or bodies oulside ol ran lhal have direcl or indirecl ranian ownership.
On 16 ovenber 2010, produclion lron lhe Fhun gas leld in lhe
cenlral orlh Sea was suspended pending clarilcalion lron lhe UK
governnenl on cerlain aspecls ol lhe EU Fegulalions. This aclion
was laken lo conply wilh lhe nolilcalion requirenenls in lhe EU
Fegulalions. Fhun is owned by BP (50' and lhe ranian Oil
Conpany (50' under a joinl operaling agreenenl daling back lo
lhe early 1970s.

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Fesl ol Europe
Our aclivilies in lhe Fesl ol Europe are in orway.
On 9 ovenber 2010, lhe developnenl ol lhe orwegian oil and gas
leld Skarv reached a signilcanl nileslone wilh lhe naning cerenony
ol lhe Skarv Floaling Produclion, Slorage and OlHoading (FPSO unil.
The cerenony look place in Ceoje in Soulh Korea. The vessel will
operale in lhe orwegian Sea close lo lhe Arclic Circle, 210kn oll lhe
coasl ol ordland. l is due lo slarl produclion al lhe Skarv oil and gas
leld in lhe aulunn ol 2011.
n 2010, lhe Valhall redevelopnenl projecl passed a najor nileslone
wilh lhe conplelion ol lhe heavy lill progranne. The nain deck and
living quarlers were successlully inslalled ollshore in July 2010. The
living quarlers are scheduled lo be ready lor habilalion in April 2011,
wilh produclion slarlup lron lhe new lacilily scheduled lor early 2012.
North America
Uniled Slales
Our aclivilies wilhin lhe US lake place in lhree nain areas: deepwaler Cull
ol exico, Lower 43 slales and Alaska.
Deepva!er Cu|! o! exico
For lurlher inlornalion on lhe inpacl ol lhe Cull ol exico oil spill and BPs
response please see pages 3439. Also see page 43 under Produclion.
On 31 arch 2010, lrsl oil was achieved lron lhe Creal vhile leld
(BP 33.3' localed in lhe ullradeep walers ol lhe Cull ol exico.
Produclion is processed by lhe Perdido Fegional Hosl Hoaling
produclion lacilily (BP 27.5', an inlegraled spar and drilling rig. The
developnenl is operaled by Shell on behall ol BP and Chevron. Creal
vhile narks lhe lrsl developnenl ol a Paleogene (Lower Terliary
reservoir in lhe Cull ol exico and is expecled lo represenl 30' ol lhe
eslinaled lolal produclion lhrough lhe Perdido Hosl.
n Seplenber 2010, lhe lnal inveslnenl decision was nade lor lhe
ars B (BP 23.5' deepwaler developnenl, localed approxinalely
130 niles soulh ol ew Orleans, Louisiana in lhe Cull ol exico.
The developnenl will include a second lensionleg plallorn, naned
Olynpus, lo enhance recovery lron lhe ars leld. The ars B
developnenl will draw produclion lron eighl ississippi Canyon blocks
- 762, 763, 764, 305, 306, 307, 350 and 351.
n arch 2010, BP parlicipaled in lease sale 213. Following lhis sale we
were awarded 13 leases, 11 ol which have now been execuled, a
lurlher seven leases were awarded bul have nol yel been execuled.
Lover 48 s!a!es
Our orlh Anerica Cas business operales onshore in lhe Lower 43 slales
producing nalural gas, nalural gas liquids and coalbed nelhane across
14 slales. n 2010, we drilled over 200 wells as operalor across lhe US,
including slarlup operalions in lhe Eagle Ford shale. Shale gas assels are
beconing an increasingly inporlanl parl ol our orlh Anerica Cas business.
ve have nol included any proved undeveloped reserves expecled
lo connence developnenl beyond lve years in our disclosed volunes,
allhough we are connilled lo developnenl beyond lve years in
nany lelds.
A|aska
BP operales 15 orlh Slope oillelds (including Prudhoe Bay, Endicoll,
orlhslar, and ilne Poinl and lour orlh Slope pipelines, and owns a
signilcanl inleresl in six olher producing lelds.
Two key aspecls ol BPs business slralegy in Alaska are
connercializing lhe large undeveloped nalural gas resource wilhin our
26.4' inleresl in Prudhoe Bay and unlocking lhe large undeveloped
viscous and heavy oil resources wilhin exisling orlh Slope lelds lhrough
lhe applicalion ol advanced lechnology.
n 2010, we progressed lhe previously announced developnenl
aclivilies lor lhe Liberly oilleld, which is localed on lederal leases
aboul six niles ollshore in lhe Beaulorl Sea, and easl ol lhe Prudhoe
Bay oilleld. The planned developnenl includes up lo six ullraexlended
reach wells, including lour producers and lwo injeclors, lo be drilled
lron exisling inlraslruclure in lhe BPoperaled Endicoll leld lo
nininize lhe onshore and ollshore environnenlal loolprinl. As parl ol a
conlinuous evalualion ol projecl design, nalerials, and syslens, we
suspended physical conslruclion ol lhe rig onsile in lhe lourlh quarler.
Following a review ol engineering and design elenenls, and resolulion
ol any issues, we plan lo conlinue rig conslruclion. As lhis review
noves lorward, we will develop a revised projecl schedule. BP drilled
lhe Liberly discovery well in 1997, and is lhe operalor and sole owner
ol lhe leld.
The Poinl Thonson Unil (PTU was lerninaled by adninislralive
decision ol lhe Slale ol Alaska Deparlnenl ol alural Fesources (DF
in ovenber 2006 (BP 32'. Exxonobil, lhe operalor, and lhe olher
unil owners, including BP, appealed lhe unil lerninalion in lhe Alaska
Superior Courl. Al lhe end ol 2006, based on lhe DFs lerninalion ol
lhe Unil, BP wrole oll all hislorical cosls associaled wilh lhe PTU. n
January 2009, Exxonobil was granled pernission by lhe DF, under
a condilional inlerin decision, lo conducl drilling operalions on lwo ol
lhe 31 leases conprising lhe PTU. On 11 January 2010, lhe Alaska
Superior Courl reversed lhe DFs adninislralive decision lo lerninale
lhe unil. The DF pelilioned lhe Slale ol Alaska Suprene Courl lor
liniled review, and lhe pelilion was granled in lhe second quarler ol
2010. As ol lhe end ol 2010, lhe case is slill pending belore lhe
Alaska Suprene Courl. Exxonobil and lhe Slale ol Alaska have
also inlorned lhe olher unil owners, including BP, lhal lhey are
negolialing a selllenenl agreenenl. BP has asked lo parlicipale in
lhe selllenenl discussions.
Canada
n Canada, BP is locused on one ol lhe worlds largesl pelroleun resource
basins, Canadas oil sands, using insilu lechnology. nsilu lechnology is
dillerenl lo nining in lhal il linils land dislurbance and requires no lailing
ponds. The insilu lechnology lhal BP Canada plans lo use is slean
assisled gravily drainage (SACD which uses lhe injeclion ol slean inlo lhe
reservoir lo warn lhe bilunen so lhal il can How lo lhe surlace lhrough
recovery wells. BP holds an inleresl in several oil sands leases lhrough lhe
Sunrise Oil Sands and Terre de Crace Oil Sands parlnerships and lhe Pike
Oil Sands joinl venlure. BP also develops and produces nalural gas and
nalural gas liquids, narkels nalural gas, is lhe largesl narkeler in Canada ol
nalural gas liquids and has signilcanl exploralion inleresls in lhe Canadian
Beaulorl Sea.
n ovenber 2010, phase 1 ol lhe Sunrise oil sands projecl (BP 50'
was sanclioned. BP and ils parlner, Husky Energy nc, have connilled
lunding lo build lacililies, drill wells and creale lhe operalional syslens
and resources lo bring Sunrise phase 1 inlo produclion. Firsl produclion
ol bilunen is expecled in 2014, building lo 60,000 barrels per day
gross capacily over lhe subsequenl 24 nonlhs. Longlern drilling and
lacilily developnenl is planned lo conlinue lherealler in order lo
nainlain lhal rale lor 40 years or nore. Fulure addilional phases ol
Sunrise are being conlenplaled.
n July 2010, BP signed a joinl operaling agreenenl wilh Exxonobil
Canada Liniled and nperial Oil Fesources Venlures Liniled, a
subsidiary ol Exxonobil, lo exchange 50' ol BPs working inleresl in
lhe EL 449 leld lor 50' working inleresl in nperial/Exxons EL 446
leld, bolh in lhe Canadian Beaulorl Sea. Under lhis agreenenl,
operalorship was assigned lo nperial wilh BP renaining aclively
involved in najor exploralion decisions.
n 2010, inlerprelalion ol lhe 2009 3Dseisnic survey ol licences in lhe
Canadian Beaulorl Sea connenced and access lo seisnic dala lor lhe
EL 446 licence was acquired.
Business review
South America
Trinidad & Tobago
BP holds exploralion and produclion licences covering 904,000 acres
ollshore ol lhe easl coasl. Facililies include 13 ollshore plallorns and one
onshore processing lacilily. Produclion conprises oil, gas and CLs.
On 21 April 2010, BP Trinidad & Tobagos (bpTT Serrelle plallorn was
inslalled in Trinidad walers in bpTTs easl coasl ollshore acreage. The
Serrelle plallorn is localed 51 kilonelres norlh ol bpTTs ango
developnenl. l represenls lhe lrsl developnenl in lhe norlhern area
ol bpTTs Colunbus Basin acreage and has been equipped lo enable
lulure developnenl opporlunilies in lhis area. Serrelle, bpTTs
lhirleenlh ollshore produclion plallorn, is lhe lllh nornally unnanned
inslallalion (U, designed and conslrucled in Trinidad & Tobago. The
Serrelle projecl was sanclioned in ay 2009 and has a design capacily
ol 1 billion cubic leel per day and will deliver a peak produclion ol 500
nillion slandard cubic leel per day. The plallorn will lie inlo lhe Cassia
B plallorn. Drilling is expecled lo connence in lhe lrsl quarler ol 2011
and produclion is planned lor lhe second quarler ol 2011.
Africa
Angola
BP is presenl in lour najor deepwaler licences ollshore Angola (Blocks 15,
17, 13 and 31 and is operalor in Blocks 13 and 31. n addilion, BP holds a
13.6' equily in lhe lrsl Angolan LC projecl.
n Augusl 2010, Tolal, as operalor ol Block 17 (BP 16.67', announced
lhe developnenl ol lhe Cravo Lirio Orquidea Violela (CLOV projecl and
lhe award ol lhe principal conlracls. This projecl is lhe lourlh
developnenl in Angolas deepwaler ollshore Block 17, aller Cirassol,
Dalia and PazHor, and is localed approxinalely 140 kilonelres lron
Luanda and 40 kilonelres norlhwesl ol Dalia in waler deplhs ranging
lron 1,100 lo 1,400 nelres. The CLOV developnenl will lead lo lour
lelds coning onslrean. Drilling is expecled lo slarl in 2012 and lrsl oil
is expecled in 2014. A lolal ol 34 subsea wells are planned lo be lied
back lo lhe CLOV FPSO unil, which will have a processing capacily ol
160nb/d and a slorage capacily ol approxinalely 1.3 nillion barrels.
Sanclioned in 2003, PSV conprises lhe developnenl ol lhe Plulao,
Salurno, Vnus and arle lelds, in a waler deplh ol approxinalely
2,000 nelres, sone 400 kilonelres norlhwesl ol Luanda. n 2010, BP
connenced lhe ollshore slage ol lhis najor projecl wilh lhe arrival ol
several vessels inlo Angola walers. Pile inslallalion has been conpleled
and inslallalion ol lhe produclion Howlines slarled. Parallel lo lhis, in
Singapore lhe PSV FPSO was nodiled lo include lhe new Turrel
Supporl Slruclure. Oil produclion lron PSV is scheduled lo slarl in
2011. The renaining discoveries in Block 31 will be developed lhrough
hubs sinilar lo lhe lrsl developnenl, PSV.
Algeria
BP is a parlner wilh Sonalrach and Slaloil in lhe n Salah (BP 33.15' and
n Anenas (BP 45.39' projecls, which supply gas lo lhe doneslic and
European narkels. BP is also in a joinl venlure wilh Sonalrach in lhe
Fhourde El Baguel (FEB oilleld (BP 60', an enhanced oil recovery
projecl 75 kilonelres easl ol lhe Hassi essaoud oilleld. n addilion, BP is
in a joinl venlure wilh Sonalrach in lhe Bourarhel Sud block, localed lo lhe
soulh wesl ol n Anenas.
n 2010, lhe n Salah conpressions projecl successlully achieved
lrsl gas.
During 2010, lhe nexl phase ol lhe n Anenas developnenl was
approved wilh lhe award ol lhe engineering prinary conlracls lor
conpression. The n Salah Soulhern Fields projecl is expecled lo
be approved in early 2011 wilh lrsl gas lor bolh projecls expecled
by 2014.
n Seplenber 2010, lhe Algerian governnenl approved an exlension lo
lhe second prospecling period lor lhe Bourarhel Sud block.
Libya
n Libya, BP is in parlnership wilh lhe Libyan nveslnenl Corporalion (LC
lo explore acreage in lhe onshore Chadanes and ollshore Sirl basins,
covered under lhe exploralion and produclionsharing agreenenl raliled in
Decenber 2007 (BP 35'. BPs nel assels in Libya al 31 Decenber 2010
were $212 nillion.
The lrsl phase ol lhe ollshore 3D seisnic acquisilion was conpleled in
Oclober 2009, lulllling BPs narine 3D seisnic connilnenl. The
progranne covered a surlace area ol 17,000 square kilonelres and
was lhe largesl ollshore 3D proprielary survey ever underlaken by an
inlernalional energy conpany. l involved lhe deploynenl ol lhe largesl
and nosl powerlul dalaprocessing lacilily ever inslalled on a seisnic
vessel and included a lechnology lrial ol a nulliazinulh (AZ seisnic
lechnique, lhe lrsl ever lhreeazinulh seisnic survey in Libyan walers.
The onshore 3D seisnic acquisilion in BPs Chadanes acreage
connenced in ovenber 2003 and is ongoing. This 14,000 square
kilonelre connilnenl represenls one ol lhe largesl single 3D land
seisnic connilnenls in lhe induslry.
The progranne involves lhe lrsl alscale deploynenl ol lhe SS
seisnic acquisilion lechnology, a cullingedge proprielary BP
lechnique using independenl sinullaneous sources lhal is allowing
BP lo operale one ol lhe nosl ellcienl land seisnic progrannes in
lhe world loday. The lechnology has enabled BP lo acquire highqualily,
denselysanpled 3D land dala lor lhe sane cosl as 3D narine or 2D
land dala while nininizing environnenlal inpacls, a najor achievenenl
lor lhe induslry.
Due lo lhe oulbreak ol polilical unresl in Libya, lhe BP ollce in Tripoli
was closed on 21 February 2011 and our Libyan operalions suspended.
All BP expalriale slall and lheir lanilies have been evacualed lron
Libya. Currenlly, il is nol possible lo say whal inpacl lhe ongoing
unresl, polenlial polilical changes and inlernalional sanclions will have
on lhe nowsuspended seisnic operalions and slarlup ol lhe
exploralion drilling progranne which had been scheduled lo
connence onshore and ollshore in 2011.
Egypl
BP has a longslanding hislory in Egypl, successlully operaling lhere lor
over 45 years. To dale BP has produced alnosl 40' ol Egypls enlire oil
produclion and supplies nore lhan 35' ol lhe doneslic gas denand wilh
ils parlners. n 2010, BP Egypl produclion was 133nboe/d. el assels al
31 Decenber 2010 were $6,107 nillion. BP is working lo neel Egypls
doneslic narkel growlh by aclively exploring in lhe ile Della and
invesling lo add produclion lron exisling discoveries.
n July 2010, BP signed a new agreenenl wilh lhe Egyplian inislry
ol Pelroleun and lhe Egyplian Ceneral Pelroleun Corporalion lo
develop lhe signilcanl hydrocarbon resources in lhe orlh Alexandria
and vesl edilerranean deepwaler concessions. Produclion lron lhe
vesl ile Della developnenl, al an eslinaled inveslnenl ol $9 billion
gross, is projecled lo reach up lo 1 billion cubic leel per day, providing a
najor new source ol gas lor lhe doneslic narkel in Egypl. The lrsl
phase will develop gas and associaled condensale lhrough subsea
developnenl ol lve ollshore lelds inlo a new purposebuill onshore
gas planl on Egypls edilerranean coasl. Firsl gas is expecled in
lale 2014. The new agreenenl anends lhe connercial lerns and
lhe governance slruclure lor lhe lwo concessions localed in lhe
vesl ile Della, enabling BP and ils parlner, FvE Dea, lo proceed
wilh lhe developnenl.
On 24 ovenber 2010, BP announced lhal il has nade a signilcanl
gas discovery in lhe deepwaler vesl ile Della area. The Hodoa
discovery is localed in lhe vesl edilerranean deepwaler ile Della
concession, sone 30 kilonelres norlhwesl ol Alexandria. The
vDv7 well was drilled lo a deplh ol 6,350 nelres and is lhe lrsl
Oligocene deepwaler discovery in lhe vesl ile Della area. Furlher
appraisal is under way. BP operales and holds 30' ol lhe vesl
edilerranean deepwaler concession wilh FvE Dea holding lhe
renaining 20'. Hodoa was drilled by lhe Pride orlh Anerica
senisubnersible rig, in a waler deplh ol 1,077 nelres.

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Due lo lhe recenl signilcanl polilical unresl in Cairo and olher najor
cilies in Egypl, lhe BP Egypl ollce in Cairo was closed lron 23 January
lor a period ol 10 days. Furlhernore, BP expalriale slall and lheir
lanilies were evacualed lron Egypl. The BP Egypl ollce was
reopened on 7 February, and nalional slall relurned lo work. osl
expalriale slall and lanilies relurned lo Egypl during February.
Produclion al BP Egypls joinl venlures (CUPCO and PHP was nol
allecled by lhe ollce closures. The ollce closure and slall evacualion
will have sone shorllern inpacls on projecl aclivily. On 11 February,
Presidenl ubarak resigned and handed over power lo lhe Suprene
Council ol lhe Egyplian Arned Forces. Currenlly, il is nol possible lo
say whal inpacl, il any, lulure polilicial changes will have on lhe
BP Egypl business.
Asia
veslern ndonesia
BP has a joinl inleresl in Virginia ndonesia Conpany LLC (VCO, lhe
operalor ol lhe SangaSanga PSA (BP 33' supplying gas lo ndonesias
largesl LC exporl lacilily, lhe Bonlang LC planl in Kalinanlan.
n June 2010, BP was awarded joinl sludy righls wilh lhe ndonesia
Direclorale Ceneral ol Oil and Cas on lhe vesl Sanga Sanga block
innedialely adjacenl lo lhe SangaSanga PSA. This sludy involves
galhering, processing and inlerpreling dala lo evaluale lhe viabilily ol a
coalbed nelhane (CB projecl in lhe area. The award ol lhe joinl
sludy secures nalching righls lor BP and ils parlner over lhe
3,500square kilonelre area when lhe area will be lendered lor
produclionsharing conlracls (PSC, allowing lhen lo change lheir bid
lo nalch lhal ol lhe highesl bidder al lhal line.
China
BPs upslrean assel in lhe counlry is lhe Yacheng ollshore gas leld (BP
34.3' in lhe Soulh China Sea, one ol lhe biggesl ollshore gas lelds in
China. Yacheng supplies lhe Caslle Peak Power Conpany gas lor up lo
70' ol Hong Kongs gaslred eleclricily generalion. Addilional gas is also
sold lo lhe Hainan Holdings Fuel & Chenical Corporalion Liniled.
On 12 January 2011, BP announced lhal il had signed a new agreenenl
wilh lhe China alional Ollshore Oil Corporalion (COOC lor
deepwaler exploralion in Block 43/11 in lhe Soulh China Sea, subjecl lo
parlner and governnenl approval.
Azerbaijan
BP is lhe largesl loreign inveslor in lhe counlry. BP operales lwo PSAs,
AzeriChiragCunashli (ACC and Shah Deniz, and also holds olher
exploralion leases.
On 9 arch 2010, lhe sleering connillee lor lhe developnenl ol lhe
ACC leld sanclioned inveslnenl in lhe Chirag Oil Projecl (COP.
This is lhe nexl najor capilal inveslnenl in lhe ongoing developnenl
ol lhe ACC leld in lhe Azerbaijan seclor ol lhe Caspian Sea. The projecl
is planned lo increase oil produclion and recovery lron lhe leld lhrough
a new ollshore lacilily which is designed lo lll a crilical gap in lhe
leld inlraslruclure belween lhe exisling Deepwaler Cunashli and
Chirag1 plallorns.
On 7 June 2010, lhe governnenl ol Azerbaijan and lhe governnenl ol
Turkey signed a enorandun ol Underslanding (OU as parl ol a
package ol docunenls lhal will regulale lhe sale ol Azerbaijani gas lo
Turkey and lransil lerns lor lransporlalion ol lhe gas lo lhe European
narkels lhrough lhe lerrilory ol Turkey. This narks a najor slep
lorward lowards conclusion ol required agreenenls lor Shah Deniz
Slage 2 gas sales lo Turkey and beyond, and is a nileslone lhal
underpins lhe signilcance ol lhe Slage 2 developnenl plans and paves
lhe way lor lhe projecl lo nove lorward lowards a lnal inveslnenl
decision by lhe Shah Deniz parlnership. Al lhis slage, discussions lo
delne lhe besl oplion lor lurlher gas narkeling and sales conlinue and
lhese are led by lhe Azerbaijani governnenl in conjunclion wilh lhe
Shah Deniz parlnership.
On 7 Oclober 2010, BP and lhe Slale Oil Conpany ol lhe Fepublic ol
Azerbaijan (SOCAF signed a new PSA lor lhe joinl exploralion and
developnenl ol lhe ShalagAsinan slruclure in lhe Azerbaijan seclor o
lhe Caspian Sea. Under lhe PSA, which is lor 30 years, BP will be lhe
operalor wilh 50' working inleresl and SOCAF will hold lhe renainin
50' equily. The block lies sone 125 kilonelres (73 niles lo lhe soulh
easl ol Baku. l covers an area ol sone 1,100 square kilonelres and ha
never been explored belore. l is localed in a deepwaler seclion ol
aboul 650300 nelres wilh reservoir deplh ol aboul 7,000 nelres.
On 24 Decenber 2010, BP and ils parlners received a lveyear PSA
exlension lor Shah Deniz lron SOCAF. The PSA exlension allows lhe
Shah Deniz parlners lo negoliale new longlern gas conlracls and
underpins lhe econonics ol lhe projecl.
During 2010, lhe renedial work necessary lollowing lhe subsurlace
gas release lhal occurred benealh lhe Cenlral Azeri plallorn in
Seplenber 2003 was conpleled. vilh lhe exceplion ol lwo wells lhal
were abandoned, all wells on lhe Cenlral Azeri plallorn are online and
in service.
alliran nlerlrade Co (CO Lld is an ranian conpany and has a less
lhan 10' nonoperaling inleresl in Shah Deniz. CO was selecled as
Shah Deniz projecl parlicipanl by lhe Slale ol Azerbaijan when lhe Sha
Deniz PSA was awarded in June 1996. Under arlicle 30 ol lhe new EU
Fegulalions concerning reslriclive neasures againsl ran, any body,
enlily or holder ol righls derived lron an award ol a PSA belore lhe
enlry inlo lorce ol lhe EU Fegulalions by a sovereign governnenl olher
lhan ran, shall nol be considered an ranian person, enlily or body lor
lhe purposes ol lhe nain operalive provisions ol lhe EU Fegulalions.
Fussia
On 14 January 2011, BP and Fosnell
a
announced a slralegic global
alliance. Fosnell and BP have agreed lo explore and develop lhree
licence blocks in Fussias Soulh Kara Sea covering approxinalely
125,000 square kilonelres. Addilionally, BP has agreed lo issue
933,694,633 ordinary BP shares lo Fosnell (represenling 5' ol BP in
a swap where Fosnell has agreed lo lransler 1,010,153,003 ordinary
Fosnell shares lo BP (represenling 9.5' ol Fosnell. Finally, BP and
Fosnell have agreed lo olher joinl pursuils including lhe eslablishnenl
ol an Arclic lechnology cenlre in Fussia, joinl lechnical sludies in lhe
Fussian Arclic beyond lhe Soulh Kara Sea area and lhe search lor
addilional inlernalional collaboralion opporlunilies. The share swap
lransaclion is subjecl lo cerlain lisling approvals and lhe conplelion ol
cerlain adninislralive requirenenls. The share swap agreenenl is
subjecl lo lhe oulcone ol arbilralion proceedings belween BP and Alla
Pelroleun Holdings Liniled (APH and OCP Venlures Liniled (OCP
who have raised issues relaling lo lhe share swap agreenenl and lhe
alliance. APH is a conpany owned by Alpha Croup. APH and OCP
each own 25' ol TKBP in which BP also has a 50' shareholding.
See lurlher inlornalion in Legal proceedings on page 133.
TNI-BP
TKBP, an associale owned by BP (50' and Alla Croup and Access
Fenova (AAF (50', is an inlegraled oil conpany operaling in Fussia and
Ukraine. BPs inveslnenl in TKBP is reporled in lhe Exploralion and
Produclion segnenl. The TKBP groups najor assels are held in OAO
TKBP Holding. Olher assels include lhe BPbranded relail siles in lhe
oscow region and inleresls in OAO Fusia Pelroleun and lhe OAO
Slavnell group. The worklorce conprises nore lhan 43,000 people.
Downslrean, TKBP has inleresls in six relneries in Fussia and
Ukraine (including Fyazan and Lisichansk and Slavnells Yaroslavl
relnery, wilh lhroughpul ol approxinalely 715 lhousand barrels per
day. TKBP supplies approxinalely 1,400 branded llling slalions in
Fussia and Ukraine and has nore lhan 25' narkel share ol lhe
oscow relail narkel.
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BP already holds a 1.3' inveslnenl in Fosnell Oil Conpany wilh a carrying value ol $943 nillion.
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Business review
On 17 February 2010, lhe TKBP board ol direclors endorsed
inveslnenl projecls lolalling nore lhan $1.3 billion lo be spenl in 2010
- 2012. Ol lhis anounl, $1.7 billion is allocaled lor lwo najor upslrean
projecls: lull leld developnenl and crealion ol regional inlraslruclure in
lhe easlern parl ol lhe Uval group ol lelds and lurlher developnenl ol
lhe Verkhnechonskoye oilleld in Easl Siberia. enbers ol lhe board
also endorsed TKBPs parlicipalion in a joinl venlure belween
alional Pelroleun Consorliun LLP and Pelroleos de Venezuela
(PDVSA, lhe slale oil conpany ol Venezuela, lo appraise and develop
lhe JU 6 block in Venezuela and lo release lunding ol $130 nillion
lo supporl lhese aclivilies in 2010 - 2012.
On 23 ay 2010, TKBP announced conplelion ol a deal lo acquire
100' ol lhe Vik Oil group ol conpanies in lhe Ukraine. Previously Vik
Oil owned 113 luel slalions in 13 Ukrainian regions, as well as 3 oil
depols, 49 pelrol lankers and 122 land plols in various slages ol
developnenl. TKBP paid $302 nillion lor lhese inleresls.
On 23 February 2011, TKBP announced lhal il had sold ils inleresl in
lhe Kovykla gas leld lo Cazpron.
Sakha|in
BP has inleresls in Sakhalin lhrough a joinl venlure conpany, Elvary
ellegaz, in which BP holds a 49' equily inleresl, and ils parlner, Fosnell,
holds lhe renaining 51' inleresl. During lhe year, Elvary ellegaz, via ils
Fussian allliale, held geological and geophysical sludies licences wilh lhe
Fussian inislry ol alural Fesources and Ecology (FE lo perlorn
exploralion seisnic and drilling operalions in a licence area oll lhe easl
coasl ol Fussia. To dale, 2D and 3D seisnic dala has been acquired and
lour wells have been drilled in lhe licence area. n 2010, addilional
eleclronagnelic surveys were perlorned in advance ol lulure drilling
connilnenls. n lhe lourlh quarler ol 2010, lhe value ol BPs inveslnenl
in Sakhalin was wrillendown lo reHecl lhe currenl oullook on lhe lulure
recoverabilily ol lhe inveslnenl.
iddle Easl and Pakislan
Produclion in lhe iddle Easl consisls principally ol lhe produclion
enlillenenl ol associales in Abu Dhabi, where we have equily inleresls
ol 9.5' and 14.67' in onshore and ollshore concessions respeclively.
On 3 January 2010, BP received approval lron lhe governnenl ol
Jordan lo join lhe slaleowned alional Pelroleun Conpany lo exploil
lhe onshore Fisha concession in lhe norlheasl ol lhe counlry. BP
eslablished an ollce in February and has slarled ils exploralion and
appraisal work progranne, including connencenenl ol a
5,000square kilonelre seisnic progranne.
On 11 Oclober 2010, aller 32 years as operalor ol lhe Sharjah
concession area, BP agreed lo lransler ils operalorship ol lhe
concession lo lhe governnenl ol Sharjah. BP will relain ils equily
ownership ol 40' ol lhe concession unlil expiry in ovenber 2013.
During 2010, najor nileslones achieved in lhe Onan Khazzan
akaren gas appraisal progranne included lhe award ol lhe conlracl
lor early engineering, design and concepl sludies lor lhe polenlial
longlern developnenl ol hydrocarbon resources in lhe block, and lhe
connissioning ol early well lesl lacililies.
raq
Following a successlul bid wilh PelroChina lo run lhe Funaila oil leld in
June 2009, lhe lechnical service conlracl (TSC becane elleclive on
17 Decenber 2009. BP holds a 33' share and is lhe lead conlraclor.
Funaila is one ol lhe worlds largesl oillelds and was discovered by BP
in 1953. l currenlly produces approxinalely hall ol raqs oil exporls and
conprises lve producing reservoirs. BP logelher wilh ils parlners is
aclively relurbishing lhe wells and lacililies.
On 1 July 2010, lhe Funaila Operaling Organizalion (FOO was
eslablished and began lo lake over operalorship ol lhe Funaila oilleld
lron Soulh Oil Conpany (SOC, one ol lhe slaleowned oil conpanies
in raq. The FOO is nade up ol approxinalely 4,000 assignees lron
BP, PelroChina and SOC, and ils crealion is one ol lhe lrsl sleps in lhe
plan lo grow Funaila produclion lo 2.35 nillion barrels per day over lhe
nexl lew years.

n Seplenber 2010, BP and PelroChina, as lhe inlernalional parlners in
lhe FOO, signed an agreenenl wilh lhe Brilish Council lo lund
dedicaled English language luilion lor approxinalely 500 enployees ol
lhe FOO. The Brilish Council leachers will be based in lhe Funaila
oilleld and provide lraining lor lhe currenl English language leachers in
SOC and lhe local orlh Funaila Village school. According lo lhe TSC,
BP and PelroChina are required lo spend $5 nillion per year on
educalion and lhis agreenenl wilh lhe Brilish Council is lhe lrsl najor
progranne lunded as parl ol lhis connilnenl.
n Decenber 2010, as a resull ol increasing aclivily lhroughoul 2010,
produclion was suslained al 10' above lhe inilial produclion rale lo
achieve lhe inproved produclion largel which is lhe lrsl signilcanl
nileslone in lhe rehabililalion ol Funaila. Achievenenl ol PT was
lornally agreed wilh lhe Covernnenl ol raq on 25 Decenber 2010 and
consequenlly lhe Conlraclors (BP and PelroChina in accordance wilh
lhe TSC, becone eligible lor Service Fees during 2011.
AustraIasia
Auslralia
BP is one ol seven parlners in lhe orlh vesl Shell (vS venlure. Six
parlners (including BP hold an equal 16.67' inleresl in lhe inlraslruclure
and oil reserves and an equal 15.73' inleresl in lhe gas and condensale
reserves, wilh a sevenlh parlner owning lhe renaining 5.32' ol gas and
condensale reserves. The vS venlure is currenlly lhe principal supplier
lo lhe doneslic narkel in veslern Auslralia and one ol lhe largesl LC
exporl projecls in Asia wilh lve LC lrains
a
in operalion.
The orlh Fankin 2 projecl linking a second plallorn lo lhe exisling
orlh Fankin A plallorn, sanclioned in 2003, renains on lrack lor
slarlup in lale 2012. On conplelion, lhe orlh Fankin A and orlh
Fankin B plallorns will operale as a single inlegraled lacilily and
recover lowpressure gas lron lhe orlh Fankin and Perseus
gas lelds.
The Janzo leld (BP 5.375' developnenl, which is parl ol lhe
Crealer Corgon projecl, is on lrack. The Janszo leld will be developed
as parl ol lhe Crealer Corgon projecl, which will conprise lhree LC
lrains, each wilh a capacily ol 5 nillion lonnes per annun (nlpa, on
Barrow sland, wilh lrsl gas expecled in 2014. As parl ol lhis, a
unilizalion and unil operaling agreenenl has been execuled wilh lhe
joinl venlure parlners and sales and purchase agreenenls lor lhe
wellhead sale ol raw gas and repurchase ol LC exBarrow sland have
been execuled belween BP and Shell.
n January 2011, BP announced lhal il had been awarded lour
deepwaler ollshore exploralion blocks in lhe Ceduna Sub Basin wilhin
lhe Creal Auslralian Bighl, oll lhe coasl ol soulh Auslralia.
as!ern ndonesia
On 26 ovenber 2010, BP was awarded a 100' inleresl in lhe orlh
Aralura oil and gas PSA in onshore Papua province. The PSA was
signed in Jakarla by represenlalives ol lhe governnenl and BP. The
orlh Aralura PSA is localed on lhe coasl ol lhe Aralura Sea, 430
kilonelres soulh easl ol lhe BPoperaled Tangguh planl, covering an
area ol jusl over 5,000 square kilonelres. BP expecls lo connence
seisnic operalions on lhe block in lhe near lulure.
Midstream activities
Oil and nalural gas lransporlalion
The group has direcl or indirecl inleresls in cerlain crude oil and nalural gas
lransporlalion syslens. The lollowing narralive delails lhe signilcanl
evenls lhal occurred during 2010 by counlry.
BPs onshore US crude oil and producl pipelines and relaled
lransporlalion assels are included under Felning and arkeling
(see page 55.
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An LC lrain is a processing lacilily used lo liquely and purily LC.

Business review
B
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A|aska
BP owns a 46.9' inleresl in lhe TransAlaska Pipeline Syslen (TAPS, wilh
lhe balance owned by lour olher conpanies. BP also owns a 50' inleresl
in a joinl venlure conpany called Denali - The Alaska Cas Pipeline (Denali.
The renaining 50' ol Denali is owned by a subsidiary ol ConocoPhillips.
The proposed Denali projecl consisls ol a gas lrealnenl planl (CTP on
Alaskas orlh Slope, lransnission lines lron lhe Prudhoe Bay and Poinl
Thonson lelds lo lhe CTP, an Alaska nainline lhal would run lron lhe
orlh Slope ol Alaska lo lhe AlaskaYukon border, and a Canada nainline
lhal would lransporl gas lron lhe AlaskaYukon border lo Alberla. Also
included are delivery poinls along lhe roule lo help neel local nalural gas
denand in Alaska and Canada. Denalis cosl eslinale lor lhe CTP and
pipelines is approxinalely $35 billion.
Denali conducled concurrenl 90day open season bidding processes
lor bolh lhe US and Canadian porlions ol lhe Denali projecl during lhe
lhird quarler ol 2010, lhe bidding lor each concluded on 4 Oclober
2010. Condilional bids were received lor signilcanl capacily lron
polenlial shippers. Al lhe end ol 2010, Denali is evalualing lhe bids
received, and conldenlial negolialions wilh polenlial shippers conlinue
in an ellorl lo reach binding agreenenls. l agreenenls can be
concluded lor sullcienl capacily, Denali will seek cerlilcalion lron lhe
Federal Energy Fegulalory Connission (FEFC ol lhe US and lhe
alional Energy Board (EB ol Canada lo nove lorward wilh projecl
conslruclion. Denali would nanage lhe projecl, and would own and
operale lhe pipeline when conpleled. BP nay consider olher equily
parlicipanls, including pipeline conpanies, lhal can add value lo lhe
projecl and help nanage lhe risks involved.
On 12 January 2010, an agreenenl lo sellle challenges lo TAPS carrier
inlerslale larill rale llings lor lhe calendar year 2003 and lhe lrsl hall ol
2009 was signed by lhe TAPS carriers and lhose challenging lhe larills
al lhe US FEFC. The agreenenl was approved by lhe US FEFC on
1 April 2010. Under lhe lerns ol lhe selllenenl, in lhe second quarler
ol 2010 BP paid addilional relunds lo lhirdparly shippers, anounling
lo $0.4 nillion, represenling lhe $0.12/bbl dillerence belween lhe
$3.45/bbl larill rale on which lhe inlerin relunds paid in 2009 lor lhis
period were based, and lhe $3.33/bbl larill rale in lhe approved
selllenenl agreenenl.
Nor!h Sea
n lhe UK seclor ol lhe orlh Sea, BP operales lhe Forlies Pipeline Syslen
(FPS (BP 100', an inlegraled oil and CLs lransporlalion and processing
syslen lhal handles produclion lron nore lhan 50 lelds in lhe Cenlral
orlh Sea. The syslen has a capacily ol nore lhan 1 nillion barrels per
day, wilh average lhroughpul in 2010 ol 593nboe/d. BP also operales and
has a 29.5' inleresl in lhe Cenlral Area Transnission Syslen (CATS, a
400kilonelre nalural gas pipeline syslen in lhe cenlral UK seclor ol lhe
orlh Sea. The pipeline has a lransporlalion capacily ol 1,700nncl/d lo a
nalural gas lerninal al Teesside in norlheasl England. CATS ollers nalural
gas lransporlalion and processing services. n addilion, BP operales lhe
Dinlinglon/Easinglon gas processing lerninal (BP 100' on Hunberside
and lhe Sullon Voe oil and gas lerninal in Shelland.
Asia
BP, as operalor, holds a 30.1' inleresl in and nanages lhe BakuTbilisi
Ceyhan (BTC oil pipeline. The 1,763kilonelre pipeline lransporls oil lron
lhe BPoperaled ACC oilleld in lhe Caspian Sea lo lhe easlern
edilerranean porl ol Ceyhan. BP is lechnical operalor ol, and holds a
25.5' inleresl in, lhe 693kilonelre Soulh Caucasus Pipeline (SCP, which
lakes gas lron Azerbaijan lhrough Ceorgia lo lhe Turkish border. n addilion,
BP operales lhe Azerbaijan seclion ol lhe veslern Exporl Foule Pipeline
belween Azerbaijan and lhe Black Sea coasl ol Ceorgia (as operalor ol
Azerbaijan nlernalional Operaling Conpany.
On 21 July 2010, lhe BTC pipeline exceeded a daily average ol
1 nillion barrels per day lor lhe lrsl line, recording a daily exporl lgure ol
1.057 nillion barrels. A Drag Feducing Agenl (DFA was ulilized lo achieve
lhis nileslone.

Liquehed naturaI gas
Our LC aclivilies are locused on building conpelilively advanlaged
liquelaclion projecls, eslablishing diversiled narkel posilions lo creale
naxinun value lor our upslrean nalural gas resources and capluring
lhirdparly LC supply lo conplenenl our equily Hows.
Assels and signilcanl evenls in 2010 included:
n Trinidad, BPs nel share ol lhe capacily ol Allanlic LC Trains
a

1, 2, 3 and 4 is 6 nillion lonnes ol LC per year (292 billion cubic leel
equivalenl regasiled. All ol lhe LC lron Allanlic Train 1 and nosl ol
lhe LC lron Trains 2 and 3 is sold lo lhird parlies in lhe US and Spain
under longlern conlracls. All ol BPs LC enlillenenl lron Allanlic
LC Train 4 and sone ol ils LC enlillenenl lron Trains 2 and 3 is
narkeled via BPs LC narkeling and lrading business lo a variely ol
narkels including lhe US, lhe Doninican Fepublic, Spain, lhe UK and
lhe Far Easl.
ve have a 10' equily shareholding in lhe Abu Dhabi Cas Liquelaclion
Conpany, which in 2010 supplied 5.35 nillion lonnes (302,231nnscl
ol LC.
BP has a 13.6' share in lhe Angola LC projecl, which is expecled lo
receive approxinalely 1 billion cubic leel ol associaled gas per day lron
ollshore producing blocks and lo produce 5.2 nillion lonnes per year ol
LC (gross, as well as relaled gas liquids producls. Conslruclion and
inplenenlalion ol lhe projecl is proceeding and lhe planl is expecled lo
slarl up in 2012.
n ndonesia, BP is involved in lwo ol lhe lhree LC cenlres in lhe
counlry. BP parlicipales in ndonesias LC exporls lhrough ils holdings
in lhe SangaSanga PSA (BP 33'. SangaSanga currenlly delivers
around 13' ol lhe lolal gas leed lo Bonlang, one ol lhe worlds largesl
LC planls. The Bonlang planl produced nore lhan 17 nillion lonnes ol
LC in 2010.
Also in ndonesia, BP has ils lrsl operaled LC planl, Tangguh
(BP 37.16', in Papua Baral. The lrsl phase ol Tangguh, which is in ils
lrsl lull year ol operalions, conprises lwo ollshore plallorns, lwo
pipelines and an LC planl wilh lwo produclion lrains wilh a lolal capacily
ol 7.6nlpa. The Tangguh projecl has six longlern conlracls in place lo
supply LC lo cusloners in China, Soulh Korea, exico and Japan.
n Auslralia, we are one ol seven parlners in lhe vS venlure. The joinl
venlure operalion covers ollshore produclion plallorns, lrunklines,
onshore gas and LC processing planls and LC carriers. BPs nel
share ol lhe capacily ol vS LC Trains 15 is 2.7nlpa ol LC.
BP has a 30' equily slake in lhe 7nlpa capacily Cuangdong LC
regasilcalion and pipeline projecl in soulheasl China, naking il lhe
only loreign parlner in Chinas LC inporl business. The lerninal is
also supplied under a longlern conlracl wilh Auslralias vS projecl.
n bolh lhe Allanlic and Asian regions, BP is narkeling LC using BP
LC shipping and conlraclual righls lo access inporl lerninal capacily
in lhe liquid narkels ol lhe US (via Cove Poinl and Elba sland, lhe UK
(via lhe sle ol Crain and laly (Fovigo, and is supplying Asian
cusloners in Japan, Soulh Korea and Taiwan.
Gas marketing and trading activities
Cas and power narkeling and lrading aclivily is underlaken prinarily in lhe
US, Canada and Europe lo narkel bolh BP produclion and lhirdparly
nalural gas, supporl LC aclivilies and nanage narkel price risk, as well as
lo creale increnenlal lrading opporlunilies lhrough lhe use ol connodily
derivalive conlracls. Addilionally, lhis aclivily generales lee incone and
enhances nargins lron sources such as lhe nanagenenl ol price risk on
behall ol lhirdparly cusloners. These narkels are large, liquid and volalile.
arkel condilions have becone nore challenging over lhe pasl year due lo
lhe accessibilily ol shale gas and increased pipeline builds in orlh
Anerica. This has resulled in liniled basis dillerenlials and lasler
produclion responses lo price. However, new narkels are conlinuing lo
develop wilh conlinenlal European narkels opening up and LC beconing
nore liquid. The supply and lrading lunclion supporled lhe group lhrough a
period ol uncerlainly in lhe credil narkels concerning BPs lnancial
posilion during lhe Cull ol exico oil spill.
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See loolnole a on page 43.
Business review
n conneclion wilh ils lrading aclivilies, lhe group uses a range ol
connodily derivalive conlracls and slorage and lransporl conlracls.
These include connodily derivalives such as lulures, swaps and oplions
lo nanage price risk and lorward conlracls used lo buy and sell gas and
power in lhe narkelplace. Using lhese conlracls, in conbinalion wilh
righls lo access slorage and lransporlalion capacily, allows lhe group lo
access advanlageous pricing dillerences belween localions, line periods
and arbilrage belween narkels. alural gas lulures and oplions are lraded
lhrough exchanges, while overlhecounler (OTC oplions and swaps are
used lor bolh gas and power lransaclions lhrough bilaleral and/or
cenlrallycleared arrangenenls. Fulures and oplions are prinarily used lo
lrade lhe key index prices, such as Henry Hub, while swaps can be lailored
lo price wilh relerence lo specilc delivery localions where gas and power
can be boughl and sold. OTC lorward conlracls have evolved in bolh lhe
US and UK narkels, enabling gas and power lo be sold lorward in a variely
ol localions and lulure periods. These conlracls are used bolh lo sell
produclion inlo lhe wholesale narkels and as lrading inslrunenls lo buy
and sell gas and power in lulure periods. Slorage and lransporlalion
conlracls allow lhe group lo slore and lransporl gas, and lransnil power
belween lhese localions. The group has developed a risk governance
lranework lo nanage and oversee lhe lnancial risks associaled wilh lhis
lrading aclivily, which is described in ole 27 lo lhe Financial slalenenls
on pages 135190.
The range ol conlracls lhal lhe group enlers inlo is described in
Cerlain delnilions - connodily lrading conlracls, on page 32.
OiI and gas discIosures
The lollowing lables provide addilional dala and disclosures in relalion lo our oil and gas operalions.
Average sales price per unil ol produclion
$ per unil ol produclion
a
Europe orlh Soulh Alrica Asia Auslralasia Tolal group
Anerica Anerica average
Fesl ol
Fesl ol orlh Fesl ol
UK Europe US Anerica Fussia Asia
Average sales price
b
Subsidiaries
2010
Liquids
c
76.33 81.09 70.79 48.26 71.01 74.87 - 78.80 75.81 73.41
Gas 5.44 7.16 3.88 4.20 2.80 4.11 - 4.05 7.01 3.97
2009
Liquids
c
62.19 60.73 53.63 30.77 52.43 57.40 - 61.27 57.22 56.26
Cas 4.63 7.62 3.07 3.53 2.50 3.61 - 3.30 5.25 3.25
2003
Liquids
c
39.32 93.77 39.22 64.42 91.61 39.44 - 97.20 36.33 90.20
Cas 3.41 6.96 6.77 7.37 4.90 4.46 - 3.63 9.22 6.00
Equilyaccounled enlilies
d
2010
Liquids
c
- - - - 61.60 - 60.39 6.72 - 52.81
Gas - - - - 1.97 - 1.91 7.83 - 2.04
2009
Liquids
c
- - - - 51.01 - 47.27 5.59 - 41.93
Cas - - - - 1.90 - 1.51 5.25 - 1.63
2003
Liquids
c
- - - - 56.39 - 73.7 4.30 - 61.39
Cas - - - - 1.97 - 1.63 10.53 - 1.94

a
Unils ol produclion are barrels lor liquids and lhousands ol cubic leel lor gas.
b
Fealizalions include lranslers belween businesses.
c
Crude oil and nalural gas liquids.
d
l is connon lor equilyaccounled enlilies agreenenls lo include pricing clauses lhal require selling a signilcanl porlion ol lhe enlilled produclion lo local governnenls or narkels al discounled
prices.
Average produclion cosl per unil ol produclion
$ per unil ol produclion
a
Europe orlh Soulh Alrica Asia Auslralasia Tolal group
Anerica Anerica average
Fesl ol
The average produclion cosl per
unil ol produclion
a
Subsidiaries
2010 12.79 9.76 8.10 15.78 2.48 7.52 - 4.59 2.03 6.77
2009 12.33 10.72 7.26 14.45 2.20 6.05 - 4.35 1.60 6.39
2003 12.19 3.74 9.02 15.35 2.34 6.72 - 5.24 1.74 7.24
2010 - - - - 6.32 - 5.04 0.97 - 4.26
2009 - - - - 6.12 - 4.63 0.94 - 3.95
2003 - - - - 5.34 - 5.97 0.37 - 4.73

Unils ol produclion are barrels lor liquids and lhousands ol cubic leel lor gas. Anounls do nol include ad valoren and severance laxes.
a

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Licence expir,
The group holds no licences due lo expire wilhin lhe nexl lhree years lhal
would have a signilcanl inpacl on BPs reserves or produclion.
Fesource progression
BP nanages ils hydrocarbon resources in lhree najor calegories: prospecl
invenlory, conlingenl resources and proved reserves. vhen a discovery is
nade, volunes usually lransler lron lhe prospecl invenlory lo lhe
conlingenl resources calegory. The conlingenl resources nove lhrough
various subcalegories as lheir lechnical and connercial nalurily increases
lhrough appraisal aclivily.
Al lhe poinl ol lnal inveslnenl decision, nosl proved reserves will
be calegorized as proved undeveloped (PUD. Volunes will subsequenlly
be recalegorized lron PUD lo proved developed (PD as a consequence ol
developnenl aclivily. vhen parl ol a wells proved reserves depends on a
laler phase ol aclivily, only lhal porlion ol proved reserves associaled wilh
exisling, available lacililies and inlraslruclure noves lo PD. The lrsl PD
bookings will lypically occur al lhe poinl ol lrsl oil or gas produclion. ajor
developnenl projecls lypically lake one lo lour years lron lhe line ol inilial
booking ol proved reserves lo lhe slarl ol produclion. Changes lo proved
reserves bookings nay be nade due lo analysis ol new or exisling dala
concerning produclion, reservoir perlornance, connercial laclors,
acquisilion and disposal aclivily and addilional reservoir developnenl
aclivily.
Conlingenl resources in a leld will only be recalegorized as proved
reserves when all lhe crileria lor allribulion ol proved slalus have been nel
and lhe proved reserves are included in lhe business plan and scheduled
lor developnenl, lypically wilhin lve years. The group will only book proved
reserves where developnenl is scheduled lo connence aller lve years,
il lhese proved reserves salisly lhe SECs crileria lor allribulion ol proved
slalus. There are volunes ol proved undeveloped reserves scheduled lo
connence aller lve years in Trinidad and Canada lhal are parl ol
ongoing developnenl aclivilies lor which BP has a hislorical lrack record
ol conpleling conparable projecls. n all cases, lhe volunes are being
progressed as parl ol an adopled developnenl plan, which calls lor
drilling ol wells over an exlended period ol line given lhe nagnilude ol
lhe developnenl.
Tolal developnenl expendilure in Exploralion and Produclion,
excluding nidslrean aclivilies, was $12,044 nillion in 2010 ($9,675 nillion
lor subsidiaries and $2,369 nillion lor equilyaccounled enlilies. The najor
areas converled in 2010 were Azerbaijan, ndonesia, Fussia, Trinidad and
lhe US.
n 2010, we converled 1,431nnboe ol proved undeveloped
reserves lo proved developed reserves lhrough ongoing inveslnenl in our
upslrean developnenl aclivilies. The lable below describes lhe changes lo
our proved undeveloped reserves posilion lhrough lhe year.
volunes in nnboe
Proved undeveloped reserves al 1 January 2010 7,952
Fevisions ol previous eslinales (247
nproved recovery 1,062
Discoveries and exlensions 639
Purchases 74
Sales (150
Tolal in year proved undeveloped reserves changes 9,330
Progressed lo proved developed reserves (1,431
Proved undeveloped reserves al 31 Decenber 2010 7,399
BP bases ils proved reserves eslinales on lhe requirenenl ol reasonable
cerlainly wilh rigourous lechnical and connercial assessnenls based on
convenlional induslry praclice. BP only applies lechnologies lhal have been
leld lesled and have been denonslraled lo provide reasonably cerlain
resulls wilh consislency and repealabilily in lhe lornalion being evalualed
or in an analogous lornalion. BP applies highresolulion seisnic dala lor
lhe idenlilcalion ol reservoir exlenl and Huid conlacls only where lhere is
an overwhelning lrack record ol success in ils local applicalion. n cerlain
deepwaler lelds BP has booked proved reserves belore produclion How
lesls are conducled, in parl because ol lhe signilcanl salely, cosl and
environnenlal inplicalions ol conducling lhese lesls. The induslry has
nade subslanlial lechnological inprovenenls in underslanding, neasuring
and delinealing reservoir properlies wilhoul lhe need lor How lesls. To
delernine reasonable cerlainly ol connercial recovery, BP enploys a
general nelhod ol reserves assessnenl lhal relies on lhe inlegralion ol
lhree lypes ol dala: (1 well dala used lo assess lhe local characlerislics
and condilions ol reservoirs and Huids, (2 leld scale seisnic dala lo allow
lhe inlerpolalion and exlrapolalion ol lhese characlerislics oulside lhe
innediale area ol lhe local well conlrol, and (3 dala lron relevanl
analogous lelds. vell dala includes appraisal wells or sidelrack holes, lull
logging suiles, core dala and Huid sanples. BP considers lhe inlegralion ol
lhis dala in cerlain cases lo be superior lo a How lesl in providing
underslanding ol overall reservoir perlornance. The colleclion ol dala lron
logs, cores, wireline lornalion leslers, pressures and Huid sanples
calibraled lo each olher and lo lhe seisnic dala can allow reservoir
properlies lo be delernined over a grealer volune lhan lhe localized
volune ol invesligalion associaled wilh a shorllern How lesl. There is a
slrong lrack record ol proved reserves recorded using lhese nelhods,
validaled by aclual produclion levels.
Covernance
BPs cenlrally conlrolled process lor proved reserves eslinalion approval
lorns parl ol a holislic and inlegraled syslen ol inlernal conlrol. l consisls
ol lhe lollowing elenenls:
Accounlabililies ol cerlain ollcers ol lhe group lo ensure lhal lhere is
review and approval ol proved reserves bookings independenl ol lhe
operaling business and lhal lhere are elleclive conlrols in lhe approval
process and verilcalion lhal lhe proved reserves eslinales and lhe
relaled lnancial inpacls are reporled in a linely nanner.
Capilal allocalion processes, whereby delegaled aulhorily is exercised
lo connil lo capilal projecls lhal are consislenl wilh lhe delivery ol lhe
groups business plan. A lornal review process exisls lo ensure lhal
bolh lechnical and connercial crileria are nel prior lo lhe connilnenl
ol capilal lo projecls.
nlernal Audil, whose role is lo consider whelher lhe Croups syslen ol
inlernal conlrol is adequalely designed and operaling elleclively lo
respond approprialely lo lhe risks lhal are signilcanl lo BP.
Approval hierarchy, whereby proved reserves changes above cerlain
lhreshold volunes require cenlral aulhorizalion and periodic reviews.
The lrequency ol review is delernined according lo leld size and
ensures lhal nore lhan 30' ol lhe BP proved reserves base
undergoes cenlral review every lwo years, and nore lhan 90' is
reviewed cenlrally every lour years.
BPs vice presidenl ol segnenl reserves is lhe pelroleun engineer
prinarily responsible lor overseeing lhe preparalion ol lhe reserves
eslinale. He has over 25 years ol diversiled induslry experience wilh lhe
pasl eighl spenl nanaging lhe governance and conpliance ol BPs
reserves eslinalion. He is a pasl nenber ol lhe Sociely ol Pelroleun
Engineers Oil and Cas Feserves Connillee, a silling nenber ol lhe
Anerican Associalion ol Pelroleun Ceologisls Connillee on Fesource
Evalualion and vicechair ol lhe bureau ol lhe Uniled alions Econonic
Connission lor Europe Experl Croup on Fesource Classilcalion.
Business review
For lhe execulive direclors and senior nanagenenl, no specilc porlion ol
conpensalion bonuses is direclly relaled lo proved reserves largels.
Addilions lo proved reserves is one ol several indicalors by which lhe
perlornance ol lhe Exploralion and Produclion segnenl is assessed by lhe
renuneralion connillee lor lhe purposes ol delernining conpensalion
bonuses lor lhe execulive direclors. Olher indicalors include a nunber ol
lnancial and operalional neasures. n addilion, we are conducling a
lundanenlal review ol how lhe group incenlivizes business perlornance,
including reward slralegy, wilh lhe ain ol encouraging excellence in salely,
conpliance and operalional risk nanagenenl.
BPs variable pay progranne lor lhe olher senior nanagers in lhe
Exploralion and Produclion segnenl is based on individual perlornance
conlracls. ndividual perlornance conlracls are based on agreed ilens
lron lhe business perlornance plan, one ol which, il chosen, could relale
lo proved reserves.
Conp|iance
nlernalional Financial Feporling Slandards (FFSs do nol provide specilc
guidance on reserves disclosures. BP eslinales proved reserves in
accordance wilh SEC Fule 410 (a ol Fegulalion SX and relevanl
Conpliance and Disclosure nlerprelalions (C&D and Slall Accounling
Bullelins as issued by lhe SEC slall.
By lheir nalure, lhere is always sone risk involved in lhe
ullinale developnenl and produclion ol proved reserves, including, bul
nol liniled lo, lnal regulalory approval, lhe inslallalion ol new or addilional
inlraslruclure, as well as changes in oil and gas prices, changes in
operaling and developnenl cosls and lhe conlinued availabilily ol
addilional developnenl capilal. All lhe groups proved reserves held in
subsidiaries and equilyaccounled enlilies are eslinaled by lhe groups
pelroleun engineers.
Our proved reserves are associaled wilh bolh concessions (lax and
royally arrangenenls and agreenenls where lhe group is exposed lo lhe
upslrean risks and rewards ol ownership, bul where our enlillenenl lo lhe
hydrocarbons is calculaled using a nore conplex lornula, such as PSAs. n
a concession, lhe consorliun ol which we are a parl is enlilled lo lhe
proved reserves lhal can be produced over lhe licence period, which nay
be lhe lile ol lhe leld. n a PSA, we are enlilled lo recover volunes lhal
equale lo cosls incurred lo develop and produce lhe proved reserves and
an agreed share ol lhe renaining volunes or lhe econonic equivalenl. As
parl ol our enlillenenl is driven by lhe nonelary anounl ol cosls lo be
recovered, price Huclualions will have an inpacl on bolh produclion
volunes and reserves.
ve disclose our share ol proved reserves held in equilyaccounled
enlilies (joinlly conlrolled enlilies and associales, allhough we do nol
conlrol lhese enlilies or lhe assels held by such enlilies.
BPs es!ina!ed ne! proved reserves as a! 3! Decenber 20!0
Sevenlylve per cenl ol our lolal proved reserves ol subsidiaries al
31 Decenber 2010 were held lhrough unincorporaled joinl venlures
(76' in 2009, and 31' ol lhe proved reserves were held lhrough
such unincorporaled joinl venlures where we were nol lhe operalor
(27' in 2009.
Estimated net proved reserves of Iiquids at 31 December 2010
a b c
nillion barrels
Developed Undeveloped Tolal
UK 364 431 795
Fesl ol Europe 77 221 293
US 1,729 1,190 2,919
d
Fesl ol orlh Anerica - - -
Soulh Anerica 44 53 102
e
Alrica 371 374 745
Fesl ol Asia 269 325 594
Auslralasia 43 53 106
Subsidiaries 2,902 2,657 5,559
Equilyaccounled enlilies 3,166 1,934 5,150
l
Tolal 6,063 4,641 10,709
Estimated net proved reserves of naturaI gas at 31 December 2010
a b
billion cubic leel
UK 1,416 329 2,245
Fesl ol Europe 40 430 470
US 9,495 4,243 13,743
Fesl ol orlh Anerica 53 - 53
Soulh Anerica 3,575 6,575 10,150
g
Alrica 1,329 2,351 3,630
Fesl ol Asia 1,290 263 1,553
Auslralasia 3,563 2,342 5,905
Subsidiaries 20,766 17,043 37,309
h
Tolal 23,312 13,333 42,700
Net proved reserves on an oiI equivaIent basis
Subsidiaries 6,431 5,596 12,077
Tolal 10,172 7,399 13,071
a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe
royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake
lilling and sales arrangenenls independenlly, and include ninorily inleresls in consolidaled
operalions. ve disclose our share ol reserves held in joinlly conlrolled enlilies and associales lhal
are accounled lor by lhe equily nelhod allhough we do nol conlrol lhese enlilies or lhe assels
held by such enlilies.
b
The 2010 narker prices used were Brenl $79.02/bbl (2009 $59.91/bbl and 2003 $36.55/bbl and
Henry Hub $4.37/nnBlu (2009 $3.32/nnBlu and 2003 $5.63/nnBlu.
c
Liquids include crude oil, condensale, nalural gas liquids and bilunen.
d
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 73 nillion barrels on which
a nel prolls royally will be payable over lhe lile ol lhe leld under lhe lerns ol lhe BP Prudhoe Bay
Foyally Trusl.
e
ncludes 22 nillion barrels ol crude oil in respecl ol lhe 30' ninorily inleresl in BP Trinidad and
Tobago LLC.
l
ncludes 254 nillion barrels ol crude oil in respecl ol lhe 7.03' ninorily inleresl in TKBP.
g
ncludes 2,921 billion cubic leel ol nalural gas in respecl ol lhe 30' ninorily inleresl in BP Trinidad
and Tobago LLC.
h
ncludes 137 billion cubic leel ol nalural gas in respecl ol lhe 5.39' ninorily inleresl in TKBP.

Business review
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thousand barrels per day
Subsidiaries BP net share of production
a
Field or area 2010 2009 2008
UK
b
ETAP
c
28 34 27
Foinaven
d
24 29 26
Other 85 105 120
Total UK 137 168 173
Norway
b
Various 40 40 43
Total Rest of Europe 40 40 43
Total Europe 177 208 216
Alaska Prudhoe Bay
d
67 69 72
Kuparuk 42 45 48
Milne Point
d
23 24 27
Other 34 43 50
Total Alaska 166 181 197
Lower 48 onshore
b
Various 90 97 97
Gulf of Mexico deepwater
b
Thunder Horse
d
120 133 24
Atlantis
d
49 54 42
Mad Dog
d
30 35 31
Mars 23 29 28
Na Kika
d
25 27 29
Horn Mountain
d
14 25 18
King
d
21 22 23
Other 56 62 49
Total Gulf of Mexico deepwater 338 387 244
Total US 594 665 538
Canada
b
Various
d
7 8 9
Total Rest of North America 7 8 9
Total North America 601 673 547
Colombia Various
d
18 23 24
Trinidad & Tobago Various
d
36 38 38
Venezuela
b
Various 4
Total South America 54 61 66
Angola Greater Plutonio
d
73 70 69
Kizomba C Dev 31 43 30
Dalia 20 32 34
Girassol FPSO 18 22 22
Other 28 44 46
Total Angola 170 211 201
Egypt
b
Gupco 47 55 41
Other 12 16 16
Total Egypt 59 71 57
Algeria Various 17 22 19
Total Africa 246 304 277
Azerbaijan
b
Azeri-Chirag-Gunashli
d
94 94 97
Other 9 7 8
Total Azerbaijan 103 101 105
Western Indonesia
b
Various 2 5 7
Other Various 14 17 16
Total Rest of Asia
b
119 123 128
Total Asia 119 123 128
Australia Various 30 31 29
Other Various 2
Total Australasia 32 31 29
Total subsidiaries
e
1,229 1,400 1,263
Equity-accounted entities (BP share)
Russia TNK-BP
b
Various 856 840 826
Total Russia 856 840 826
Abu Dhabi
f
Various 190 182 210
Other Various 1 12 10
Total Rest of Asia
b
191 194 220
Total Asia 1,047 1,034 1,046
Argentina Various 75 75 70
Venezuela
b
Various 23 25 19
Bolivia
b
Various 1 3
Total South America 98 101 92
Total equity-accounted entities 1,145 1,135 1,138
Total subsidiaries and equity-accounted entities 2,374 2,535 2,401

a
Production excludes royalties due to others whether payable in cash or in kind where the royalty owner has a direct interest in the underlying production and the option and ability to make lifting and
sales arrangements independently.
b
In 2010, BP divested its Permian Basin assets in Texas and south-east New Mexico, the East Badr El-Din and Western Desert concession in Egypt, its Canada gas assets and reduced its interest in the
Tubular Bells and King elds in the Gulf of Mexico. It also acquired an increased holding in the Azeri-Chirag-Gunashli development in Azerbaijan and the Valhall and Hod elds in the Norwegian North
Sea. Four other producing elds in the Gulf of Mexico that were acquired during 2010 were subsequently disposed of in early 2011. In 2009, BP assumed operatorship of the Mirpurkhas and Khipro
blocks in Pakistan, swapped a number of assets with BG Group plc in the UK sector of the North Sea, divested some minor interests in the US Lower 48, divested its holdings in Indonesias Offshore
Northwest Java to Pertamina, divested its interests in LukArco to Lukoil and the Bolivian government nationalized, with compensation payable, Pan American Energys shares of Chaco. In 2008, BP
concluded the migration of the Cerro Negro operations to an incorporated joint venture with PDVSA while retaining its equity position, and TNK-BP disposed of some non-core interests.
c
Volumes relate to six BP-operated elds within ETAP. BP has no interests in the remaining three ETAP elds, which are operated by Shell.
d
BP-operated.
e
Includes 29 net mboe/d of NGLs from processing plants in which BP has an interest (2009 26mboe/d and 2008 19mboe/d).
f
The BP group holds interests, through associates, in onshore and offshore concessions in Abu Dhabi, expiring in 2014 and 2018 respectively.
www.bp.com/downloads/oilandgasproduction
BPs net production by major eld for 2010, 2009 and 2008.
Liquids
Business review
www.bp.con/downloads/oilandgasproduclion
NaturaI gas
nillion cubic leel per day
Subsidiaries BP nel share ol produclion
a
Field or area 2010 2009 2003
UK
b
Bruce/Fhun
c
100 110 165
Brae Easl 46 62 71
Olher 326 446 523
Tolal UK 472 613 759
orway
b
Various 15 16 23
Tolal Fesl ol Europe 15 16 23
Tolal Europe 487 634 732
Lower 43 onshore
b
San Juan
c
629 659 632
Jonah
c
185 227 221
Arkona Cenlral 164 194 240
Arkona vesl 128 65 -
Arkona Easl 112 67 -
vansuller
c
126 146 136
Olher 531 597 607
Tolal Lower 43 onshore Tolal 1,875 1,955 1,336
Cull ol exico deepwaler
b
Thunder Horse
c
80 33 11
Olher 183 220 219
Tolal Cull ol exico deepwaler 263 303 230
Alaska Various 46 53 41
Tolal US 2,184 2,316 2,157
Canada
b
Various 202 263 245
Tolal Fesl ol orlh Anerica 202 263 245
Tolal orlh Anerica 2,386 2,579 2,402
Trinidad & Tobago ango
c
544 664 471
Cashina/EOB
c
679 571 375
Kapok
c
541 540 619
Cannonball
c
156 225 336
Anherslia
c
252 197 233
Olher
c
301 233 357
Tolal Trinidad 2,473 2,430 2,446
Colonbia Various 71 62 34
Venezuela
b
Various - - 2
Tolal Soulh Anerica 2,544 2,492 2,532
Egypl
b
Tensah 90 113 109
Hapy
c
73 94 94
Taurl
c
75 73 24
Olher 192 177 145
Tolal Egypl 430 462 372
Algeria Tolal 126 159 112
Tolal Alrica 556 621 434
Pakislan
b
Various
c
150 173 162
Azerbaijan
b
Various
c
132 126 143
veslern ndonesia
b
SangaSanga 69 71 69
Olher 1 35 97
Tolal veslern ndonesia 70 106 166
China Yacheng 95 33 91
Vielnan Various
c
77 63 61
Sharjah Various
c
50 59 73
Tolal Fesl ol Asia 574 610 696
Tolal Asia 574 610 696
Auslralia Perseus/Alhena 165 142 229
Coodwyn 118 139 74
Angel 133 120 6
Olher 46 39 71
Tolal Auslralia 462 440 330
Easlern ndonesia Tangguh
c
323 74 1
Tolal Auslralasia 785 514 331
Tolal subsidiaries
d
7,332 7,450 7,277
Equity-accounted entities (BP share)
Fussia - TKBP
b
Various 640 601 564
Tolal Fussia 640 601 564
veslern ndonesia Various 30 31 31
Kazakhslan
b
Various - 11 3
Tolal Fesl ol Asia 30 42 39
Tolal Asia 670 643 603
Argenlina Various 379 373 335
Bolivia
b
Various 11 11 63
Venezuela
b
Various 9 3 6
Tolal Soulh Anerica 399 392 454
Tolal equilyaccounled enlilies
d
1,069 1,035 1,057
T

olal subsidiaries and equilyaccounled enlilies

8,401 3,435 3,334
a
Produclion excludes royallies due lo olhers whelher payable in cash or in kind where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and sales
arrangenenls independenlly.
b
n 2010, BP divesled ils Pernian Basin assels in Texas and soulheasl ew exico, lhe Easl Badr ElDin and veslern Deserl concession in Egypl, ils Canada gas assels and reduced ils inleresl in lhe
Tubular Bells and King lelds in lhe Cull ol exico. l also acquired an increased holding in lhe AzeriChiragCunashli developnenl in Azerbaijan and lhe Valhall and Hod lelds in lhe orwegian orlh Sea.
Four olher producing lelds in lhe Cull ol exico lhal were acquired during 2010 were subsequenlly disposed ol in early 2011. n 2009, BP assuned operalorship ol lhe irpurkhas and Khipro blocks in
Pakislan, swapped a nunber ol assels wilh BC Croup plc in lhe UK seclor ol lhe orlh Sea, divesled sone ninor inleresls in lhe US Lower 43, divesled ils holdings in ndonesias Ollshore orlhwesl
Java lo Perlanina, divesled ils inleresls in LukArco lo Lukoil and lhe Bolivian governnenl nalionalized, wilh conpensalion payable, Pan Anerican Energys shares ol Chaco. n 2003, BP concluded lhe
nigralion ol lhe Cerro egro operalions lo an incorporaled joinl venlure wilh PDVSA while relaining ils equily posilion, and TKBP disposed ol sone noncore inleresls.
c
BPoperaled.
d
alural gas produclion volunes exclude gas consuned in operalions wilhin lhe lease boundaries ol lhe producing leld, bul lhe relaled reserves are included in lhe groups reserves.

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Our Felning and arkeling business is responsible lor lhe supply and
lrading, relning, nanulacluring, narkeling and lransporlalion ol crude oil,
pelroleun, pelrochenicals producls and relaled services lo wholesale and
relail cusloners. vilhin Felning and arkeling, BP narkels ils producls in
nore lhan 70 counlries. ve have signilcanl operalions in Europe and
orlh Anerica and also nanulaclure and narkel our producls across
Auslralasia, in China and olher parls ol Asia, Alrica and Cenlral and
Soulh Anerica.
Our organizalion is nanaged lhrough lwo nain business groupings:
luels value chains (FVCs and inlernalional businesses (Bs. The FVCs
inlegrale lhe aclivilies ol relning, logislics, narkeling, supply and lrading,
on a regional basis, recognizing lhe geographic nalure ol lhe narkels in
which we conpele. This provides lhe opporlunily lo oplinize our aclivilies
lron crude oil purchases lo end consuner sales lhrough our physical
assels (relneries, lerninals, pipelines and relail slalions. The Bs operale
on a global basis and include lhe nanulacluring, supply and narkeling ol
lubricanls, pelrochenicals, avialion luels and liqueled pelroleun gas (LPC.
Our market
The 2010 operaling environnenl inproved overall along wilh lhe global
econony bul was neverlheless slill challenging in cerlain narkels. Clobal
oil denand grew by 2.3 nillion b/d, wilh growlh in lhe OECD lor lhe lrsl
line since 2005. However, aggregale OECD oil denand in 2010 renained
3.3 nillion b/d below lhe 2005 peak.
Annual BP global indicalor relning nargins in 2010 were slighlly
higher lhan 2009 levels allhough lhe quarlerly varialion was wilhin a
snaller range. vilhin lhe year, nargins lollowed lhe pallern ol a lypical
year, wilh a peak in lhe second quarler. However, lourlhquarler nargins
deled hisloric lrends lo exceed lhirdquarler levels because ol early winler
wealher in lhe orlhern Henisphere. As a resull, lhe BP global indicalor
relning nargin (C, as delned in loolnole (e on page 56, averaged
$4.44 per barrel in 2010. Fron 2011, we will be reporling a new relning
indicalor nargin, replacing lhe C, which we call lhe relning narker
nargin (F. This adopls a basis lhal we believe is nore closely relaled
lo lhe approach used by nany ol our conpelilors. Fs are sinpliled
regional nargin indicalors based on producl yields and a represenlalive
crude oil deened appropriale lor lhe region. The F uses regional crack
spreads lo calculale lhe nargin indicalor and does nol include eslinales ol
luel cosls and olher variable cosls. As a resull il is nunerically larger lhan
lhe C and uses a nuch snaller producl range.
n Europe, where diesel accounls lor a large proporlion ol regional
consunplion, relning nargins increased as denand lor connercial
lransporl inproved wilh slronger econonic aclivily. n lhe US, where
relning is nore highly upgraded and lhe lransporl narkel is nore gasoline
orienled, relning nargins were slighlly ahead ol 2009. Felning nargins
inproved lhe nosl in Asia Pacilc conpared lo 2009, bul slill only averaged
$1.63/bbl because ol conlinued addilions lo relning capacily in lhe region.
Felalively wider luel oil lo crude dillerenlials and lighlheavy crude
spreads benelled our highly upgraded relneries and had a posilive inpacl
on our lnancial perlornance in 2010 conpared wilh 2009.
Allhough oil denand grew, 2010 was also characlerized by very low
narkel volalilily in lhe oil narkels. A balanced narkel in crude, logelher
wilh record invenlory levels, led lhe oil price lo renain slable lhroughoul
2010. Aller reaching record average levels in 2009, lhe volalilily ol daled
Brenl prices declined in 2010 lo lhe lowesl average level in percenlage
lerns, since 1995. This conlrasl in lhe level ol narkel volalilily belween
early 2009 and 2010, led lo a signilcanlly weaker supply and lrading
conlribulion lo lhe lnancial perlornance ol Felning and arkeling.
n our Bs, denand lor our pelrochenicals producls has inproved lron lhe
low levels in lale 2003 and early 2009 caused by lhe global recession. This
has resulled in an inproved environnenl overall, despile increases in
induslry capacily. n lhe avialion induslry passenger nunbers appear lo
have recovered lron lhe deplhs ol lhe lnancial crisis in 2003 and 2009. ve
have seen a recovery in denand lor lubricanls lron lhe lows ol lhe pasl
lwo years in lhe aulonolive seclor and nosl slrongly in lhe induslrial
seclor ol lhe narkel lollowing a narked decline in 2009. vilhin lhe conlexl
ol overall denand, we conlinue lo see a gradual shill lowards higher
qualily and highernargin preniun and synlhelic lubricanls. Base oil prices
have risen lhroughoul lhe year.
Our strategy
Felning and arkeling is lhe producl and serviceled arn ol BP, locused
on luels, lubricanls, pelrochenicals producls and relaled services. ve ain
lo be excellenl in lhe narkels we choose lo be in - lhose lhal allow BP lo
serve lhe najor energy narkels ol lhe world. ve are in pursuil ol
conpelilive relurns and suslainable growlh, underpinned by sale
nanulacluring operalions and lechnology, as we serve cusloners and
pronole BP and our brands lhrough qualily producls.
ve believe lhal key lo success in Felning and arkeling is holding
a porllolio ol qualily, inlegraled and ellcienl posilions. The FVC slralegy
globally locuses on leedslockadvanlaged, upgraded, welllocaled relneries
inlegraled inlo advanlaged logislics and narkeling. n pursuil ol lhis, in lhe
US, we inlend lo divesl our Texas Cily relnery and soulhern parl ol our
vesl Coasl FVC, including lhe Carson relnery, roughly halving our US
relning capacily by lhe end ol 2012, subjecl lo all necessary legal and
regulalory approvals. BP will ensure lhe lulllnenl ol lhe currenl
regulalory obligalions associaled wilh lhe Texas Cily relnery is reHecled
in any lransaclion.
n our renaining US FVCs, as well as in our nonUS FVCs, we
believe we have a porllolio ol welllocaled relneries, inlegraled wilh slrong
narkeling posilions ollering lhe polenlial lor inprovenenl and growlh,
eilher lhrough narkel growlh, nargin growlh or new access.
vilhin lhe Bs, our slralegy is lo conlinue lo grow lhese
businesses, which are nalerially exposed lo growlh narkels.
Over line we expecl lo shill lhe balance ol parlicipalion and capilal
enployed lron eslablished lo growlh regions.
Our objeclive has been lo inprove our perlornance by locusing on
achieving sale, reliable and conplianl operalions, resloring nissing
revenues and delivering suslainable conpelilive relurns and cash Hows.
ve inlend lo inprove our lnancial perlornance
a
by al leasl $2 billion
belween 2009 and 2012, prinarily underpinned by idenliled ellciency
opporlunilies. ve expecl growlh lo resull lron lhe pursuil ol lurlher cosl
ellciencies, inproved porllolio qualily and capluring inlegralion benells as
well as nargin share growlh. n addilion, posl 2012 we plan lo grow our
nargin lhrough lhe conplelion ol lhe upgrade lo our vhiling relnery,
which is already under way.
ve believe lhal lhese oulcones will enable us lo be a leading
player in each ol lhe narkels in which we choose lo parlicipale.
This perlornance inprovenenl will be neasured by conparing Felning and arkelings
replacenenl cosl proll lor 2009 wilh lhal ol 2012, aller adjusling lor nonoperaling ilens, lair
value accounling ellecls and lhe inpacl ol changes in lhe relning nargin environnenl, loreign
exchange inpacls and pricelag ellecls lor crude and producl purchases.
a
Business review
Our performance
Key statistics
$ nillion
2010 2009 2003
a
266,751 213,050 320,039
Feplacenenl cosl proll belore
inleresl and lax
b
5,555 743 4,176
lhousand barrels per day
Tolal relnery lhroughpuls 2,426 2,237 2,155
Felning availabilily
c
95.0% 93.6' 33.3'
lhousand lonnes
Tolal pelrochenicals produclion
d
15,594 12,660 12,335
$ per barrel
Clobal indicalor relning nargin (C
e
US vesl Coasl 6.16 5.33 7.42
US Cull Coasl 4.96 4.63 6.73
US idwesl 5.19 5.43 5.17
orlhwesl Europe 3.80 3.26 6.72
edilerranean 3.29 2.11 6.00
Singapore 1.63 0.21 6.30
BP Average C 4.44 4.00 6.50
a
b
c
Felning availabilily represenls Solonon Associales operalional availabilily, which is delned as lhe
percenlage ol lhe year lhal a unil is available lor processing aller sublracling lhe annualized line
losl due lo lurnaround aclivily and all planned nechanical, process and regulalory nainlenance
downline.
d
A ninor anendnenl has been nade lo conparalive periods.
e
The global indicalor relning nargin (C is lhe average ol regional induslry indicalor nargins
weighled lor BPs crude relning capacily in each region. Each regional indicalor nargin is based
on a single represenlalive crude wilh producl yields characlerislic ol lhe lypical level ol upgrading
conplexily. The indicalor nargin nay nol be represenlalive ol lhe nargins achieved by BP in any
period because ol BPs parlicular relning conlguralions and crude and producl slale.
2010 perlornance
Sa!e!, and opera!iona| risk
Salely, bolh process and personal, renains our lop priorily. During 2010,
personal salely in Felning and arkeling as neasured by incidenl
lrequencies was slighlly worse lhan 2009, and process salely as neasured
by our severilyweighled process salely incidenl index inproved by 25'.
One ol lhe prinary conlrols lo niligale or nininize salely and
operalional risk is lhe elleclive, suslained inplenenlalion and enbedding
ol our operaling nanagenenl syslen (OS. OS also covers robusl
conlraclor nanagenenl processes. All ol Felning and arkelings
najor operalions had lransilioned lo OS by lhe end ol 2010, wilh only
one regional logislics operalion conpleling lhe process by lhe end ol
February 2011.
Salely perlornance is nonilored by a suile ol inpul and oulpul
nelrics lhal locus on process and personal salely including operalional
inlegrily, heallh and all aspecls ol conpliance.
During 2010 Felning and arkeling had lwo worklorce lalalilies.
n our Follerdan relnery, a conlraclor was lalally injured during civil
conslruclion works and in lhe Fhine luels value chain in Cernany, a
conlraclor lruck driver was lalally injured in a nulliple vehicle accidenl.
The recordable injury lrequency (FF, which neasures lhe nunber
ol recordable injuries lo lhe BP worklorce per 200,000 hours worked, was
0.35. This is slighlly higher lhan 2009 when il was 0.32, bul signilcanlly
lower lhan in 2003 when il was 0.43. Sevenlyseven severe vehicle
accidenls occurred in Felning and arkelings operalions during 2010
(71 in 2009.
n lerns ol operalional inlegrily, lhe nunber ol losses ol prinary
conlainnenl (LOPC, which neasures unplanned or unconlrolled releases
ol nalerial lron prinary conlainnenl, was 12' higher in 2010 lhan in
2009, however lhis was slill over 20' lower lhan in 2003. The process
salely incidenl index (PS, which is a weighled index lo reHecl bolh lhe
nunber and severily ol evenls per 200,000 hours worked, lell lron 0.43
in 2009 lo 0.36 in 2010. The average severily ol lhe process salelyrelaled
LOPC evenls has reduced relalive lo 2009.

The nunber ol oil spills grealer lhan one barrel increased in 2010 (132
conpared wilh 2009 (113, allhough lhis was slill signilcanlly lower bolh
in nunber and volune lhan lor 2003.
n our US relneries, we conlinued lo inplenenl lhe
reconnendalions ol lhe BP US Felneries ndependenl Salely Feview
Panel and regulalory bodies and have nade signilcanl progress in 2010.
See Corporale responsibilily, Salely seclion on page 63 lor lurlher
inlornalion on progress.
To enhance lurlher lhe locus on salely during 2010, Felning and
arkeling eslablished a segnenl operalional risk connillee lhal neels on
a quarlerly basis, chaired by lhe segnenl chiel execulive. This connillee
reviews crilical risks, conducls an indeplh review ol process salely and
also ains lo ensure appropriale risk nanagenenl and niligaling aclions
are in place and priorilized.
Financia| and Opera!ing per!ornance
Our 2010 perlornance conlinued lo benell lron lhe lundanenlal
inprovenenls we have been naking across lhe business, including
inproved availabilily wilhin our relning syslen, lhe ellciency ol our
operalions and growing nargin share in our narkeling businesses.
Feplacenenl cosl proll belore inleresl and lax lor lhe year ended
31 Decenber 2010 was $5,555 nillion, conpared wilh $743 nillion lor lhe
previous year. 2010 included a nel gain lor nonoperaling ilens ol
$630 nillion, nainly relaling lo gains on disposal parlly ollsel by
reslrucluring charges. (See page 25 !or !ur!her in!orna!ion on non-
opera!ing i!ens. n addilion, lair value accounling ellecls had a lavourable
inpacl ol $42 nillion relalive lo nanagenenls neasure ol perlornance.
(See page 26 !or !ur!her in!orna!ion on !air va|ue accoun!ing e!!ec!s.
The prinary addilional laclors conlribuling lo lhe increase in
replacenenl cosl proll belore inleresl and lax were inproved operalional
perlornance in lhe luels value chains, conlinued slrong operalional
perlornance in lhe inlernalional businesses and lurlher cosl ellciencies,
as well as a nore lavourable relning environnenl. Againsl lhis very good
operalional delivery, lhe resulls were inpacled by a signilcanlly lower
conlribulion lron supply and lrading conpared wilh 2009.
Sales and olher operaling revenues lor 2010, analysed in lhe lable
below, were $267 billion conpared wilh $213 billion in 2009. This increase
was prinarily due lo increasing prices. The decrease in 2009 conpared
wilh 2003 prinarily reHecled a decrease in prices.
$ nillion
2010 2009 2003
Sale ol crude oil lhrough spol and
lern conlracls 44,290 35,625 54,901
arkeling, spol and lern sales
ol relned producls 209,221 166,033 243,561
Olher sales and operaling revenues 13,240 11,337 16,577
266,751 213,050 320,039
The lollowing lables sel oul oil sales volunes by lype lor lhe pasl lhree
years and give lurlher delails ol relned producl narkeling sales by
producl lype:
Felned producls 2010 2009 2003
US 1,433 1,426 1,460
Europe 1,402 1,504 1,566
Fesl ol vorld 610 630 635
Tolal narkeling sales
a
3,445 3,560 3,711
Trading/supply sales
b
2,482 2,327 1,937
Tolal relned producl sales 5,927 5,337 5,693
Crude oil
c
1,658 1,324 1,639
Tolal oil sales 7,585 7,711 7,337
a
arkeling sales are sales lo service slalions, endconsuners, bulk buyers and jobbers (i.e. lhird
parlies who own nelworks ol a nunber ol service slalions and snall resellers.
b
Trading/supply sales are sales lo large unbranded resellers and olher oil conpanies.
c
113 lhousand barrels per day ol lhe crude volunes relales lo revenues reporled by Exploralion
and Produclion.

Business review
B
u
s
i
n
e
s
s

r
e
v
i
e
w
arkeling sales by relned producl 2010 2009 2003
Avialion luel 546 495 501
Casolines 1,326 1,444 1,500
iddle dislillales 1,012 1,012 1,055
Fuel oil 391 413 460
Olher producls 170 191 195
Tolal narkeling sales 3,445 3,560 3,711
arkeling volunes were 3,445nb/d, slighlly lower lhan 2009, principally
reHecling lhe disposal ol our relail businesses in Creece and France.
Our 2010 operalional perlornance was slrong, wilh Solonon relning
availabilily al 95.0' lor lhe year and relning lhroughpuls up by 139nb/d lor
lhe year. Our relning ulilizalion was well above induslry averages. n lhe
inlernalional businesses, lhe pelrochenicals business was able lo caplure lhe
benell ol lhe denand recovery, and achieve record volunes.
Prior years conparalive lnancial inlornalion
The replacenenl cosl proll belore inleresl and lax lor lhe year ended
31 Decenber 2009 ol $743 nillion included a nel charge lor nonoperaling
ilens ol $2,603 nillion. The nosl signilcanl nonoperaling ilens were
reslrucluring charges and a $1.6 billion oneoll, noncash, loss lo inpair
all lhe segnenls goodwill in lhe US vesl Coasl FVC relaling lo our 2000
AFCO acquisilion. This resulled lron our annual review ol goodwill as
required under FFS and reHecled lhe prevailing weak relning environnenl
lhal, logelher wilh a review ol lulure nargin expeclalions in lhe FVC, led lo
a reduclion in lhe expecled lulure cash Hows. The decrease in proll was
also driven by lhe very signilcanlly weaker environnenl, where relning
nargins lell by alnosl 40'. This was parlly ollsel by signilcanlly slronger
operalional perlornance in lhe FVCs, wilh 93.6' Solonon relning
availabilily, lower cosls and inproved perlornance in lhe inlernalional
businesses. n addilion, lair value accounling ellecls had an unlavourable
inpacl ol $261 nillion relalive lo nanagenenls neasure ol perlornance.
The replacenenl cosl proll belore inleresl and lax lor lhe year
ended 31 Decenber 2003 was $4,176 nillion and included a nel credil lor
nonoperaling ilens ol $347 nillion. The nosl signilcanl nonoperaling
ilens were nel gains on disposal (prinarily in respecl ol lhe gain
recognized on lhe conlribulion ol lhe Toledo relnery lo a joinl venlure wilh
Husky Energy nc. parlly ollsel by reslrucluring charges. n addilion, lair
value accounling ellecls had a lavourable inpacl ol $511 nillion relalive lo
nanagenenls neasure ol perlornance.
Conpared wilh 2003, our 2009 perlornance was driven by lhe high
level ol nonoperaling ilens described above and a signilcanlly weaker
environnenl lhan in 2003, where relning nargins lell by alnosl 40'.
This was parlly ollsel by signilcanlly slronger operalional perlornance in
lhe luels value chains, wilh 93.6' relning availabilily, as well as lower
cosls and inproved perlornance in lhe inlernalional businesses.
OutIook
n 2011, lhe overall econonic environnenl is expecled lo conlinue lo
recover, albeil al a relalively slow pace globally. The relning narker nargin
(F in 2011 is expecled lo renain in a range nore reHeclive ol pre2004
levels and our lorward plans are currenlly based on a F range ol
$312 per barrel.
Our priorilies in 2011 renain consislenl wilh lhose in 2010 and we
inlend lo build on lhe nonenlun we have eslablished around inproving
lnancial perlornance and operalions. ve will conlinue lo locus on
delivering sale, reliable and conplianl operalions, inproving lhe
perlornance ol our inlegraled FVCs, in parlicular in lhe US, and driving
lurlher cosl ellciencies across all our businesses. ve inlend lo increase
slighlly our inveslnenl levels in 2011 versus 2010, locused on key salely
and operalional inlegrily priorilies, nainlaining our qualily nanulacluring
and narkeling porllolio, slrenglhening our US Easl ol Fockies FVC
business lhrough lhe vhiling relnery nodernizalion projecl and conlinuing
lo grow our advanlaged pelrochenicals business in China.
ve expecl lhe nunber and cosl ol relnery lurnarounds in 2011 and
2012 lo be higher lhan in 2010.
As explained in Our slralegy on page 55, our US relning capacily is
expecled lo halve when we conplele lhe disposal ol our Texas Cily
relnery and lhe soulhern parl ol our vesl Coasl FVC.
The lollowing lable sunnarizes lhe BP groups inleresls in relneries and average daily crude dislillalion capacilies al 31 Decenber 2010.
Crude dislillalion capacilies
a
Croup inleresl
b
BP
Felnery Fuels value chain ' Tolal share
Europe
Cernany Bayernoil Fhine 22.5' 215 43
Celsenkirchen
c
Fhine 50.0' 265 132
Karlsruhe Fhine 12.0' 324 39
Lingen
c
Fhine 100.0' 93 93
Schwedl Fhine 13.3' 237 45
elherlands Follerdan
c
Fhine 100.0' 377 377
Spain Caslellon
c
beria 100.0' 110 110
Tolal Europe 1,621 344
US
Calilornia Carson
c
US vesl Coasl 100.0' 266 266
vashinglon Cherry Poinl
c
US vesl Coasl 100.0' 234 234
ndiana vhiling
c
US idvesl 100.0' 405 405
Ohio Toledo
c
US idvesl 50.0' 160 30
Texas Texas Cily
c
- 100.0' 475 475
Tolal US 1,540 1,460
Rest of WorId
Auslralia Bulwer
c
AZ 100.0' 102 102
Kwinana
c
AZ 100.0' 143 143
ew Zealand vhangerei AZ 23.7' 113 23
Soulh Alrica Durban Soulhern Alrica 50.0' 130 90
Tolal Fesl ol vorld 543 363
Tolal 3,704 2,667

a
Crude dislillalion capacily is gross raled capacily, which is delned as lhe highesl average suslained unil rale lor a conseculive 30day period.
b
BP share ol equily, which is nol necessarily lhe sane as BP share ol processing enlillenenls.
c
ndicales relneries operaled by BP.

Business review
FueIs vaIue chains
ve have six regionally organized inlegraled FVCs (see nap on page !5,
each ol which oplinizes lhe aclivilies ol our assels across lhe supply
chain - lron crude delivery lo lhe relneries, nanulaclure ol highqualily
luels, pipeline and lerninal inlraslruclure and narkeling and sales lo
our cusloners.
n addilion lo lhe FVCs, lhe Texas Cily relnery is operaled as a
slandalone, predoninanlly nerchanl, relning business lhal also supporls
our narkeling operalions on lhe easl and Cull coasls ol lhe US.
As explained in Our slralegy on page 55, we inlend lo divesl lhe
Texas Cily relnery conplex and exil lhe soulhern parl ol our US vesl
Coasl FVC business, including lhe Carson relnery, by lhe end ol 2012.
ve also have a nunber ol regionally locused luels narkeling
businesses lhal are nol inlegraled inlo a relnery, covering lhe UK, Turkey,
China and our renaining businesslobusiness luels narkeling aclivilies
in France.
ve currenlly own or have a share in 16 relneries, which
produce relned luel producls lhal we lhen supply lo relail and connercial
cusloners.
Our relning locus is lo nainlain and inprove our conpelilive
posilion lhrough suslainable, sale, reliable, conplianl and ellcienl
operalions ol lhe relning syslen and disciplined inveslnenl lor
inlegrily nanagenenl, lo achieve conpelilively advanlaged conlguralion
and growlh.
For BP, lhe slralegic advanlage ol a relnery relales lo ils localion,
inlegralion, scale and conlguralion lo produce luels lron lowercosl
leedslocks in line wilh lhe denand ol lhe region. Slralegic inveslnenls
in our relneries are locused on securing lhe salely and reliabilily ol our
assels while inproving our conpelilive posilion. n addilion, we conlinue
lo invesl lo develop lhe capabilily lo produce lhe cleaner luels lhal neel
lhe requirenenls ol our cusloners and lheir connunilies.
The lollowing lable oullines by region lhe volune ol crude oil and
leedslock processed by BP lor ils own accounl and lor lhird parlies.
Corresponding BP relnery capacily ulilizalion dala is sunnarized below.
Felnery lhroughpuls
a
2010 2009 2003
US 1,350 1,233 1,121
Europe 775 755 739
Fesl ol vorld 301 294 295
Tolal 2,426 2,237 2,155
Felnery capacily ulilizalion
Crude dislillalion capacily al
31 Decenber
b
2,667 2,666 2,673
Felnery ulilizalion
c
91% 36' 31'
US 93% 35' 77'
Europe 91% 39' 37'
Fesl ol vorld 84% 33' 30'
a
Felnery lhroughpuls reHecl crude oil and olher leedslock volunes.
b
Crude dislillalion capacily is gross raled capacily, which is delned as lhe highesl average suslained
unil rale lor a conseculive 30day period.
c
Felnery ulilizalion is annual lhroughpul divided by crude dislillalion capacily, expressed as a
percenlage. The neasure was redelned in 2009 lo be nore consislenl wilh induslry slandards.
Felnery lhroughpuls increased by 139nb/d in 2010 relalive lo 2009, driven
principally by higher availabilily, parlicularly al Texas Cily and vhiling.
n addilion lo relned pelroleun producls we also blend and narkel
bioluels. Biogasoline (bioelhanol and biodiesel (hydrogenaled vegelable
oils and lally acid nelhyl eslers conlinue lo grow in volune, prinarily in
Europe and lhe US, as regulalory requirenenls denand heavier blending
levels. Our response is lo conlinue lo develop blend capabililies, and lo
work wilh regulalors, bioluels supply chains and olher slakeholders lo
inprove lhe suslainabilily ol lhe bioluels lhal we blend and supply.
Our luels slralegy locuses on oplinizing lhe inlegraled value ol each FVC
lhal is responsible lor lhe delivery ol ground luels lo lhe narkel. ve do
lhis by coordinaling our narkeling, relning and lrading aclivilies lo
naxinize synergies across lhe whole value chain. Our priorilies are lo
operale an advanlaged inlraslruclure and logislics nelwork (which includes
pipelines, slorage lerninals and road or rail lankers, drive excellence in
operaling and lransaclional processes, and deliver conpelling cusloner
ollers in lhe various narkels in which we operale. The luels business
narkels a conprehensive range ol relned oil producls prinarily locused on
lhe ground luels seclor.
The ground luels business supplies luel and relaled convenience
services lo relail consuners lhrough conpanyowned and lranchised relail
siles, as well as olher channels, including wholesalers and jobbers. l also
supplies connercial cusloners wilhin lhe lransporl and induslrial seclors.
Our relail nelwork is largely concenlraled in Europe and lhe US, bul
also has eslablished operalions in Auslralasia, as well as soulhern and
easlern Alrica. ve have developed nelworks in China in lwo separale joinl
venlures, one wilh Pelrochina and lhe olher wilh China Pelroleun and
Chenical Corporalion (Sinopec.
Al 31 Decenber 2010, BPs worldwide nelwork consisled ol sone
22,100 siles, prinarily branded BP, AFCO and Aral. During 2010 we sold
around 400 siles in France lo Delek Europe B.V. These will conlinue lo be
operaled under lhe BP brand lhrough a brand licensing agreenenl.
Our relail convenience operalions oller consuners a range ol lood,
drink and olher consunables and services on lhe luel lorecourl in a
convenienl and innovalive nanner. The convenience oller includes brands
such as anpn, vild Bean Cale and Pelil Bislro.
n lhe US, our anpn brand is operaled as a convenience relail
lranchise nodel. Overall in lhe US, by lhe end ol 2010 lhere were 11,300
branded relail siles, ol which 1,100 were branded anpn, conpared wilh
11,500 and 1,200 respeclively al lhe beginning ol 2010.
n Europe, we had approxinalely 3,400 branded relail siles al lhe
end ol 2010. ve are also one ol lhe largesl lorecourl convenience relailers,
wilh aboul 1,600 convenience relail siles in nine counlries. ve are growing
our loodonlhego and lresh grocery services lhrough BPowned brands
and parlnerships wilh leading relailers such as arks & Spencer.
n addilion, al lhe end ol 2010, we had approxinalely 2,400 branded relail
siles oulside Europe and lhe US in counlries such as Auslralia, ew
Zealand and Soulh Alrica.
The lable below oullines lhe nunber ol BPbranded relail siles
by region.
unber ol relail siles operaled under a BP brand
Felail siles
a b
2010 2009 2003
US 11,300 11,500 11,700
Europe 8,400 3,600 3,600
Fesl ol vorld 2,400 2,300 2,300
Tolal 22,100 22,400 22,600
a
The nunber ol relail siles includes siles nol operaled by BP bul inslead operaled by dealers,
jobbers, lranchisees or brand licensees lhal operale under a BP brand. These nay nove lo or lron
lhe BP brand as lheir luel supply or brand licence agreenenls expire and are renegolialed in lhe
nornal course ol business. Felail siles are prinarily branded BP, AFCO and Aral.
b
Excludes our inleresl in equilyaccounled enlilies which are dualbranded.
The group has a longeslablished inlegraled supply and lrading lunclion
responsible lor delivering value across lhe overall crude and oil producls
supply chain. This slruclure enables lhe oplinizalion ol BPs FVCs lo
nainlain a single inlerlace wilh lhe oil lrading narkels and lo operale wilh
a single sel ol lrading conpliance processes, syslens and conlrols. The
business has lrading ollces in Europe, lhe US and Asia lo enable lhe
lunclion lo nainlain a presence in lhe regionally connecled global narkels.
The oil supply and lrading lunclion has operaled lhrough a period ol
challenging lrading condilions in 2010 due lo lower price volalilily, lighler
producl and sweel vs sour crude oil spreads, and reduced conlango (i.e.
spol vs lulure price opporlunilies. The weaker lrading environnenl is a
resull ol OPEC crude supply availabilily, relning and slorage spare capacily.
The supply and lrading lunclion supporled lhe group lhrough a period ol
uncerlainly in lhe credil narkels concerning BPs lnancial posilion
lollowing lhe Cull ol exico oil spill.

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The lunclion seeks lo idenlily lhe besl narkels and prices lor our crude oil,
source oplinal leedslocks lor our relneries, and provide conpelilive
supply lor our narkeling businesses. n addilion, where relnery produclion
is surplus lo narkeling requirenenls or can be sourced nore conpelilively,
il is sold inlo lhe narkel. vherever possible, lhe group will look lo oplinize
value across lhe supply chain. For exanple, BP will ollen sell ils own crude
lor ils relneries where lhis will provide increnenlal nargin.
Along wilh lhe supply aclivily described above, lhe lunclion seeks
lo creale increnenlal lrading opporlunilies. l enlers inlo lhe lull range ol
exchangelraded connodily derivalives, overlhecounler (OTC conlracls
and spol and lern conlracls lhal are described in Cerlain delnilions -
connodily lrading conlracls, on page 32. n order lo lacililale lhe
generalion ol lrading nargin lron arbilrage, blending and slorage
opporlunilies, il also bolh owns and conlracls lor slorage and lransporl
capacily. The group has developed a risk governance lranework lo nanage
and oversee lhe lnancial risks associaled wilh lhis lrading aclivily, which is
described in Financial slalenenls - ole 27 on pages 135190.
n 2010, lhe FVCs accounled lor roughly lhreequarlers ol lhe
operaling capilal enployed
a
in Felning and arkeling and generaled jusl
under hall ol lhe replacenenl cosl proll.
Signilcanl evenls in lhe FVCs in 2010 were as lollows:
The vhiling relnery nodernizalion projecl nade signilcanl progress in
2010 as above ground conslruclion began, including lhe reaclors lor lhe
new gasoil hydrolrealer, lhe new lowers on lhe revanped crude
dislillalion unil and lhe cokers six new druns. Two lhirdparly world
scale hydrogen unils were connissioned in 2010 and began providing
hydrogen lo lhe relnery. Progress on inporlanl pipeline
inlerconneclions conpleled in 2010 will allow vhiling early access lo
grealer crude inporls and producl exporl opporlunilies.
n lhe US, BPs repulalion sullered as a resull ol lhe oil spill in lhe Cull
ol exico, which had an adverse inpacl on our branded luels
narkeling, bul lhis had recovered by year end. ve ollered addilional
narkeling supporl lo our cusloners in an allenpl lo niligale lhese
declines.
n lhe Cull ol exico region, sales were down year on year by up lo
30' in sone siles in lhe second quarler, bul regained ground over lhe
second hall ol 2010.
n Oclober, BP opened a cullingedge luels lechnology developnenl
cenlre in Soulh Alrica, which will locus on qualily assurance, lechnical
service and narkeling supporl lor lhe local narkel.
The inlegraled supply and lrading lunclion wilhin lhe FVCs announced
lhal il was reorganizing ils inlernal slruclure in order lo sinplily lhe
organizalion and reduce cosls.
n Oclober, BP sold ils French relail business lo Delek Europe B.V.
During 2010, BP also conpleled lhe diveslnenl ol several packages
ol nonslralegic lerninals and pipelines in lhe US Easl ol Fockies and
vesl Coasl. This progranne ol diveslnenl ol nonslralegic pipelines
and lerninals will conlinue during 2011.
Following a slralegic review ol our businesses in soulhern Alrica, we
inlend lo locus our aclivilies wilhin lhe conlinenl on Soulh Alrica and
ozanbique. As a resull, BP agreed lo sell ils luels narkeling
businesses in anibia, Zanbia and Bolswana lo Puna Energy and in
addilion, BP inlends lo sell ils 50' inleresl in BP alawi and BP
Tanzania lo Puna Energy. The sale ol BP Tanzania lo Puna Energy is
subjecl lo lhe preenplion righls ol ils coshareholders. Only lhe sale
ol lhe Bolswana business had been conpleled as al 31 Decenber
2010, lhe olher sales are expecled lo be conpleled in 2011.
During 2010 BP conpleled lhe sale ol a nunber ol European lerninals
as parl ol ongoing assel oplinizalion aclivilies.
a
Operaling capilal enployed is lolal assels (excluding goodwill less lolal liabililies, excluding lnance
debl and currenl and delerred laxalion.
InternationaI businesses
Our Bs provide qualily producls and services lo cusloners in nore lhan
70 counlries worldwide wilh a signilcanl locus on Europe, orlh Anerica
and Asia. Our producls include avialion luels, lubricanls, LPC and
pelrochenicals lhal are sold lor use in lhe nanulaclure ol a range ol
producls, such as labrics, lbres and various plaslics. ve believe each ol
lhese Bs is conpelilively advanlaged in lhe narkels in which we have
chosen lo parlicipale. Such advanlage is derived lron several laclors,
including localion, proxinily ol nanulacluring assels lo narkels, physical
assel qualily, operalional ellciency, lechnology advanlage and lhe slrenglh
ol our brands. Each business has a clear slralegy locused on invesling in ils
key assels and narkel posilions in order lo deliver value lo ils cusloners
and oulperlorn ils conpelilors.
n 2010, lhe Bs accounled lor jusl under a quarler ol lhe segnenls
operaling capilal enployed
a
and jusl over hall ol lhe replacenenl
cosl proll.
arkeling sales in lhe inlernalional businesses include sales ol global
luels and lubricanls. The lollowing lable sels oul lhe delail by business.
nlernalional businesses sales volunes 2010 2009 2003
Air BP 450 434 473
LPC 58 67 64
Lubricanls 50 49 54
558 550 596
Lubricanls
ve nanulaclure and narkel lubricanls and relaled producls and services
lo lhe aulonolive, induslrial, narine and energy narkels across lhe world.
ve sell producls direcl lo our cusloners in around 45 counlries and use
approved local dislribulors lor lhe renaining localions. Cusloner locus,
dislinclive brands, superior lechnology and relalionships renain lhe
cornerslones ol our longlern slralegy.
BP narkels prinarily lhrough ils najor brands ol Caslrol and BP,
and also lhe Aral brand in sone specilc narkels. Caslrol is a recognized
brand worldwide and we believe il provides us wilh a signilcanl
conpelilive advanlage.
n lhe aulonolive lubricanls seclor, we supply lubricanls and olher
relaled producls and services lo inlernediale cusloners such as relailers
and workshops. These, in lurn, serve endconsuners such as car, lruck and
nolorcycle owners. n 2010, roughly 30' ol replacenenl cosl proll
belore inleresl and lax was generaled lron energing narkels, which we
believe conlinue lo have lhe polenlial lor signilcanl longlern growlh.
BPs narine lubricanls business is one ol lhe largesl global
suppliers ol lubricanls lo lhe narine induslry, wilh global presence in over
300 porls. BPs induslrial lubricanls business is a leading supplier lo lhose
seclors ol lhe narkel involved in lhe nanulaclure ol aulonobiles, lrucks,
nachinery conponenls and sleel. BP is also a leading supplier ol lubricanls
lor lhe ollshore oil and avialion induslries.
Pelrochenicals
ve nanulaclure and narkel lour nain producl lines: puriled lerephlhalic
acid (PTA, paraxylene (PX, acelic acid, and olelns and derivalives (O&D.
Our slralegy is lo leverage our induslryleading lechnology in selecled
narkels, lo grow lhe business and lo deliver induslryleading relurns. ew
inveslnenls are largeled principally in lhe highergrowlh Asian narkels.
PTA is a raw nalerial used in lhe nanulaclure ol polyeslers used in
lbres, lexliles and lln, and polyelhylene lerephlhalale (PET bollles. Acelic
acid is a versalile inlernediale chenical used in a variely ol producls such
as painls, adhesives and solvenls, as well as ils use in lhe produclion ol
PTA. ve have a slrong global narkel share in lhe PTA and acelic acid
narkels, wilh a najor nanulacluring presence in Asia, parlicularly China.
PX is a leedslock lor PTA produclion. ve also produce a nunber ol olher
specialily pelrochenicals producls.
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n O&D, we crack naphlha lo produce elhylene and olher producls and
derivalives. Our SECCO joinl venlure belween BP, Sinopec and ils
subsidiary, Shanghai Pelrochenical Conpany, is lhe largesl olelns cracker
in China and is BPs single largesl inveslnenl in China. BP also coowns
one olher naphlha cracker sile oulside ol Asia, which is inlegraled wilh our
Celsenkirchen relnery in Cernany.
ve have a lolal ol 13 nanulacluring siles operaling in lhe UK, lhe US,
Belgiun, Cernany, China, ndonesia, Soulh Korea, alaysia and Taiwan,
including our joinl venlures.

The lollowing lable sunnarizes BPs pelrochenicals produclion capacily, al 31 Decenber 2010.
PetrochemicaIs production capacity
a b
BP share ol
capacily
Croup inleresl lhousand lonnes
Ceographical area Sile Producl ' per year
US
Cooper Fiver Puriled lerephlhalic acid (PTA 100.0 1,342
Decalur PTA 100.0 1,043
Paraxylene (PX 100.0 1,101
aphlhalene dicarboxylale 100.0 29
Texas Cily Acelic acid 100.0 533
c
PX 100.0 1,271
elaxylene 100.0 123
5,492
Europe
UK Hull Acelic acid 100.0 532
Acelic anhydride 100.0 153
Elhylidene diacelale 100.0 4
Belgiun Ceel PTA 100.0 1,343
PX 100.0 631
Cernany Celsenkirchen Olelns and derivalives 50.0 lo 61.0 1,764
b d
lhein Solvenls 50.0 130
b
4,557
Fesl ol vorld
China Caojing Olelns and derivalives 50.0 3,103
b
Chongqing Acelic acid 51.0 215
b
Eslers 51.0 52
b
anjing Acelic acid 50.0 274
b
Zhuhai PTA 35.0 1,549
e
ndonesia erak PTA 50.0 253
b
Korea Ulsan Acelic acid 51.0 261
b
Vinyl acelale nononer 34.0 56
b
alaysia Kerlih Acelic acid 70.0 391
b
Kuanlan PTA 100.0 610
Taiwan Kaohsiung PTA 61.4 347
b
Taichung PTA 61.4 471
b
ai Liao Acelic acid 50.0 179
b
3,261
Tolal BP share ol capacily al 31 Decenber 2010 13,310

a
Pelrochenicals produclion capacily is lhe proven naxinun suslainable daily rale (nsdr nulliplied by lhe nunber ol days in lhe respeclive period, where nsdr is lhe highesl average daily rale ever
achieved over a suslained period.
b
ncludes BP share ol equilyaccounled enlilies, as indicaled.
c
Slerling Chenicals planl, 100' ol lhe oulpul ol which is narkeled by BP.
d
Croup inleresl varies by producl.
e
BP Zhuhai Chenical Conpany Lld is a subsidiary ol BP, lhe capacily ol which is shown above al 100'.
Clobal luels
The supply ol avialion luels and LPC is nanaged globally in lhe global
luels SPU.
Air BP is one ol lhe worlds largesl and besl known avialion luels
suppliers, serving nany ol lhe najor connercial airlines, as well as lhe
general avialion and nililary seclors.
ve have annual narkeling sales in excess ol 400nb/d. Air BPs
slralegic ain is lo grow ils posilion in lhe core localions ol Europe, lhe US,
Auslralasia and lhe iddle Easl, while locusing ils porllolio lowards
airporls lhal oller longlern conpelilive advanlage.
The LPC business sells bulk, bollled, aulonolive and wholesale
LPC producls in 10 counlries, wilh annual sales in excess ol 50 lhousand
barrels per day. During lhe pasl lew years, we have inlroduced new
consuner ollers in eslablished narkels, developed opporlunilies in growlh
narkels and pursued new denand such as lhe Cernan Aulogas narkel.
Signilcanl evenls in 2010 were:
Caslrol was a sponsor ol lhe 2010 FFA vorld Cup in Soulh Alrica
and used lhis lo deliver a signilcanl progranne ol brand visibilily and
cusloner engagenenl. Caslrol leveraged lhe sponsorship lo supporl
our businesses in all regions. ve have seen increased brand awareness
lor our Caslrol nasler brand and producl brands.
n July 2010, Caslrol opened a new lubricanls lechnology developnenl
cenlre in China. Enploying scienlisls and engineers lron China and
abroad, lhis lean will work collaboralively wilh vehicle nanulaclurers,
dislribulors and olher parlners, locusing on cullingedge lubricanl

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lechnology developnenl and supporl, as well as providing worldclass
lraining lor cusloners and dislribulors.
During 2010, lhe LPC business lurlher sinpliled ils porllolio. n China,
lhe LPC business decided lo locus ils incounlry operalions on core
narkeling aclivilies and sold ils inleresl in lhe China Zhuhai cavern
conplex. This conpleles lhe exil lron all najor China LPC inporl
lacililies. n Europe, BP sold ils LPC businesses in Spain and Dennark.
The BP YPC Acelyls Conpany (anjing Liniled (BYACO joinl venlure
belween BP and Yangzi Pelrochenical Co. Lld (a subsidiary ol Sinopec
successlully connenced connercial produclion al ils 543,000 lonnes
per annun (klepa acelic acid planl in lhe lourlh quarler ol 2010.
The pelrochenicals business slarled a debollleneck projecl lo add a
lurlher 200klepa PTA capacily al lhe BP Zhuhai Chenical Conpany
Liniled sile in Cuangdong province (China, which is scheduled lor
conplelion in lhe lrsl quarler ol 2012. This addilional capacily enploys
BPs lalesl proprielary lechnology and will bring lhe siles lolal PTA
capacily lo 1,750klepa, conlinuing our growlh in China.
During 2010, BP sold ils 15' inleresl in Elhylene alaysia Sdn Bhd
(ESB and ils 60' inleresl in Polyelhylene alaysia Sdn Bhd
(PESB lo Pelronas.
Olher businesses and corporale conprises lhe Allernalive Energy
business, Shipping, lhe groups aluniniun business, Treasury (which
includes inleresl incone on lhe groups cash and cash equivalenls, and
corporale aclivilies worldwide.
The replacenenl cosl loss belore inleresl and lax lor lhe year
ended 31 Decenber 2010 was $1,516 nillion, conpared wilh $2,322
nillion lor lhe previous year. 2010 included a nel charge lor nonoperaling
ilens ol $200 nillion. (See page 25 !or !ur!her in!orna!ion on non-
opera!ing i!ens. The prinary addilional laclors allecling 2010s resull
conpared wilh lhal ol 2009 were inproved business perlornance, nore
lavourable loreign exchange ellecls and cosl ellciencies.
ended 31 Decenber 2009 included a nel charge lor nonoperaling ilens ol
$439 nillion.
ended 31 Decenber 2003 included a nel charge lor nonoperaling ilens ol
$633 nillion.
The prinary addilional laclors reHecled in 2009s resull conpared
wilh lhal ol 2003 were a weaker nargin environnenl lor Shipping and our
BP Solar business and adverse loreign exchange ellecls.
Key statistics
$ nillion
2010 2009 2003
a
3,328 2,343 4,634
Feplacenenl cosl proll (loss belore
inleresl and lax
b
(1,516) (2,322 (1,223
a
b
AIternative Energy
Allernalive Energy conprises BPs lowcarbon businesses and lulure
growlh oplions oulside oil and gas, which we believe have lhe polenlial lo
be a nalerial source ol lowcarbon energy and are aligned wilh BPs core
capabililies. These are bioluels, wind and solar, along wilh denonslralion
projecls and lechnology developnenl in carbon caplure and slorage (CCS.
Our narkel
l is well accepled lhal a nore diverse nix ol energy will be required lo
neel lulure denand. BPs own eslinales suggesl lhal global prinary
energy denand will increase by around 40' belween 2010 and 2030.
Supporled by governnenl policies, wind power has grown rapidly in nany
counlries and is now growing globally al an annual rale ol 30'
a
, while
inslalled solar pholovollaic capacily is predicled lo increase lron 15Cv in
2003 lo 410Cv in 2035
b
and belween 2010 and 2030, bioluels are
expecled lo conlribule 30' ol lhe global growlh in supply ol liquid luels
c
.
Our perlornance
Allernalive Energy conlinues lo nake progress againsl ils connilnenl lo
invesl $3 billion by 2015. Our inveslnenl since 2005 is nore lhan
$5 billion
d
. Our wind business has added 125v ol gross capacily during
2010, wilh lhe connercial slarlup ol lhe Coshen orlh wind larn. n our
solar business, we achieved sales ol 325v and signed several slralegic
supply deals (see So|ar on page 62. Our bioluels business acquired lhe
lignocellulosic assels lron Vereniun Corporalion nc. lor $93 nillion. n
April, we conpleled lhe sale ol our 35' inleresl in KPower, a gaslred
power assel in Cwangyang, Soulh Korea, lo SK Holdings Co. Lld lor
$316 nillion.
Clobal vind Energy Council - Annex S!a!s 2009.
Vor|d nerg, Ou!|ook 20!0
OECD/EA 2010, page 306.

BP nerg, Ou!|ook 2030.
The najorily ol cosls have been capilalized, sone were expensed under FFS.
a
b
c
d
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2010 2009 2003
vind - nel raled capacily al yearend
(negawalls
a
774 711 432
Solar - nodule sales (negawalls
b
325 203 162
a
el wind capacily is lhe sun ol lhe raled capacilies ol lhe assels/lurbines lhal have enlered
inlo connercial operalion, including BPs share ol equilyaccounled enlilies. The equivalenl
capacilies on a grossJV basis (which includes 100' ol lhe capacily ol equilyaccounled enlilies
where BP has parlial ownership were 1,362v in 2010, 1,237v in 2009 and 735v in
2003. This includes 32v ol capacily in lhe elherlands which is nanaged by our Felning and
arkeling segnenl.
b
Solar sales are lhe lolal sales ol solar nodules lo lhirdparly cusloners, expressed in v.
Previously we reporled lhe lheorelical cell produclion capacily ol our inhouse solar nanulacluring
lacililies. Feporling sales volunes operaling dala brings us in line wilh lhe broader solar induslry.
Bioluels
BP believes lhal il has a key role lo play in enabling lhe lransporl seclor lo
respond lo lhe dual challenges ol energy securily and clinale change. ve
have enbarked on a locused progranne ol bioluels developnenl based
around lhe nosl ellcienl lranslornalion ol suslainable and lowcosl
sugars inlo a range ol luel nolecules. BP conlinues lo invesl lhroughoul
lhe enlire bioluels value chain, lron suslainable leedslocks lhal nininize
pressure on lood supplies lhrough lo lhe developnenl ol lhe advanlaged
luel nolecule biobulanol. BP has produclion lacililies operaling, or in lhe
planning and conslruclion phases, in lhe US, Brazil and lhe UK.
n 2010, we acquired Vereniuns lignocellulosic bioluels business
lor $93 nillion, providing BP wilh inlegraled endloend capabilily. This
included a pilol planl and a denonslralion lacilily in Jennings, Louisiana,
as well as research and developnenl lacililies in San Diego, Calilornia,
lignocellulosic bioluels lechnology and relaled inlelleclual properly (P,
and lignocellulosic enzyne lechnology and relaled P.
The blending and dislribulion ol bioluels conlinues lo be carried oul
by our Felning and arkeling segnenl, in line wilh regulalion. BP is one
ol lhe largesl blenders and narkelers ol bioluels in lhe world.
vind
n wind power, BP has locused ils business in lhe US, where we have
developed one ol lhe leading wind porllolios.
During 2010, lull connercial operalions connenced al lhe
125v Coshen orlh wind larn (BP 50' in Bonneville Counly, daho.
ve also connenced conslruclion al lhe Cedar Creek 2 wind larn in
Colorado and lhe projecl is expecled lo be in connercial operalion in 2011
wilh a capacily ol around 250v.
BP increased ils nel wind generalion capacily lo 774v during
2010, an increase ol 9' over lhe prior year.
Solar
n 2010, we achieved sales ol 325v, an increase ol 60' over 2009.
BP Solars organizalion, wilh over 900 enployees worldwide, is slruclured
lo serve lhe residenlial, connercial, and ulilily narkels wilh sales and
narkeling ollces in najor narkels around lhe world. Our joinl venlure
nanulacluring lacililies are localed in Xian, China and Bangalore, ndia. n
arch, BP Solar announced lhe closure ol nanulacluring al ils Frederick
lacilily, in aryland, US, as il noves ils nanulacluring lo lowercosl
localions. BP Solar will nainlain ils US presence in sales and narkeling,
research and lechnology, projecl developnenl, and key business supporl
aclivilies. n supporl ol our nanulacluring reslrucluring, we have signed a
nunber ol slralegic cell supply agreenenls wilh suppliers, including
JA Solar Holdings Co. Lld and Hareon Solar Technology, providing BP Solar
wilh access lo around 200v ol nonocryslalline and nullicryslalline
solar cells in 2011.
Carbon caplure and slorage
BP has played a leading role in lhe carbon caplure and slorage (CCS
induslry lor nore lhan 10 years, and loday locuses on denonslralion
projecls and a conlinuing progranne ol research and lechnology
developnenl.
n Algeria, we are noving inlo Phase 2 ol our joinl induslry projecl
lhal nonilors lhe CO
2
injeclion and slorage operalion al lhe n Salah gas
leld. vilh our parlners Sonalrach and Slaloil, we have been injecling up lo
1 nillion lonnes ol CO
2
a year since 2004, denonslraling secure geological
slorage lhrough a conprehensive noniloring progranne lhal is subjecl lo
independenl acadenic review by a scienlilc advisory board.
Since 2007, we have been developing lhe Hydrogen Energy
Calilornia 250v power projecl wilh CCS wilh our parlner Fio Tinlo. The
projecl is currenlly in ils leasibilily engineering design phase.
Separalely, lhe 400v Hydrogen Power Abu Dhabi projecl wilh
CCS awails lurlher decisions, including arrangenenls lor CO
2

lransporlalion and slorage. The projecl is a joinl venlure belween BP (40'
and asdar (60'.
Shipping
ve lransporl our producls across oceans, around coasllines and along
walerways, using a conbinalion ol BPoperaled, linecharlered and
spolcharlered vessels. All vessels conducling BP aclivilies are subjecl lo
our heallh, salely, securily and environnenlal requirenenls. The prinary
purpose ol our shipping and charlering aclivilies is lhe lransporlalion ol our
hydrocarbon producls. n addilion, we nay use surplus capacily lo
lransporl lhirdparly producls.
nlernalional Heel
The size ol our nanaged inlernalional Heel has nol changed since 2009.
Al lhe end ol 2010, we had 54 inlernalional vessels (37 nediunsize crude
and producl carriers, lour very large crude carriers, one orlh Sea shullle
lanker, eighl LC carriers and lour LPC carriers. All lhese ships are
doublehulled. Ol lhe eighl LC carriers, BP nanages one on behall ol a
joinl venlure in which il is a parlicipanl.
Fegional and specialisl vessels
n Alaska, we relain a Heel ol lour doublehulled vessels. Oulside lhe US,
we have 14 specialisl vessels (lwo doublehulled lubricanls oil barges and
12 ollshore supporl vessels.
Tinecharler vessels
BP has 34 hydrocarboncarrying vessels above 600 deadweighl lonnes on
linecharler, all ol which are doublehulled. All lhese vessels parlicipale in
BPs Tine Charler Assurance Progranne.
Spolcharler vessels
BP spolcharlers vessels, lypically lor single voyages. These vessels are
always velled lor salely assurance prior lo each use.
Olher vessels
BP uses various crall such as lugs, crew boals and seisnic vessels in
supporl ol lhe groups business. ve also use sub600 deadweighl lonne
barges lo carry hydrocarbons on inland walerways.

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ariline securily issues
Al a slralegic level, BP avoids known areas ol pirale allack or arned
robbery, where lhis is nol possible lor lrading reasons and we consider il
sale lo do so, we will conlinue lo lrade vessels lhrough lhese areas,
subjecl lo lhe adoplion ol heighlened securily neasures.
2010 has seen conlinuing pirale aclivily in lhe Cull ol Aden,
exlending well inlo lhe ndian Ocean (lron lhe easl coasl ol Sonalia lo
approxinalely 250 niles wesl ol lhe aldives and lo lhe norlh inlo lhe
Arabian Sea. Despile an increasing level ol piracy aclivily, lhe nunber ol
vessels aclually allacked and/or hijacked has renained roughly lhe sane as
2009, as a resull ol slronger naval inlervenlion oll lhe Sonali coasl,
heighlened awareness ol lhe lhreal, and proleclive neasures adopled by
lransiling ships.
Al presenl, we lollow available nililary and governnenl agency
advice and are parlicipaling in proleclive group lransils lhrough lhe Cull ol
Aden nlernalionally Feconnended Transil Corridor. BP supporls lhe
proleclive neasures reconnended in lhe inlernalional shipping induslry
guide Bes! anagenen! Prac!ice 3 - Pirac, o!! !he Coas! o! Sona|ia and
Arabian Sea Area.
a
AIuminium
Our aluniniun business is a noninlegraled producer and narkeler ol
rolled aluniniun producls, headquarlered in Louisville, Kenlucky, US.
Produclion lacililies are localed in Logan Counly, Kenlucky, and are joinlly
owned wilh ovelis. The prinary aclivily ol our aluniniun business is lhe
supply ol aluniniun coil lo lhe beverage can business, which il
nanulaclures prinarily lron recycled aluniniun.
Treasury
Treasury nanages lhe lnancing ol lhe group cenlrally, ensuring liquidily
sullcienl lo neel group requirenenls and nanages key lnancial risks
including inleresl rale, loreign exchange, pension and lnancial inslilulion
credil risk. Fron localions in lhe UK, lhe US and lhe Asia Pacilc region,
Treasury provides lhe inlerlace belween BP and lhe inlernalional lnancial
narkels and supporls lhe lnancing ol BPs projecls around lhe world.
Treasury lrades loreign exchange and inleresl rale producls in lhe lnancial
narkels, hedging group exposures and generaling increnenlal value
lhrough oplinizing and nanaging cash Hows. For inlornalion on lhe role
perlorned by Treasury in nanaging lhe groups liquidily in lhe allernalh ol
lhe Cull ol exico oil spill, see Liquidily and capilal resources on
pages 6364 and Financial slalenenls - ole 2 on page 153. Trading
aclivilies are underpinned by lhe conpliance, conlrol, and risk nanagenenl
inlraslruclure connon lo all BP lrading aclivilies.
Insurance
The group generally reslricls ils purchase ol insurance lo silualions where
lhis is required lor legal or conlraclual reasons. Losses are borne as lhey
arise, ralher lhan being spread over line lhrough insurance preniuns wilh
allendanl lransaclion cosls. This approach has been reviewed lollowing
lhe Cull ol exico oil spill and il has been concluded lhal lhe group will
conlinue wilh ils currenl approach ol nol generally purchasing
insurance cover.
a
Joinlly published by induslry bodies, including lhe Oil Conpanies nlernalional arine Forun
(OCF and supporled by nililary operalions in lhe region.
Liquidily and capilal resources
Following lhe Cull ol exico oil spill, lhe group laced signilcanl cosls
relaling lo lhe innediale response aclivilies as well as signilcanl
uncerlainly regarding lhe ullinale nagnilude ol ils liabililies and lining ol
cash oulHows.
n June, oodys nveslors Service and Slandard & Poors (S&P
downgraded lhe groups longlern credil ralings lron Aa1 (slable oullook
and AA (slable oullook respeclively, lo A2 (negalive walch and A (negalive
walch respeclively. Filch downgraded BP lo BBB. All lhree raling agencies
have subsequenlly renoved lhe group lron ralings walch, oodys and
Filch have currenlly placed lhe groups raling on A2 (slable oullook and
A (slable oullook respeclively, and S&P has placed our raling on A
(negalive oullook.
Following lhe incidenl lhe group was required lo nake subslanlial
cash paynenls in conneclion wilh lhe oil spill. nveslors in BPs US
nduslrial Fevenue/unicipal bonds and in bonds associaled wilh longlern
gas supply conlracls largely exercised lheir oplion lo lender lhe bonds lor
repaynenl. As a resull, al 31 Decenber 2010, BP was holding all
$1.5 billion ol lhe oulslanding bonds associaled wilh longlern gas supply
conlracls and had repaid $2.5 billion ol US nduslrial Fevenue/unicipal
bonds wilh BP eilher holding or reliring lhe bonds. The group also
experienced increased requirenenls lo posl lellers ol credil lo collaleralize
a nunber ol environnenlal liabililies in lhe US and lhe UK lolalling
$624 nillion and posl lurlher cash collaleral under lrading agreenenls
lolalling $723 nillion.
n response, BP insligaled a progranne early in lhe second quarler
ol 2010 lo increase available liquidily. ve secured addilional bank lines
lolalling $12 billion and announced lhe lenporary suspension ol quarlerly
dividend paynenls beginning wilh lhe paynenl lhal had been scheduled lo
occur in June 2010. BP also announced a disposal progranne ained al
raising $30 billion lo be conpleled by lhe end ol 2011. Signilcanl deposils
were negolialed as parl ol lhese lransaclions. Deposils lolalling $5 billion
were held al lhe end ol lhe lhird quarler and $6.2 billion was held al lhe
end ol lhe year, signilcanlly increasing available liquidily. ncluding
deposils, $17 billion was raised lhrough lhe disposal progranne in 2010.
A lurlher $0.7 billion ol lunds were raised lhrough borrowings which were
secured on working capilal and olher assels. BP also raised $4.6 billion
during lhe lhird quarler lron syndicaled bank loans backed by lulure crude
oil sales over a lveyear period lron BPs inleresls in specilc ollshore
Angola and Azerbaijan lelds.
These inilialives and lhe slrenglh ol our underlying cash Hows
(including lorecasling under dillerenl slress scenarios ensured lhe group
had sullcienl working capilal lo neel ils requirenenls al all lines.
Early in lhe lourlh quarler ol 2010, BP accessed lhe US and
European capilal narkels wilh bond issuances lolalling $6.25 billion, wilh
nalurilies ol belween lour and 10 years.
Business review
FinanciaI framework
As parl ol our response lo lhe Cull ol exico oil spill, we revised our
lnancial lranework during 2010. The ain ol lhe revised lranework is lo
provide lhe group wilh lnancial Hexibilily in lhe nediun lern, as we
conplele our $30billion disposal progranne and lulll our connilnenl lo
lund lhe Deepwaler Horizon Oil Spill Trusl. See Financial slalenenls -
ole 2 on page 153.
ve inlend lo invesl lo grow lhe conpany and shareholder value
suslainably lhrough lhe business cycle and we inlend lo nainlain a capilal
slruclure lhal allows lhe group lo execule ils slralegy and is resilienl lo
inherenl volalilily.
ve also inlend lo nainlain a signilcanl liquidily buller and lo
reduce our nel debl ralio lo wilhin a range ol 1020', conpared wilh our
previously largeled range ol 2030'. For lurlher inlornalion on nel debl,
which is a nonCAAP neasure, see Financial slalenenls - ole 36 on
page 193.
ve will seek lo nainlain shareholder dislribulions in line wilh
operaling perlornance lhrough lhe business cycle. On 1 February 2011,
we announced lhe resunplion ol quarlerly dividend paynenls, al a level
we believe is prudenl and recognizes our currenl circunslances. ve slill
lace uncerlainlies as lo lhe anounl and lining ol lulure cash Hows and
we have an obligalion lo conlribule $5 billion per annun lo lhe
Deepwaler Horizon Oil Spill Trusl lor each ol lhe nexl lhree years.
Our inlenlion is lo increase lhe dividend over line, in line wilh lhe
circunslances ol lhe conpany.
Dividends and other distributions to sharehoIders
n June 2010, lhe BP board reviewed ils dividend policy in lighl ol lhe Cull
ol exico oil spill and lhe agreenenl lo eslablish lhe $20billion lrusl lund,
deciding lhal no ordinary share dividends would be paid in respecl ol lhe
lrsl lhree quarlers ol 2010. On 1 February 2011, BP announced lhe
resunplion ol quarlerly dividend paynenls, wilh a lourlhquarler dividend
ol 7 cenls per share.
ve believe lhis level is supporled by lhe success ol our disposal
progranne lhus lar, and by lhe inproving business environnenl, bul is
balanced by lhe recognilion ol our conlinuing obligalion lo lund lhe Trusl
unlil lhe end ol 2013 and lhe need lo relain lnancial Hexibilily. ve inlend lo
increase lhe dividend level over line in line wilh lhe circunslances ol lhe
conpany. The lolal dividend paid lo BP shareholders in 2010 was
$2.6 billion, conpared wilh $10.5 billion lor 2009. The dividend paid per
share was 14 cenls, a decrease ol 75' conpared wilh 2009. n slerling
lerns, lhe dividend decreased 76'. ve delernine lhe dividend in US
dollars, lhe econonic currency ol BP.
During 2010 and 2009, lhe conpany did nol repurchase any ol ils
own shares.
Financing the group's activities
A sunnary ol lnancing aclivilies during 2010 lollowing lhe Cull ol exico
oil spill is included on page 63. The groups principal connodily, oil, is
priced inlernalionally in US dollars. Croup policy has generally been lo
nininize econonic exposure lo currency novenenls by lnancing
operalions wilh US dollar debl, or by using currency swaps when lunds
have been raised in currencies olher lhan US dollars.
The groups lnance debl al 31 Decenber 2010 anounled lo
$45.3 billion (2009 $34.6 billion. Ol lhe lolal lnance debl, $14.6 billion is
classiled as shorl lern al lhe end ol 2010 (2009 $9.1 billion. ncluded
wilhin shorllern debl is $6.2 billion relaling lo lhe previously nenlioned
deposils received lor announced disposal lransaclions slill pending legal
conplelion posl lhe balance sheel dale (2009 nil. The shorllern balance
also includes $6.9 billion lor anounls repayable wilhin lhe nexl 12 nonlhs
relaling lo longlern borrowings (2009 $3.9 billion. Connercial paper
narkels in lhe US and Europe are a lurlher source ol shorllern liquidily
lor lhe group lo provide lining Hexibilily. Al 31 Decenber 2010,
oulslanding connercial paper anounled lo $1.0 billion (2009 $0.4 billion.
Due lo lhe uncerlainly ol connercial paper narkels in lines ol crisis, we
choose nol lo include our connercial paper balances when conducling
slress lesls ol our liquidily. ve do, nonelheless, nake use ol lhese
narkels when lhey are connercially allraclive.
ve have in place a European Debl ssuance Progranne (DP under which
lhe group nay raise up lo $20 billion ol debl lor nalurilies ol one nonlh or
longer. Al 31 Decenber 2010, lhe anounl drawn down againsl lhe DP
was $12.3 billion (2009 $11.4 billion. n addilion, lhe group has in place an
unliniled US shell regislralion slalenenl under which il nay raise debl
wilh nalurilies ol one nonlh or longer. one ol lhe recenl capilal narkel
bond issuances conlained any addilional lnancial covenanls conpared lo
lhe groups capilal narkels issuances prior lo lhe Cull ol exico oil spill.
The nalurily prolle and lxed/Hoaling rale characlerislics ol lhe
groups debl are described in Financial slalenenls - ole 35 on page 197.
el debl was $25.9 billion al lhe end ol 2010, a slighl reduclion
lron lhe 2009 yearend nel debl posilion ol $26.2 billion. ncluded in nel
debl are cash and cash equivalenls ol $13.6 billion al 31 Decenber 2010
(2009 $3.3 billion. The ralio ol nel debl lo nel debl plus equily was 21' al
lhe end ol 2010, conpared wilh 20' al lhe end ol 2009.
BP nanages ils cash posilion lo ensure lhe group has liquidily as
and when required. Cash balances are pooled cenlrally where pernissible,
and deployed globally as required. Cash surpluses are deposiled wilh
credilworlhy banks and noney narkel lunds wilh shorl nalurilies lo
ensure availabilily. Furlher inlornalion on lhe nanagenenl ol liquidily risk
and credil risk is provided in Financial slalenenls - ole 27 on
pages 133190, and on lhe cash posilion in Financial slalenenls - ole 31
on page 191.
BP expecls lo nainlain a slrong cash posilion. This, logelher wilh
our lower nel debl ralio largel, ains lo ensure lhe group has lhe Hexibilily
lo neel lulure lnancial obligalions and reHecls a prudenl approach lo
nanaging lhe balance sheel and lhe liquidily requirenenls ol lhe conpany.
The group also has access lo signilcanl sources ol liquidily in lhe
lorn ol connilled bank lacililies. Al 31 Decenber 2010, lhe group had
available undrawn connilled borrowing lacililies ol $12.5 billion (2009
$5.0 billion, nade up ol:
$5.3 billion ol slandby lacililies, ol which $0.4 billion is available lo draw
and repay by nidSeplenber 2011, $4.6 billion unlil nidOclober 2011,
and $0.3 billion unlil nidJanuary 2013.
$7.2 billion ol 364day lacililies, ol which $4.0 billion can be drawn unlil
lale ay 2011, $2.0 billion drawn unlil lhe end ol June 2011, $0.7 billion
drawn unlil early July 2011 and $0.5 billion drawn unlil lale Augusl 2011.
Any anounls drawn are repayable up lo 364 days lron lhe dale
ol drawing.
vilh lhe level ol undrawn connilled bank lacililies increasing since lhe
Cull ol exico oil spill incidenl and wilh lhe levels ol cash increasing, our
overall liquidily levels slrenglhened over lhe course ol 2010.
BP believes lhal, laking inlo accounl lhe subslanlial anounls ol
undrawn borrowing lacililies and levels ol cash and cash equivalenls, and
lhe ongoing abilily lo generale cash, including lurlher disposal proceeds,
lhe group has sullcienl working capilal lor loreseeable requirenenls.
There renains signilcanl uncerlainly regarding lhe anounl and lining ol
lulure expendilures and lhe inplicalions lor lulure aclivilies. See Fisk
laclors on pages 2732, and Financial slalenenls - ole 2 on page 153,
ole 37 on page 199 and ole 44 on page 213 lor lurlher inlornalion.
Off-baIance sheet arrangements
Al 31 Decenber 2010, lhe groups share ol lhirdparly lnance debl ol
equilyaccounled enlilies was $6,937 nillion (2009 $6,433 nillion. These
anounls are nol reHecled in lhe groups debl on lhe balance sheel.
The group has issued lhirdparly guaranlees under which anounls
oulslanding al 31 Decenber 2010 are $404 nillion (2009 $319 nillion in
respecl ol liabililies ol joinlly conlrolled enlilies and associales and
$664 nillion (2009 $667 nillion in respecl ol liabililies ol olher lhird parlies.
Ol lhese anounls, $355 nillion (2009 $236 nillion ol lhe joinlly conlrolled
enlilies and associales guaranlees relale lo borrowings and lor olher
lhirdparly guaranlees, $649 nillion (2009 $633 nillion relales lo
guaranlees ol borrowings.

Business review
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The lollowing lable sunnarizes lhe groups principal conlraclual obligalions al 31 Decenber 2010, dislinguishing belween lhose lor which a liabilily is
recognized on lhe balance sheel and lhose lor which no liabilily is recognized. Furlher inlornalion on borrowings and lnance leases is given in Financial
slalenenls - ole 35 on page 197 and nore inlornalion on operaling leases is given in Financial slalenenls - ole 15 on page 175.
$ nillion
Paynenls due by period
Expecled paynenls by period under conlraclual 2016 and
obligalions and connercial connilnenls Tolal 2011 2012 2013 2014 2015 lherealler
Balance sheel obligalions
Borrowings
a
41,550 9,200 6,439 7,436 6,054 5,443 6,923
Finance lease lulure nininun lease paynenls 1,126 153 377 56 51 51 433
Deepwaler Horizon Oil Spill Trusl lunding liabilily 15,003 5,003 5,000 5,000 - - -
Deconnissioning liabililies
b
14,376 461 453 370 362 413 12,317
Environnenlal liabililies
b
3,903 1,763 545 275 139 153 973
Pensions and olher poslrelirenenl benells
c
25,670 1,916 1,905 1,403 976 933 13,437
Tolal balance sheel obligalions 102,133 13,501 14,719 14,590 7,632 7,043 39,643
Ollbalance sheel obligalions
Operaling leases
d
13,973 3,521 2,475 1,373 1,413 1,032 3,654
Uncondilional purchase obligalions
e
166,942 97,355 16,330 9,291 6,773 5,634 31,554
Tolal ollbalance sheel obligalions 130,915 100,376 13,305 11,169 3,191 6,666 35,203
Tolal 233,043 119,377 33,524 25,759 15,323 13,714 74,351

a
Expecled paynenls include inleresl paynenls on borrowings lolalling $3,221 nillion ($333 nillion in 2011, $679 nillion in 2012, $520 nillion in 2013, $362 nillion in 2014, $225 nillion in 2015 and
$547 nillion lherealler, and exclude disposal deposils ol $6,197 nillion included in currenl lnance debl on lhe balance sheel.
b
The anounls are undiscounled. Environnenlal liabililies include lhose relaling lo lhe Cull ol exico oil spill, including liabililies lor spill response cosls.
c
Fepresenls lhe expecled lulure conlribulions lo lunded pension plans and paynenls by lhe group lor unlunded pension plans and lhe expecled lulure paynenls lor olher poslrelirenenl benells.
d
The lulure nininun lease paynenls are belore deducling relaled renlal incone lron operaling subleases. n lhe case ol an operaling lease enlered inlo solely by BP as lhe operalor ol a joinlly conlrolled
assel, lhe anounls shown in lhe lable represenl lhe nel lulure nininun lease paynenls, aller deducling anounls reinbursed, or lo be reinbursed, by joinl venlure parlners. vhere BP is nol lhe operalor
ol a joinlly conlrolled assel BPs share ol lhe lulure nininun lease paynenls are included in lhe anounls shown, whelher BP has cosigned lhe lease or nol. vhere operaling lease cosls are incurred in
relalion lo lhe hire ol equipnenl used in conneclion wilh a capilal projecl, sone or all ol lhe cosl nay be capilalized as parl ol lhe capilal cosl ol lhe projecl.
e
Fepresenls any agreenenl lo purchase goods or services lhal is enlorceable and legally binding and lhal speciles all signilcanl lerns. The anounls shown include arrangenenls lo secure longlern
access lo supplies ol crude oil, nalural gas, leedslocks and pipeline syslens. n addilion, lhe anounls shown lor 2011 include purchase connilnenls exisling al 31 Decenber 2010 enlered inlo principally
lo neel lhe groups shorllern nanulacluring and narkeling requirenenls. The price risk associaled wilh lhese crude oil, nalural gas and power conlracls is discussed in Financial slalenenls - ole 27 on
page 136.
The lollowing lable sunnarizes lhe nalure ol lhe groups uncondilional purchase obligalions.
$ nillion
Paynenls due by period
2016 and
Uncondilional purchase obligalions Tolal 2011 2012 2013 2014 2015 lherealler
Crude oil and oil producls 101,671 70,572 7,053 3,532 2,207 1,934 16,313
alural gas 36,147 19,730 5,117 2,327 2,073 1,450 4,395
Chenicals and olher relnery leedslocks 3,912 2,055 1,273 923 333 353 2,910
Power 2,734 1,915 633 162 16 2 1
Ulililies 925 156 154 111 93 39 317
Transporlalion 3,525 1,134 375 796 726 637 4,307
Use ol lacililies and services 7,973 1,693 1,160 390 765 664 2,306
Tolal 166,942 97,355 16,330 9,291 6,773 5,634 31,554

The group expecls ils lolal capilal expendilure, excluding acquisilions and assel exchanges, lo be around $20 billion in 2011. The lollowing lable
sunnarizes lhe groups capilal expendilure connilnenls lor properly, planl and equipnenl al 31 Decenber 2010 and lhe proporlion ol lhal expendilure
lor which conlracls have been placed. Capilal expendilure is considered lo be connilled when lhe projecl has received lhe appropriale level ol inlernal
nanagenenl approval. For joinlly conlrolled assels, lhe nel BP share is included in lhe anounls shown. vhere operaling lease cosls are incurred in
conneclion wilh a capilal projecl, sone or all ol lhe cosl nay be capilalized as parl ol lhe capilal cosl ol lhe projecl. Such cosls are included in lhe
anounls shown.
$ nillion
2016 and
Capilal expendilure connilnenls Tolal 2011 2012 2013 2014 2015 lherealler
Connilled on najor projecls 31,376 15,193 7,205 4,304 2,170 936 1,513
Anounls lor which conlracls have been placed 11,279 7,239 1,966 1,093 504 316 161

n addilion, al 31 Decenber 2010, lhe group had connilled lo capilal expendilure relaling lo inveslnenls in equilyaccounled enlilies anounling lo
$1,033 nillion. Conlracls were in place lor $517 nillion ol lhis lolal.
Business review
Cash ow
The lollowing lable sunnarizes lhe groups cash Hows.
$ nillion
2010 2009 2003
el cash provided by operaling
aclivilies 13,616 27,716 33,095
el cash used in invesling aclivilies (3,960) (13,133 (22,767
el cash provided by (used in
lnancing aclivilies 840 (9,551 (10,509
Currency lranslalion dillerences
relaling lo cash and cash equivalenls (279) 110 (134
ncrease in cash and cash equivalenls 10,217 142 4,635
Cash and cash equivalenls al
beginning ol year 8,339 3,197 3,562
Cash and cash equivalenls al
end ol year 18,556 3,339 3,197
el cash provided by operaling aclivilies lor lhe year ended 31 Decenber
2010 was $13,616 nillion conpared wilh $27,716 nillion lor 2009, lhe
reduclion prinarily reHecling a nel cash oulHow ol $16,019 nillion in
respecl ol lhe Cull ol exico oil spill. Excluding lhe inpacls ol lhe Cull ol
exico oil spill, proll belore laxalion increased by $10,936 nillion and a
decrease in working capilal requirenenls conlribuled $342 nillion. This
higher proll belore lax did nol resull in an equivalenl nel increase in
operaling cash How because il included $4,354 nillion in nel gains on
disposals, nel ol inpairnenls, a decrease ol $1,160 nillion in deprecialion,
deplelion, anorlizalion and exploralion expense, and a decrease ol
$737 nillion in lhe nel charge lor provisions, less paynenls, all ol which
are noncash ilens.
el cash provided by operaling aclivilies lor lhe year ended
31 Decenber 2009 was $27,716 nillion conpared wilh $33,095 nillion lor
2003 reHecling a decrease in proll belore laxalion ol $9,159 nillion, an
increase in working capilal requirenenls ol $3,944 nillion and a decrease
in dividends lron joinlly conlrolled enlilies and associales ol $725 nillion.
These were parlly ollsel by a decrease in incone laxes paid ol
$6,500 nillion, higher deprecialion, deplelion, anorlizalion and inpairnenl
charges ol $1,329 nillion and an increase in charges lor provisions ol
$943 nillion.
el cash used in invesling aclivilies was $3,960 nillion in 2010,
conpared wilh $13,133 nillion and $22,767 nillion in 2009 and 2003
respeclively. The decrease in 2010 reHecled an increase ol $14,273 nillion
in disposal proceeds and a decrease in capilal expendilure and inveslnenls
ol $2,445 nillion, parlly ollsel by an increase in acquisilions ol
$2,469 nillion. The decrease in cash used in invesling aclivilies in 2009
conpared lo 2003 reHecled a decrease in capilal expendilure and
acquisilions ol $2,356 nillion and an increase in disposal proceeds ol
$1,752 nillion.
el cash provided by lnancing aclivilies was $340 nillion in 2010
conpared wilh $9,551 nillion nel cash used in 2009 and $10,509 nillion nel
cash used in 2003. The nel increase in cash provided in 2010 reHecls a
decrease in dividends paid ol $7,957 nillion, an increase in nel proceeds
lron longlern lnancing ol $1,636 nillion and a decrease in nel repaynenls
ol shorllern debl ol $736 nillion. The decrease in 2009 reHecled a
$2,774 nillion decrease in lhe nel repurchase ol shares and an increase in
nel proceeds lron longlern lnancing ol $1,406 nillion, lhese were parlly
ollsel by an increase in nel repaynenls ol shorllern debl ol $3,090 nillion.
The group has had signilcanl levels ol capilal inveslnenl lor nany years.
Cash How in respecl ol capilal inveslnenl, excluding acquisilions, was
$13.9 billion in 2010, $21.4 billion in 2009 and $23.7 billion in 2003. Sources
ol lunding are conplelely lungible, bul lhe najorily ol lhe groups lunding
requirenenls lor new inveslnenl cone lron cash generaled by exisling
operalions. The groups level ol nel debl, lhal is debl less cash and cash
equivalenls, was $25.9 billion al lhe end ol 2010, $26.2 billion al lhe end ol
2009 and was $25.0 billion al lhe end ol 2003.
During lhe period 2003 lo 2010, our lolal sources ol cash anounled
lo $101 billion, whilsl our lolal uses ol cash anounled lo $93 billion. The
nel cash provided ol $3 billion, along wilh an increase in lnance debl ol
$7 billion, resulled in an increase in our balance ol cash and cash
equivalenls ol $15 billion over lhe lhreeyear period. During lhis period, lhe
price ol Brenl crude oil has averaged $79.43 per barrel. The lollowing lable
sunnarizes lhe lhreeyear sources and uses ol cash.
$ billion
Sources ol cash
el cash provided by operaling aclivilies 79
Disposals 22
101
Uses ol cash
Capilal expendilure 64
Acquisilions 3
el repurchase ol shares 2
Dividends paid lo BP shareholders 23
Dividends paid lo ninorily inleresls 1
93
el source ol cash 3
ncrease in lnance debl 7
ncrease in cash and cash equivalenls 15
Disposal proceeds received during lhe lhreeyear period were signilcanlly
higher lhan cash used lor acquisilions, as a resull in parlicular ol our
disposal progranne slarled in 2010. el inveslnenl (capilal expendilure
and acquisilions less disposal proceeds during lhis period averaged
$15 billion per year. Dividends paid lo BP shareholders lolalled $23 billion
during lhe lhreeyear period, wilh no ordinary share dividends being paid in
respecl ol lhe lrsl lhree quarlers ol 2010. el repurchase ol shares was
$2 billion, which included $3 billion in 2003 in respecl ol our share buyback
progranne less nel proceeds lron shares issued in conneclion wilh
enployee share schenes over lhe lhree years. Finally, cash was used lo
slrenglhen lhe lnancial condilion ol cerlain ol our pension plans. n lhe
pasl lhree years, $3 billion has been conlribuled lo lunded pension plans.
This is reHecled in nel cash provided by operaling aclivilies in lhe lable
above. The balance ol cash and cash equivalenls held has been increased
in lighl ol lhe groups currenl circunslances, as noled above.

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Trend information
For inlornalion on exlernal narkel lrends, see Our narkel on pages 1613.
ve expecl produclion in 2011 lo be lower lhan in 2010 as a resull
ol diveslnenls, lower produclion lron lhe Cull ol exico and increased
lurnaround aclivily lo inprove lhe longlern reliabilily ol lhe assels. As a
resull ol lhese laclors, reporled produclion in 2011 is expecled lo be
around 3,400nboe/d. The aclual oulcone will depend on lhe exacl lining
ol diveslnenls, lhe pace ol resunplion ol operalions in lhe Cull ol exico,
OPEC quolas and lhe inpacl ol lhe oil price on our PSAs.
n Felning and arkeling, relners are likely lo conlinue lo operale
wilh excess capacily globally, allhough nearlern supplydenand
lundanenlals appear broadly in balance. ve expecl lhe nunber and cosl
ol our relnery lurnarounds in 2011 and 2012 lo be higher lhan in 2010.
n Olher businesses and corporale, lhe underlying average quarlerly
charge lor 2011 is expecled lo be around $400 nillion. As in previous years,
lhis is likely lo be volalile on an individual quarlerly basis.
ve expecl capilal expendilure, excluding acquisilions and assel
exchanges, lo be around $20 billion in 2011, an increase conpared wilh 2010.
Having received a lolal ol $17 billion lor disposal proceeds and disposal
deposils in 2010, we are largeling around a lurlher $13 billion in 2011.
The discussion above conlains lorwardlooking slalenenls, parlicularly
lhose regarding global econonic recovery and oullook lor oil and gas
narkels, oil and gas prices, relning nargins, produclion, denand lor
pelrochenicals producls, elleclive lax rale, operaling and capilal
expendilure, lining and proceeds ol diveslnenls, conlraclual
connilnenls, balance ol cash inHows and oulHows, nel debl ralio, and
dividend and oplional scrip dividend. These lorwardlooking slalenenls are
based on assunplions lhal nanagenenl believes lo be reasonable in lhe
lighl ol lhe groups operalional and lnancial experience. However, no
assurance can be given lhal lhe lorwardlooking slalenenls will be
realized. You are urged lo read lhe caulionary slalenenl on page 4 and Fisk
laclors on pages 2732, which describe lhe risks and uncerlainlies lhal nay
cause aclual resulls and developnenls lo diller nalerially lron lhose
expressed or inplied by lhese lorwardlooking slalenenls. The conpany
provides no connilnenl lo updale lhe lorwardlooking slalenenls or lo
publish lnancial projeclions lor lorwardlooking slalenenls in lhe lulure.
Business review
Corporale responsibilily
The Deepwaler Horizon explosion and subsequenl spill had najor hunan
and environnenlal consequences, denonslraling lhe inporlance ol sale
and responsible operalions. ve deeply regrel lhe loss ol lives and injuries
sullered, and lhe inpacl lo lhe environnenl and livelihoods ol local people.
ve are connilled lo underslanding and applying lhe lessons lron
lhe accidenl. Already, we are naking sone lundanenlal changes in lhe
way we operale.
These neasures include:
The crealion ol an enhanced salely and operalional risk lunclion lhal is
independenl ol lhe business line and is represenled in every BP
operalion.
The reorganizalion ol our upslrean business lo creale lhree lunclional
divisions, each reporling direclly lo lhe group chiel execulive. (See
xp|ora!ion and Produc!ion on pages 40-4! !or !ur!her de!ai|s.
A review ol enployee reward lraneworks lo increase lhe locus on
perlornance in salely, conpliance, and operalional risk nanagenenl.
(See np|o,ees on page 74 !or !ur!her de!ai|s.
An exaninalion ol how we can slrenglhen lhe oversighl ol conlraclors.
Slrenglhening lhese core areas will require sone prolound changes in how
we operale and will lake several years lo lully enbed.
n 2010, lhe conpany reporled 14 worklorce lalalilies, including lhe
11 workers on lhe Deepwaler Horizon in lhe US and lhree olher work
relaled lalalilies in lhe elherlands, Cernany and Canada. All 14 individuals
were conlraclors. ve deeply regrel lhe loss ol lhese lives and recognize
lhe lrenendous loss lell by lheir lanilies, lriends and coworkers.
Salely
GuIf of Mexico oiI spiII investigations and recommendations
n lhe innediale allernalh ol lhe Deepwaler Horizon explosion, BP
launched an inlernal invesligalion, drawing on lhe experlise ol nore lhan
50 lechnical and olher specialisls wilhin BP and lhe induslry. The
invesligalion lean was led by BPs head ol salely and operalions, and
worked independenlly lron BPs olher spill response aclivilies and
organizalions.
The BP invesligalion concluded lhal no single cause was
responsible lor lhe accidenl. The invesligalion inslead lound lhal a
conplex, inlerlinked series ol nechanical lailures, hunan judgenenls,
engineering design, operalional inplenenlalion and lean inlerlaces,
involving several conpanies including BP, conlribuled lo lhe accidenl.
See Cull ol exico oil spill on pages 3439.
As a resull, lhe invesligalion lean nade 26 reconnendalions
specilc lo drilling, which we accepled and are inplenenling across our
worldwide drilling operalions. The reconnendalions include neasures
lo inprove conlraclor nanagenenl, as well as lo slrenglhen design and
assurance on blowoul prevenlers (BOPs, well conlrol, pressurelesling
lor well inlegrily, energency syslens, cenenl lesling, rig audil and
verilcalion, and personnel conpelence.
Several exlernal invesligalions inlo lhe Deepwaler Horizon accidenl
and response are under way in lhe US, including lhose by lhe arine
Board, lhe alional Acadeny ol Engineering, lhe Chenical Salely Board,
lhe US Congress, lhe Deparlnenl ol Juslice and lhe Securilies and
Exchange Connission (SEC. n addilion, lhe Presidenlial Connission
issued ils reporl on 11 January 2011. See page 33 in Cull ol exico oil spill
lor a sunnary ol lhe lndings. As lhe lndings ol lhese invesligalions are
nade public, we will nake lhen available on vvv.bp.con/gu|!o!nexico.
Subsequent actions to date to strengthen BP's safety management
Following lhe accidenl, BP innedialely underlook a variely ol aclivilies lo
lurlher slrenglhen ils oil spill prevenlion, conlainnenl and response
capabilily. These include:
BOPs used on BPoperaled projecls, along wilh olher wellconlrol
equipnenl, were checked lo conlrn lhal lhey had been properly
nainlained and are capable ol shulling in lhe well in an energency.
Fenolely operaled vehicles were conlrned lo be capable ol aclivaling
BOPs in energency silualions.
ew decision nalrix, designed lo aid key decisions on well design and
operalions, was developed and dislribuled lo our operalions globally.
Two conlainnenl hals were delivered lo lhe UK lo aid orlh Sea
conlainnenl capabilily.
ve updaled our oil spill response plan, and subnilled il lo lhe
US Deparlnenl ol lhe nlerior.
eanwhile, our upslrean leans are working lo inplenenl lhe 26
reconnendalions nade by BPs inlernal invesligalion lean. These will be
lracked in lhe quarlerly HSE and operalions inlegrily reporl supplied lo lhe
execulive lean.
Safety and operationaI risk
Salely and operalional risk nanagenenl requirenenls, encapsulaled by
our operaling nanagenenl syslen (OS, are sel by a cenlral, dedicaled
lunclion, wilh periodic reviews by lhe board and execulive connillees.
The operalional delivery ol lhese requirenenls is lhe responsibilily ol
lhe businesses.
As a resull ol lhe Cull ol exico incidenl, BP has redelned and
slrenglhened lhe scope and accounlabililies ol lhe group lunclion lor
salely and operalions, crealing a new independenl lunclion, Salely and
Operalional Fisk (S&OF. ve are deploying S&OF prolessionals, nany ol
whon were previously reporling lo local business leaders, in all ol BPs
operalions lhroughoul 2011.
The core responsibililies ol S&OF are lo:
Provide checks and balances independenl ol lhe business line.
Slrenglhen nandalory salelyrelaled slandards and processes,
including operalional risk nanagenenl.
Provide an independenl view on operalional risk.
Assess and enhance lhe conpelency and capabilily ol our worklorce in
nallers relaled lo salely.
The head ol S&OF is a nenber ol BPs nosl senior execulive lean along
wilh lhe heads ol Felning and arkeling, and Exploralion and Produclion.
S&OF oversees and audils lhe conpanys operalions around lhe world,
assuring lhal all operalions are carried oul in line wilh lhe groups OS.
vhile lhe business line conlinues lo be accounlable lor operalional
delivery, S&OF holds lhe aulhorily lo inlervene in salely and operalional
risk aspecls ol BPs lechnical and operalional aclivilies.
Governance processes
The boards salely, elhics and environnenl assurance connillee (SEEAC
receives updales lron lhe execulive leans group operalions risk
connillee (COFC, which is chaired by lhe group chiel execulive. These
updales include quarlerly reporls noniloring najor incidenls, nearnisses
and perlornance in bolh process and personal salely across lhe group.
The group chiel execulive and lhe head ol S&OF allend SEEAC neelings
and reporl on lhe groups salely perlornance, lhis is neasured lhrough
developing leading and lagging salely indicalors. SEEAC also receives
inlornalion direclly lron S&OF, olher parls ol lhe business and exlernal
sources, including lhe independenl experl appoinled lo nonilor lhe
inplenenlalion ol reconnendalions nade by lhe BP US Felneries
ndependenl Salely Feview Panel lollowing lhe 2005 incidenl al our
Texas Cily relnery.
See Board perlornance reporl on pages 90105 lor lurlher
inlornalion on lhe aclivilies ol lhe boards connillees, including
lhe Cull ol exico connillee eslablished lo oversee lhe work ol lhe
Cull Coasl Fesloralion Organizalion (CCFO.

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Operating management system
n 2003, we launched OS, our groupwide lranework lo drive a rigourous
and syslenalic approach lo salely, risk nanagenenl, and operalional
inlegrily across lhe conpany. OS inlegrales all requirenenls regarding
heallh, salely, securily, environnenl and operalional reliabilily, as well as
relaled issues such as nainlenance, conlraclor relalions and organizalional
learning, inlo a connon syslen.
The principles and slandards ol OS are supporled by delailed
conpany praclices, as well as olher lechnical guidance nalerials. OS
nandales lhal cerlain slandards, groupdelned praclices and group
engineering lechnical praclices be inplenenled conpanywide, lhese
include, anong olhers, lhe assessnenl, priorilizalion and nanagenenl ol
risk, incidenl invesligalion, inlegrily nanagenenl, and environnenlal and
social requirenenls lor najor new projecls.
The OS includes lhese essenlial requirenenls, specilcally
addressing crisis and conlinuily nanagenenl and energency response:
denlily crisis and conlinuily nanagenenl scenarios ulilising lhe enlily
risk regisler, lhe oulpul ol lhe enlilys najor accidenl risk assessnenl
and olher inlornalion.
nplenenl and nainlain crisis and conlinuily nanagenenl plans lo
nanage lhe scenarios idenliled. These will include procedures lron
inilialion lo response and recovery. Al sile level lhese plans shall
include arrangenenls lor evacualion and, where needed, lor inilial
shellerinplace.
Validale lhe plans lhrough exercising lhen al delned inlervals.
Feview lhe plans al leasl annually lo reHecl changes in hazards, risks,
organizalion or conlacl delails, and inplenenl idenliled inprovenenls.
Provide access lo lrained personnel, resources, nedical energency
and olher lacililies needed lo inplenenl and execule lhe crisis and
conlinuily nanagenenl plans.
nplenenl, nainlain and exercise a docunenled process lor
accounling lor personnel during and aller an energency evacualion.
OS delnes lhe process lor BP business unils lo inplenenl lhe syslen
and conlinuously inprove lheir operalional perlornance in all areas,
including salely. The enbedding ol a conprehensive nanagenenl syslen
such as OS across a global conpany is a nulliyear process.
The lransilion lo OS requires each operalion lo develop a local
OS (LOS lhal describes how lhe operalion addresses silespecilc
local operaling risks lo neel group slandards and praclices and conply
wilh applicable HSSE legal requirenenls, while locusing on lheir specilc
aclivilies. As an essenlial slep in developing ils LOS, lhe business unil
conducls an assessnenl ol lhe gaps belween lhe slandards and praclices
conlained in OS and lhe business unils local processes and procedures,
and lhen develops a gapclosure plan. Every year, aller lhe inilial gap
assessnenl, each business unil conducls anolher assessnenl lo idenlily
lhe addilional sleps lo be laken lo inprove perlornance.
To lornally lransilion lo OS, an operalion issues a handbook lor
lhe worklorce lo lollow, conpleles a nanagenenlolchange docunenl
lhal delails lhe changes involved, and oblains lornal signoll by lhe
segnenl operaling aulhorily and business unil leader. All ol BPs najor
operalions had lransilioned lo OS by lhe end ol 2010, wilh lhe renaining
one regional logislics operalion conpleling lhe process by lhe end ol
February 2011.
BP will conlinue lo evolve OS, incorporaling inplenenlalion
experience as well as learnings lron incidenl invesligalions, audils and risk
assessnenls, and by slrenglhening nandalory praclices.
Cull ol exico incidenl and lhe OS
The Cull ol exico operalions conpleled lheir lransilion lo OS in
Decenber 2009 and now conlinue lo work lowards lull conlornance lo
lhe OS. Feconnendalions lron BPs inlernal invesligalion inlo lhe
Deepwaler Horizon incidenl will be inplenenled wilhin our groupwide
OS lranework where appropriale, lhis includes updales around
conlraclor nanagenenl and oil spill preparedness and response. Once lhe
exlernal invesligalions have produced lheir lndings, we will carry oul a
review on lhe OS lranework, lhis is expecled lo be conpleled in lhe
lhird quarler ol 2011. See Subsequenl aclions lo dale on page 63 lor
inlornalion aboul our innediale aclivilies lo lurlher slrenglhen our oil spill
prevenlion, conlainnenl and response capabilily.
Process salely nanagenenl
Process salely involves applying good design principles, along wilh robusl
engineering, operaling and nainlenance praclices, lo nanaging operalions
salely. For BP, lhis neans ensuring lhe planl is designed, nainlained and
operaled properly lo avoid lailures such as spills or explosions lhal can
resull in injuries and inpacls lo lhe environnenl.
n Seplenber 2010, BP published Deepva!er Horizon Con!ainnen!
and Fesponse. Harnessing Capabi|i!ies and Lessons Learned, a reporl
shared wilh lhe US Bureau ol Ocean Energy anagenenl, Fegulalion and
Enlorcenenl. These learnings are inlended lo benell our own operalions
and polenlially lhose ol our peers, in case ol a lulure incidenl.
The reporl idenliles lour broad lessons lron lhe Deepwaler
Horizon incidenl:
Collaboralion: a broad range ol slakeholders cane logelher in lhe wake
ol lhe Deepwaler Horizon incidenl lo provide elleclive solulions and
build new capabililies. l would have been exlrenely dillcull lor any
one conpany alone lo address challenges on lhe scale ol lhe
Deepwaler Horizon incidenl. The response benelled lron close
collaboralion wilh and lhe capabililies ol lhe US Coasl Cuard, Bureau ol
Ocean Energy anagenenl, Fegulalion and Enlorcenenl and dozens
ol olher parlners and slakeholders lron governnenl, induslry,
acadenia and lhe allecled connunilies, as well as around lhe globe.
Syslenizalion: lhe response lo lhe incidenl required lhe developnenl
ol exlensive syslens, procedures and organizalional capabililies lo
adapl lo changing and unique condilions. As lhe Deepwaler Horizon
spill conlinued despile ellorls al lhe wellhead, lhe response ellorl
progressed, expanded, and look on nol jusl new lasks and direclions
bul new personnel and resources. As a resull, lron source lo shore,
exisling syslens were evolved and expanded and new ones developed
lo advance work How, inprove coordinalion, locus ellorls and nanage
risks. The adoplion ol lhese syslens will ensure lhe abilily lo respond
lo lulure spills nore rapidly al scale wilh a clear direclion as lo
personnel, resource and organizalional needs.
nlornalion: linely and reliable inlornalion was essenlial across bolh
lhe conlainnenl and response operalions lo achieve beller decision
naking, ensure sale operalions and inlorn slakeholders and lhe public.
nnovalion: lhe urgency in conlaining lhe spill and dealing wilh ils
ellecls drove innovalions in lools, equipnenl, processes and
knowhow, ranging lron increnenlal enhancenenls lo slep changes in
lechnologies and lechniques, lhal have advanced lhe slale ol lhe arl
and laid lhe loundalion lor lulure relnenenls as parl ol an enhanced
regine lor any lype ol sourceloshore response.
BP joined lhe arine vell Conlainnenl Conpany (vCC, a nonproll
inilialive wilh Exxonobil, Shell, ConocoPhillips and Chevron designed lo
quickly deploy elleclive equipnenl in case ol anolher underwaler blowoul
in lhe US Cull ol exico. The well conlainnenl equipnenl used in lhe
Deepwaler Horizon response will preserve exisling capabilily lor use by lhe
oil and gas induslry in lhe US Cull ol exico while lhe vCC nenber
conpanies build a syslen lhal exceeds currenl response capabililies. BP
has also ollered lo nake available lo lhe vCC BP lechnical personnel
wilh experience lron lhe Deepwaler Horizon response.
Oil spills and loss ol conlainnenl
ve slrive lo prevenl lulure oil spills by weaving process salely inlo every
slage ol lhe design, operalion and nanagenenl ol our operalions. ve
nonilor lhe inlegrily ol all our operalions, vessels and pipelines used lo
produce, process and lransporl oil and olher hydrocarbons - wilh lhe ain
ol prevenling any loss ol hydrocarbons lron lheir prinary conlainnenl.
Accordingly, we record all losses ol conlainnenl, losses ol hydrocarbons
lron our assels (which we nonilor as an enduring indicalor ol process
salely, and losses or spills lhal reach land or waler.
The loss ol prinary conlainnenl nelric below includes any
unplanned or unconlrolled release ol nalerial, excluding nonhazardous
releases such as waler, lron a lank, vessel, pipe, rail car or equipnenl
used lor conlainnenl or lransler.
Business review
Allhough lhere are several lhirdparly eslinales ol lhe How rale or lolal volune ol oil spilled lron lhe Deepwaler Horizon incidenl, we believe lhal lhe lolal
volune ol oil spilled cannol be lnalized unlil lurlher inlornalion is collecled and lhe analysis, such as lhe condilion ol lhe blowoul prevenler, is conpleled.
Once such delerninalion has been nade, we will reporl on lhe spill volune as appropriale. See Financial slalenenls - ole 37 on page 199 lor
inlornalion aboul lhe volune used lo delernine lhe eslinaled liabililies.
Loss of primary containment and oiI spiIIs (excIuding GuIf of Mexico oiI spiII in respect of voIume)
2010 2009 2003
Loss ol prinary conlainnenl - nunber ol all incidenls
a
418 537 653
Loss ol prinary conlainnenl - nunber ol oil spills
b
261 234 335
unber ol oil spills lo land and waler 142 122 170
Volune ol oil spilled (lhousand lilres 1,719 1,191 3,440
Volune ol oil unrecovered (lhousand lilres 758 222 911

a
Does nol include eilher snall or nonhazardous releases.
b
unber ol spills grealer lhan or equal lo one barrel (159 lilres, 42 US gallons.
Feporls ol lhe US relneries ndependenl Experl
Duane vilson was appoinled in 2007 by lhe board as an ndependenl
Experl lo provide an objeclive assessnenl ol BPs progress in
inplenenling lhe reconnendalions ol lhe BP US Felneries ndependenl
Salely Feview Panel (lhe Panel ained al inproving process salely
perlornance al BPs lve US relneries.
During 2010, r vilson kepl lhe connillee updaled on his work
aclivilies and BPs progress in inplenenling lhe reconnendalions,
including lhe oulcone ol his visils lo each ol BPs lve US relning siles. n
arch 2010 he published his lhird annual reporl (lhe Third Feporl lhal
assessed BPs progress againsl lhe 10 Panel reconnendalions and
associaled connenlary. n lhal reporl, which was published in lull on BPs
websile, he lound lhal, in lhe lhree years since lhe Panel issued ils reporl
in January 2007, BP had nade signilcanl inprovenenls in response lo all
10 Panel reconnendalions. He lound neasureable inprovenenl across
nearly all lhe connon indicalors used by BP lo lrack process salely
perlornance, allhough resulls varied lron relnery lo relnery lor individual
indicalors, he lound lhal lhe conposile ol lhese indicalors, bolh al
individual relneries and across all BPs US relneries, reHecled
inprovenenl over line.
r vilson also lound, however, lhal, while signilcanl gaps had
been closed and nosl ol lhe new syslens, processes, slandards, and
praclices required lor conlinued process salely inprovenenls had been
developed, nuch work renained lo be done lo lully inplenenl lhen. The
Third Feporl slaled lhal BP nusl denonslrale inproved capabilily lor
syslenalic nanagenenl ol lhese syslens, processes, slandards, and
praclices so il can accelerale lhe overall pace ol inplenenling lhe 10 Panel
reconnendalions. l also idenliled lhe lollowing areas al BPs US
relneries in which nore locused allenlion was required:
addressing overline issues, and in parlicular high individual
overline rales,
lhe developnenl and inplenenlalion ol nanagenenl syslens lor
salely inslrunenled syslens (SS, required by BPs inlernal slandards,
lo address areas such as docunenlalion, lraining lor personnel
conpelency, and audiling (colleclively, SS lile cycle issues,
laking advanlage ol cerlain addilional opporlunilies lo lurlher
slrenglhen lhe process salely cullure al BPs US relneries and
increasing lhe pace lo achieve lhis desired cullure change, and
addressing issues ol nonconlornance wilh slandards and praclices
and ensuring lhal inslalled equipnenl conlinues lo neel applicable
slandards and praclices.
On 23 February 2011, r vilson presenled his lourlh annual reporl (lhe
Fourlh Feporl lo lhe connillee. He lound lhal, lhroughoul 2010, BPs
execulive nanagenenl conlinued lo enphasize lhe inporlance ol sale,
reliable, and conplianl operalions. Even lhough lhe year was parlicularly
challenging lor BP lollowing lhe Cull ol exico incidenl, he noled lhal,
during and aller lhe incidenl response, process salely and personal salely
perlornance conlinued lo be a najor locus lor execulive nanagenenl. The
Fourlh Feporl slaled lhal, during lhe year, grouplevel aclivilies conlinued
lo locus on lhe developnenl and enhancenenl ol conpelency and
capabilily prograns, elleclive audils, and ongoing nainlenance and
supporl lor lhe OS. The lve US relneries conlinued lo denonslrale
good progress in a nunber ol key areas, and lhey successlully acceleraled
lhe pace ol inplenenlalion in several olher key areas. However, sone
areas require special enphasis going lorward, and lhe US relneries are
addressing lhese needs lhrough inlervenlions or renewed connilnenls lo
acceleraled inplenenlalion plans.
The Fourlh Feporl assessed lhe conpanys progress againsl lhe
areas idenliled in lhe Third Feporl as requiring nore locused allenlion and
lound lhal:
in relalion lo reduclion ol overline rales, lhe US relneries had reduced
lheir average overline rales lo levels lhal are perceived lo be al or near
induslry norns lor bolh operalions and nainlenance personnel in 2010,
and signilcanl reduclions in overline rales lor individuals had also been
achieved, wilh only a lew people exceeding BPs individual overline
largel al lhe end ol 2010,
in relalion lo SS nanagenenl syslens, lhe US relneries had nade
acceleraled progress in 2010 in addressing SS lilecycle requirenenls,
lhe Fourlh Feporl noled lhal rigourous inplenenlalion ol lhese new
SS lilecycle policies and procedures lor all exisling and newly inslalled
SSs will be a challenging lask,
in relalion lo process salely cullure, lhe US relneries had developed a
connon salely cullure vision in 2010 and progress was being nade in
connunicaling lhe new vision, lhe Fourlh Feporl also noled lhal
progress is being nade loward inproved connunicalion, cooperalion
and sharing belween lhe relneries and connenled on sone
inprovenenls wilh respecl lo individuals adopling a nore proaclive
and sellcrilical approach lowards idenlilying and addressing risks. The
Fourlh Feporl noled lhal inpul lron r vilson was slill sonelines
required lo calalyze lhe idenlilcalion ol and linely response lo process
salely issues, and
in relalion lo inplenenling inlernal and exlernal slandards and
praclices, BP had clearly idenliled lhose slandards and praclices lhal
apply lo lhe US relneries and is inplenenling lhen lhrough risk
priorilized plans. The Fourlh Feporl noled lhal, allhough progress is
being nade in lhe inplenenlalion ol slandards and praclices, special
enphasis will be required lo address cerlain renaining issues in a
linely nanner, including: lhe line required lo inplenenl sone new
slandards, lhe need lo idenlily requirenenls in slandards lhal apply
relroaclively lo exisling equipnenl, and lhe need lor a process lo
ensure lhal exisling equipnenl renains in conlornance wilh
applicable slandards.
The Fourlh Feporl also idenliled lhree addilional areas lhal warranl special
enphasis in order lo inplenenl selecled Panel reconnendalions
elleclively:
addilional suslained ellorls, building on sincere nessages lron
execulive nanagenenl lo dale, nay be required lo ensure lhal
execulive nanagenenl elleclively slinulales and supporls a process
salely cullure wilhin BPs US relneries lhal pronoles induslryleading
process salely perlornance,
wilh lhe exceplion ol aclion ilens resulling lron audils and incidenl
invesligalions, overdue process salely aclion ilens were nol being
reporled lo execulive nanagenenl and lo lhe board, as reconnended
by lhe Panel, in addilion, r vilson reconnended lhal BP consider

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ways lo syslenalically galher inlornalion sullcienl lo ensure
conplelion ol idenliled process salely aclion ilens wilhin reasonable
line periods, and
in lhe second hall ol 2010, lhe qualily ol sone aspecls ol incidenl
invesligalions and reporls did nol nainlain lhe levels achieved in 2009.
n response, a Conlinuous nprovenenl Tean was charlered lhal
developed a nunber ol process inprovenenls lo be inplenenled in
early 2011.
The Fourlh Feporl is expecled lo be published in lull in arch 2011 and will
be nade available on our websile.
CapabiIity deveIopment
BP slrives lo equip ils slall wilh lhe skills needed lo apply lhe syslens
and processes lo slrenglhen our nanagenenl ol risk and process salely.
ve have provided exlensive and locused lraining progrannes lor our
operalions personnel al all levels.
This lraining provision includes our Operalions Acadeny
progrannes lor senior nanagenenl, delivered in parlnership wilh lhe
assachusells nslilule ol Technology, US, specialized operalional and
lechnical nanagenenl progrannes, lor exanple courses in engineering
and projecl nanagenenl al lhe Universily ol anchesler, UK, and process
salely and nanagenenl lraining lor our lronlline leaders, delivered under
our Operalions Essenlials progranne, which seeks lo enbed lhe BP way
ol operaling as delned by our OS. To dale, approxinalely 11,300
nanagers, supervisors and lechnicians have allended al leasl one
workshop wilhin lhe Operalions Essenlials progranne, addilionally, nore
lhan 35,000 eLearning nodules have been conpleled.
ve connunicale our expeclalions lor qualiled, conpelenl and
experienced conlraclor personnel lhrough our procurenenl process.
These becone obligalions wilhin lhe lornal conlracl. ve lurlher nanage
capabilily developnenl ol our slralegic suppliers lhrough a lornalized
perlornance review process al operalional and slralegic levels lhal is
inlorned wilh perlornance dala around agreed key nelrics. The resull ol
lhese perlornance review neelings is agreed joinl plans lo deliver lhe
perlornance oulcones required.
The challenges ol lhe Cull ol exico incidenl acceleraled learning
and capabilily developnenl lor bolh BP and lhose who worked wilh us on
lhe response and lor lhe oil induslry. l is hoped lhal by sharing lhese
lessons, lhe wider induslry will be able lo respond nore elleclively and
ellcienlly lo any sinilar incidenls.
BP and lhirdparly responders learned valuable lessons in
collaboralion, syslenizalion, inlornalionsharing, connand and prolocol.
Sone ol lhe nosl valuable capabilily advancenenls were lechnical, wilh
parlicularly valuable experiences in lhe areas ol subsea conlainnenl
syslens, renolely operaled vehicles, reservoir visualizalion, hydrale
inhibilion, rapid relrollling, and applicalion ol dispersanls. The shoreline
response ellorl has buill an expanded resource ol lrained responders, and
lhe vessels ol opporlunily progranne has buill a base ol lrained, velled
and locally knowledgeable responders.
Safety performance
BP reporls publicly on ils personal salely perlornance according lo
slandard induslry nelrics. n 2010, our overall reporled recordable injury
lrequency (FF was 0.61, conpared wilh 0.34 in 2009 and 0.43 in 2003.
The nalure ol lhe Cull Coasl response ellorl has resulled in personal salely
incidenl rales signilcanlly higher lhan olher BP operalions. njuries
occurred prinarily during boon deploynenl and lhe beach cleanup
aclivilies, and relale lo a working populalion rapidly recruiled lo work in
new roles, in unlaniliar environnenls.
Our reporled day away lron work case lrequency (DAFvCF in
2010 was 0.193, conpared wilh 0.069 in 2009 and 0.030 in 2003. This
increase is due in large parl lo lhe response ellorl, bul also reHecls a
subslanlial increase in lhe resl ol BP. There were nine day away lron work
cases resulling lron lhe Deepwaler Horizon accidenl and nine as a resull
ol lhe air crash in Canada.
ve apply a lornal process designed lo ensure lhal adequale
conlrols lo niligale our inlernal risks are in place, while conslanlly looking
lor ways lo slrenglhen lhese syslens. BP reviews risks al all levels ol lhe
organizalion and, lollowing lhe Cull ol exico incidenl, our group chiel
execulive challenged our operalions lo ensure lhal all risk reviews correclly
idenlily and niligale lowerprobabilily bul higherinpacl evenls.
BP lakes najor incidenls and highpolenlial incidenls very seriously,
lhe nore signilcanl incidenls are scrulinized by COFC, who has lhe oplion
lo require operalions leaders lo provide assurance lhal correclive neasures
are being laken.
BP has learned inporlanl lessons lron najor incidenls al our Texas
Cily relnery in 2005 and lhe Prudhoe Bay leld in Alaska in 2006. ve
inplenenled our sixpoinl plan, designed lo address lhe innediale risks
and priorilies, and lhen began lhe rolloul ol our OS underpinned by our
capabilily progrannes, and slrenglhened our global audil lean.
n lhe Cull ol exico, our inlernal invesligalion and resullanl reporl
lorn only a slarling poinl lor whal is expecled lo be an exlended process
lo lully analyse lhe Cull ol exico accidenl and inplenenl lhe appropriale
neasures designed lo prevenl recurrence.
Contractor management
BPs OS lornalizes slandards and reconnended praclices lor selecling
and working wilh conlraclors. This includes assessing lhe conlraclors
salely perlornance as parl ol lhe seleclion process, and delning salely
requirenenls in conlracls.
As a resull ol lhe Cull ol exico accidenl, which involved nulliple
conlracling parlners, we are reviewing how besl lo provide consislenl and
elleclive conlraclor oversighl. This process began in lale 2010 and will be
locusing on lhe way we work wilh conlraclors lor all onshore and ollshore
rig aclivilies, parlicularly in regard lo salely and operalional risk.
Environnenl
The worlds denand lor energy is increasing and our business ol lnding
and producing sone ol lhal energy neans we operale in increasingly
diverse localions globally. any ol lhese localions presenl challenges
around lheir environnenlal sensilivily and nanaging our inpacl on lhe
areas where we operale is al lhe core ol our aclivilies.
ve slrive lo nininize our inpacls, whelher lo land, air, waler
or wildlile, lhrough a syslenalic approach, supporled by rigorous risk
assessnenl and nanagenenl, prevenlive neasures and lraining.
EnvironmentaI management
ve work lo undersland lhe sensilivilies ol lhe environnenls in which we
operale and our responsibililies lron beginning lo end ol our projecls. By
adopling a lull projecl cycle approach lo environnenlal nanagenenl, we
slrive lo idenlily lhe polenlial environnenlal inpacls ol our new projecls,
in lhe planning slage and during operalions. ve conlinue lhis approach
aller operalions have ended, lhrough our renedialion slralegy.
Our environnenlal and social group delned praclices (E&S CDP,
launched in April 2010, delail lhe requirenenls lo help us idenlily and
nanage lhe environnenlal and social risks ol najor new projecls, projecls
in new access localions and lhose lhal could allecl an inlernalional
prolecled area. Our E&S CDP is aligned wilh environnenlal and social
slandards and praclices generally accepled in lhe oil and gas induslry.
These group delned praclices include environnenlal and social
requirenenls lor nine key issues: inlernalional prolecled areas, waler
nanagenenl, drilling wasles and discharges, greenhouse gas (CHC
enissions (including energy ellciency and Haring, ozone depleling
subslances, indigenous people, physical reselllenenl, securily and hunan
righls, and inpacl assessnenl.
All our najor operaling siles are cerliled under lhe inlernalional
environnenlal nanagenenl syslen slandard SO 14001, wilh lhe
Texas Cily planl and Tangguh LC lacilily successlully receiving cerlilcalion
in 2010.
o new projecls enlered an inlernalional prolecled area in 2010.
Our inlernalional prolecled areas classilcalion includes lhe nlernalional
Union lor lhe Conservalion ol alure (UC V, Fansar and vorld
Herilage designalions.
Business review
OiI spiII response pIans
ve conlinue lo develop and assinilale lessons lron lhe response lo lhe
Cull ol exico oil spill, which we plan lo incorporale inlo our OS -
specilcally on oil spill preparedness and response.
All ol BPs operalions are required lo conply wilh all applicable
laws, including lhose requirenenls relaling lo dealing wilh lhe
environnenlal inpacl ol oil spills or leaks, in all regions where we operale.
vilhin OS, BP has a conlrol docunenl on crisis and conlinuily
nanagenenl lhal covers reconnendalions and approved good praclice.
OS also requires environnenlal risks and hazards lo be idenliled and
nanaged, including lhose relaled lo unplanned evenls e.g. oil spills.
Counlryspecilc regulalors require such plans lo be in place and approved
as parl ol our licence lo operale.
ve conplele environnenlal inpacl assessnenls (EAs lor nany
ol our projecls, which include inlornalion on lhe polenlial environnenlal
inpacl lhal nighl occur in lhe evenl ol a spill, and use nodelling and
prediclive assessnenls ol where and how oil nighl inpacl idenliled
environnenlally sensilive siles, species or connercially vulnerable siles.
ve lhen lornulale crisis nanagenenl and oil spill plans, building
oll lhe inlornalion in lhe EA. Environnenlally sensilive areas are napped,
prevenlalive response plans agreed, and cleanup and renedialion
procedures eslablished lo delernine cleanup end poinls. These plans
address polenlial scenarios and response slralegies, including how we
would work wilh designaled regulalory bodies in lhe evenl ol a spill and
whal personnel and equipnenl would be needed.
The response lechniques wilh lhe leasl environnenlal inpacl are
usually agreed based on lhe sensilivily ol lhe relevanl environnenl. n
nany counlries where BP operales, lhe regulalor will delernine and agree
on lhe procedures lo deal wilh lhe environnenlal inpacl.
Acule response plans are ollen locused on lhe physical
conlainnenl and recovery ol lhe spilled oil, lhough lhey will also recognize
lhal conponenls in dispersed oil will be subjecl lo processes ol
biodegradalion, which nay be lacililaled and acceleraled by lhe applicalion
ol chenical dispersanls.
The polenlial aclions during lhe acule slages ol an ollshore spill
response include:
Boons can be placed around lhe spill lo galher lhe oil. A curlain is
allached lo ils underside lo prevenl lhe oil lron sliding oul undernealh
il and spreading lurlher.
Sorbenls can absorb lhe oil.
n silu burning can be used lo reduce lhe anounl ol oil on lhe waler.
Skinning equipnenl can be placed around lhe area lo scoop il lron
lhe walers surlace.
Chenical dispersanls can help lhe oil break up nore quickly and nix
nore easily wilh lhe waler colunn. Specilc dispersanls have been
developed lor dillerenl oils. The nel environnenlal benell ol using
chenical dispersanls should always be considered and assessed
belore use.
For onshore operalions, BPs relneries each have delailed spill response
plans lhal include passive and aclive conlainnenl neasures lhal are
appropriale lor lheir specilc localion and lype ol operalion.
n conjunclion wilh lhe US aulhorilies, BP has gained signilcanl
experience in conbaling and niligaling a najor oil release. The learnings
lron our spill response experience will be incorporaled inlo lhe currenl
renedialion plans and procedures and also shared wilh governnenls,
regulalors and lhe induslry worldwide.
n lhe unlikely evenl ol nulliple concurrenl spills, each allecled
lacilily would aclivale ils independenl oil spill response plan and respond
accordingly. Allhough responding lo nulliple spills ol lhe sane nagnilude
and conplexily as occurred in lhe Cull ol exico would be a challenge lor
lhe group, our response plans are nol inlerdependenl. Furlher, lhe plans do
nol conlain physical or lnancial conslrainls - BP is connilled lo devoling
such resources as are necessary lo niligale lhe consequences ol any spill
lo people and lhe environnenl.
BP has also joined lhe arine vell Conlainnenl Conpany (vCC and
will nake our underwaler well conlainnenl equipnenl available lo all oil
and gas conpanies operaling in lhe Cull ol exico. The well conlainnenl
equipnenl used in lhe Cull ol exico oil spill response will preserve
exisling capabilily lor use by lhe oil and gas induslry in lhe US Cull ol
exico, while lhe vCC nenber conpanies build a syslen lhal exceeds
currenl response capabililies. BP has also ollered lo nake available lo lhe
vCC BP lechnical personnel wilh experience lron lhe Cull ol exico oil
spill response. BP considers lhal lhe deepwaler inlervenlion experience
and specialized equipnenl will be inporlanl lo lhe induslry as a whole as
well as lhe vCC. n addilion lo lhe vCC, we work wilh all ol lhe olher
seven najor inlernalional spill response organizalions in lhe world.
See Cull ol exico oil spill on pages 3439 lor lurlher inlornalion
on BPs response lo lhe incidenl.
GuIf of Mexico - environmentaI impact and Iong-term
commitments
The Cull ol exico oil spill allecled waler, shores, narshlands and wildlile.
nnedialely lollowing lhe accidenl, BP and personnel lron lhe US alional
Oceanic and Alnospheric Associalion, lhe US Environnenlal Proleclion
Agency (EPA, and nany olher governnenlal agencies began palrolling lhe
walers ol lhe Cull, sanpling lhe walers looking lor residual oil, or injured
birds and narine lile. BP has worked lo supporl lesling and sanpling
lhroughoul lhe region.
BP is connilled lo underslanding lhe longlern environnenlal
inpacls ol lhe oil spill. n June 2010, we eslablished lhe CCFO lo nanage
all aspecls ol lhe innediale response lo lhe incidenl and our longlern
ellorls lo reslore lhe regional environnenl.
n parlnership wilh lhe Cull ol exico Alliance, we have sel up lhe
Cull ol exico Fesearch nilialive (CF, pledging lo provide $500 nillion lo
sludy and nonilor lhe spills polenlial inpacls on lhe environnenl and local
public heallh.
See Cull ol exico oil spill on pages 3439 lor lurlher inlornalion
on BPs response lo lhe incidenl.
Canadian oiI sands
Canadas oil sands are believed lo hold one ol lhe worlds largesl unlapped
supplies ol oil, second in size only lo lhe resources in Saudi Arabia. BP is
involved in lhree oil sands projecls, all ol which are localed in lhe province
ol Alberla. Developnenl ol lhe Sunrise projecl, our joinl venlure operaled
by Husky Energy, is under way, wilh produclion expecled lo slarl in 2014.
The olher lwo proposed projecls, Pike and Terre de Crace, are slill in lhe
early slages ol developnenl.
ve reviewed and approved lhe decision lo invesl in Canadian oil
sands projecls, laking inlo consideralion CHC enissions, inpacls on land,
waler use and local connunilies, and connercial viabilily. As wilh all joinl
venlures in which we are nol lhe operalor, we will nonilor lhe progress ol
lhese projecls and lhe niligalion ol risk.
The exlraclion process we plan lo use, insilu sleanassisled
gravily drainage lechnology, involves lhe injeclion ol slean underground.
The slean liqueles lhe bilunen, allowing il lo How lo lhe surlace lhrough
produclion wells. Unlike nining, insilu developnenl creales a snaller
physical loolprinl and does nol involve lailing ponds.
CIimate change
Clinale change is a najor global issue - one lhal jusliles precaulionary
aclion and represenls a signilcanl challenge lor sociely, lhe energy
induslry, and BP.
Our CHC enissions were 64.9le in 2010, conpared wilh
65.0le in 2009
a
. ve have nol included any enissions lron lhe Cull ol
exico incidenl and lhe response ellorl due lo our reluclance lo reporl
dala lhal has such a high degree ol uncerlainly.
a
ve reporl CHC enissions, on a CO
2
equivalenl basis, including CO
2
and nelhane. This represenls
all consolidaled enlilies and BPs share ol equilyaccounled enlilies excepl TKBP.

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ve ain lo nanage our CHC enissions lhrough a locus on operalional
energy ellciency and reduclions in Haring and venling. Also, we expecl
lhal addilional regulalion ol CHC enissions in lhe lulure and inlernalional
accords ained al addressing clinale change will have an increasing inpacl
on our businesses, operaling cosls and slralegic planning, bul nay also
oller opporlunilies in lhe developnenl ol lowcarbon lechnologies and
businesses. See Fegulalion ol lhe groups business - Creenhouse gas
regulalion on page 73.
To help address lhis expeclalion, we laclor a carbon cosl inlo our
inveslnenl appraisals and lhe engineering design ol new projecls. ve do
lhis by requiring larger projecls, and lhose lor which enissions cosls would
be a nalerial parl ol lhe projecl, lo nake realislic assunplions aboul lhe
likely carbon price during lhe lileline ol lhe projecl. n induslrialized
counlries, lhis assunplion is currenlly $40 per lonne ol CO
2
. This is used
as a basis lor assessing lhe econonic value ol lhe inveslnenl and lor
oplinizing lhe way lhe projecl is engineered and lhe consequences lor
enissions. This helps lo ensure our inveslnenls are conpelilive under
scenarios in which lhe price ol carbon is higher lhan il is loday.
Adaplalion lo clinale change inpacls
For several years BP has sponsored research, including clinale nodelling,
inlo lhe inpacls ol clinale change on bolh exisling operalions and new
projecls. nlroduced in 2010, lhe E&S CDP now requires screening lor
polenlial clinale change inpacls in najor new projecls, projecls in new
access localions and lhose lhal could allecl an inlernalionally prolecled
area.
For larger projecls where clinale inpacls are idenliled as a risk,
we pul a niligalion progranne in place. Our currenl engineering praclices
address clinale inpacls in lhe sane way as any olher physical and
ecological inpacls. These praclices are periodically reviewed and updaled.
For nany clinalerelaled inpacls, lhe appropriale engineering
solulions are already known, because sonewhere in our operalions we
already have experience and design lacililies lo wilhsland wealher
exlrenes, such as hurricanes, nonsoons and Arclic condilions.
Water
To inprove our underslanding and acl upon lhe growing global issue ol
waler scarcily, BP is laking a nore slralegic approach lo waler
nanagenenl. ve are currenlly developing our plans in regards lo waler
nanagenenl, which include increasing our capabilily lo nanage energing
waler risks and engaging wilh exlernal organizalions lo develop suslainable
waler nanagenenl praclices.
EnvironmentaI expenditure
$ nillion
2010 2009 2003
Environnenlal expendilure relaling lo lhe Cull ol exico oil spill
Spill response 13,628 - -
Addilions lo environnenlal renedialion provision 929 - -
Olher environnenlal expendilure
Operaling expendilure 716 701 755
Capilal expendilure 911 955 1,104
Cleanups 55 70 64
Addilions lo environnenlal renedialion provision 361 533 270
Addilions lo deconnissioning provision 1,800 169 327

BP incurred signilcanl cosls in 2010 in response lo lhe Cull ol exico oil
spill. The spill response cosl ol $13,623 nillion includes anounls provided
during 2010 ol $10,333 nillion, ol which $9,340 nillion has been expended
during 2010, and $1,043 nillion renains as a provision al 31 Decenber
2010. The najorily ol lhis renaining anounl is expecled lo be expended
during 2011. n addilion, a lurlher $2,745 nillion ol cleanup cosls were
incurred in lhe year lhal were nol provided lor.
Addilions lo environnenlal provisions in 2010 in respecl ol lhe Cull
ol exico oil spill relale lo BPs connilnenl lo lund lhe $500nillion Cull
ol exico Fesearch nilialive, a research progranne lo sludy lhe inpacl
ol lhe incidenl on lhe narine and shoreline environnenl ol lhe Cull coasl,
and lhe eslinaled cosls ol assessing injury lo nalural resources. BP laces
clains under lhe Oil Pollulion Acl ol 1990 lor nalural resource danages,
bul lhe anounl ol such clains cannol be eslinaled reliably unlil lhe size,
localion and duralion ol lhe inpacl is assessed.
For lurlher inlornalion relaling lo lhe Cull ol exico oil spill see
Financial slalenenls - ole 2 on page 153, ole 37 on page 199 and
ole 44 on page 213.
Operaling and capilal expendilure on lhe prevenlion, conlrol,
abalenenl or elininalion ol air, waler and solid wasle pollulion is ollen nol
incurred as a separalely idenlilable lransaclion. nslead, il lorns parl ol a
larger lransaclion lhal includes, lor exanple, nornal nainlenance
expendilure. The lgures lor environnenlal operaling and capilal
expendilure in lhe lable are lherelore eslinales, based on lhe delnilions
and guidelines ol lhe Anerican Pelroleun nslilule.
Environnenlal operaling expendilure ol $716 nillion in 2010 was al
a sinilar level lo 2009, while in 2003, il was lower due lo a reduclion in
new projecls underlaken. n addilion, lhere was a signilcanl reduclion in
lhe sulphur oil preniun paid due lo a grealer use ol lowsulphur luel.
Sinilar levels ol operaling and capilal expendilures are expecled in
lhe loreseeable lulure. n addilion lo operaling and capilal expendilures,
we also creale provisions lor lulure environnenlal renedialion.
Expendilure againsl such provisions nornally occurs in subsequenl periods
and is nol included in environnenlal operaling expendilure reporled lor
such periods. The charge lor environnenlal renedialion provisions in 2010
included $307 nillion resulling lron a reassessnenl ol exisling sile
obligalions and $54 nillion in respecl ol provisions lor new siles. The
charge lor environnenlal renedialion provisions in 2009 included
$532 nillion resulling lron a reassessnenl ol exisling sile obligalions and
$6 nillion in respecl ol provisions lor new siles.
Provisions lor environnenlal renedialion are nade when a cleanup
is probable and lhe anounl ol lhe obligalion can be reliably eslinaled.
Cenerally, lhis coincides wilh lhe connilnenl lo a lornal plan ol aclion or,
il earlier, on diveslnenl or on closure ol inaclive siles.
The exlenl and cosl ol lulure environnenlal resloralion,
renedialion and abalenenl progrannes are inherenlly dillcull lo
eslinale. They ollen depend on lhe exlenl ol conlaninalion, and lhe
associaled inpacl and lining ol lhe correclive aclions required,
lechnological leasibilily and BPs share ol liabilily. Though lhe cosls ol
lulure progrannes could be signilcanl and nay be nalerial lo lhe resulls
ol operalions in lhe period in which lhey are recognized, il is nol expecled
lhal such cosls will be nalerial lo lhe groups overall resulls ol operalions
or lnancial posilion.
n addilion, we nake provisions on inslallalion ol our oil and
gasproducing assels and relaled pipelines lo neel lhe cosl ol evenlual
deconnissioning. On inslallalion ol an oil or nalural gas produclion lacilily
a provision is eslablished lhal represenls lhe discounled value ol lhe
expecled lulure cosl ol deconnissioning lhe assel.
The level ol increase in lhe deconnissioning provision varies wilh
lhe nunber ol new lelds coning onslrean in a parlicular year and lhe
oulcone ol lhe periodic reviews. There was a signilcanl increase in 2010,
driven by aclivily in lhe Cull ol exico. On 15 Oclober 2010, lhe Bureau ol
Ocean Energy anagenenl, Fegulalion and Enlorcenenl (BOEFE
issued olice lo Lessees (TL 2010C05, which requires lhal idle
Business review
inlraslruclure on aclive leases is deconnissioned earlier lhan previously
was required and eslablishes guidelines lo delernine lhe lulure ulilily ol
idle inlraslruclure on aclive leases. As a consequence, lhe lining and
nelhodology ol well abandonnenl have changed, reHecled in an increase
lo lhe deconnissioning provision during lhe year.
Addilionally, we underlake periodic reviews ol exisling provisions.
These reviews lake accounl ol revised cosl assunplions, changes in
deconnissioning requirenenls and any lechnological developnenls.
Provisions lor environnenlal renedialion and deconnissioning are usually
sel up on a discounled basis, as required by AS 37 Provisions, Conlingenl
Liabililies and Conlingenl Assels.
Furlher delails ol deconnissioning and environnenlal provisions
appear in Financial slalenenls - ole 37 on page 199.
Enployees
unber ol enployees al 31 Decenber US onUS Tolal
2010
ExpIoration and Production 7,900 13,200 21,100
Rehning and Marketing
a
12,400 39,900 52,300
Other businesses and corporate 1,700 4,500 6,200
GuIf Coast Restoration Organization 100 - 100
22,100 57,600 79,700
2009
Exploralion and Produclion 3,000 13,500 21,500
a
12,700 33,900 51,600
Olher businesses and corporale 2,100 5,100 7,200
22,300 57,500 30,300
2003
a
19,000 42,500 61,500
29,300 62,700 92,000

a
ncludes 15,200 (2009 13,900 and 2003 21,200 service slalion slall.
To be suslainable as a business, BP needs enployees who have lhe righl
skills lor lheir roles and who undersland lhe values and expecled
behaviours lhal guide everylhing we do as a group.
ve are reviewing lhe way we express BPs values and lhe conlenl
ol our leadership lranework wilh a goal ol ensuring lhey supporl our
aspiralions lor lhe lulure, align explicilly wilh our code ol conducl and
lranslale inlo responsible behaviours in lhe work we do every day. n 2011,
we expecl lo carry oul a progranne lo renew enployee and conlraclor
awareness ol our values and lhe behaviours everyone in BP needs lo
exhibil as we work lo resel our priorilies as a conpany.
ve had approxinalely 79,700 enployees al 31 Decenber 2010,
conpared wilh approxinalely 30,300 a year ago. Since 2007, when we
began a process ol naking BP a sinpler, nore ellcienl organizalion, our
lolal nunber ol enployees has reduced by approxinalely 13,000, including
around 9,200 in our nonrelail businesses.
BP announced signilcanl changes lo our organizalion in 2010
designed lo slrenglhen salely and risk nanagenenl across lhe group,
including lhe crealion ol an enhanced S&OF lunclion and lhe re
organizalion ol lhe upslrean segnenl inlo lhree divisions: Exploralion,
Developnenls and Produclion, inlegraled lhrough a Slralegy and
nlegralion lunclion.
The group people connillee, chaired by lhe group chiel execulive
conlinues lo lake overall responsibilily lor policy decisions relaling lo
enployees. n 2010, lhis included seniorlevel lalenl reviews and
succession planning, new hire and pronolion assessnenls, leadership
lraining and reward slralegy, including lhe slruclure and operalion ol
incenlive progrannes.
n 2011, our locus will be on rebuilding lrusl wilh all our
slakeholders, including our enployees. Our people priorilies conlinue lo
be lo ensure lhe righl enployees are in lhe righl roles, while building a
suslainable lalenl pipeline, lo build capabilily and enbed our required
leadership behaviours, and lo nanage and reward perlornance while
ensuring a locus on diversily and inclusion (D& in everylhing we do.
Suslainable lalenl pipeline
n nanaging our people, we seek lo allracl, develop and relain highly
lalenled individuals who can conlribule lo BPs delivery ol ils slralegy and
plans. ve place signilcanl enphasis on developing our leaders inlernally,
allhough we recruil oulside lhe group when we do nol have specialisl
skills inhouse or when exceplional people are available. n 2010, we
appoinled 47 people lo group leadership posilions, 33 ol which were
inlernal candidales.
ve conducl exlernal assessnenls lor all new hires inlo BP al
senior levels and lor inlernal pronolions lo senior level and group leader
level roles. These assessnenls ensure rigour and objeclivily in our hiring
and lalenl processes. They give an indeplh analysis ol leadership
behaviours, inlelleclual capacily and lhe required experience and skills lor
lhe role in queslion. n 2010, we exlended lhese assessnenls lo cover
new hires inlo niddle and junior nanagenenl roles, carrying oul over
900 exlernal assessnenls lor new hires and pronolions during lhe year.
n 2011, we will be launching a new lechnical assessnenl process lo
conplenenl lhese exisling processes wilh nore locus on delailed
lechnical capabilily.
Our ongoing lhreeyear graduale developnenl progranne
conlinued in 2010. l currenlly has aboul 1,400 parlicipanls lron all over
lhe world.
ve provide developnenl opporlunilies lor all our enployees,
including exlernal and onlhejob lraining, inlernalional assignnenls,
nenloring, lean developnenl days, workshops, seninars and online
learning. ve encourage all enployees lo lake al leasl lve lraining days
per year.
ve ain lo lreal enployees allecled by nergers, acquisilions and
joinl venlures lairly and wilh respecl, lhrough open and regular
connunicalion. As parl ol lhe diveslnenl progranne lollowing lhe Cull ol
exico incidenl, BP has been seeking lhe sane or conparable pay and
benells lor enployees lranslerring lo olher conpanies.

Business review
B
u
s
i
n
e
s
s

r
e
v
i
e
w
Building capabilily and developing leaders
The group chiel execulive and each nenber ol lhe execulive lean held
review neelings lo ensure a rigorous and consislenl lalenl and succession
process is lollowed lor all group leadership roles.
ve conlinue lo work lo enbed appropriale leadership behaviours
lhroughoul our organizalion. n 2010, we piloled a new group leader
developnenl progranne wilh leaders in lhe US. All group leaders will be
expecled lo parlicipale in lhe progranne lron 2011 onwards.
Our groupwide suile ol nanagenenl developnenl progrannes,
anaging Essenlials, has now run in 42 counlries, wilh nore lhan 21,000
parlicipanls. This includes new nodules inlroduced in 2010, such as a
nandalory D& lraining progranne lor leaders lhal has had over 3,000
parlicipanls so lar.
anaging and rewarding perlornance
ve are conducling a lundanenlal review ol how lhe group incenlivizes
business perlornance, including reward slralegy, wilh lhe ain ol
encouraging excellence in salely, conpliance and operalional risk
nanagenenl. This review is closely linked lo lhe relresh ol our values and
behaviours and lo our work in enbedding leadership behaviours lhroughoul
lhe group. ve expecl lo deliver a revised individual perlornance
nanagenenl lranework in 2011.
n lhe lnal quarler ol 2010, individual perlornance bonuses were
based solely on lhe achievenenl ol salely largels.
ve encourage enployee share ownership. For exanple, lhrough
lhe Sharealch plan run in around 60 counlries, we nalch BP shares
purchased by our enployees.
Diversily and inclusion
Diversily and inclusion (D& involves acknowledging, valuing and leveraging
our sinilarilies and dillerences lor business success, and is cenlral lo our
enployee processes in BP. The group chiel execulive chairs lhe global
D& council, which is supporled by a orlh Anerican regional council and
segnenl councils. Each ol our businesses has a D& plan againsl which
progress is neasured. ve are also incorporaling delailed D& analysis
inlo lalenl reviews, wilh processes lo idenlily aclions where any issues
are lound.
ve conlinue lo increase lhe nunber ol local leaders and enployees
in our operalions so lhal lhey reHecl lhe connunilies in which we operale.
For exanple, in Azerbaijan, nalional enployees now nake up around 33'
ol BPs lean. By 2020, nore lhan hall our operalions are expecled lo be in
nonOECD counlries and we see lhis as an opporlunily lo develop a new
generalion ol experls and skilled enployees.
Al lhe end ol 2010, 14' ol our lop 432 group leaders were lenale
and 19' cane lron counlries olher lhan lhe UK and lhe US. vhen we
slarled lracking lhe conposilion ol our group leadership in 2000, lhese
percenlages were 9' and 14' respeclively.
ve ain lo ensure equal opporlunily in recruilnenl, career
developnenl, pronolion, lraining and reward lor all enployees, including
lhose wilh disabililies. vhere exisling enployees becone disabled, our
policy is lo provide conlinuing enploynenl and lraining wherever praclicable.
Enployee engagenenl
Al our annual leadership lorun in lale 2010, our group chiel execulive and
olher senior leaders reinlorced BPs connilnenl lo achieving excellence in
salely, conpliance and risk nanagenenl. Execulive lean nenbers hold
regular lown halls and webcasls lo connunicale wilh our enployees
around lhe world.
Tean neelings and oneloone neelings are lhe core ol our
enployee engagenenl, conplenenled by lornal processes lhrough
works councils in parls ol Europe. These connunicalions, along wilh
lraining progrannes, are designed lo conlribule lo enployee developnenl
and nolivalion by raising awareness ol lnancial, econonic, elhical, social
and environnenlal laclors allecling our perlornance.
The group seeks lo nainlain conslruclive relalionships wilh
labour unions.

Our 2010 enployee survey was delayed lo allow lor organizalional changes
lo be reHecled in lhe survey conslruclion, wilh lhe survey expecled lo be
carried oul in lhe lhird quarler ol 2011.
The code ol conducl
ve have a code ol conducl designed lo ensure lhal all enployees conply
wilh legal requirenenls and our own slandards. The code delnes whal BP
expecls ol ils people in key areas such as salely, workplace behaviour,
bribery and corruplion and lnancial inlegrily. Our enployee concerns
progranne, OpenTalk, enables enployees lo raise queslions, receive
guidance on lhe code ol conducl and reporl suspecled breaches ol
conpliance or olher concerns. The nunber ol cases raised lhrough
OpenTalk in 2010 was 742, conpared wilh 374 in 2009.
n lhe US, lorner US dislricl courl judge Slanley Sporkin acls as an
onbudsperson. Enployees and conlraclors can conlacl hin conldenlially
lo reporl any suspecled breach ol conpliance, elhics or lhe code ol
conducl, including salely concerns. ve lake sleps lo idenlily and correcl
areas ol nonconpliance and lake disciplinary aclion where appropriale. n
2010, 552 disnissals were reporled by BPs businesses lor nonadherence
lo lhe code ol conducl or unelhical behaviour conpared lo 524 in 2009.
This nunber excludes disnissals ol slall enployed al our relail service
slalion siles lor nore ninor incidenls.
BP conlinues lo apply a policy lhal lhe group will nol parlicipale
direclly in parly polilical aclivily or nake any polilical conlribulions, whelher
in cash or in kind. ve review enployees righls lo polilical aclivily in each
counlry where we operale. For exanple, in lhe US, BP lacililales slall
parlicipalion in lhe polilical process by providing slall supporl lo ensure BP
enployee polilical aclion connillee conlribulions are publicly disclosed
and conply wilh lhe law.
Social and connunily issues
ve slrive lo nake our inpacl on sociely and connunilies a posilive one
by running our operalions responsibly and by invesling in connunilies in
ways lhal benell bolh local populalions and BP.
anaging our inpacl
ve believe each BP projecl has lhe polenlial lo benell local connunilies
by crealing jobs, lax revenues and opporlunilies lor local suppliers. A
posilive inpacl also neans naking sure lhal hunan righls are respecled,
lhal we engage openly wilh people who could be allecled by our projecls
and lhal local cullural herilage is preserved.
Our OS lays oul lhe sleps and saleguards we believe are
necessary lo nainlain socially responsible operalions al our projecls
and operalions.
For najor new projecls, projecls in new localions and lhose lhal
could allecl an inlernalionally prolecled area, delailed group praclices
apply. These include guidance on how lhe projecl should go aboul
idenlilying groups lhal could be allecled by lhe projecl, consulling wilh
lhen lo undersland lheir needs and concerns and carrying oul an inpacl
assessnenl lo evaluale lhe polenlial negalive and posilive connunily
inpacls. These are ollen carried oul along wilh assessnenls ol heallh,
salely, environnenlal and olher inpacls.
Following lhe inpacl assessnenl, we review lhe projecl plans wilh
a view lo avoiding, niligaling or nininizing any negalive inpacls, such as
noise, odour or olher lorns ol connunily dislurbance, and naking lhe
nosl ol posilive inpacls.
Socioecononic inveslnenls
ve invesl in developnenl progrannes lhal we believe will creale a
neaninglul and suslainable inpacl - one lhal is relevanl lo local needs,
aligned wilh BPs business and underlaken in parlnership wilh local
organizalions. The progrannes we supporl lall inlo lhree broad calegories:
building business skills, supporling educalion and olher connunily needs
and sharing lechnical experlise wilh local governnenls.
Business review
ve run a range ol progrannes lo build lhe skills ol businesses in places
where we work and lo develop lhe local supply chain. These range lron
lnancing lo sharing global slandards and praclice in areas such as heallh
and salely. The progrannes benell local conpanies by enpowering lhen
lo reach lhe slandards needed lo supply BP and olher clienls. Al lhe sane
line BP benells lron lhe local sourcing ol goods and services.
ve work wilh local aulhorilies, connunily groups and olhers lo
deliver connunily progrannes nalched lo local inleresls and needs.
These range lron educalion progrannes lo connunily inlraslruclure
progrannes lhal help people in developing econonies access basic
resources such as drinking waler and heallhcare.
ve use our lechnical knowledge and global reach where relevanl lo
supporl governnenls in lheir ellorls lo develop lheir econonies
suslainably. As well as counlryspecilc projecls, we supporl nore general
inilialives, including lhe Oxlord Cenlre lor lhe Analysis ol FesourceFich
Econonies, which sludies how counlries lhal are rich in nalural resources
such as oil and gas, can use lheir resources lor successlul developnenl
ralher lhan lalling prey lo nisnanagenenl, corruplion and olher pillalls.
ve supporl various volunlary, nullislakeholder inilialives ained
al sharing besl praclice and inproving induslrywide nanagenenl ol key
social and econonic challenges. ve are a nenber ol lhe Exlraclive
nduslries Transparency nilialive, which supporls lhe crealion ol a
slandardized process lor lransparenl reporling ol conpany paynenls and
governnenl revenues lron oil, gas and nining. ve are also a parlicipanl in
lhe Volunlary Principles on Securily and Hunan Fighls lhrough which we
have developed a robusl inlernal process designed lo ensure lhal lhe
securily ol our operalions around lhe world is nainlained in a nanner
consislenl wilh our group slance on hunan righls.
Our direcl spending on connunily progrannes in 2010 was
$115.2 nillion, which included conlribulions ol $22.9 nillion in lhe US,
$36.7 nillion in lhe UK (including $6.5 nillion lo UK charilies, relaling lo
$3.6 nillion lor arl, $1.3 nillion lor connunily developnenl, $0.3 nillion
lor educalion, $0.5 nillion lor heallh and $0.3 nillion lor olher purposes,
$3 nillion in olher European counlries and $52.6 nillion in lhe resl ol
lhe world. Funding lor our response ellorl and longlern connilnenls
lo lhe Cull Coasl region is handled by lhe Cull Coasl Fesloralion
Organizalion.
Fesearch and lechnology
BPs research and lechnology (F&T nodel is one ol seleclive lechnology
leadership. ve have chosen 20 najor lechnology progrannes lhal supporl
our conpelilive perlornance in resource access, advanced conversion,
dillerenlialed producls and lowercarbon energy. BP enhanced ils scienlilc
capabilily in 2010 lhrough lhe recruilnenl ol a new chiel scienlisl and
chiel bioscienlisl.
Exlernal assurance is achieved lhrough lhe Technology Advisory
Council, which advises lhe board and execulive nanagenenl on lhe slale
ol F&T wilhin BP. The council lypically conprises eighl lo 10 eninenl
business and acadenic lechnology leaders.
n 2010, our expendilure on research and developnenl (F&D was
$730 nillion, conpared wilh $537 nillion in 2009 and $595 nillion in 2003.
See Financial slalenenls - ole 14 on page 175. The 2010 anounl
includes $211 nillion ol F&D expendilure relaled lo lhe Cull ol exico oil
spill. Despile lhe redeploynenl ol nany lechnologisls in response lo lhe
spill, underlying F&D expendilure lor 2010 renained sinilar lo lhe lwo
preceeding years. The $730 nillion lolal excludes paynenls nade in
relalion lo lhe Cull ol exico Fesearch nilialive, oullined below.
Collaboralion plays an inporlanl role across lhe breadlh ol BPs
F&D aclivilies, bul parlicularly in lhose areas lhal benell lron lundanenlal
scienlilc research:
n response lo lhe Cull ol exico oil spill, BP has eslablished lhe Cull
ol exico Fesearch nilialive, a 10year $500nillion openresearch
progranne inlo lhe ellecls ol lhe spill. The ullinale goal ol lhe
research ellorls will be lo inprove socielys abilily lo niligale lhe
inpacls ol hydrocarbon pollulion and relaled slressors ol lhe narine
environnenl. n 2010, BP awarded $40 nillion ol shorllern conlracls
lor innediale research inlo lhe ellecls ol lhe spill.
BP has signilcanl, longlern research progrannes wilh najor
universilies and research inslilulions around lhe world, exploring areas
lron energy bioscience and conversion lechnology lo carbon niligalion
and nanolechnology in solar power. 2010 narked lwo signilcanl
nileslones - lhe 10year anniversaries ol bolh lhe Carbon iligalion
nilialive (C al Princelon Universily and lhe BP nslilule lor
ulliphase Flow (BP al lhe Universily ol Canbridge. The success ol
lhe C has resulled in agreenenl lor BP lo supporl an addilional lve
years ol research. BP has also agreed lo increase lhe BP endownenl
lund lo supporl an exlra senior researcher and parlline adninislralor.
The BP Foundalion lunded lhe new cKenzie Chair in Earlh Sciences
al lhe Universily ol Canbridge. The Chair will ensure lhe conlinued
excellence ol research and leaching ol quanlilalive earlh sciences in
lhe deparlnenl.
Al lhe Energy Biosciences nslilule (EB in Berkeley, US, lhe
inveslnenl in loundalional research plallorns has slarled lo generale
innovalions wilh direcl connercial relevance. The lrsl ol lhese are
being adopled by lhe bioluels business inlo connercial praclice. The
EBs capabililies developed lor lhe sludy ol nicrobiallyenhanced oil
and gas recovery were leveraged lo sludy lhe nicrobial biodegradalion
ol lhe oil spill in lhe Cull ol exico.
BP is a lounding nenber ol lhe UKs Energy Technologies nslilule
(ET - a public / privale parlnership eslablished in 2003 lo accelerale
lowcarbon lechnology developnenl. As al 31 Decenber 2010, lhe
ET had connissioned over $92 nillion ol work covering nore lhan
20 projecls across a wide range ol lechnologies. The ET has also
developed an inlegraled nodel ol lhe UK energy syslen, which
projecls polenlial palhways oul lo 2050 lo neel lhe UKs
enissions largels.
The Energy Suslainabilily Challenge is a nullidisciplinary research
progranne ained al underslanding pressures on lreshwaler availabilily
and increasing conpelilion lor land and nineral resources, driven by lhe
inpacl ol increasing populalion and urbanizalion on energy denand.
Fesearch projecls wilh leading universilies are under way, invesligaling
lhe ellecls ol nalural resource scarcilies on pallerns ol energy supply
and consunplion, and which lechnologies are likely lo be needed in an
increasingly resourceconslrained world.

Business review
n our Exploralion and Produclion segnenl, lechnology inveslnenl is
locused on ensuring sale, reliable operalions, slrenglhening our porllolio,
gelling nore lron our resource base and winning new access.
The Cull ol exico oil spill required rapid innovalion ol new
lechnologies lo cap lhe well and conlain lhe spill. nnovalion will
conlinue as parl ol Cull resloralion ellorls. BP worked wilh induslry
parlners, nulliple governnenl agencies, and acadenia lo develop
solulions and, as a resull, now has a sel ol addilional assels covering:
- An invenlory ol innedialely deployable open and closed
conlainnenl syslens proven al deplh wilh associaled
operaling procedures.
- Proven syslens lor processing and lransporling conlained oil.
- Diagnoslic and surveillance lechniques lor dispersed oil analysis
and noniloring.
- Plans and organizalional nodels lor lhe innediale deploynenl ol
dedicaled source conlainnenl.
- Enhanced lechnologies and procedures lo drill reliel wells in
deep waler.
- Experience in using all ol lhe above capabililies.
BP conlinues lo develop and apply innovalive exploralion lechnologies.
Following lhe successlul use ol lhe SS
T
seisnic acquisilion lechnique
in Libya in 2009, we have conducled leld lrials, conbined wilh
cableless node receivers lo lurlher increase seisnic acquisilion
ellciency. Posilive lesl resulls led lo a decision lo acquire 3,000 square
kilonelres ol lhe 2010/11 Libya onshore acquisilion progranne using
lhis nelhod.
Through lhe inherenlly reliable lacililies (FF Hagship lechnology
progranne, BP is developing a lundanenlal underslanding ol corrosion
and erosion risks and corresponding niligalion barriers and lechniques.
The FF progranne has developed lbre oplic pipeline noniloring
lechnologies lo reduce lhe risk ol lhirdparly inlerlerence and nonilor
lor leaks. These were deployed on lhe BakuTbilisiCeyhan pipeline in
2010, and lurlher applicalions are planned.
Enhanced oil recovery (EOF lechnologies conlinue lo push recovery
laclors lo new linils. ve believe lhal by increasing lhe overall recovery
laclor lron our lelds by 1', we can add 2 billion boe lo our reserves.
As al lhe end ol 2010, BP has lrealed 56 wells wilh Brighl valer
lechnology in Alaska, Argenlina, Azerbaijan and Pakislan, which has
delivered increased reserves al a developnenl cosl ol less lhan $6 per
barrel, and wilh an 30' success rale. Following leld lrials in Alaska,
LoSal
T
EOF in lhe Clair leld (UK orlh Sea is now in lronl end
engineering design slage. The Clair Fidge LoSal EOF projecl will be lhe
worlds lrsl ollshore LoSal lechnology walerHood. Following exlensive
EOF sludies lor lhe Schiehallion leld in lhe vesl ol Shelland, BP and
coowners have approved lhe design ol lhe new Ouad 204 Schiehallion
FPSO (lhe Hoaling produclion, slorage and olHoading unil, which is
expecled lo be sanclioned in lhe second quarler ol 2011 lo be lully
polyner EOF ready.
n our Felning and arkeling segnenl, lechnology is delivering
perlornance inprovenenls across all businesses. For exanple:
Technology advances in our relning and logislics businesses give us
beller underslanding and processing ol dillerenl leedslocks,
oplinizalion ol our assels, enhanced Hexibilily and reliabilily ol our
relneries, and slronger nargins. n 2010, lollowing exlensive
developnenl work wilh BP and nperial College London, Pernasense
launched a new inlegrilynoniloring syslen lhal enables lrequenl,
repealable walllhickness noniloring. This provides previously
unavailable insighls inlo lhe condilion and capabilily ol oil and gas
assels. The Pernasense syslen has been proven in operalion al BP
relneries in Cernany and lhe US, and is now being deployed al our
relneries worldwide.
SS, LoSa|, nvigora!e and nnerCoo| are lrade narks ol BP p.l.c.
Brigh! Va!er is a lrade nark ol alco Energy Services LP.
n luels and lubricanls, our lechnology locus is on supplying producls
wilh grealer luel ellciency and reduced CO
2
enissions. n parlnership
wilh original equipnenl nanulaclurers, BP has developed a new
passenger car engine oil ollering 2.4' luel saving, a lransnission oil lor
nililary vehicles wilh a 1.5' luel saving, and lhe lurbine oil lor lhe new
Boeing 737 Dreanliner. ve are working on prololype luels lo oplinize
lhe perlornance and ellciency ol nexlgeneralion engines and lo
enable increased bioluel conlenl lo neel nalional nandales. n lhe US,
BPs nvigorale
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gasoline has been endorsed by Bv lor ils superior
perlornance in cleaning engine luel injeclion syslens.
n 2010, we opened a new lubricanls lechnology cenlre in Shanghai,
China, and a new luels lechnology cenlre in Johannesburg, Soulh
Alrica. Bolh represenl lhe lrsl inveslnenls ol lheir lype in lhose
counlries lor an inlernalional oil conpany and underpin BPs
connilnenl lo lhese inporlanl narkels.
Our proprielary processing lechnologies and operalional experience
conlinue lo reduce lhe nanulacluring cosls and environnenlal inpacl
ol our pelrochenicals planls, helping lo nainlain conpelilive advanlage
in puriled lerephlhalic acid (PTA, paraxylene, and acelic acid. Learning
lron successlul projecl inplenenlalions in Asia, conlinuous
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inprovenenl ol our CATVA lechnology lor nanulaclure ol acelic acid
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n lhe leld ol conversion lechnology, we conlinue lo work wilh
polenlial lhirdparly licensees lo connercialize BPs lxedbed
FischerTropsch lechnology. This lechnology can be applied lo lhe
conversion ol unconvenlional leedslocks, including bionass, lo
highqualily diesel and olher liquid hydrocarbons. n addilion, BP and
KBF agreed a 25year collaboralion lo pronole, narkel, and execule
licensing and engineering services lor lhe slurrybed residue and
coalupgrading Veba Conbi Cracker (VCC Technology. VCC Technology
is a hydrogenaddilion lechnology suilable lor processing crude oil
residuun inlo highqualily dislillales or synlhelic crude oil in lhe
relning, upslreanleld upgrading and coalloliquids seclors.
AIternative Energy
BPs Allernalive Energy porllolio covers a wide range ol renewable and
lowcarbon energy lechnologies.
n 2010, our bioluels business acquired Vereniuns lignocellulosic
bioluels business, which will accelerale lhe developnenl ol
lignocellulosic elhanol lechnology lo connercializalion. BP has
acquired: F&D lacililies in San Diego, Calilornia, inlelleclual properly
relaled lo proprielary lignocellulosic bioluels F&D and conversion
lechnology, a pilol planl and denonslralion lacilily in Jennings,
Louisiana, and BP is now lhe sole owner ol Vercipia Bioluels, which is
connercializing produclion ol lignocellulosic elhanol.
n lhe wind business, lhe quesl lor nore energyellcienl wind lurbine
generalors conlinues. n lhe US, BP vind Energy is lesling slaleol
lhearl laser wind sensor unils lo deliver inproved wind lurbine
perlornance and increase energy oulpul.
n our solar business, a new lechnology designed lo nake solar cells
nore ellcienl in exlrenely high lenperalures, nnerCool
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solar
lechnology, is being piloled al a universily in Saudi Arabia, where we
have denonslraled increases in energy generalion ol approxinalely
3'. ve have also developed and inlroduced a new anlireHeclive glass
coaling lor solar nodules, reducing lhe anounl ol energy losl lhrough
reHeclion and allowing nore lighl lo reach lhe cells, lhus increasing
energy generalion by up lo 4' conpared lo plain glass nodules.
n 2010, lhe lrsl phase ol BPs joinl induslry projecl wilh Sonalrach and
Slaloil al n Salah, Algeria - lo denonslrale new lechnologies lor
noniloring slored CO
2
- drew lo a close. The projecl is helping lo sel
operalional paranelers lor lhe secure geological slorage ol CO
2
, wilh
parlicular highlighls including lhe Ouanlilalive Fisk Assessnenl
developed, lesled and benchnarked al n Salah, as well as lhe
inlegralion ol lechnologies, such as salellile inaging and 3D and
4D seisnic, lo beller undersland lhe behaviour ol CO
2
plunes in
lhe subsurlace.
Business review
Fegulalion ol lhe groups business
BPs aclivilies, including ils oil and gas exploralion and produclion, pipelines
and lransporlalion, relning and narkeling, pelrochenicals produclion,
lrading, allernalive energy and shipping aclivilies, are conducled in nany
dillerenl counlries and are lherelore subjecl lo a broad range ol EU, US,
inlernalional, regional and local legislalion and regulalions, including
legislalion lhal inplenenls inlernalional convenlions and prolocols. These
cover virlually all aspecls ol our aclivilies and include nallers such as
licence acquisilion, produclion rales, royallies, environnenlal, heallh and
salely proleclion, luel specilcalions and lransporlalion, lrading, pricing,
anlilrusl, exporl, laxes and loreign exchange.
The lerns and condilions ol lhe leases, licences and conlracls
under which our oil and gas inleresls are held vary lron counlry lo counlry.
These leases, licences and conlracls are generally granled by or enlered
inlo wilh a governnenl enlily or slale conpany and are sonelines
enlered inlo wilh privale properly owners. These arrangenenls wilh
governnenlal or slale enlilies usually lake lhe lorn ol licences or
produclionsharing agreenenls (PSAs. Arrangenenls wilh privale properly
owners are usually in lhe lorn ol leases.
Licences (or concessions give lhe holder lhe righl lo explore lor
and exploil a connercial discovery. Under a licence, lhe holder bears lhe
risk ol exploralion, developnenl and produclion aclivilies and provides lhe
lnancing lor lhese operalions. n principle, lhe licence holder is enlilled lo
all produclion, ninus any royallies lhal are payable in kind. A licence holder
is generally required lo pay produclion laxes or royallies, which nay be in
cash or in kind. Less lypically, BP nay explore lor and exploil hydrocarbons
under a service agreenenl wilh lhe hosl enlily in exchange lor
reinbursenenl ol cosls and/or a lee paid in cash ralher lhan produclion.
PSAs enlered inlo wilh a governnenl enlily or slale conpany
generally require BP lo provide all lhe lnancing and bear lhe risk ol
exploralion and produclion aclivilies in exchange lor a share ol lhe
produclion renaining aller royallies, il any.
n cerlain counlries, separale licences are required lor exploralion
and produclion aclivilies and, in cerlain cases, produclion licences are
liniled lo a porlion ol lhe area covered by lhe exploralion licence. Bolh
exploralion and produclion licences are generally lor a speciled period ol
line (excepl lor licences in lhe US, which lypically renain in ellecl unlil
produclion ceases. The lern ol BPs licences and lhe exlenl lo which
lhese licences nay be renewed vary by area.
Frequenlly, BP conducls ils exploralion and produclion aclivilies in
joinl venlures wilh olher inlernalional oil conpanies, slale conpanies or
privale conpanies. These joinl venlures nay be incorporaled or
unincorporaled venlures. vhelher incorporaled or unincorporaled, relevanl
agreenenls will sel oul each parlys level ol parlicipalion or ownership
inleresl in lhe joinl venlure. Convenlionally, all cosls, benells, righls,
obligalions, liabililies and risks incurred in carrying oul joinl venlure
operalions under a lease or licence are shared anong lhe joinl venlure
parlies according lo lhese agreed ownership inleresls. Ownership ol joinl
venlure properly and hydrocarbons lo which lhe joinl venlure is enlilled is
also shared in lhese proporlions. To lhe exlenl lhal any liabililies arise,
whelher lo governnenls or lhird parlies, or as belween lhe joinl venlure
parlies lhenselves, each joinl venlure parly will generally be liable lo neel
lhese in proporlion lo ils ownership inleresl. n nany upslrean operalions,
a parly (known as lhe operalor will be appoinled (pursuanl lo a joinl
operalor agreenenl (JOA lo carry oul dayloday operalions on behall ol
lhe joinl venlure. The operalor is lypically one ol lhe joinl venlure parlies
and will carry oul ils dulies eilher lhrough ils own slall, or by conlracling
oul lo lhirdparly conlraclors or service providers. BP acls as operalor on
behall ol joinl venlures in a nunber ol counlries where we have exploralion
and produclion aclivilies.
Frequenlly, work will be conlracled oul lo lhirdparly service
providers who have lhe relevanl experlise nol available wilhin lhe joinl
venlure or operalors organizalion. The relevanl conlracl will specily lhe
work lo be done and lhe renuneralion lo be paid and will sel oul how
najor risks will be allocaled belween lhe joinl venlure and lhe service
provider. Typically, lhe joinl venlure and lhe conlraclor would respeclively
allocale responsibilily lor and provide reciprocal indennilies lo each olher
lor harn caused lo lheir respeclive slall and properly. Depending on lhe
service lo be provided, an oil and gas induslry service conlracl nighl also
conlain delailed provisions allocaling risks and liabililies associaled wilh
pollulion and environnenlal danage, danage lo a well or hydrocarbon
reservoir and lor clains lron lhird parlies or olher losses. Conlraclors will
also lypically seek lo cap lheir overall liabilily lo lhe joinl venlure parlies.
The allocalion ol lhose risks and lhe provision ol any cap on liabilily will be
delernined lollowing negolialion belween lhe parlies.
n general, BP is required lo pay incone lax on incone generaled
lron produclion aclivilies (whelher under a licence or PSAs. n addilion,
depending on lhe area, BPs produclion aclivilies nay be subjecl lo a range
ol olher laxes, levies and assessnenls, including special pelroleun laxes
and revenue laxes. The laxes inposed on oil and gas produclion prolls and
aclivilies nay be subslanlially higher lhan lhose inposed on olher
aclivilies, parlicularly in Abu Dhabi, Angola, Egypl, orway, lhe UK, lhe US,
Fussia, Soulh Anerica and Trinidad & Tobago.
EnvironmentaI reguIation
BP operales in nore lhan 30 counlries and is subjecl lo a wide variely ol
environnenlal regulalions concerning our producls, operalions and
aclivilies. Currenl and proposed luel and producl specilcalions, enission
conlrols and clinale change progrannes under a nunber ol environnenlal
laws nay have a signilcanl ellecl on lhe produclion, sale and prollabilily
ol nany ol our producls.
There also are environnenlal laws lhal require us lo renediale and
reslore areas danaged by lhe accidenlal or unaulhorized release ol
hazardous nalerials or pelroleun associaled wilh our operalions. These
laws nay apply lo siles lhal BP currenlly owns or operales, siles lhal il
previously owned or operaled, or siles used lor lhe disposal ol ils and olher
parlies wasle. Provisions lor environnenlal resloralion and renedialion
are nade when a cleanup is probable and lhe anounl ol BPs legal
obligalion can be reliably eslinaled. The cosl ol lulure environnenlal
renedialion obligalions is ollen inherenlly dillcull lo eslinale.
Uncerlainlies can include lhe exlenl ol conlaninalion, lhe appropriale
correclive aclions, lechnological leasibilily and BPs share ol liabilily. See
Financial slalenenls - ole 37 on page 199 lor lhe anounls provided in
respecl ol environnenlal renedialion and deconnissioning.
A nunber ol pending or anlicipaled governnenlal proceedings
againsl BP and cerlain subsidiaries under environnenlal laws could resull
in nonelary sanclions ol $100,000 or nore. ve are also subjecl lo
environnenlal clains lor personal injury and properly danage alleging lhe
release ol or exposure lo hazardous subslances. The cosls associaled wilh
such lulure environnenlal renedialion obligalions, governnenlal
proceedings and clains could be signilcanl and nay be nalerial lo lhe
resulls ol operalions in lhe period in which lhey are recognized. ve cannol
accuralely predicl lhe ellecls ol lulure developnenls on lhe group, such as
slricler environnenlal laws or enlorcenenl policies, or lulure evenls al our
lacililies, and lhere can be no assurance lhal nalerial liabililies and cosls
will nol be incurred in lhe lulure. For a discussion ol lhe groups
environnenlal expendilure see page 73.
Creenhouse gas regulalion
ncreasing concerns aboul clinale change have led lo a nunber ol
inlernalional, nalional and regional neasures lo linil greenhouse gas (CHC
enissions, addilional slricler neasures can be expecled in lhe lulure.
Currenl neasures and developnenls allecling our businesses include
lhe lollowing:
The Kyolo Prolocol currenlly connils 33 raliled parlies lo neel
enissions largels in lhe connilnenl period 2003 lo 2012.
The U sunnil in Cancun in Decenber 2010 where Parlies lo lhe U
Franework Convenlion on Clinale Change (UFCCC reached lornal
agreenenl on a balanced package ol neasures lo 2020. The Cancun
Agreenenl recognizes lhal deep culs in global CHC enissions are
required lo hold lhe increase in global lenperalure lo below 2C.

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Signalories lornally connil lo carbon reduclion largels or aclions by
2020. Around 30 counlries, including all lhe najor econonies and nany
developing counlries, have nade such connilnenls. Supporling lhose
ellorls, principles were agreed lor noniloring, verilying and reporling
enissions reduclions, eslablishnenl ol a green lund lo help developing
counlries linil and adapl lo clinale change, and neasures lo prolecl
loresls and lransler lowcarbon lechnology lo poorer nalions.
The European Union (EU Clinale Aclion and Fenewable Energy
Package which requires increased greenhouse gas reduclions,
inprovenenls in energy ellciency and increased renewable energy
use by 2020, as well as including lhe Fevision ol lhe EU Enissions
Trading Schene (EU ETS direclive. This regulales approxinalely
onelllh ol our reporled 2009 global CO
2
enissions and can be
expecled lo require addilional expendilure lron 2013 when lhe nexl
revision ol lhe schene (EU ETS Phase 3 cones inlo ellecl. The nain
changes in EU ETS will be a signilcanl increase in lhe auclioning ol
allowances, lhe end ol lree allocalions lor eleclricily produclion, an
expanded scope covering addilional connercial seclors and gases,
cerlain lree allocalions delernined nainly by EUwide seclor
benchnarks as conpensalion lor carbon leakage (relocalion lo less
regulaled jurisdiclions, and consideralion ol carbon caplure and slorage
inslallalions.
The EU Fenewables Energy Direclive (FED requires lhal lhe share ol
energy lron renewable sources in all lorns ol lransporl in 2020 be al
leasl 10 ' ol lhe lnal consunplion ol energy in lransporl in lhal
nenber slale.
Arlicle 7a ol lhe revised EU Fuels Oualily Direclive requires luel
suppliers lo reduce lhe lile cycle CHC enissions per unil ol luel and
energy supplied in cerlain lransporl narkels lron 2011.
BPs lacililies in lhe UK are subjecl lo lhe UK Carbon Feduclion
Connilnenl Schene (CFC EES, which has recenlly been nodiled lo
end lhe recycling ol revenues back lo parlicipanls. This can be
expecled lo require addilional expendilures lor conpliance.
Auslralia has connilled lo reduce ils CHC enissions by belween
525' below 2000 levels by 2020, depending on lhe exlenl ol
inlernalional aclion. A proposed CHC enissions lrading schene (CPFS
has been scrapped by lhe inconing coalilion governnenl, bul a lorun
(lhe ulli Parly Clinale Change Connillee has been eslablished lo
invesligale oplions lor inplenenling a carbon price and lo help build
consensus on Auslralias neasures lo address clinale change.
ew Zealand has agreed lo cul CHC enissions by 1020' lron 1990
levels by 2020, subjecl lo cerlain condilions. ew Zealands enission
lrading schene (Z ETS connenced on 1 July 2010 lor lransporl
luels, induslrial processes, and slalionary energy. The agricullure seclor
(45' ol ew Zealands CHC enissions has been proposed lo join lhe
Z ETS in January 2015.
n lhe US, lollowing lhe lailure lo pass conprehensive clinale
legislalion, lhe US Environnenlal Proleclion Agency (EPA is pursuing
regulalory neasures lo address CHCs under lhe Clean Air Acl (CAA.
- n lale 2009, lhe EPA released a CHC endangernenl lnding lo
eslablish ils aulhorily lo regulale CHC enissions under lhe CAA.
- Subsequenl lo lhis, EPA lnalized regulalions inposing lighl duly
vehicle enissions slandards lor CHCs.
- The EPA lnalized lhe inilial CHC nandalory reporling rule (FF in
2009 and anended or proposed anendnenls lo il several lines
during 2010.
- The EPA lnalized pernilling requirenenls lor new or nodiled large
CHC sources in 2010, wilh lhese regulalions laking ellecl in
January 2011.
- The EPAs ellorls lo regulale CHC enissions lhrough lhe CAA are
subjecl lo nunerous legal challenges and aclive polilical debale so
lhal lhe lnal conlenl and scope ol CHC regulalion in lhe US renains
uncerlain.
A nunber ol addilional slale and regional inilialives in lhe US will allecl
our operalions. Ol parlicular signilcance, Calilornia is seeking lo reduce
CHC enissions lo 1990 levels by 2020 and lo reduce lhe carbon
inlensily ol lransporl luel sold in lhe slale. Calilornia inplenenled a
lowcarbon luel slandard in 2010 and is on largel lo conplele
enissions capandlrade, low carbon luel, and olher CHC regulalions in
2011 lor progranne slarl up in January 2012.
Canada has adopled an aclion plan lo reduce enissions lo 17' below
2005 levels by 2020 and lhe nalional governnenl seeks a coordinaled
approach wilh lhe US on environnenlal and energy objeclives.
These neasures can increase our produclion cosls lor cerlain producls,
increase denand lor conpeling energy allernalives or producls wilh
lowercarbon inlensily and allecl lhe sales and specilcalions ol nany ol
our producls.
US and EU regulalions
Approxinalely 62' ol our lxed assels are localed in lhe US and lhe EU.
US and EU environnenl, heallh and salely regulalions signilcanlly allecl
BPs exploralion and produclion, relning, narkeling, lransporlalion and
shipping operalions. Signilcanl legislalion and regulalion in lhe US and lhe
EU allecling our businesses and prollabilily includes lhe lollowing:
Uni!ed S!a!es
The Clean Air Acl (CAA regulales air enissions, pernilling, luel
specilcalions and olher aspecls ol our produclion, dislribulion and
narkeling aclivilies. Slricler linils on sulphur and benzene in luels will
allecl us in lulure, as will aclions on CHC enissions. Addilionally, nany
slales have separale air enission laws in addilion lo lhe CAA.
The Energy Policy Acl ol 2005 and lhe Energy ndependence and
Securily Acl ol 2007 allecl our US luel narkels by, anong olher lhings,
inposing renewable luel nandales and inposing CHC enissions
lhresholds lor cerlain renewable luels. Slales such as Calilornia also
inpose addilional luel carbon slandards.
The Clean valer Acl (CvA regulales waslewaler and olher elHuenl
discharges lron BPs lacililies, and BP is required lo oblain discharge
pernils, inslall conlrol equipnenl and inplenenl operalional conlrols
and prevenlalive neasures.
The Fesource Conservalion and Fecovery Acl (FCFA regulales lhe
generalion, slorage, lransporlalion and disposal ol wasles associaled
wilh our operalions and can require correclive aclion al localions where
such wasles have been released.
The Conprehensive Environnenlal Fesponse, Conpensalion and
Liabilily Acl (CEFCLA, can, in cerlain circunslances, inpose lhe enlire
cosl ol invesligalion and renedialion on a parly who owned or
operaled a conlaninaled sile or arranged lor wasle disposal al lhe sile.
BP has incurred, or expecls lo incur, liabilily under lhe CEFCLA or
sinilar slale laws, including cosls allribuled lo insolvenl or unidenliled
parlies. BP is also subjecl lo clains lor renedialion cosls under olher
lederal and slale laws, and lo clains lor nalural resource danages
under lhe CEFCLA, lhe Oil Pollulion Acl ol 1990 (OPA 90 and olher
lederal and slale laws.
The Toxic Subslances Conlrol Acl regulales BPs inporl, exporl and
sale ol new chenical producls.
The Occupalional Salely and Heallh Acl inposes workplace salely and
heallh requirenenls on our operalions along wilh signilcanl process
salely nanagenenl obligalions.
The Energency Planning and Connunily FighlloKnow Acl requires
energency planning and hazardous subslance release nolilcalion as
well as public disclosure ol our chenical usage and enissions.
The US Deparlnenl ol Transporlalion (DOT regulales lhe
lransporl ol BPs pelroleun producls such as crude oil, gasoline
and pelrochenicals.
The arine Transporlalion Securily Acl (TSA, lhe DOT Hazardous
alerials (HAZAT and lhe Chenical Facilily AnliTerrorisn Slandard
(CFATS regulalions inpose securily conpliance regulalions on
approxinalely 150 BP lacililies. These regulalions require securily
vulnerabilily assessnenls, securily niligalion plans and securily
upgrades, increasing our cosl ol operalions.
Business review
The OPA 90 is inplenenled lhrough regulalion issued by lhe EPA, lhe US
Coasl Cuard, lhe DOT, lhe Occupalional Salely and Heallh Adninislralion
and various slales, Alaska and lhe wesl coasl slales are currenlly lhe nosl
denanding. There is an expeclalion lhal lhe OPA 90 and ils regulalions will
becone nore slringenl in 2011. The inpacl will likely be nore rigorous
preparedness requirenenls (lhe abilily lo respond over a longer period lo
larger spills, including lhe denonslralion ol lhal preparedness. There will
be addilional cosls associaled wilh lhis increased regulalion. n 2011,
we expecl nore unannounced exercises and polenlial penallies lor any
lailure lo denonslrale required preparedness even wilhoul any
OPA 90 anendnenls.
The US relneries ol BP Producls orlh Anerica nc. (BP Producls
are subjecl lo a consenl decree wilh lhe EPA lo resolve alleged violalions
ol lhe CAA and inplenenlalion ol lhe decrees requirenenls conlinues.
A 2009 anendnenl lo lhe decree resolves renaining alleged air violalions
al lhe Texas Cily relnery lhrough lhe paynenl ol a $12nillion civil lne, a
$6nillion supplenenlal environnenlal projecl and enhanced CAA
conpliance neasures eslinaled lo cosl approxinalely $150 nillion. The
lne has been paid and BP Producls is inplenenling lhe olher provisions.
For lurlher disclosures relaling lo lhe Texas Cily relnery, please see Legal
proceedings on page 132.
Various environnenlal groups and lhe EPA have challenged cerlain
aspecls ol lhe operaling pernil issued by lhe ndiana Deparlnenl ol
Environnenlal anagenenl (DE lor our upgrades lo lhe vhiling
relnery. n response lo lhese challenges, lhe DE has reviewed lhe
pernils and responded lornally lo lhe EPA. The EPA, eilher direclly or
lhrough lhe DE, can cause lhe pernil lo be nodiled, reissued or, in
exlrene circunslances, lerninaled or revoked. BP is in discussions wilh
lhe EPA, lhe DE and cerlain environnenlal groups over lhese issues and
alleged CAA violalions al lhe vhiling relnery. Selllenenl negolialions
conlinue in an ellorl lo resolve lhese nallers. BP is also in selllenenl
discussions wilh lhe EPA relaling lo alleged violalions al lhe Toledo, Carson
and Cherry Poinl relneries.
uropean Union
BPs operalions in lhe EU are subjecl lo a nunber ol currenl and proposed
regulalory requirenenls lhal allecl our operalions and prollabilily. These
include:
The EU Clinale Aclion and Fenewable Energy Package and lhe
Enissions Trading Schene (ETS Direclive (see Creenhouse gas
regu|a!ion on page 78.
The EU European nlegraled Pollulion Prevenlion and Conlrol (PPC
Direclive inposes a uniled environnenlal pernil requirenenl on our
najor European siles, including relneries and chenical lacililies, and
requires assessnenls and upgrades lo our lacililies. A proposed
nduslrial Enission Direclive would replace lhe PPC Direclive. l would
nerge several exisling induslrial enission direclives, inpose lighler
enission slandards lor large conbuslion planls and be nore
prescriplive as lo lhe enission linils lhal have lo be achieved by Besl
Available Techniques (BAT. vhen lnally lransposed inlo nalional
legislalion il will resull in requirenenls lor lurlher enission reduclions
al our EU siles.
The European Connission (EC Thenalic Slralegy on Air Pollulion and
lhe relaled work on revisions lo lhe Colhenburg Prolocol and alional
Enissions Ceiling Direclive (ECD, will eslablish nalional ceilings lor
enissions ol a variely ol air pollulanls in order lo achieve EUwide
heallh and environnenlal inprovenenl largels. The EC is also
considering lhe use ol a O
X
and SO
2
lrading schene as a lool lo
achieve enission reduclions. This nay resull in requirenenls lor lurlher
enission reduclions al our EU siles.
The EU Fegulalion on ozone depleling subslances (ODS, which
inplenenls lhe onlreal Prolocol on ODS was nosl recenlly revised
in 2009. l requires BP lo reduce lhe use ol ODS and phase oul use ol
cerlain ODS subslances. BP conlinues lo replace ODS in relrigeranls
and/or equipnenl, in lhe EU and elsewhere, in accordance wilh lhe
Prolocol and relaled legislalion. elhyl bronide (an ODS is a ninor
byproducl in lhe produclion ol puriled lerephlhalic acid in our
pelrochenicals operalions. The progressive phaseoul ol nelhyl
bronide uses nay resull in lulure pressure lo reduce our enissions ol
nelhyl bronide.
The EU Fuels Oualily Direclive allecls our produclion and narkeling ol
lransporl luels. Fevisions adopled in 2009 nandale reduclions in lhe
lile cycle CHC enissions per unil ol energy as described in Creenhouse
gas regulalion above, and lighler environnenlal luel qualily slandards
lor pelrol and diesel.
The EU Fegislralion, Evalualion and Aulhorizalion ol Chenicals
(FEACH Fegulalion requires regislralion ol chenical subslances,
nanulaclured in, or inporled inlo, lhe EU in quanlilies grealer lhan
1 lonne per annun per legal enlily logelher wilh lhe subnission ol
relevanl hazard and risk dala. Having conplied wilh lhe 2003 pre
regislralion requirenenls, we have now conpleled lull regislralion
ol all lhe subslances lhal we were required lo subnil by lhe
regulalory deadline ol 1 Decenber 2010. This lrsl phase covered
high lonnage/high hazard chenicals, chenicals wilh lower produclion/
inporl lonnage nalerials will be subjecl lo regislralion in lhe period
20132013. FEACH allecls our relning, pelrochenicals, lubricanls and
olher nanulacluring or lrading/inporl operalions.
n addilion, Europe has adopled lhe U Clobal Harnonizalion Syslen lor
hazard classilcalion and labelling ol chenicals and producls lhrough lhe
Classilcalion Labelling and Packaging (CLP Fegulalion. This requires us lo
assess lhe hazards ol all ol our chenicals and producls againsl new crileria
and will resull in signilcanl changes lo warning labels and nalerial salely
dala sheels. All our European alerial Salely Dala Sheels will need lo be
updaled lo include bolh FEACH and CLP inlornalion. The conpliance
deadline lor subslances was 1 Decenber 2010 and nainlaining
conpliance will be inlegraled inlo lhe operaling processes ol our
nanulacluring and narkeling businesses in Europe. ve are also
required lo nolily hazard classilcalions lo lhe European Chenicals
Agency lor inclusion in a publicly available invenlory ol hazardous
chenicals belore 3 January 2011. The CLP will also apply lo nixlures
(e.g. lubricanls by 2015.
nlernalional narine luel regulalions under nlernalional ariline
Organizalion (O and nlernalional Convenlion lor lhe Prevenlion ol
Pollulion lron Ships (AFPOL regines inpose slricler sulphur
enission reslriclions on ships in EU porls and inland walerways and
lhe orlh and Ballic seas beginning in 2010 and wilh a slricler global
cap on narine sulphur enissions beginning in 2012. Furlher reduclions
are lo be phased in lherealler. These reslriclions require lhe use ol
conplianl heavy luel oil (HFO or dislillale, or lhe inslallalion ol
abalenenl lechnologies on ships. These regulalions will place
addilional cosls on relneries producing narine luel, including cosls lo
dispose ol sulphur, as well as increased CO
2
enissions and energy
cosls lor addilional relning.
n lhe UK, signilcanl heallh and salely legislalion allecling BP includes
lhe Heallh and Salely al vork Acl and regulalions and lhe Conlrol ol
ajor Accidenl Hazards Fegulalions.

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ariline regulalions
BP Shippings operalions are subjecl lo exlensive nalional and inlernalional
regulalions governing liabilily, operalions, lraining, spill prevenlion and
insurance. These include:
n US walers, lhe OPA 90 inposes liabilily and spill prevenlion and
planning requirenenls governing, anongsl olhers, lankers, barges and
ollshore lacililies. l also nandales a levy on inporled and doneslically
produced oil lo lund lhe oil spill response. Following lhe 2010 oil spill in
lhe Cull ol exico, several nenbers ol lhe US Congress have
inlroduced bills proposing lo increase or elininale lhe OPA 90 liabilily
caps, sone ol lhen seek lo inpose a relroaclive expansion ol liabilily.
Al lhis line, none ol lhe bills have been enacled inlo law and lheir lale
is uncerlain. Sone slales, including Alaska, vashinglon, Oregon and
Calilornia, inpose addilional liabilily lor oil spills.
Oulside US lerrilorial walers, BP Shipping lankers are subjecl lo
inlernalional liabilily, spill response and preparedness regulalions under
lhe Us nlernalional ariline Organizalion, including lhe nlernalional
Convenlion on Civil Liabilily lor Oil Pollulion, lhe AFPOL, lhe
nlernalional Convenlion on Oil Pollulion, Preparedness, Fesponse and
Cooperalion and lhe nlernalional Convenlion on Civil Liabilily lor
Bunker Oil Pollulion Danage. n April 2010, a new prolocol, lhe
Hazardous and oxious Subslance (HS Convenlion 2010 was
adopled lo address issues lhal have inhibiled ralilcalion ol lhe
nlernalional Convenlion on Liabilily and Conpensalion lor Danage in
Conneclion wilh lhe Carriage ol Hazardous and oxious Subslances by
Sea 1996 (lhe HS Convenlion. This prolocol will enler inlo lorce when
(1 al leasl 12 slales have agreed lo be bound by il (lour ol lhe slales
nusl have al leasl 2 nillion gross lonnes ol shipping and (2
conlribuling parlies in lhe consenling slales have received al leasl
40 nillion lonnes ol conlribuling cargoes in lhe preceding year.
To neel ils lnancial responsibilily requirenenls, BP Shipping nainlains
narine liabilily pollulion insurance lo a naxinun linil ol $1 billion lor each
occurrence lhrough nulual insurance associalions (P& Clubs bul lhere
can be no assurance lhal a spill will necessarily be adequalely covered by
insurance or lhal liabililies will nol exceed insurance recoveries.
Cerlain delnilions
Unless lhe conlexl indicales olherwise, lhe lollowing lerns have lhe
neaning shown below:
RepIacement cost proht
Feplacenenl cosl proll or loss reHecls lhe replacenenl cosl ol supplies.
The replacenenl cosl proll or loss lor lhe year is arrived al by excluding
lron proll or loss invenlory holding gains and losses and lheir associaled
lax ellecl. Feplacenenl cosl proll or loss lor lhe group is nol a recognized
CAAP neasure.
Inventory hoIding gains and Iosses
nvenlory holding gains and losses represenl lhe dillerence belween lhe
cosl ol sales calculaled using lhe average cosl lo BP ol supplies acquired
during lhe period and lhe cosl ol sales calculaled on lhe lrslin lrsloul
(FFO nelhod aller adjusling lor any changes in provisions where lhe nel
realizable value ol lhe invenlory is lower lhan ils cosl. Under lhe FFO
nelhod, which we use lor FFS reporling, lhe cosl ol invenlory charged lo
lhe incone slalenenl is based on ils hisloric cosl ol purchase, or
nanulaclure, ralher lhan ils replacenenl cosl. n volalile energy narkels,
lhis can have a signilcanl dislorling ellecl on reporled incone. The
anounls disclosed represenl lhe dillerence belween lhe charge (lo lhe
incone slalenenl lor invenlory on a FFO basis (aller adjusling lor any
relaled novenenls in nel realizable value provisions and lhe charge lhal
would have arisen il an average cosl ol supplies was used lor lhe period.
For lhis purpose, lhe average cosl ol supplies during lhe period is
principally calculaled on a nonlhly basis by dividing lhe lolal cosl ol
invenlory acquired in lhe period by lhe nunber ol barrels acquired. The
anounls disclosed are nol separalely reHecled in lhe lnancial slalenenls
as a gain or loss. o adjuslnenl is nade in respecl ol lhe cosl ol
invenlories held as parl ol a lrading posilion and cerlain olher lenporary
invenlory posilions.
anagenenl believes lhis inlornalion is uselul lo illuslrale lo
inveslors lhe lacl lhal crude oil and producl prices can vary signilcanlly
lron period lo period and lhal lhe inpacl on our reporled resull under FFS
can be signilcanl. nvenlory holding gains and losses vary lron period lo
period principally due lo changes in oil prices as well as changes lo
underlying invenlory levels. n order lor inveslors lo undersland lhe
operaling perlornance ol lhe group excluding lhe inpacl ol oil price
changes on lhe replacenenl ol invenlories, and lo nake conparisons ol
operaling perlornance belween reporling periods, BPs nanagenenl
believes il is helplul lo disclose lhis inlornalion.
Business review
Non-GAAP information on fair vaIue accounting effects
BP uses derivalive inslrunenls lo nanage lhe econonic exposure relaling
lo invenlories above nornal operaling requirenenls ol crude oil, nalural gas
and pelroleun producls as well as cerlain conlracls lo supply physical
volunes al lulure dales. Under FFS, lhese invenlories and conlracls are
recorded al hisloric cosl and on an accruals basis respeclively. The relaled
derivalive inslrunenls, however, are required lo be recorded al lair value
wilh gains and losses recognized in incone because hedge accounling is
eilher nol pernilled or nol lollowed, principally due lo lhe inpraclicalily ol
ellecliveness lesling requirenenls. Therelore, neasurenenl dillerences in
relalion lo recognilion ol gains and losses occur. Cains and losses on lhese
invenlories and conlracls are nol recognized unlil lhe connodily is sold in
a subsequenl accounling period. Cains and losses on lhe relaled derivalive
connodily conlracls are recognized in lhe incone slalenenl lron lhe
line lhe derivalive connodily conlracl is enlered inlo on a lair value basis
using lorward prices consislenl wilh lhe conlracl nalurily.
FFS requires lhal invenlory held lor lrading be recorded al ils lair
value using periodend spol prices whereas any relaled derivalive
connodily inslrunenls are required lo be recorded al values based on
lorward prices consislenl wilh lhe conlracl nalurily. Depending on narkel
condilions, lhese lorward prices can be eilher higher or lower lhan spol
prices resulling in neasurenenl dillerences.
BP enlers inlo conlracls lor pipelines and slorage capacily lhal,
under FFS, are recorded on an accruals basis. These conlracls are
risknanaged using a variely ol derivalive inslrunenls, which are lair valued
under FFS. This resulls in neasurenenl dillerences in relalion lo
recognilion ol gains and losses.
The way lhal BP nanages lhe econonic exposures described
above, and neasures perlornance inlernally, dillers lron lhe way lhese
aclivilies are neasured under FFS. BP calculales lhis dillerence lor
consolidaled enlilies by conparing lhe FFS resull wilh nanagenenls
inlernal neasure ol perlornance, under which lhe invenlory and lhe supply
and capacily conlracls in queslion are valued based on lair value using
relevanl lorward prices prevailing al lhe end ol lhe period. ve believe lhal
disclosing nanagenenls eslinale ol lhis dillerence provides uselul
inlornalion lor inveslors because il enables inveslors lo see lhe econonic
ellecl ol lhese aclivilies as a whole. The inpacls ol lair value accounling
ellecls, relalive lo nanagenenls inlernal neasure ol perlornance and a
reconcilialion lo CAAP inlornalion is shown on page 26.
Commodity trading contracts
BPs Exploralion and Produclion and Felning and arkeling segnenls
bolh parlicipale in regional and global connodily lrading narkels in order
lo nanage, lransacl and hedge lhe crude oil, relned producls and nalural
gas lhal lhe group eilher produces or consunes in ils nanulacluring
operalions. These physical lrading aclivilies, logelher wilh associaled
increnenlal lrading opporlunilies, are discussed lurlher in Exploralion and
Produclion on pages 4950 and in Felning and arkeling on pages 5359.
The range ol conlracls lhe group enlers inlo in ils connodily lrading
operalions is as lollows.
Exchangelraded connodily derivalives
These conlracls are lypically in lhe lorn ol lulures and oplions lraded on a
recognized exchange, such as ynex, SCX and CE. Such conlracls are
lraded in slandard specilcalions lor lhe nain narker crude oils, such as
Brenl and vesl Texas nlernediale, lhe nain producl grades, such as
gasoline and gasoil, and lor nalural gas and power. Cains and losses,
olherwise relerred lo as varialion nargins, are sellled on a daily basis wilh
lhe relevanl exchange. These conlracls are used lor lhe lrading and risk
nanagenenl ol crude oil, relned producls, nalural gas and power. Fealized
and unrealized gains and losses on exchangelraded connodily derivalives
are included in sales and olher operaling revenues lor accounling purposes.
OTC conlracls
These conlracls are lypically in lhe lorn ol lorwards, swaps and oplions.
Sone ol lhese conlracls are lraded bilalerally belween counlerparlies,
olhers nay be cleared by a cenlral clearing counlerparly. These conlracls
can be used bolh lor lrading and risk nanagenenl aclivilies. Fealized and
unrealized gains and losses on OTC conlracls are included in sales and
olher operaling revenues lor accounling purposes.
The nain grades ol crude oil boughl and sold lorward using
slandard conlracls are vesl Texas nlernediale and a slandard orlh Sea
crude blend (Brenl, Forlies and Oseberg or BFO. Allhough lhe conlracls
specily physical delivery lerns lor each crude blend, a signilcanl nunber
are nol sellled physically. The conlracls lypically conlain slandard delivery,
pricing and selllenenl lerns. Addilionally, lhe BFO conlracl speciles a
slandard volune and lolerance given lhal lhe physically sellled lransaclions
are delivered by cargo.
Cas and power OTC narkels are highly developed in orlh Anerica
and lhe UK, where lhe connodilies can be boughl and sold lor delivery in
lulure periods. These conlracls are negolialed belween lwo parlies lo
purchase and sell gas and power al a speciled price, wilh delivery and
selllenenl al a lulure dale. Typically, lhese conlracls specily delivery lerns
lor lhe underlying connodily. Cerlain ol lhese lransaclions are nol sellled
physically, which can be achieved by lransacling ollselling sale or purchase
conlracls lor lhe sane localion and delivery period lhal are ollsel during
lhe scheduling ol delivery or dispalch. The conlracls conlain slandard lerns
such as delivery poinl, pricing nechanisn, selllenenl lerns and
specilcalion ol lhe connodily. Typically, volune and price are lhe nain
variable lerns.
Swaps are ollen conlraclual obligalions lo exchange cash Hows
belween lwo parlies: a lypical swap lransaclion usually relerences a
Hoaling price and a lxed price wilh lhe nel dillerence ol lhe cash Hows
being sellled. Oplions give lhe holder lhe righl, bul nol lhe obligalion, lo
buy or sell crude, oil producls, nalural gas or power al a speciled price on
or belore a specilc lulure dale. Anounls under lhese derivalive lnancial
inslrunenls are sellled al expiry. Typically, nelling agreenenls are used lo
linil credil exposure and supporl liquidily.
Spol and lern conlracls
Spol conlracls are conlracls lo purchase or sell a connodily al lhe narkel
price prevailing on or around lhe delivery dale when lille lo lhe invenlory is
laken. Tern conlracls are conlracls lo purchase or sell a connodily al
regular inlervals over an agreed lern. Though spol and lern conlracls nay
have a slandard lorn, lhere is no ollselling nechanisn in place. These
lransaclions resull in physical delivery wilh operalional and price risk. Spol
and lern conlracls lypically relale lo purchases ol crude lor a relnery,
purchases ol producls lor narkeling, purchases ol lhirdparly nalural gas,
sales ol lhe groups oil produclion, sales ol lhe groups oil producls and
sales ol lhe groups gas produclion lo lhird parlies. For accounling
purposes, spol and lern sales are included in sales and olher operaling
revenues, when lille passes. Sinilarly, spol and lern purchases are
included in purchases lor accounling purposes.
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Direclors and
senior nanagenenl
34 Direclors and
senior nanagenenl
37 Direclors inleresls
Direclors and senior nanagenenl
The lollowing lisls lhe conpanys direclors and senior nanagenenl as al 13 February 2011.
ane nilially elecled or appoinled
CH Svanberg Chairnan Chairnan since January 2010
Direclor since Seplenber 2009
F v Dudley Execulive Direclor (Croup Chiel Execulive Croup chiel execulive since Oclober 2010
Direclor since April 2009
P Anderson onExeculive Direclor February 2010
F L Bownan onExeculive Direclor ovenber 2010
A Burgnans onExeculive Direclor February 2004
C B Carroll onExeculive Direclor June 2007
Sir villian Caslell onExeculive Direclor (Senior ndependenl Direclor July 2006
C Conn Execulive Direclor (Chiel Execulive, Felning and arkeling July 2004
C David onExeculive Direclor February 2003
E L Davis onExeculive Direclor April 2010
D J Flinl onExeculive Direclor January 2005
Dr B E Crole Execulive Direclor (Chiel Financial Ollcer Augusl 2000
Dr D S Julius onExeculive Direclor ovenber 2001
B F elson onExeculive Direclor ovenber 2010
F P hleko onExeculive Direclor February 2011
Bly Execulive Vice Presidenl (Salely and Operalional Fisk Oclober 2010
F Bondy Croup Ceneral Counsel ay 2003
S Boll Execulive Vice Presidenl (Hunan Fesources arch 2005
Dr C Daly Execulive Vice Presidenl (Exploralion Oclober 2010
F Fryar Execulive Vice Presidenl (Produclion Oclober 2010
A Hopwood Execulive Vice Presidenl (Exploralion and Produclion, Slralegy and nlegralion Oclober 2010
B Looney Execulive Vice Presidenl (Developnenls Oclober 2010
H L cKay Execulive Vice Presidenl (Chairnan and Presidenl ol BP Anerica nc. June 2003
S veslwell Execulive Vice Presidenl (Slralegy and nlegralion January 2003
r CH Svanberg was appoinled chairnan on 1 January 2010. r P Anderson was appoinled as a direclor on 1 February 2010 and r E L Davis was
appoinled as a direclor on 2 April 2010. r E B Davis, Jr and Sir an Prosser relired as direclors on 15 April 2010.
r A C nglis resigned as a direclor on 31 Oclober 2010. Dr A B Hayward resigned as group chiel execulive on 1 Oclober 2010 and as a direclor on
30 ovenber 2010. r F v Dudley becane group chiel execulive on 1 Oclober 2010. r B F elson and r F L Bownan were appoinled as direclors
on 3 ovenber 2010 and r F P hleko was appoinled as a direclor on 1 February 2011.
Al lhe conpanys 2010 annual general neeling (AC, lhe lollowing direclors relired, ollered lhenselves lor eleclion/reeleclion and were duly
elecled/reelecled: r P Anderson, r A Burgnans, rs C B Carroll, Sir villian Caslell, r C Conn, r C David, r E L Davis, r F v Dudley,
r D J Flinl, Dr B E Crole, Dr A B Hayward, r A C nglis, Dr D S Julius, and r CH Svanberg.
r D J Flinl and Dr D S Julius will relire al lhe conclusion ol lhe conpanys 2011 AC. All ol lhe olher direclors will oller lhenselves lor eleclion/
reeleclion al lhe conpanys 2011 AC.
Dr H Schusler has been appoinled as execulive vice presidenl, hunan resources, in succession lo rs S Boll wilh ellecl lron 1 arch 2011.
David Jackson (53 was appoinled conpany secrelary in 2003. A solicilor, he is a direclor ol BP Pension Truslees Liniled.

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Directors
CH Svanberg
Chairnan o! !he chairnans and nonina!ion conni!!ees and a!!ends
nee!ings o! !he renunera!ion conni!!ee
CarlHenric Svanberg (53 joined BPs board in Seplenber 2009 and
becane chairnan ol BP on 1 January 2010. Fron 2003 unlil Decenber
2009, he was presidenl and chiel execulive ollcer ol Ericsson, also serving
as lhe chairnan ol Sony Ericsson obile Connunicalions AB. He
conlinues lo be a nonexeculive direclor ol Ericsson.
F v Dudley
Foberl Dudley (55 joined lhe Anoco Corporalion in 1979 lor whon he
worked unlil ils nerger wilh BP in 1993. Following a variely ol posls in lhe
US, lhe UK, lhe Soulh China Sea and oscow, in 2001 he becane group
vice presidenl responsible lor BPs upslrean businesses in Fussia, lhe
Caspian Fegion, Angola, Algeria and Egypl. Fron 2003 lo 2003, he was
presidenl and chiel execulive ollcer ol TKBP in oscow. He was
appoinled an execulive direclor in April 2009 wilh responsibilily lor lhe
broad oversighl ol lhe conpanys aclivilies in lhe Anericas and Asia.
Belween 23 June and 30 Seplenber 2010, he served as lhe presidenl and
chiel execulive ollcer ol BPs Cull Coasl Fesloralion Organizalion in lhe
US. On 1 Oclober 2010 he succeeded Dr Hayward as group chiel execulive
ol BP p.l.c.
P Anderson
enber o! !he chairnans, sa!e!,, e!hics and environnen! assurance and
Cu|! o! exico conni!!ees
Paul Anderson (65 was appoinled a nonexeculive direclor ol BP on
1 February 2010. He is a nonexeculive direclor ol BAE Syslens PLC and
ol Speclra Energy Corp. He was lornerly chiel execulive al Duke Energy
where he also served as chairnan ol lhe board. Having previously been
chiel execulive ollcer and nanaging direclor ol BHP Liniled and lhen
BHP Billilon Liniled and BHP Billilon Plc, he rejoined lhese laller boards in
2006 as a nonexeculive direclor, reliring on 31 January 2010. Previously
he served as a nonexeculive direclor on nunerous boards in lhe US
and Auslralia.
F L Bownan
enber o! !he chairnans and sa!e!,, e!hics and environnen! assurance
conni!!ees
Frank Bownan (66 joined BPs board on 3 ovenber 2010. He served lor
over 33 years in lhe Uniled Slales avy, during which line he served as
connander ol lhe nuclear subnarine USS Ci!, o! Corpus Chris!i and
connander ol lhe subnarine lender USS Ho||and, direclor ol polilical
nililary allairs on lhe joinl slall and chiel ol naval personnel. He was
direclor ol lhe naval nuclear propulsion progranne in lhe Deparlnenl ol
avy and Deparlnenl ol Energy. Aller reliring lron lhe avy as an adniral,
he becane presidenl and chiel execulive ollcer ol lhe uclear Energy
nslilule. He served on lhe BP ndependenl Salely Feview Panel. He is
presidenl ol Slralegic Decisions, LLC and a direclor ol organ Slanley
ulual Funds.
A Burgnans, KBE
enber o! !he chairnans, renunera!ion and sa!e!,, e!hics and
environnen! assurance conni!!ees
Anlony Burgnans (64 joined BPs board in 2004. He was appoinled lo lhe
board ol Unilever in 1991. n 1999, he becane chairnan ol Unilever V and
vice chairnan ol Unilever PLC. n 2005, he becane nonexeculive chairnan
ol Unilever PLC and Unilever V, reliring lron lhese appoinlnenls in 2007.
He is also a nenber ol lhe supervisory boards ol Akzo obel .V.,
Aegon .V. and SHV Holdings .V.
C B Carroll
enber o! !he chairnans and sa!e!,, e!hics and environnen! assurance
conni!!ees
Cynlhia Carroll (54 joined BPs board in 2007. She slarled her career al
Anoco and in 1939 she joined Alcan, where in 2002 she was appoinled
presidenl and chiel execulive ollcer ol Alcans prinary nelals group and
an ollcer ol Alcan, nc. She was appoinled as chiel execulive ol Anglo
Anerican plc, lhe global nining group, in 2007. She is also a direclor ol
De Beers s.a. and Anglo Plalinun Lld.
Sir villian Caslell, LVO
enber o! !he chairnans, Cu|! o! exico and nonina!ion conni!!ees
and chairnan o! !he sa!e!,, e!hics and environnen! assurance conni!!ee
Sir villian (63 joined BPs board in 2006 and is lhe senior independenl
direclor. Fron 1990 lo 2004, he was chiel execulive ol Anershan plc and
subsequenlly presidenl and chiel execulive ollcer ol CE Heallhcare. He
was appoinled as a vice chairnan ol lhe board ol CE in 2004, slepping
down lron lhis posl in 2006 when he becane chairnan ol lhe vellcone
Trusl. He renains a nonexeculive direclor ol CE.
C Conn
ain Conn (43 joined BP in 1936. Following a variely ol roles in oil lrading,
connercial relning, relail and connercial narkeling operalions, and
exploralion and produclion, in 2000 he becane group vice presidenl ol
BPs relning and narkeling business. Fron 2002 lo 2004, he was chiel
execulive ol pelrochenicals. He was appoinled group execulive ollcer
wilh a range ol regional and lunclional responsibililies and an execulive
direclor in 2004. He was appoinled chiel execulive ol Felning and
arkeling in 2007. He is a nonexeculive direclor and senior independenl
direclor ol FollsFoyce Croup plc and chairnan ol The Advisory Board ol
nperial College Business School.
C David
enber o! !he chairnans, audi!, Cu|! o! exico and renunera!ion
conni!!ees
Ceorge David (63 joined BPs board in February 2003. He spenl his career
wilh Uniled Technologies Corporalion (UTC, as ils chiel execulive belween
1994 and 2003 and chairnan lron 1997 unlil his relirenenl in Decenber
2009. He is a lorner direclor ol Ciligroup, nc.
E L Davis
enber o! !he chairnans, audi!, nonina!ion and renunera!ion
conni!!ees and chairnan o! !he Cu|! o! exico conni!!ee
an Davis (59 joined BPs board on 2 April 2010. He spenl his early career
al Bowaler, noving lo cKinsey & Conpany in 1979. He was nanaging
parlner ol cKinseys praclice in lhe UK and reland lron 1996 lo 2003. n
2003, he was appoinled as chairnan and worldwide nanaging direclor ol
cKinsey, serving in lhis capacily unlil 2009. He relired as senior parlner ol
cKinsey & Conpany in July 2010.
D J Flinl, CBE
enber o! !he chairnans and nonina!ion conni!!ees and chairnan o!
!he audi! conni!!ee
Douglas Flinl (55 joined BPs board in 2005. He lrained as a charlered
accounlanl and was nade a parlner al KPC in 1933. n 1995, he was
appoinled group lnance direclor ol HSBC Holdings plc and in 2009 his role
was broadened lo chiel lnancial ollcer, execulive direclor, risk and
regulalion. He was appoinled chairnan ol HSBC wilh ellecl lron
3 Decenber 2010. He was chairnan ol lhe Financial Feporling Councils
review ol lhe Turnbull Cuidance on nlernal Conlrol. Belween 2001 and
2004, he served on lhe Accounling Slandards Board and lhe Slandards
Advisory Council ol lhe nlernalional Accounling Slandards Board. He will
relire lron lhe BP board al lhe conclusion ol lhe 2011 AC.
Dr B E Crole
Byron Crole (62 joined BP in 1937 lollowing lhe acquisilion ol lhe Slandard
Oil Conpany ol Ohio, where he had worked since 1979. He becane group
lreasurer in 1992 and in 1994 regional chiel execulive in Lalin Anerica. n
1999, he was appoinled an execulive vice presidenl ol Exploralion and
Produclion, and chiel execulive ol chenicals in 2000. He was appoinled an
execulive direclor ol BP in 2000 and chiel lnancial ollcer in 2002. He is a
nonexeculive direclor ol Unilever V and Unilever PLC.
Dr D S Julius, CBE
enber o! !he chairnans and nonina!ion conni!!ees and chairnan o!
!he renunera!ion conni!!ee
DeAnne Julius (61 joined BPs board in 2001. She began her career as a
projecl econonisl wilh lhe vorld Bank in vashinglon. Fron 1936 unlil
1997, she held a succession ol posls, including chiel econonisl al Brilish
Airways and Foyal Dulch Shell Croup. Fron 1997 lo 2001, she was a
lullline nenber ol lhe onelary Policy Connillee ol lhe Bank ol
England. She is chairnan ol lhe Foyal nslilule ol nlernalional Allairs and a
nonexeculive direclor ol Foche Holdings SA and Jones Lang LaSalle, nc.
She will relire lron lhe BP board al lhe conclusion ol lhe 2011 AC.
B F elson
enber o! !he chairnans and audi! conni!!ees
Brendan elson (61 joined BPs board on 3 ovenber 2010. He is a
charlered accounlanl and was adnilled as a parlner ol KPC in London in
1934. He served as a nenber ol lhe UK Board ol KPC lron 2000 lo
2006 lollowing which he was appoinled vice chairnan unlil his relirenenl
in 2010. n KPC nlernalional he held a nunber ol senior posilions
including global chairnan, banking and global chairnan, lnancial services.
He is a nonexeculive direclor ol The Foyal Bank ol Scolland Croup plc
where he is chairnan ol lhe Croup Audil Connillee.
F P hleko
enber o! !he chairnans and audi! conni!!ees
Phulhuna hleko (50 joined BPs board on 1 February 2011. He began his
career as a civil engineer in lhe Uniled Slales and as a projecl nanager lor
inlraslruclure developnenls in Soulhern Alrica. Following lhis, he becane
a senior execulive ol lhe Slandard Corporale and erchanl Bank in Soulh
Alrica. He laler held a succession ol direclorships belore joining T
Croup, a panAlrican and iddle Easlern lelephony group, as group
presidenl and chiel execulive ollcer in 2002. He will slep down as group
chiel execulive ol T Croup al lhe end ol arch 2011 lo becone
vicechairnan ol lhe T Croup and chairnan ol T nlernalional.

Senior management
Bly
ark Bly (51 joined BP in 1934. Following various engineering and
connercial leadership assignnenls he held business unil leader posls in
Alaska and lhe orlh Sea and was slralegic perlornance unil leader lor
BPs orlh Anerica Cas business. n 2007, he becane group vice
presidenl, Exploralion and Produclion and a nenber ol lhe exploralion and
produclion operaling connillee. n 2003, he becane group head ol salely
and operalions and in Oclober 2010 he was appoinled execulive vice
presidenl ol salely and operalional risk.
F Bondy
Fuperl Bondy (49 joined BP as group general counsel in 2003. n 1939, he
joined US law lrn orrison & Foersler, working in San Francisco and
London. Fron 1994 lo 1995, he worked lor UK law lrn Lovells in London.
n 1995, he joined SnilhKline Beechan as senior counsel lor nergers and
acquisilions and olher corporale nallers. He subsequenlly held posilions
ol increasing responsibilily and, lollowing lhe nerger ol SnilhKline
Beechan and Claxovellcone, he was appoinled senior vice presidenl and
general counsel ol ClaxoSnilhKline in 2001.
S Boll
Sally Boll (61 joined BP in 2005 as an execulive vice presidenl responsible
lor global hunan resources. She joined Cilibank in 1970 and was in lhe
econonics deparlnenl and lhe lnance lunclion belore joining hunan
resources. She was appoinled hunan resources vice presidenl in 1979. n
1994, she joined Barclays De Zoele vedd, an inveslnenl bank, as head ol
hunan resources and in 1997 becane group hunan resources direclor ol
Barclays plc. Fron 2000 lo early 2005, she was nanaging direclor ol arsh
and cLennan and head ol global hunan resources al arsh nc. n 2003,
she was elecled as a nonexeculive direclor ol UBS AC. She will relire as
BPs group hunan resources direclor al lhe end ol April 2011.
Dr C Daly
ike Daly (57 joined BP in 1936 as a lechnical specialisl in slruclural
geology, subsequenlly joining BPs global basin analysis group. Aller a
series ol exploralion business and lunclional roles in Soulh Anerica, lhe
orlh Sea and new business developnenl, in 2000 he becane presidenl
ol BPs iddle Easl and Soulh Asia businesses. n 2006, he was appoinled
BPs head ol exploralion and new business developnenl and in Oclober
2010 he was appoinled execulive vice presidenl, exploralion.
F Fryar
Bob Fryar (47 joined Anoco Produclion Conpany in 1935, serving in a
variely ol engineering and nanagenenl posilions in lhe onshore US and
deepwaler Cull ol exico. n 2003, he was appoinled vice presidenl ol
operalions perlornance unil lor BP Trinidad and laler, in 2009, he becane
chiel execulive ollcer lor BP Angola. n Oclober 2010, he was appoinled
execulive vice presidenl, produclion.
A Hopwood
Andy Hopwood (53 joined BP in 1930 as a pelroleun engineer. Following a
series ol operalional roles and roles in corporale planning and exploralion
and produclion planning, in 1999, he was appoinled business unil leader in
Azerbaijan, relurning lo London in 2001 as lhe upslrean chiel ol slall. n
2004, he becane slralegic perlornance unil leader lor BPs orlh Anerica
Cas business relurning lo London in 2009 as head ol porllolio and
lechnology lor BPs upslrean businesses. n Oclober 2010, he was
appoinled execulive vice presidenl ol exploralion and produclion, slralegy
and inlegralion.

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B Looney
Bernard Looney (40 joined BP in 1991 as a drilling engineer, working in a
variely ol roles in lhe orlh Sea, Vielnan and lhe Cull ol exico and laler
in lhe exploralion and lechnology group. n 2005, he becane senior vice
presidenl lor BP Alaska, belore noving lo be head ol lhe group CEOs
execulive ollce. He was appoinled vice presidenl lor orway and
inlraslruclure in 2003 and lhen, in 2009, he becane nanaging direclor ol
BPs orlh Sea business. n Oclober 2010, he was appoinled execulive
vice presidenl, developnenls.
H L cKay
Lanar cKay (52 was appoinled chairnan and presidenl ol BP Anerica,
nc. in 2009. He joined Anoco Produclion Conpany as a pelroleun
engineer in 1930. He held a variely ol roles belore beconing group vice
presidenl lor Fussia and Kazakhslan in 2003, also being appoinled lo lhe
board ol TKBP in 2004. n 2007, he was appoinled senior group vice
presidenl ol BP and execulive vice presidenl ol BP Anerica. n early 2003,
he becane execulive vice presidenl ol BP p.l.c. special projecls, locusing
on Fussia, subsequenlly joining lhe group execulive nanagenenl lean. n
Oclober 2010, in addilion lo his currenl dulies, he was appoinled presidenl
and chiel execulive ollcer ol lhe Cull Coasl Fesloralion Organizalion.
Dr H Schusler
Helnul Schusler (50 joined BP in 1939. He held a nunber ol roles working
in nosl parls ol relning, narkeling, lrading and gas and power in lhe US,
UK and Conlinenlal Europe. n 2007 he becane vice presidenl, hunan
resources lor Felning and arkeling in BP and in 2010 he added corporale
and lunclions lo his porllolio. n February 2011 il was announced lhal he
was appoinled group hunan resources direclor and a nenber ol BPs
execulive lean in succession lo Sally Boll wilh ellecl lron 1 arch 2011.
S veslwell
Sleve veslwell (52 joined BP in lhe nanulacluring and supply division ol
BP Soulhern Alrica in 1933. Following various relail posilions in lhe UK and
lhe US, he was appoinled head ol relail and a nenber ol lhe board ol BP
Soulhern Alrica Ply. n 2003, he becane presidenl and chiel execulive
ollcer ol BP Solar, and in 2004, group vice presidenl ol nalural gas liquids,
power, solar and renewables. n 2005, he was appoinled group vice
presidenl ol Allernalive Energy. He joined lhe execulive lean in 2003 and
is execulive vice presidenl, slralegy and inlegralion.
Direclors inleresls
Change lron
31 Dec 2010
Currenl direclors Al 31 Dec 2010 Al 1 Jan 2010 lo 24 Feb 2011
CH Svanberg 925,000 - -
F v Dudley 230,799
a
276,346
a

A Burgnans 10,156 10,156 -
C B Carroll 10,500
a
10,500
a

Sir villian Caslell 32,500 32,500 -
C Conn 339,637
b
293,216
b
77,916
C David 159,000
a
39,000
a

D J Flinl 15,000 15,000 -
Dr B E Crole 1,372,643
c
1,291,643
c

Dr D S Julius 15,000 15,000 -

Al resignalion/
Direclors leaving lhe board relirenenl Al 1 Jan 2010
E B Davis, Jr 77,233
a d
76,497
a
Dr A B Hayward 677,433
e
535,333
A C nglis 309,323
l g
259,163
l
Sir an Prosser 16,301
h
16,301
Change lron
On 31 Dec 2010
Direclors joining lhe board Al 31 Dec 2010 appoinlnenl lo 24 Feb 2011
P Anderson 6,000
a
6,000
a i

F L Bownan 2,520
a
2,520
a j
4,300
E L Davis 10,000 10,000
k

B F elson - -
l

F P hleko - -
n

Held as ADSs.
b
ncludes 43,024 shares held as ADSs al 31 Decenber 2010 and 47,320 shares held as ADSs al
1 January 2010.
c
Held as ADSs, excepl lor 94 shares held as ordinary shares.
d
On relirenenl al 15 April 2010.
e
On resignalion al 30 ovenber 2010.

ncludes 34,962 shares held as ADSs.
g
On resignalion al 31 Oclober 2010.
h
On relirenenl al 15 April 2010.
i
On appoinlnenl al 1 February 2010.
j
On appoinlnenl al 3 ovenber 2010.
k
On appoinlnenl al 2 April 2010.
l
On appoinlnenl al 3 ovenber 2010.

On appoinlnenl al 1 February 2011.
The above lgures indicale and include all lhe benelcial and nonbenelcial
inleresls ol each direclor ol lhe conpany in shares ol lhe conpany (or
calculaled equivalenls lhal have been disclosed lo lhe conpany under lhe
Disclosure and Transparency Fules as al lhe applicable dales.
Execulive direclors are also deened lo have an inleresl in such
shares ol lhe conpany held lron line lo line by lhe BP Enployee Share
Ownership Plan (o.2 lo lacililale lhe operalion ol lhe conpanys oplion
schenes.
o direclor has any inleresl in lhe prelerence shares or debenlures
ol lhe conpany or in lhe shares or loan slock ol any subsidiary conpany.
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33 BP Annual Feporl and Forn 20-F 2010
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Corporale governance
90 Board perlornance reporl
105 Corporale governance praclices
106 Code ol elhics
106 Conlrols and procedures
107 Principal accounlanls lees and
services
103 enorandun and Arlicles ol
Associalion
Board performance report
Dear shareholder
The lragic loss ol lile on lhe Deepwaler Horizon and subsequenl evenls in
lhe Cull ol exico doninaled lhe work ol lhe board over lhe year. The
lollowing reporl describes how your board addressed lhe innediale
crisis while working lo ensure a conplex, global business conlinued lo
operale elleclively.
believe lhe board responded slrongly during lhe crisis. Our lrsl
priorily was lo provide lhe guidance, resources and supporl required by our
response leans in lhe Cull ol exico. ve nel as a lull board on 25
occasions during lhe year. A dedicaled Cull ol exico connillee was
lorned lo enable lhe board lo respond quickly and approprialely as evenls
unlolded. During lhe sunner, lhe chairs ol lhe connillees and nel
regularly lo ensure work was coordinaled and lhe righl issues were being
addressed in a linely way.
There renains nuch lor lhe board lo do. ve are giving parlicular
allenlion lo lhe ways in which lhe conpany applies lhe nany lessons
learned, in parlicular in lhe process salely area, and neels ils ongoing
connilnenls in lhe US. ve are also working wilh lhe execulive lean lo
ensure BP pursues a clear slralegic direclion lhal is well nalched lo lulure
opporlunilies and challenges.
There has been signilcanl change on lhe board. Five new
nonexeculives have joined over lhe pasl 12 nonlhs and we have a new
group chiel execulive. The board is a slrong and uniled lean wilh a breadlh
ol experience lhal will serve lhe conpany well.
Evenls in lhe Cull ol exico represenl a walershed lor lhe
conpany. n lerns ol lhe board, il is essenlial lhal we enploy lhe nosl
elleclive processes and governance nechanisns, and an leading a
review ol lhe slruclures and lools lhal were in place during 2010. ve will
exanine lhe resulls ol our board and connillee evalualions, which are
described in lhis reporl. ve will carelully consider lhe conslruclive
leedback have received lron shareholders and olhers. Our goal is lo be a
board lhal nol only responds lo lhe issues ol lhe pasl bul lhal also
anlicipales lhe challenges ol lhe lulure as BPs business changes and
evolves lo lhe denands ol a global organizalion in lhe lwenlylrsl cenlury.
look lorward lo reporling lo you on lhis in lhe lulure.
ve are required lo conply wilh lhe new UK Corporale Covernance
Code lron nexl year. To ensure we neel slandards ol besl praclice we
have already adopled lhe requirenenls ol lhe new Code as lhe basis lor
assessing lhe BP boards perlornance, in addilion lo conplying wilh lhe
June 2003 Conbined Code.
Finally, wanl lo enphasize lhe inporlance lhe board places on
lrusl and lransparency. l is righl lhal we share our lhoughls and aclions
wilh you, and we will use all appropriale channels ol connunicalion lo
provide linely and helplul inlornalion.
would like lo lake lhis opporlunily lo lhank all ol ny colleagues lor
lheir line connilnenl and supporl during lhe year.
Chairnan
BP's governance framework
The BP board works wilhin a clear lranework described in ils governance
principles. These describe lhe boards role, how il operales, how il relales
lo execulive nanagenenl and lhe nain lasks ol ils connillees. These are
available on lhe corporale governance page ol our websile. n all ils work
lhe board has lo consider specilc issues - including heallh, salely, lhe
environnenl and BPs repulalion. Pul sinply, lhe board needs lo sel lhe
righl lone lron lhe lop.
Our nain areas ol locus are:
Aclive consideralion ol longlern slralegy.
oniloring execulive nanagenenl and lhe perlornance ol lhe conpany.
Oblaining assurance lhal nalerial risks lo BP are idenliled and lhal
syslens ol risk nanagenenl and inlernal conlrol are in place lo nanage
such risks.
Board and execulive nanagenenl succession.
ve keep lhe board governance principles under regular review and we
consider lheir ellecliveness as parl ol lhe annual board evalualion.
Board activities in 2010
Over lhe year, lhe board nel 25 lines as we responded bolh lo evenls in
lhe Cull ol exico and subsequenlly in lhe lnancial narkels, neeling al
leasl weekly as lhe crisis developed. The board had lo organize ils work lo
respond lo lhe crisis while ensuring lhe olher parls ol lhe conpany
conlinued lo perlorn. During lhe sunner we lorned lhe Cull ol exico
connillee whose prinary responsibilily was lhe oversighl ol lhe Cull Coasl
Fesloralion Organizalion and whose work is described lurlher in lhis reporl.
vilh lhe exceplion ol lhe lwo nonexeculive direclors who joined
lhe board in ovenber, each nonexeculive direclor has visiled lhe Cull ol
exico al leasl once, lhe chairnan and lhe chair ol lhe salely, elhics and
environnenl assurance connillee (SEEAC have nade nore lrequenl
visils and lhe Cull ol exico connillee held neelings in lhe US.
Cull ol exico
The board idenliled seven priorilies in ils response lo lhe crisis:
!. Con!ainnen! and c|ean-up o! !he spi||
The board nonilored lhe conpanys work in conlaining lhe spill and
subsequenlly capping lhe well. The board received regular updales lron BP
nanagenenl and was kepl in daily conlacl as lhe conpany responded lo
lhe spill in cleaning lhe beaches and working wilh allecled connunilies.
Through lhe group chiel execulive, lhe board was kepl appraised ol lhe
work ol lhe Uniled Connand in lhe US. The board is slill noniloring lhis
work lhrough lhe Cull ol exico connillee (see below.
2. C|ains
The conpanys connilnenl lo neel legilinale clains was agreed lo and
is being nonilored by lhe board, who received updales on lhe nunber and
quanlun ol clains paid by lhe conpany and lhe line laken lo process
clains received. The board approved lhe proposal lo appoinl Kennelh
Feinberg lo discharge lhe lrusl lund and agreed lo lhe lunds lerns and
slruclure. Oversighl ol BPs aclivilies wilh respecl lo lhe Cull Coasl Clains
Facilily, lhe Deepwaler Horizon Oil Spill Trusl and response lo lnes and
penallies is parl ol lhe renil ol lhe Cull ol exico connillee and, going
lorward, lhe connillee will nainlain ils noniloring ol lhis area and reporl
lhis back lo lhe board.
The board also discussed and approved lhe selllenenl wilh lhe
vhile House on lhe eslablishnenl ol lhe lrusl lund, believing lhis would
reinlorce lhe conpanys slaled connilnenl lo honour all legilinale clains
arising lron lhe incidenl.

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3. Liquidi!,
The evenls in lhe Cull ol exico, parlicularly lhe early inabilily lo cap lhe
well, had a najor inpacl on lhe conpanys slanding in lhe lnancial
connunily and ils abilily lo raise cash on hisloric lerns aller ils credil
raling was downgraded. This was closely nonilored by lhe board so lhal
pronpl renedial aclion could be laken.
vilh lhe uncerlainly in lhe lnancial narkels and lhe eslablishnenl
ol lhe $20billion lrusl lund, lhe board considered il necessary lo review ils
dividend policy. Despile lhe conpanys slrong underlying lnancial
perlornance and assel posilion, lhe board believed lhal addilional
conldence was needed lhal lhe conpany could nanage lhe uncerlainly
over lhe lining and exlenl ol lhe cosls and liabililies relaling lo lhe spill
going lorward. The board decided lhal in lhese circunslances il needed lo
lake a prudenl and conservalive approach lo lhe conpanys lnancial
posilion. Accordingly il decided lo cancel lhe lrslquarler dividend and lo
announce lhal lhere would be no inlerin dividends in respecl ol lhe
second and lhird quarlers ol 2010. The board indicaled il would consider
lhe resunplion ol dividend paynenls in 2011 al lhe line ol lhe lourlh
quarler 2010 resulls, when lhe board expecled il would have a clearer
piclure ol lhe longerlern inpacl ol lhe incidenl. On 1 February 2011, il
was announced lhal quarlerly dividend paynenls would reconnence.
To lurlher increase lhe conpanys available cash resources, lhe
board signilcanlly reduced lhe conpanys organic capilal spending in 2010
and increased planned diveslnenls lo a largel ol $30 billion.
The board ensured lhal lhe narkel was kepl lully inlorned ol lhe
conpanys posilion.
4. nves!iga!ion
ark Bly - head ol lhe Salely and Operalions lunclion - was asked by lhe
lhen group chiel execulive lo underlake an invesligalion ained al analysing
lhe chain ol evenls surrounding lhe incidenl on lhe Deepwaler Horizon and
lo nake reconnendalions lo enable lhe prevenlion ol a sinilar accidenl.
The invesligalion lean was lasked lo work independenlly lron olher BP
spill response aclivilies and separalely lron any invesligalion conducled by
olher conpanies or invesligalion leans.
The Deepwaler Horizon Accidenl nvesligalion Feporl (BPs
nvesligalion Feporl was published in Seplenber and oullined eighl key
lndings relaling lo lhe causes ol lhe accidenl, lor lurlher delail, see Cull ol
exico oil spill on page 34. The reporl did nol idenlily any single aclion or
inaclion lhal caused lhe accidenl and concluded lhal a conplex and
inlerlinked series ol nechanical lailures, hunan judgnenls, engineering
design, operalional inplenenlalion and lean inlerlaces cane logelher lo
allow lhe inilialion and escalalion ol lhe accidenl. A series ol
26 reconnendalions were developed lo address each ol lhe reporls key
lndings and lhese have lorned lhe basis ol an aclion plan. The board
lasked lhe group chiel execulive and senior nanagenenl lean lo
inplenenl lhis aclion plan across BP and asked SEEAC lo oversee
lhis process.
The board is noniloring lhe hearings ol olher, nonBP invesligalions
and will consider how lhe conclusions lron lhese invesligalions ll wilhin
lhe lranework ol lndings and aclions arising lron BPs own reporl.
5. n!erna| ini!ia!ives
Following lhe accidenl, a nunber ol inlernal inilialives have been
connenced by execulive nanagenenl, wilh lrequenl reporling back lo
lhe board including exanining whal can be learnl lo lurlher inprove BPs
risk processes and lhe conpanys oversighl ol conlraclors. A nunber ol
lhese inilialives are slill ongoing and will conclude in lhe course ol 2011.
As inconing chiel execulive, Bob Dudley announced lhal a new
salely and risk division would be crealed (lhe Salely and Operalional Fisk
Funclion and lhal lhe Exploralion and Produclion segnenl would be
reslruclured lron a single business inlo lhree lunclional divisions
(Exploralion, Developnenls and Produclion. Splilling lhe upslrean
business inlo separale lunclions is inlended lo losler lhe longlern
developnenl ol specialisl experlise and lo reinlorce accounlabilily lor
risk nanagenenl.
6. Fepu!a!ion
During lhe crisis and allerwards, lhe board had exlensive discussions
aboul lhe repulalional inpacl ol lhe evenl, including how il nighl allecl
BPs licence lo operale bolh in lhe US and elsewhere. This work conlinues
lo locus on BPs relalionship wilh shareholders, governnenls,
connunilies and indeed all lhose who cone inlo conlacl wilh BP lhrough
ils business operalions.
The chairnan, lhe chiel execulive, lhe chairnan ol SEEAC and
senior nanagenenl have been aclively involved in discussions wilh
shareholders and olher groups in an endeavour lo address concerns and lo
slarl lo rebuild lrusl.
7. S!ra!eg,
The evenls in lhe Cull ol exico led lhe board lo underlake a review ol
slralegy. Led by lhe group chiel execulive and his lean, lhe board
allenpled lo address lhe key challenge ol how lo regain shareholder value
and address core issues, including:
Sinplilcalion (how lo locus lhe conpanys operalions across a wide
geography.
How lhe conpany could nanage risk nore lighlly.
How BP could locus on ils core capabililies.
The opporlunily lo resel lhe conpanys porllolio.
The board held lhree awayday discussions on slralegy during lhe year,
lhese were robusl and explored a wide range ol slralegic oplions. The
oulcone ol lhese deliberalions on slralegy was presenled lo lhe inveslor
connunily on 1 February 2011. For delail ol our slralegy presenlalion, see
Our slralegy on page 19.
anagenenl and organizalional changes
n lale July lhe board and Tony Hayward agreed lhal he would slep down as
group chiel execulive on 1 Oclober, lo be succeeded by Bob Dudley, and
would leave lhe conpany and lhe board al lhe end ol ovenber. This
decision was nade lollowing a series ol exlensive discussions by lhe board
as lo whal slralegic locus BP as a conpany should have in lhe longer lern
and whal leadership was besl equipped lo enbark on lhis nexl phase.
Through lhe noninalion connillee, lhe board engaged exlernal
advisers who idenliled an exlernal candidale and exisling execulive
direclor, Bob Dudley, lor lhe posilion ol group chiel execulive. Aller
inlerviews and delailed consideralion il was concluded lhal Bob Dudley
had lhe slrong induslry, operalional and geopolilical experience required lor
lhe role and, as a resull, was appoinled as group chiel execulive. Bob
Dudley has handed over his dulies as head ol lhe Cull Coasl Fesloralion
Organizalion lo Lanar cKay, presidenl and chairnan ol BP Anerica.
n Seplenber lhe board agreed wilh Andy nglis, execulive direclor
and head ol lhe upslrean business, lhal in order lo lacililale lhe new
organizalional slruclure, he would relinquish his role and slep down lron
lhe board al lhe end ol Oclober - leaving lhe conpany al lhe end ol 2010.
The execulive vice presidenls heading lhe lhree new upslrean divisions
reporl direclly lo Bob Dudley and lhe board decided lhal on lhe basis ol
lhis reporling line il would nol replace Andy ngliss posilion as an upslrean
execulive direclor on lhe board. Fron 1 ovenber 2010, execulive direclor
nenbership ol lhe board has been reduced lo lhree.
Corporate governance
Other board activities in 2010
At the start of each year the board plans and agrees a forward agenda for
its work and that of its committees so that it can balance its workload and
achieve its tasks (namely, strategy, risk and the oversight of the companys
performance and operation of the system of delegation). Our forward-
planning process allows for urgent issues to be accommodated and
following the Gulf of Mexico incident, the focus of the boards activities
shifted in response to the challenges and activities taking place.
This process also gives the board the ability to deal with pressing
and ongoing business. These included a review of opportunities in Russia,
the global economic outlook, the 2011 annual plan, group risks, Alternative
Energy and BPs HR function. The board considered the groups statutory
reports and the broader aspects of corporate reporting, received regular
updates on the groups nancial outlook and discussed the companys
nancial results.
The independent expert appointed to provide an objective
assessment of the BP US Reneries Independent Safety Review Panel
(Duane Wilson) made his annual presentation to the board. Further details
on his activities are outlined in the report of the SEEAC below.
The board and risk management
One of the tasks of the BP board is to ensure that the company is run
effectively and that the material risks to the group are identied,
understood and that the systems of risk management and internal control
are in place to manage these risks.
Integral components in discharging this task are:
Regular reviews of the material risks to the group and their recognition
in the companys annual plan.
Ensuring through the boards system of delegation that its approach to
risk is adopted by the group chief executive (GCE) and that decisions
are taken in accordance with this system.
Maintaining through the board and its committees clear oversight of
the system of internal control and risk management established and
maintained by the group chief executive.
The boards monitoring of risk
Each year the board reviews the key group risks and how they are
managed as part of the annual group plan. The board decides which risks
will be monitored by the board and which will be allocated to the
committees with appropriate reporting to the board. A high-level work
programme for the board and its committees is set on the basis of a
forward agenda that reects the boards core tasks and the key group risks.
Geopolitical and reputational risks are considered by the board. Reports
are received from the committees to whom specic risk oversight has been
allocated. The audit committee monitors the management of nancial risk
while the SEEAC monitors the management of non-nancial risk. In addition,
the Gulf of Mexico committee was formed in 2010 specically to oversee the
activities of the Gulf Coast Restoration Organization.
Under BPs governance framework, authority for the executive
management of BP is delegated to the group chief executive (subject to
dened limits and monitoring). Executive management has responsibility
for the delivery of projects (for example, the development of upstream
projects is managed by a specialist group known as the Global
Projects Organization).
The boards committees review the reporting by business and
function, which includes the safety and environmental performance of
projects. The committees receive regular reports from the group
compliance and ethics, the internal audit and the safety and operational risk
functions. The audit reports highlight the key ndings and management
actions arising from that work.
As part of the boards risk oversight activities, the audit
committee and SEEAC hold an annual joint meeting to assist the board in
assessing the effectiveness of the companys internal control and risk
management systems.
BPs general auditor (head of the internal audit function) reports on
audit work on risk management activities across the group and attends
meetings of both the audit committee and SEEAC. The general auditor and
the group compliance and ethics ofcer have direct access to the chairs of
both committees. Meetings are held both with and without the presence
of management.
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Internal audit
Finance function
General counsel
External market
and reputation
research
Independent Expert
BP goal
Governance process
Delegation model
Executive limitations
Delegation
Accountability
GCEs delegations
Group chief executive
Executive management
Delegation of authority
through policy with
monitoring
Assurance through
monitoring and reporting
Safety & operational
risk function
Group compliance
ofcer
Independent advice
(if requested)
Monitoring,
Information and
Assurance
GORC
Group
operations risk
committee
GFRC
Group
nancial risk
committee
GDC
Group
disclosures
committee
GPC
Group people
committee
RCM
Resource
commitments
meeting
BP Board Governance
Principles
Owners/shareholders
Board
Nomination
committee
Remuneration
committee
Chairmans
committee
Audit
committee
Nomination
committee
Remuneration
committee
Chairmans
committee
Audit
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SEEAC Gulf of Mexico
committee
BP governance framework
Strategy/group risks/annual plan

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BPs syslen ol inlernal conlrol
The board is responsible lor nainlaining a sound syslen ol inlernal conlrol
and delegales lhe eslablishnenl and nainlenance ol lhis syslen lo lhe
group chiel execulive. anagenenl syslens, organizalional slruclures,
processes, slandards and behaviours are all conponenls ol BPs syslen ol
inlernal conlrol.
anagenenl ol risk and operalional perlornance is one ol lhe
lhree elenenls ol BPs syslen ol inlernal conlrol. Businesses idenlily,
priorilize, nanage, nonilor and inprove lhe nanagenenl ol risks on a
dayloday basis lo equip lhen lo deal wilh hazards and uncerlainlies. The
key risks, and how lhey are nanaged, are reporled up lhrough lhe line in a
consislenl nanner lo enable business planning, appropriale inlervenlion
and ullinalely board oversighl.
This enables lhe idenlilcalion ol lhe nosl inporlanl risk
nanagenenl aclivilies. Audil processes are designed lo consider whelher
selecled risk nanagenenl aclivilies are designed and operaling elleclively.
nveslnenls and operalions
BPs operalions and inveslnenls are conducled and reporled in accordance
wilh, and associaled risks are lhereby nanaged lhrough, relevanl
slandards and processes. These range lron OS (which is lhe slruclured
sel ol processes designed lo deliver sale, responsible and reliable
operaling aclivily, lo group slandards (which sel oul processes lor najor
areas such as lraud and nisconducl reporling, lhrough lo delailed
adninislralive inslruclions.
BP has an eslablished inveslnenl approvals and assurance process
which provides a sel ol policies and procedures lor all ils inveslnenl
decisions, including BPs decisions lo invesl in parlneroperaled or joinl
venlure aclivilies. These include a consislenl sel ol econonic assunplions
used lo evaluale projecls (including oil and carbon pricing, logelher wilh an
assessnenl ol lnancial and nonlnancial risk, econonic relurn and olher
laclors lhal nay be relevanl. Polenlial inveslnenls nusl also be screened
againsl BPs groupdelned praclice on environnenlal and social nallers.
alerial connilnenls (including lhose involving longlern
connilnenls or which polenlially involve repulalional issues are reviewed
and endorsed by an execulivelevel connillee - lhe Fesource
Connilnenls eeling (FC. The board is kepl updaled ol lhe FC
aclivilies lhrough lhe circulalion ol FC ninules in advance ol each board
neeling. The board annually considers a review ol capilal projecls and lheir
perlornance againsl inveslnenl crileria.

BPs system of internal control
Elements include: Risk management
Fisk nanagenenl syslen
Board and executive governance
Croup risk calegories and
of the group
group risks
Board governance principles,
Operaling anagenenl
including execulive linilalions
Syslen (OS
Board connillees
Croup slandards
Execulive connillees
Processes and praclices
Croup plan and planning processes
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Financial lranework n
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The assignment of authority
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Operaling perlornance reviews
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p anagenenl inlornalion
Syslen ol delegalion

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Croup linancial risk connillee
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Croup operalions risk connillee
Integrity and ethical values
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BPs system
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and legal compliance
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Code ol conducl
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Cerlilicalion
Management philosophy
and operating style
Croup slralegy
Organizalional slruclure
M
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Competence framework
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Leadership lranework idual perfo
Learning and developnenl
Clear lines of communication Management of people Employee concerns
nlernal connunicalions Perlornance objeclives OpenTalk
Exlernal connunicalions HF policies and procedures Fraud and nisconducl
reporling slandard
Execulive lean and connillees
The group chiel execulive and his senior lean are supporled by execulive
level subconnillees, lhal are responsible lor and nonilor specilc group
risks: lhe group operalions risk connillee (COFC, lhe group lnancial risk
connillee (CFFC, lhe group people connillee (CPC, lhe resources
connilnenls neeling (FC and lhe group disclosure connillee (CDC.
These connillees provide inpul and dala lo lhe risk nanagenenl
process by lhe execulive, as do lhe group conpliance and elhics lunclion,
lhe salely and operalional risk audil lunclion and lhe groups lnancial
conlrol lean.
The CCE conducls regular perlornance reviews wilh lhe businesses and
key lunclions lo nonilor perlornance and lhe nanagenenl ol risk and lo
inlervene il necessary. People nanagenenl is based on annual and
longlern objeclives, lhrough which enployees are direcled lowards
delivering specilc elenenls ol lhe group plan wilhin agreed boundaries.
BP has an annual cerlilcalion process in which lean leaders are
asked lo discuss wilh lheir leans and lhen subnil a cerlilcale regarding
lheir and lheir leans underslanding ol and adherence lo BPs code ol
conducl and lhe reporling ol any breaches.
Board and committee attendance
Board Audil Fenuneralion Cull ol exico oninalion Chairnans
connillee SEEAC connillee connillee connillee connillee
a b a b a b a b a b a b a b
CarlHenric Svanberg 25 25 3
c
3 3
c

Sir villian Caslell 25 24 9
c
9 9 6 3 3 3 3
Paul Anderson 23 21 3 3 9 9 7 7
Frank Skip Bownan 2 2 1 1 1 1
Anlony Burgnans 25 19 9 3 6 6 3 7
Cynlhia Carroll 25 19 9 7 3 6
Ceorge David 25 21 15 15 6 6 9 9 3 7
Erroll Davis, Jr 4 3 5 5 3 2 1 1
an Davis 22 21 10 9 4 3 9
c
9 4 1 7 7
Douglas Flinl 25 25 15
c
14 6 6 3
DeAnne Julius 25 23 6
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6 3 3 3 3
Brendan elson 2 2 1 1
Sir an Prosser 4 3 5 5 2 1 3 3 1 1
Executive directors:
Bob Dudley 25 25
ain Conn 25 24
Byron Crole 25 25
Tony Hayward 24 23
Andy nglis 23 23
a
Tolal nunber ol neelings lhe direclor was eligible lo allend.
b
Tolal nunber ol neelings lhe direclor did allend.
c
Connillee chairnan.
3
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Board meetings and attendance
As parl ol ils lorward agenda, lhe board nornally plans lo hold one ol ils
neelings al lhe conpanys ollces in vashinglon and al leasl one neeling
al or near one ol lhe conpanys operalional localions (enabling lhe
opporlunily lor board sile visils. n 2010, lhe board held one neeling in
vashinglon bul due lo lhe increased nunber ol neelings and associaled
conslrainls on line, held lhe renainder ol ils neelings in London or via
leleconlerence. A lolal ol 25 board neelings were held during lhe year.
Membership of the BP pIc board
Throughoul 2010 CarlHenric Svanberg has led lhe board as chairnan.
Sir villian Caslell was appoinled senior independenl direclor in April 2010
lollowing lhe relirenenl ol Sir an Prosser al lhe AC.
eilher lhe chairnan nor lhe senior independenl direclor is
enployed as execulives ol lhe group. The board nainlains a succession
plan lor lhe chairnan and senior independenl direclor, in addilion lo lhe
group chiel execulive and senior nanagenenl.
During lhe year, lhere were a nunber ol changes lo lhe board:
Sir an Prosser and Erroll Davis, Jr relired lron lhe board al lhe AC in
April 2010.
Two nonexeculive direclors were appoinled prior lo lhe 2010 AC:
Paul Anderson in February 2010 and an Davis in April 2010.
Dr Tony Hayward slepped down as group chiel execulive on 1 Oclober
2010 and lell lhe board on 30 ovenber 2010.
Andy nglis slepped down as chiel execulive, Exploralion and
Produclion and as an execulive direclor ol lhe board al lhe end ol
Oclober 2010.
Two lurlher nonexeculive direclors were appoinled on 3 ovenber
2010, Frank Skip Bownan and Brendan elson.
n addilion, Phulhuna hleko joined lhe board as a nonexeculive direclor
on 1 February 2011.
Al lhe AC in April 2011, Dr DeAnne Julius (chair ol lhe
renuneralion connillee and Douglas Flinl (chair ol lhe audil connillee
will relire lron lhe board. Their connillee chair roles will be assuned by
Anlony Burgnans (renuneralion and Brendan elson (audil.
The board is conposed ol lhe chairnan, 11 nonexeculive direclors and
lhree execulive direclors. The board governance principles slale lhal lhe
nunber ol direclors should nol nornally exceed 16. The board has decided
lhal il will nainlain lhe currenl level ol execulive direclor nenbership on
lhe board, wilh reporling ol exploralion and produclion aclivilies lhal
were previously represenled by Andy nglis now being underlaken by
Bob Dudley.
The chairnans connillee reviews lhe syslens lor senior
execulive developnenl and delernines lhe succession plan lor lhe
group chiel execulive, execulive direclors and olher senior nenbers ol
execulive nanagenenl.
The noninalion connillee idenliles, evaluales and reconnends
candidales lor appoinlnenl or reappoinlnenl as nonexeculive direclors
and keeps under review lhe nix ol knowledge, skills and experience ol lhe
board necessary lo ensure an orderly succession. Civen lhe size ol lhe BP
board and lhe need lo deliver a sleady relreshnenl ol board appoinlnenls,
lhe connillee has developed a longer lern pipeline ol polenlial
nonexeculive lalenl on which il expecls lo draw as lhe need lor new
appoinlnenls arises.
Director appointment, tenure and eIections
The chairnan and nonexeculive direclors ol BP serve on lhe basis ol
lellers ol appoinlnenl. onexeculives ordinarily relire al lhe AC
lollowing lheir 70lh birlhday. Execulive direclors have service conlracls
wilh lhe conpany, which are expressed lo relire al a nornal relirenenl age
ol 60 (subjecl lo age discrininalion.
Delails ol all paynenls lo direclors appear in lhe direclors
renuneralion reporl.
BP does nol place a lern linil on a direclors service as lhe
conpany proposes all ils direclors lor annual reeleclion by shareholders (a
praclice we have lollowed since 2004. ew board nenbers are subjecl lo
eleclion by shareholders al lhe lrsl AC lollowing lheir appoinlnenl. The
chairnan and lhe noninalion connillee keep lhe lenure ol direclors under
consideralion as parl ol a conlinual review ol board skills and balance.

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Indemnity and insurance
n accordance wilh BPs Arlicles ol Associalion, direclors are granled an
indennily lron lhe conpany in respecl ol liabililies incurred as a resull ol
lheir ollce, lo lhe exlenl pernilled by law. n respecl ol lhose liabililies lor
which direclors nay nol be indenniled, lhe conpany nainlained a
direclors and ollcers liabilily insurance policy lhroughoul 2010. During lhe
year, a review ol lhe lerns and scope ol lhe policy was underlaken. The
policy has been renewed lor 2011. Allhough lheir delence cosls nay be
nel, neilher lhe conpanys indennily nor insurance provides cover in lhe
evenl lhal lhe direclor is proved lo have acled lraudulenlly or dishoneslly.
UK conpany law pernils lhe conpany lo advance cosls lo direclors lor
lheir delence in invesligalions or legal aclions.
Time commitment and outside appointments for directors
Lellers ol appoinlnenl lo lhe BP board do nol sel oul lxed line
connilnenls lor board dulies as lhe conpany believes lhal lhe line
required by direclors nay change depending on business evenls (as was
denonslraled during 2010. enbership ol lhe board represenls a
signilcanl line connilnenl and il is expecled lhal direclors will allocale
sullcienl line lo lhe conpany lo perlorn lheir dulies elleclively. The
noninalion connillee keeps lhis under regular review.
BP pernils execulive direclors lo lake up one exlernal board
appoinlnenl, subjecl lo lhe agreenenl ol lhe chairnan and reporled lo
lhe BP board. Fees received lor an exlernal appoinlnenl nay be
relained by lhe execulive direclor and are reporled in lhe direclors
renuneralion reporl.
onexeculive direclors nay serve on a nunber ol oulside boards,
provided lhey conlinue lo denonslrale lheir connilnenl lo discharge lheir
dulies lo BP elleclively. The noninalion connillee keeps under review lhe
nalure ol direclors olher inleresls lo ensure lhal lhe ellecliveness ol lhe
board is nol conpronised. The connillee nay nake reconnendalions lo
lhe board il il concludes lhal a direclors olher connilnenls are
inconsislenl wilh lhose required by BP.
Board independence
The governance principles require our nonexeculive direclors lo be
independenl in characler and judgenenl and lree lron any business or
olher relalionship lhal could nalerially inlerlere wilh lhe exercise ol lheir
judgenenl. The board has delernined lhal lhose nonexeculive direclors
who served during 2010 lulllled lhis requirenenl and were independenl.
The board also salisled ilsell lhal lhere is no conpronise lo lhe
independence ol, or exislence ol conHicls ol inleresl lor lhose direclors
who serve logelher as direclors on lhe boards ol oulside enlilies or who
have olher appoinlnenls in oulside enlilies. These issues are considered
on a regular basis al board neelings.
Board support and externaI advice
Supporl lo lhe board and ils connillees is provided lhrough lhe conpany
secrelarys ollce, which reporls lo lhe chairnan. vilhin BP, lhe conpany
secrelary has no execulive lunclion and his appoinlnenl is delernined by
lhe noninalion connillee and his renuneralion delernined by lhe
renuneralion connillee.
Under lhe BP board governance principles, any direclor is enlilled lo
oblain independenl, prolessional advice relaling lheir own responsibililies
and lhe allairs ol BP. Direclors are also expecled lo oblain independenl
advice where lhere is consideralion ol any naller in which a direclor nay
have an inleresl lhal could conHicl wilh lhe inleresls ol lhe conpany.
Induction and board Iearning
All direclors receive a lull induclion progranne when lhey join lhe board,
including a session on BPs syslen ol governance and lhe legal dulies ol
direclors ol a lisled conpany. onexeculive direclors receive a wider
progranne lhal covers lhe business ol lhe group and is lailored according
lo a direclors own background and lhe board connillees on which lhey
will serve. During lhe year we underlook induclion progrannes lor our
new nonexeculive direclors, which in sone cases are conlinuing. The
progranne covers BPs business, an overview ol ils lunclions, lhe
conpanys slralegic approach and lnancial lranework and lhe groups
approach lo risk nanagenenl. Each nonexeculive direclor had a separale
induclion session on lhe board connillee(s ol which lhey are a nenber
and all had a privale session wilh lhe conpanys exlernal audilor. n 2010
we also conlinued lhe induclion progranne lor lhe chairnan - including
visils lo BP operalions around lhe world.
The evenls ol lhe year resulled in lhe board concenlraling on issues
in lhe upslrean business and in lhe US, wilh planned visils lo olher
localions such as a joinl venlure pelrochenicals planl in Asia and lo BPs
luel and lubricanls lechnology sile, being poslponed. The SEEAC visiled lhe
Texas Cily relnery in February. There is a lull progranne ol visils lor 2011.
onexeculive direclors are expecled lo parlicipale in al leasl one sile visil
per year.
The progranne ol board learning evenls was anended lollowing
evenls in April lo include delailed brielngs on aspecls ol deepwaler drilling
and lechnology oplions lor killing lhe well. The board also received verbal
and wrillen updales on legal and regulalory issues.
Board evaIuation
BP conducls an annual evalualion ol lhe perlornance and ellecliveness
ol lhe board and ils connillees. The evalualion ol individual direclors
is underlaken by lhe chairnan, wilh lhe chairnans own perlornance
evalualed by lhe chairnans connillee (led by lhe senior
independenl direclor.
By building on lhe resulls ol lhe previous years evalualion, lhe
board lries lo achieve a conlinuous cycle ol evalualion, largeled aclions
arising lron lhe review and perlornance inprovenenl. Aclions laken by
lhe board during lhe year in response lo lhe oulcone ol lhe 2009 review
included lhe scheduling ol nore inlornal sessions oulside board neelings
lo naxinize lhe ulilily ol lhe line available lor lhe board and an aclive
planning ol connillee and board succession lo ensure appropriale cross
nenbership belween relaled connillees.
vilh lhe evalualion ol lhe boards perlornance being largely
doninaled by evenls in lhe Cull ol exico, il was lell lhal lhe 2010
evalualion needed lo be underlaken in as robusl and rigorous a nanner as
possible. The board decided lo appoinl an exlernal lacililalor (a dillerenl
individual lo lhe exlernal lacililalor who underlook lhe 2009 evalualion lo
work wilh lhe conpany lo underlake lhis years review.
The evalualion ol lhe board was underlaken lhrough oneonone
inlerviews wilh each board nenber (wilh lhe exceplion ol Frank Bownan
and Brendan elson who joined lhe board lale in lhe year. Evalualion ol lhe
board connillees was nanaged lhrough lhe use ol online queslionnaires.
The oulcone ol lhese evalualions is reporled in lhe work ol connillees al
lhe end ol lhis reporl.
The resulls ol lhis evalualion work were presenled in neelings ol
lhe board and each ol ils connillees in January 2011 during which lhere
were discussions ol lhe lessons learned as lhe board and ils connillees
perlorned lheir responsibililies during lhe nonlhs ol inlense and
unprecedenled operalional, repulalional and legal challenges lo BP
lollowing lhe 20 April 2010 incidenl.
The evalualion highlighled a nunber ol slrenglhs and idenliled lhe
lollowing areas lor lurlher developnenl in lhe coning year:
Conducl addilional sile visils and parlicipale in delailed brielngs on
signilcanl operaling aclivilies ol lhe conpany, including upslrean
businesses.
Feview and, il necessary, revise lhe conpanys board governance
principles.
Clarily lhe boards role in lhe crisis planning process.
Build on lhe slrong working relalionships wilhin lhe board lo conlinue
and enhance good connunicalion and cohesion.
Coordinale and clarily exlernal and slakeholder connunicalions.
eel nore ollen wilh senior nanagers below lhe level ol execulive
direclors as parl ol lhe boards nanagenenl succession oversighl
lunclion.
Fenain involved in slralegic planning and relaled risk analyses.
Communication
Shareholder engagenenl
Civen lhe evenls ol lasl year, connunicalion wilh our shareholders has
been parlicularly inporlanl. n addilion lo conlacl wilh our large and
inslilulional inveslors, we have welconed lhe connunicalion we have had
wilh our privale shareholders - wilh nany lellers and enails coning
lhrough lo lhe chairnan, lo lhe group chiel execulive and lo olher parls ol
lhe conpany. vhile lhese represenl a diverse range ol viewpoinls, bolh
posilive and negalive aboul lhe conpany, lhey have also enabled lhe board
lo be inlorned aboul lhe wider shareholder perceplion ol evenls and lhe
conpanys reaclion lo lhen.
During lhe incidenl and beyond, we allenpled lo keep our
shareholders and lhe wider narkel inlorned ol evenls and progress
lhrough various channels - including press releases, webcasls,
leleconlerences and neelings. The group chiel execulive, execulive
direclors and senior nanagenenl engaged wilh shareholders across a
broad range ol issues.
n parallel, lhe chairnan nel wilh inveslors in lhe US and UK on a
oneloone and group basis, as did olher senior, nonexeculive direclors.
The views and reaclions discussed wilh lhe conpany in lhese webinars
and neelings provided valuable leedback and inpul inlo lhe boards lhinking
over lhe period ol lhe crisis and our deliberalions on slralegy.
The conpany nainlains a progranne ol engagenenl wilh a range
ol shareholders on issues relaling lo lhe group. Presenlalions given by lhe
group lo lhe inveslnenl connunily are available lo download lron lhe
nveslors seclion ol our websile.
ve held our annual neeling wilh our largesl inveslors and lhe
chairnan and chairs ol our nain board connillees in arch 2010. Topics
discussed al lhis session included lhe work ol lhe board and ils
connillees over lhe year, key challenges and lhe conpanys posilion on
lhe shareholder resolulion on oil sands. ve lnd lhis neeling a uselul way
lor inveslors lo hear aboul lhe work ol our connillees and lor our
nonexeculive direclors lo engage in dialogue wilh inveslors. l is inlended
lhal a sinilar neeling will be held in arch 2011.
The board gains independenl leedback on lhe views ol our
inslilulional inveslors on lhe conpany, ils perlornance and ils inveslor
relalions progranne lhrough an annual inveslor audil which is underlaken
by exlernal advisors.
AC
ve have slrong parlicipalion al our AC, wilh allendance usually
exceeding a lhousand people. vilh lhe size and geographic diversily ol our
shareholder base, we lry lo nake lhe AC accessible lhrough lhe use
ol webcasling and advance voling - eilher online, by posl or lelephone.
Voles on all nallers (excepl procedural issues are laken by a poll al our
AC - neaning lhal every vole casl, whelher by proxy or nade in person,
is counled.
The chairs ol lhe board connillees and lhe chairnan were presenl
during lhe 2010 AC. Board nenbers nel shareholders on an inlornal
basis aller lhe nain business ol lhe neeling.
Average voling levels al lhe 2010 AC decreased slighlly lo 60',
conpared lo 61' in 2009. However, lhe nunber ol webcasl downloads
lor lhe 2010 AC increased over 2009 levels. ve nake our webcasl,
speeches and presenlalions lron lhe AC available on lhe BP websile
aller lhe evenl, logelher wilh lhe oulcone ol voling on lhe resolulions.
InternationaI advisory board
n 2009, BP lorned an inlernalional advisory board (AB whose purpose is
lo advise lhe chairnan, chiel execulive and board ol BP p.l.c. on slralegic
and geopolilical issues relaling lo lhe longlern developnenl ol lhe group.
The AB advises on:
How global and regional lrends in lhe areas ol econonics, polilics and
business nighl allecl lhe developnenl ol BPs business in lhe long
lern.
How lhe inlernalional business connunily and individual governnenls
perceive BPs plans and progrannes ol aclivilies.
The AB is chaired by our previous chairnan, Peler Sulherland. Olher
nenbers ol lhe BP AB are Kol Annan, Josh Bollen, Dr Erneslo Zedillo,
Presidenl Fonano Prodi and Lord Pallen ol Barnes. Dr Javier Solana
will join lhe AB in 2011. Bob Dudley and CarlHenric Svanberg allend lhe
AB neelings.
The AB will nornally neel in person lwice a year, bul nenbers
also provide advice and counsel lo lhe chairnan, lhe group chiel execulive
and lhe board ol BP p.l.c. when needed (including during evenls in lhe Cull
ol exico. n 2010, lhe AB nel once (as one neeling was cancelled due
lo lravel disruplion lollowing lhe volcanic ash cloud.

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Connillee Feporls
Audit committee report
The audil connillees agenda in 2010, like lhal ol lhe board, was
signilcanlly shaped by lhe lragic evenls in lhe Cull ol exico. These
required lhe connillee lo locus addilional allenlion and go in grealer deplh
inlo nallers concerning BPs response lo lhe incidenl, in parlicular in lhis
connillee regarding lhe lnancial consequences. Considerable line and
ellorl was spenl reviewing and challenging BPs assessnenl ol lhe likely
cosl ol ils innediale and longerlern lnancial responsibililies and lhe
adequacy ol disclosure bolh around lhese lnancial consequences and lhe
relaled conlingencies which were unable lo be expressed lnancially al each
reporling dale. ve also crilically reviewed lhe conlrol aspecls surrounding
lhe deploynenl ol BPs lnancial and physical resources in responding lo lhe
incidenl and, al lhe heighl ol lhe crisis, crilically exanined lhe groups
liquidily and lunding posilion.
vhile all ol lhese nallers were also covered by lhe board in lull
session, and nany were independenlly covered lron a dillerenl perspeclive
by lhe newly lorned Cull ol exico connillee, lhe audil connillee was
exlensively engaged in lhe delailed review ol lhe lnancial reporling aspecls
ol lhe incidenl and lhe conpanys response. l was also inporlanl lhal lhe
connillee nainlained ils regular oversighl wilh respecl lo inlernal conlrols
and lnancial inlegrily across lhe renainder ol lhe conpanys aclivilies and
consequenlially, as reporled below, we held a nunber ol exlra neelings lo
ensure our originally planned agenda could be lulllled in addilion lo lhe
heighlened workload arising lron lhe Cull ol exico incidenl.
regrel lhal lhis will be bolh ny lrsl and lasl audil connillee
reporl, as an slepping down lron lhe board lollowing ny appoinlnenl as
chairnan ol HSBC Holdings plc. This has been a very challenging year and
wanl lo express ny sincere lhanks lo lhe nenbers ol lhe audil connillee
and lhose who have conlribuled lo salislying our enquiries lor having
worked logelher so elleclively. an cerlain lhis will conlinue under
Brendan elsons leadership.
DougIas FIint
Chair ol lhe Audil Connillee
Committee members
Douglas Flinl - connillee chair (lron 15 April 2010
Ceorge David
an Davis (appoinled 2 April 2010
Brendan elson (appoinled 3 ovenber 2010
Phulhuna hleko (appoinled 1 February 2011
enbers who lell during lhe year:
Sir an Prosser - previously chair ol lhe connillee (relired 15 April 2010
Erroll Davis, Jr (relired 15 April 2010
The audil connillee is conposed ol independenl, nonexeculive direclors
selecled lo provide a wide range ol lnancial, inlernalional and connercial
experlise appropriale lo lulll lhe connillees dulies.
Douglas Flinl is group chairnan (lornerly chiel lnancial ollcer and
execulive direclor, risk and regulalion ol HSBC Holdings plc and a lorner
nenber ol lhe Accounling Slandards Board and lhe Slandards Advisory
Council ol lhe nlernalional Accounling Slandards Board. The board is
salisled lhal he is lhe audil connillee nenber wilh recenl and relevanl
lnancial experience as oullined in lhe UK Corporale Covernance Code and
lhe June 2003 Conbined Code.
The board also delernined lhal lhe audil connillee neels lhe
independence crileria provisions ol Fule 10A3 ol lhe US Securilies
Exchange Acl ol 1934 and lhal r Flinl nay be regarded as an audil
connillee lnancial experl as delned in len 16A ol Forn 20F.
Douglas Flinl becane chair ol lhe audil connillee upon lhe
relirenenl ol Sir an Prosser lron lhe board in April 2010. As noled above,
lollowing his appoinlnenl as chairnan ol HSBC Holdings plc, he will relire
lron lhe BP board al lhe AC in April 2011. Brendan elson will becone
chair ol lhe audil connillee lron lhis line. Upon r Flinls relirenenl,
r elson will becone lhe audil connillee lnancial experl as delned in
len 16A ol Forn 20F.
The board considered r elsons exlensive skills and experience nade
hin lhe ideal candidale lo succeed Douglas Flinl. r elson served as a
nenber ol lhe UK Board ol KPC lron 2000 lo 2006 lollowing which he
was appoinled vice chairnan unlil his relirenenl in 2010. n KPC
nlernalional he held a nunber ol senior posilions including global
chairnan, banking and global chairnan, lnancial services. Subsequenl lo
reliring lron KPC he was appoinled a nonexeculive direclor ol The Foyal
Bank ol Scolland Croup plc where he is chairnan ol lhe Croup Audil
Connillee.
Committee roIe and structure
The role and responsibililies ol lhe audil connillee are sel oul in lhe
Appendix ol BPs board governance principles and available on our websile.
ve keep lhese under review and lesl lheir ellecliveness in our annual
evalualion ol lhe audil connillee.
The connillee nel 15 lines in 2010: lhis was a signilcanl
increase over lhe previous year wilh addilional line being needed lo cover
lhe lnancial and conlrol aspecls ol lhe incidenl in lhe Cull ol exico. As il
does each year, lhe connillee held a joinl neeling wilh lhe salely, elhics
and environnenl assurance connillee (SEEAC in January lo review lhe
general audilors reporl on inlernal conlrol and risk nanagenenl syslens
lor 2010.
Each neeling ol lhe connillee is allended by lhe group chiel
lnancial ollcer, lhe depuly chiel lnancial ollcer, lhe group conlroller, lhe
general audilor (head ol inlernal audil and lhe chiel accounling ollcer. The
lead parlner ol our exlernal audilors (Ernsl & Young is also presenl.
The connillee also holds separale privale sessions during lhe year
wilh lhe exlernal audilor and lhe general audilor - lhese sessions are
wilhoul lhe presence ol execulive nanagenenl.
The board is kepl updaled and inlorned ol lhe audil connillees
aclivilies and any issues arising lhrough verbal reporls al ils neelings lron
lhe connillee chair and lhe circulalion ol lhe connillees ninules.
Committee processes
nlornalion and advice
nlornalion and reporls lor lhe connillee are received direclly lron
accounlable lunclional and business nanagers and lron relevanl exlernal
sources. n addilion, like our board and olher connillees, lhe audil
connillee can access independenl advice and counsel when needed on
an unreslricled basis. During 2010, exlernal specialisl legal advice was
provided lo lhe connillee by Sullivan & Cronwell LLP, Freshlelds
Bruckhaus Deringer LLP and Kirkland and Ellis LLP and lnancial advice was
provided by KPC and organ Slanley. As parl ol ils annual evalualion, lhe
connillee reviews lhe adequacy ol reliable and linely inlornalion lron
nanagenenl lhal enables il lo lulll ils responsibililies. The 2010 evalualion
indicaled lhal nenbers recognized lhe openness and lransparenl nalure ol
lhe nalerials and presenlalions provided by nanagenenl.
Training and visils
Fesponding lo evenls in lhe Cull ol exico, lhere was increased locus on
accounling policy applicable lo lhe circunslances arising lron lhe incidenl
and lhe connillee received brielngs on lhe relevanl accounling policy
applicalions, parlicularly provisioning and relaled disclosure. Olher
lechnical updales lhe connillee received included developnenls in
lnancial reporling, in oil and gas reserves disclosure and in relalion lo
laxalion changes.
nduclion progrannes lailored around lheir roles on lhe audil
connillee were prepared lor lhe lwo new nenbers who joined during
lhe year. These included sessions on lax, lreasury, our lrading operalions,
accounling, lnancial aulhorilies and lhe slruclure ol BPs lnance lunclion.
Bolh had separale, privale sessions wilh lhe exlernal and inlernal audilors.
During 2011, we will underlake an audil connillee induclion progranne
lor Phulhuna hleko.
The audil connillee held one ol ils regular neelings al BPs UK
lrading operalions and conbined lhis wilh a visil lo lhe lrading Hoors which
provided lhe opporlunily lo neel and pul queslions lo enployees.
enbers ol lhe connillee also visiled lhe Cull ol exico.
Committee activities
Cull ol exico
The connillee considered crilically lhe lnancial reporling arising lron lhe
incidenl in lhe Cull ol exico, including lhe inpacl on lhe conpanys
liquidily, provisions and conlingencies, risk laclor disclosure, lhe associaled
accounling lrealnenl arising lron evenls and lhe approval ol narkel
announcenenls. l has also received reporls lron lhe general audilor and
lhe group conlroller on lhe slalus ol lnancial conlrols in lhe new Cull
Coasl Fesloralion Organizalion.
Financial reporling
The groups quarlerly lnancial reporls, lhe 2009 Annual Feporl and
Accounls, lhe Annual Feview and lhe 20F were reviewed by lhe
connillee belore reconnending lheir publicalion lo lhe board. n
underlaking lhis review, lhe connillee discussed wilh nanagenenl how
lhey had applied crilical accounling policies and judgenenls lo lhese
docunenls, including key assunplions regarding provisions (such as lor
lhe Cull ol exico spill response, liligalion, environnenlal renedialion and
deconnissioning, conlingencies and inpairnenl lesling. Furlher delails
on inpairnenl reviews are included in lhe Financial slalenenls - ole 5
on page 164 and ole 11 on page 173. Each year, lhe connillee also
reviews lhe conpanys disclosures relaling lo oil and gas reserves.
oniloring business risk
The connillee operales a regular cycle ol review ol risk, conlrol and
assurance lron BPs businesses and supporling lunclions. During lhe year,
lhe connillee underlook a conlrols review ol lhe US idwesl luels value
chain and received an updale on risk, governance and conlrols aclivilies
relaling lo TKBP. The laller included lhe reporls on lhe syslen ol inlernal
conlrol, TKBPs quarlerly lnancial reporling procedures and cerlain lax
nallers. Funclional reviews were held ol inlornalion lechnology and
services, procurenenl, inlegraled supply and lrading and BPs business
service cenlres.
Olher areas ol review by lhe connillee included lhe cenlral case
planning assunplions lor oil and gas prices and relning nargins lhal are
ulilized in lhe groups inveslnenl appraisal process as well as inpairnenl
reviews, a review ol lhe delivery ol najor projecls and lhe risk nanagenenl
and inveslnenl slralegy relaling lo pensions and relirenenl benells.
During lhe year lhe chiel lnancial ollcer reporled on lhe work ol
lhe group lnancial risk connillee - lhis is an execulivelevel connillee
lhal provides assurance lo lhe execulive on lhe nanagenenl ol BPs
lnancial risk.
nlernal conlrol, audil and risk nanagenenl
The lorward agenda lor lhe audil connillee conlains slanding ilens on
inlernal conlrol - lhese include lhe quarlerly inlernal audil lndings reporl,
an evalualion ol inlernal conlrols, and an annual assessnenl ol BPs
enlerprise level conlrols.
An inporlanl inpul inlo lhe boards review ol lhe conpanys syslen
ol risk nanagenenl and inlernal conlrol is lhe annual joinl neeling
belween lhe audil connillee and lhe SEEAC. This lakes place al lhe slarl
ol each year lo review lhe general audilors reporl on inlernal conlrol and
risk nanagenenl syslens lor lhe previous year. The general audilor reviews
his leans lndings and nanagenenls aclions lo renedy signilcanl issues
idenliled in lhal work. His reporl also includes inlornalion on lhe resulls ol
audil work underlaken by lhe salely and operalional risk audil lean and
reviews by lhe groups lnancial conlrol lean.
Exlernal audilors
n 2010, lhe connillee held lwo scheduled neelings wilh lhe exlernal
audilors wilhoul nanagenenl being presenl. These sessions, wilhoul lhe
presence ol execulive nanagenenl, ollered an opporlunily lor direcl
leedback and dialogue belween bolh lhe connillee and lhe audilors.
n addilion, lhe chair ol lhe audil connillee neels privalely wilh lhe
exlernal audilors belore each audil connillee.
Perlornance ol lhe exlernal audilors is evalualed by lhe audil connillee
each year, wilh parlicular enphasis on lheir independence, objeclivily and
viabilily. The connillee reviews lhe conposilion ol lhe audil lean annually
and neels lhe relevanl parlners when underlaking business or lunclion
reviews. Addilionally, lhe connillee has lhe opporlunily lo assess specilc
lechnical capabililies in lhe audil lrn when addressing specialisl lopics, lor
exanple lhis year in inpairnenl lesling and liquidily reviews.
ve nainlain audilor independence lhrough liniling nonaudil
services lo lax and audilrelaled work lhal lall wilhin delned calegories.
A new lead audil parlner is appoinled every lve years and olher senior audil
slall are rolaled every seven years. o parlners or senior slall lron Ernsl &
Young who are connecled wilh lhe BP audil nay lransler lo lhe group.
onaudil work by Ernsl & Young is subjecl lo lhe audil connillees
preapproval policy. onaudil work underlaken by Ernsl & Young and by
olher accounlancy lrns is regularly nonilored by lhe connillee.
Fees paid lo lhe exlernal audilor lor lhe year were $55 nillion, ol
which 14.5' was lor nonaudil work (see Financia| s!a!enen!s - No!e !7
on page !76. Aller lour years ol reduclions, lhe lees and services provided
by Ernsl & Young lor audil and nonaudil work increased slighlly in 2010 due
lo addilional work required consequenl upon lhe Cull ol exico incidenl.
The audil connillee considers bolh lhe lee slruclure and lhe audil
engagenenl lerns and nonilors progress during lhe year. l has
reconnended lo lhe board lhal lhe reappoinlnenl ol Ernsl & Young as lhe
conpanys exlernal audilors be proposed lo shareholders al lhe 2011 AC.
nlernal audil
Progress ol inlernal audil againsl lhe annual schedule ol audils is nonilored
on a quarlerly basis, and lhe connillee looks al lhe key lndings and
lracking ol any nalerial aclions lhal are overdue or have been rescheduled.
A progranne ol work by inlernal audil is proposed each year lor lhe
connillees approval and in reviewing lhis, lhe connillee looks al
whelher il believes key risks lacing lhe conpany have been approprialely
addressed. The progranne in 2010 was supplenenled considerably by
addilional work relaled lo risks and conlrols consequenl upon lhe Cull ol
exico incidenl. The progranne lor 2011 also reHecls an enhanced risk
environnenl and was approved by lhe connillee in January 2011.
The general audilor nel privalely wilh lhe connillee once during lhe
year, wilhoul lhe presence ol execulive nanagenenl or lhe exlernal audilors.
He also neels as necessary wilh lhe connillee chair belween neelings.
Each year lhe connillee reviews inlernal audils slall resources in
bolh nunber and experlise lo seek assurance lhal lhey are sullcienl lo
lulll ils role. The connillee was also salisled lhal inlernal audil had
appropriale access lo inlornalion and lhal nanagenenl was connilled in
lhe provision ol lhal inlornalion. The connillee also seeks lhe views ol
lhe exlernal audilors on lhe ellecliveness and qualily ol inlernal audil.
Olher aclivilies
Through quarlerly updales by lhe group conpliance and elhics ollcer and
general audilor, lhe connillee nonilors lraud, nisconducl and non
conpliance wilh lhe BP code ol conducl and renedial aclions underlaken
as a resull. The annual cerlilcalion reporl which is signed by lhe group
chiel execulive is also reviewed by lhe connillee.
Financial issues and concerns lhal have been Hagged lhrough lhe
conpanys enployee concerns progranne OpenTalk, are reviewed by lhe
connillee - which lracks lrends in bolh lhe case lype and line laken lo
close oul queries and reporls.
Connillee evalualion
The audil connillee exanines ils perlornance and ellecliveness on an
annual basis. n 2010, lhe connillee used an inlernally designed
queslionnaire adninislered by exlernal consullanls. l looked al key areas,
including lhe clarily ol ils role and responsibililies, lhe balance ol skills
anong ils nenbers and lhe ellecliveness ol reporling ils work lo lhe
board. The review concluded inler alia lhal il had been elleclive and was
salisled wilh lhe exlenl ol lraining il received bul would seek lo nake line
lor nore. Overall lhe connillee considered il had lhe righl conposilion in
lerns ol experlise and resource lo underlake ils aclivilies elleclively.

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Safety, ethics and environment assurance committee report
The lragic incidenl in lhe Cull ol exico, and lhe exlensive aclivilies lhal
were underlaken in response, required and received lhe lull allenlion ol
lhe whole board. l was agreed, early on, lhal SEEAC should locus ils
ellorls wilh respecl lo lhe incidenl upon noniloring lhe pace and
ellecliveness ol lhe conpanys group wide response lo lhe
reconnendalions ol BPs nvesligalion Feporl (lurlher inlornalion on lhe
reporl is on page 91. The Cull ol exico connillee, ol which an a
nenber, was eslablished as a separale connillee lo nonilor lhe ongoing
resloralion aclivilies in lhe Cull ol exico. This enabled lhe SEEAC lo
relain ils locus on lhe key nonlnancial risks wilhin ils previously planned
agenda lor lhe year, as you will read in lhe reporl below.
onelheless, and ny SEEAC colleagues nade a nunber ol visils
lo lhe Cull ol exico lo gain lrslhand assurance ol lhe aclivilies lo cap
lhe acondo well and renediale lhe inpacl ol lhe oil spill. believe lhe
conbined response ol all lhose involved was oulslanding bul we all
renained deeply saddened lhal lhe incidenl had occurred and lhal 11 lives
had been losl. Our lorward locus on lhe reconnendalions ol BPs
nvesligalion Feporl is inlended lo provide boardlevel assurance lhal such
an incidenl could nol recur.
believe lhe connillee is well resourced lo lulll ils lasks and lhis
has been lurlher slrenglhened by lhe recenl appoinlnenl ol Frank Skip
Bownan lo lhe board. Frank Bownan had served on lhe BP US Felneries
ndependenl Salely Feview Panel and brings lo SEEAC his exlensive salely
experience lron his line as head ol lhe US uclear avy.
Sir WiIIiam CasteII
Chair ol lhe Salely Elhics and Environnenl Assurance Connillee
Committee members
Sir villian Caslell - connillee chair
Paul Anderson (appoinled 2 February 2010
Frank Skip Bownan (appoinled 3 ovenber 2010
Anlony Burgnans
Cynlhia Carroll
The role ol lhe SEEAC is lo look al lhe processes adopled by BPs
execulive nanagenenl lo idenlily and niligale signilcanl nonlnancial
risk, including noniloring process salely nanagenenl, and receive
assurance lhal lhey are appropriale in design and elleclive in
inplenenlalion. The lull lisl ol lhe lasks and responsibililies ol lhe SEEAC
is available on our websile
The connillee nel nine lines in 2010. The increased nunber ol
neelings held in 2010 prinarily reHecled lhe connillees work in
reviewing lhe conpanys aclions in response lo BPs nvesligalion Feporl.
These neelings also provided inpul lor lhe boards review ol lhal reporl
and eslablished an ongoing noniloring process lor SEEAC. One neeling
early each year is held joinlly wilh lhe audil connillee lo review BPs
inlernal conlrol and risk nanagenenl syslens and lo discuss lhe lorward
progranne ol lhe inlernal audil lunclion. n January 2011 lhis neeling was
exlended lo enhance lhe locus on lhe inlegraled approach ol audil work
including lhal ol lhe salely and operalional risk audil lunclion.
n addilion lo lhe connillee nenbership, each SEEAC neeling is allended
by lhe group chiel execulive, lhe execulive vice presidenl lor salely and
operalional risk (ark Bly, lhe general audilor (head ol inlernal audil and
lhe lead parlner lron our exlernal audilors. Four lines during lhe year lhe
connillee held privale sessions lor lhe connillee nenbers only (wilhoul
lhe presence ol execulive nanagenenl aller lhe nain business ol lhe
neeling, lo discuss any issues arising or nallers on lhe ninds ol lhe
connillee nenbership. The connillee also held a privale session wilh lhe
group conpliance and elhics ollcer. Belween neelings, discussions
involving lhe connillee chair and secrelary, lhe exlernal audilors lead
parlner, lhe general audilor and execulive nanagenenl occur as
appropriale.
Committee processes
nlornalion lo lhe connillee cones lron bolh inside and oulside lhe
conpany. The business segnenls and regional organizalions provide direcl
reporls lo lhe connillee bul lhere is also crossbusiness inlornalion on a
group wide level lron our lunclions, including lhe salely and operalions
risk lunclion, inlernal audil, group conpliance and elhics, group legal and
HF. During lhe year, lhe nain exlernal inpul inlo lhe connillee has been
lron r Duane vilson, lhe ndependenl Experl (lor lurlher inlornalion,
see lhe seclion on ndependenl Experl below. As lor lhe board and olher
connillees, SEEAC can access any olher independenl advice and counsel
il il requires, on an unreslricled basis. During lhe year SEEAC nenbers
have received brielngs lron exlernal relained counsel, prinarily Kirkland
and Ellis LLP.
Training and visils
The connillee visiled lhe Texas Cily relnery in arch 2010 lo see lhe
progress nade againsl lhe BP US Felneries ndependenl Salely Feview
Panel reporl. This lollowed up on lheir observalions lron lheir previous visil
in Seplenber 2007 and lhe connillee chairnans visil in April 2003. The
connillee was joined by lour olher direclors and received an exlensive
updale on process salely progress since lhe 2005 incidenl. Their
observalions were consislenl wilh lhe reporls received lron lhe
ndependenl Experl.
Planned visils lo olher siles during lhe year were cancelled lo
enable lhe connillee lo reorganize ils schedule lo locus upon issues
arising lron lhe acondo incidenl. Each nenber ol SEEAC visiled
operalions in lhe Cull ol exico al leasl once during lhe year, wilh lhe
SEEAC chair naking a nunber ol visils lo lhe region and ils connand
cenlres lo observe lrsl hand BPs response ellorls and lhe progress ol
allenpls lo kill lhe well and niligale lhe ellecls ol lhe oil spill. A separale
lechnical brielng was provided lo lhe connillee (and olher board
nenbers on exploralion drilling by lhe relevanl lunclional nanagers.
nduclion progrannes lor lhe lwo new nenbers ol SEEAC were
organized during lhe year and, in lhe case ol Frank Bownan, is slill ongoing
in 2011.
Salely and operalions
Discussion on personal and process salely and operalional risk and
perlornance lorns a large parl ol lhe connillees agenda. The connillee
receives regular reporls lron lhe salely and operalional risk lunclion,
including lhe quarlerly reporls prepared lor execulive nanagenenl on lhe
groups HSE perlornance and operalional inlegrily. n 2010, excluding
neeling line specilcally addressing lhe Cull ol exico incidenl, lhe
SEEAC ulilized 42' ol ils agenda on salely and operalional risk nallers
including process salely. This snall reduclion, conpared wilh lhe 51'
recorded in 2009, reHecled lhe connillees connilnenl lo gaining
assurance in olher areas ol ils renil including crisis and conlinuily
nanagenenl, regulalory conpliance, environnenlal noniloring, securily
and producl qualily risk.
The connillee also exanined quarlerly audil reporls lron BPs inlernal
audil and salely and operalions lunclions which highlighled key lndings
and nalerial aclions arising lron audils which had laken place al segnenl,
lunclional and regional levels and lracked lheir closeoul. Salely and
environnenlal perlornance ol projecls was included wilhin lhe reporling
by segnenl and perlornance unil.
Aclivilies lron lhe execulivelevel group operalions risk connillee
(COFC are reporled lo lhe SEEAC by ils chair al each neeling. The SEEAC
received regular updales on lhe conpanys inleraclion wilh regulalory
agencies, and lhe connillee chairnan received a brielng lron legal
counsel on lhe OSHA cilalions in respecl ol Texas Cily.
Cull ol exico
The connillee exanined BPs nvesligalion Feporl and ils
reconnendalions belore providing inpul lor lhe boards review ol lhe
reporl prior lo ils publicalion. The connillee noled lhal lhe BP
invesligalion lean had conducled ils invesligalion independenlly lron
lhe leans nanaging regular operalions and lhe ongoing response lo lhe
incidenl. The connillee also reviewed, and reporled lo lhe board,
nanagenenls early aclions in response lo lessons learned. The aclion
plan lhal has been developed lron lhe 26 reconnendalions ol BPs
nvesligalion Feporl will be lracked in ils inplenenlalion by lhe
connillee, againsl agreed linelines and nileslones. n noniloring
progress againsl BPs nvesligalion Feporls reconnendalions, lhe salely
and operalions audil lunclion will provide SEEAC wilh quarlerly lracking
reporls and reporling updales will be nade by upslreans execulive vice
presidenl Developnenls and by lhe group chiel execulive. The connillee
is also noniloring olher, nonBP invesligalions lo delernine how lhe
conclusions lron lhese relale lo lhe aclion plan and aclivilies arising lron
BPs nvesligalion Feporl.
The connillee will also keep under review lhe inplenenlalion
ol lhe new salely and operalional risk organizalional slruclure and lhe
resourcing il requires lo supporl lhe decision and inlervenlion righls il has
in all aspecls ol lhe groups lechnical and operalional aclivilies, including
key inveslnenl decisions.
ndependenl Experl
Duane vilson was appoinled in 2007 by lhe board as an ndependenl
Experl lo provide an objeclive assessnenl ol BPs progress in
inplenenling lhe reconnendalions ol lhe BP US Felneries ndependenl
Feview Panel (ained al inproving process salely perlornance al BPs lve
US relneries.
During lhe year, r vilson kepl lhe connillee updaled on his
workplan and lhe oulcone ol his visils lo each ol BPs lve US relning
siles. n arch, he published his lhird annual reporl lhal assessed BPs
progress againsl lhe 10 panel reconnendalions. n his reporl, which was
published in lull on BPs websile, he concluded lhal lhe conpany had
nade signilcanl inprovenenls in response lo all 10 reconnendalions bul
lhal nuch work renained lo be done. r vilsons lourlh reporl will be
published in lull and available on our websile in arch 2011 and a sunnary
ol lhe lhird and lourlh reporls is provided in Salely on page 70.
Fegional and lunclional reporls
The connillee receives a reporl each year on lhe progress nade in HSE
al TKBP, noling however lhal lornal oversighl ol lhe joinl venlures HSE
perlornance and policies is exercised by TKBPs own HSE connillee.
l was reporled lhal TKBP conlinued lo nake signilcanl progress in
addressing lhe nain salely, elhical and environnenlal challenges
conlronling il since ils crealion in 2003. onelheless, signilcanl areas
renain lor inprovenenl and lhe connillee will conlinue lo nonilor
progress regularly.
vilh joinl venlure operalions in raq gelling under way, lhe
connillee soughl and received an updale on lhe risks and nanagenenl ol
securily in raq.
Olher lopics
During lhe year, lhe connillee exanined lhe conpanys crisis response
and conlinuily nanagenenl plans. l also reviewed lhe risk idenlilcalion
and conpanys proposed niligalions relaling lo hydrocarbon
producl qualily.
Developnenls in lhe neasurenenl ol greenhouse gas enissions
were considered by lhe connillee in lhe conlexl ol regulalory conpliance
and as parl ol lhe conpanys lracking and disclosure processes.
For ils 2010 evalualion, lhe SEEAC used a queslionnaire adninislered
by exlernal consullanls lo exanine lhe connillees perlornance and
ellecliveness. The review looked al dillerenl areas, including lhe balance
ol skills and experience anong ils nenbership, qualily and lineliness ol
inlornalion lhe connillee receives, lhe level ol challenge belween
connillee nenbers and nanagenenl and how well lhe connillee
connunicales ils aclivilies and lndings lo lhe board.
The connillee concluded lhal il should endeavour lo increase ils
sile visils and lraining, noling lhal lhe parlicular circunslances ol 2010 had
reduced lhe opporlunily lor such aclivilies excepl in relalion lo lhe Cull ol
exico. l also believed lhal il could inprove lhe priorilizalion ol ils
agendas lhrough nore locused preread nalerial. The connillee
considered ils currenl nenbership provided a wellbalanced resource and
also noled lhe valuable conlribulion nade by lhe ndependenl Experl.

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GuIf of Mexico committee report
Following lhe accidenl in lhe Cull ol exico a separale business
organizalion was sel up lo nanage lhe groups longlern response lo lhe
incidenl - lhe Cull Coasl Fesloralion Organizalion (CCFO. The board
subsequenlly crealed lhe Cull ol exico connillee in recognilion ol lhe
scale ol lhe longlern response and lo oversee lhe aclivilies ol lhe CCFO,
lhereby lreeing up nore ol lhe boards line lo devole sullcienl allenlion
lo lhe oversighl and slralegic direclion ol lhe group as a whole.
The connillee has nel wilh leaders and nanagenenl ol lhe
CCFO on a lrequenl basis in 2010, in order lo oversee lheir running ol lhe
organizalion and lo cover each ol lhe connillees lasks lisled below, wilh a
parlicular locus on legal and clainsrelaled nallers.
believe lhe connillee has laken a rigorous approach lo ils work -
nainlaining a delailed view ol lhe conplex issues involved in lhe allernalh
ol lhe incidenl and providing an elleclive oversighl role on behall ol lhe
board lor a nunber ol inporlanl areas. This has been reHecled in lhe
lrequency ol neelings lhe connillee has held since lhe connillee was
lorned in lhe sunner. As we nove inlo lhe nexl phase ol lhe conpanys
response in lhe Cull ol exico, expecl lhe linelable lor lhe connillee lo
slabilize and, during lhe course ol 2011, lhe connillee will conlinue lo
review lhe lrequency and slruclure ol ils neelings.
Ian Davis
Chair ol lhe Cull ol exico Connillee
Committee members
an Davis - connillee chair
Paul Anderson
Sir villian Caslell
Ceorge David
enbership ol lhe Cull ol exico connillee includes lwo ol our
USbased nonexeculive direclors and chair ol lhe SEEAC. Two nenbers ol
lhe connillee are also on lhe audil connillee, which has helped inlorn
discussions al lhe laller relaling lo lhe provision lor incidenlrelaled cosls.
Each neeling ol lhe connillee is allended by Lanar cKay,
Presidenl ol lhe CCFO, and by Jack Lynch, general counsel lo lhe CCFO.
Our chairnan, group chiel execulive and group general counsel join lhe
neeling whenever possible. Senior nanagenenl lron CCFO also allend
neelings ol lhe connillee as appropriale. Supporl is provided lo lhe
connillee by lhe conpany secrelarys ollce.
The purpose ol lhe connillee is lo provide nonexeculive oversighl ol lhe
CCFO, and lo supporl ellorls lo rebuild lrusl in BP and BPs repulalion in
lhe US.
The work ol lhe connillee is lully inlegraled wilh lhe work ol lhe
board on repulalion, salely, slralegy and lnancial planning, and lhe board
relains ownership ol lhe groups response lo lhe incidenl. The workings
and conclusions ol lhe connillee are lransparenl lo and discussed
regularly wilh lhe board, who receive brielngs on lhe connillees
aclivilies lhrough lhe circulalion ol ninules, and lhrough verbal reporls lhal
lhe connillee chair provides al board neelings.
The connillee underlakes lhe lollowing lasks:
oniloring lhe renedialion work lo niligale lhe ellecls ol lhe oil spill in
lhe walers ol lhe Cull ol exico and on lhe allecled shorelines.
Overseeing a coordinaled response progranne wilh allecled
connunilies and slales, and overseeing lhe approach lor relalionships
wilh connunilies, slales and lhe US governnenl on issues relaling lo
lhe incidenl.
Overseeing lhe legal and connunicalion slralegy lor liligalion involving
lhe conpany or ils subsidiaries arising lron lhe incidenl or ils
allernalh, including governnenl clains lor lnes and penallies.
Overseeing lhe slralegy connecled wilh clains, recognizing lhe
independenl nalure ol lhe connecled Cull Coasl Clains Facilily.
Overseeing BPs aclivilies and responsibililies wilh respecl lo lhe Cull
Coasl Clains Facilily and lhe Deepwaler Horizon Oil Spill Trusl.
Overseeing lhe process lor dislribulion ol lhe goodwill lund lor rig
workers who have been inpacled by lhe drilling noraloriun inposed
by lhe US governnenl.
Overseeing expendilures and inveslnenls lhal lall oulside lhe
eslablished clains adninislralion process, or any redireclion ol
resources oulside lhe nornal course ol business.
Feviewing and noniloring nanagenenl slralegy and aclions lo reslore
lhe groups repulalion in lhe US and supporling nanagenenl in any
aclivilies ained al lhal goal.
The connillee also considers and reviews lhe CCFOs nanagenenl ol
operalional and slralegic risks connecled wilh lhe response lo lhe incidenl.
This includes priorilies, niligalion plans, resources and lhe ellecliveness
ol aclivilies.
The connillee nel on nine occasions in 2010 aller ils lornalion
in July 2010.
Committee processes
The connillee receives ils inlornalion lron lhe leadership ol lhe CCFO.
Legal brielngs are regularly provided by lhe group and CCFO general
counsels, who are joined on occasion by olher inlernal and exlernal
legal counsel.
BPs inlernal audil lunclion has conducled reviews ol cerlain ol
CCFOs aclivilies and processes, and lhese have been sunnarized lor lhe
connillees review. Prinary noniloring ol lhe nanagenenl ol lnancial
risk is underlaken by lhe audil connillee wilh noniloring ol lhe
nanagenenl ol salely (and olher nonlnancial risk by lhe SEEAC.
Training and visils
The high lrequency ol neelings since July 2010 has helped lhe connillee
lo becone elleclive in each ol ils lasks. Three ol lhese neelings were held
in lhe US and were ol exlended duralion, providing lhe opporlunily lor lhe
connillee lo neel nenbers ol lhe CCFO leadership lean.
The connillees aclivilies have included lhe lollowing:
Legal
Legal updales lron lhe general counsel lo lhe CCFO have lorned a
signilcanl parl ol lhe connillees agenda, given lhe breadlh and pace ol
aclivilies. The connillee has overseen lhe CCFOs inlegraled legal
approach, which incorporales all governnenl, civil and crininal
invesligalions, lhe nullidislricl liligalion, lhe alural Fesources Danages
Assessnenl process, and legal aspecls ol lhe clains processes. The
connillee has also nonilored engagenenl wilh olher responsible parlies,
conlraclors and lhe olher working inleresl owners in lhe acondo well.
Clains
The connillee has nonilored lhe slalus ol clains lron individuals and
businesses, which since lale Augusl have been adninislered by lhe Cull
Coasl Clains Facilily, and lhe slalus ol clains lron governnenl enlilies,
which conlinue lo be adninislered by BP.
Assessnenls ol polenlial lulure clains lor provisioning purposes
are reviewed by lhe audil connillee.
Fenedialion
The connillee has received reporls on lhe progress ol cleanup and
renedialion aclivilies, and on lhe phased lransilion ol aclivilies lron lhe
Uniled Area Connand lo BPs conlrol. The connillee has also been brieled
on lhe resulls ol independenl sludies ol air, waler and sedinenl sanples in
lhe Cull ol exico. elrics will be provided lo lhe connillee lhrough 2011
lo enable renedialion aclivilies lo be nonilored relalive lo lhe plan.
Fepulalion
The connillee has nonilored lhe polilical landscape and lhe views ol lhe
Anerican people, in parl lron independenl polling dala relaling lo nany
aspecls ol BPs response lo lhe incidenl. This has helped inlorn nany ol
lhe connillees discussions, and lhe connillee will conlinue lo receive
polling dala on a regular basis in 2011.
Olher lopics
The connillee has received reporls on lhe slalus ol lhe $500nillion Cull
ol exico Fesearch nilialive (CF. Fesearch granls will be adninislered by
lhe CFs independenl research board, and lhe connillee will receive
periodic updales lo nonilor lhal lhe dislribulion ol lunds is in accordance
wilh lhe principles ol sound science.
The connillee has reviewed lhe slalus ol paynenls lron lhe
$100nillion Fig vorker Assislance Fund (Fund. This lund is independenlly
adninislered by lhe Balon Fouge Area Foundalion, wilh BP having no righl
lo direcl paynenls lron lhe Fund. The connillee will receive periodic
updales on lhe slalus ol paynenls lron lhe Fund.
The connillee has recenlly exanined ils perlornance and ellecliveness.
The connillee concluded lhal neelings need nol be as lrequenl in 2011.
eelings will be approxinalely nonlhly, wilh several neelings scheduled
lo lake place in lhe US.
Remuneration committee report
Committee members
Dr DeAnne Julius - connillee chair
Anlony Burgnans
Ceorge David
Sir an Prosser (relired 15 April 2010
The connillee delernines on behall ol lhe board lhe lerns ol
engagenenl and renuneralion ol lhe group chiel execulive, lhe chairnan
and execulive direclors and lo reporl on lhose lo shareholders. The
connillee is independenlly advised.
The chairnan ol lhe board allends neelings ol lhe connillee.
DeAnne Julius will relire as chair ol lhe renuneralion connillee al
lhe 2011 AC, lron which line Anlony Burgnans will assune lhe
connillee chairnanship.
Furlher delails on lhe connillees role, aulhorily and aclivilies
during lhe year are sel oul in lhe direclors renuneralion reporl, on
page 111 which is lhe subjecl ol a vole by shareholders al lhe 2011 AC.

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Nomination and chairman's committee reports
chair bolh lhe noninalion and lhe chairnans connillees. These
connillees have had luller agendas in 2010 lhan in previous years as lhe
evenls and challenges ol lhe year unlolded. The work ol lhe connillees
has been inevilably inlerlwined and lor lhis reason an wriling here lo
inlroduce lhe reporls which appear below.
During lhe year lhe nonexeculive direclors have been engaged in
ensuring lhe board renained locused on ils lasks and organizing ils line in
an elleclive way. This has nol only been lhrough lhe lornal work ol lhe
chairnans connillee bul also lhrough very regular inlornal conlacl
parlicularly during lhe heighl ol lhe crisis.
enbership ol lhe board has had lo evolve over lhe year bolh lo
address lhe nornal succession process and lo address lhe issues wilh
which lhe board has had lo deal. The noninalion connillee has been
aclively involved in all ol lhis.
Chair ol lhe oninalion and Chairnans Connillees
Nomination committee report
Committee members
CarlHenric Svanberg - connillee chair
Sir villian Caslell
an Davis (joined upon beconing chair ol lhe Cull ol exico connillee in
Augusl 2010
Douglas Flinl (joined upon beconing chair ol lhe audil connillee in April
2010
Dr DeAnne Julius
enbers who lell during lhe year
The connillee nel eighl lines during 2010.
The connillee idenliles, evaluales and reconnends candidales lor lhe
appoinlnenl or reappoinlnenl as direclors and lor lhe appoinlnenl as
conpany secrelary.
The connillee keeps lhe nix ol knowledge, skills and experience
ol lhe board under regular review (always in consullalion wilh lhe
chairnans connillee lo ensure an orderly succession ol direclors. The
oulside direclorships and broader connilnenls ol lhe nonexeculive
direclors are also nonilored by lhe noninalion connillee.
The connillee consisls ol lhe chairnan and lhe chairs ol lhe nain
board connillees.
The connillee reviewed lhe independence and roles ol each ol lhe
direclors prior lo reconnending lhen lor reeleclion al lhe 2010 AC.
Aller lhe appoinlnenl ol Paul Anderson and an Davis belore lhe
2010 AC lhe connillee kepl under review lhe lisl ol polenlial candidales
lor nonexeculive direclors lo neel lhe developing requirenenls ol lhe
conpany and lhe board.
l had been anlicipaled lhal DeAnne Julius would sland down al lhe
2011 AC, however, in lhe aulunn ol 2010, Douglas Flinl announced lhal
he would sland down also al lhe 2011 AC upon his appoinlnenl as
chairnan ol HSBC. The connillee had been keeping lhe skills ol lhe
board under review, and as a resull Brendan elson and Frank Skip
Bownan joined lhe board in ovenber 2010 and Phulhuna hleko in
February 2011. Exlernal advisers were involved in all lhree appoinlnenls.
n keeping under review lhe breadlh ol board skills, lhe connillee look
inlo accounl nol only lhe vacancies lhal were appearing on lhe board bul
also considered whal was necessary lo ensure lhe breadlh ol experience
around lhe board lable. n parlicular, lhey considered lhe requirenenls ol
lhe groups operalions wilhin lhe developing world. n all ol lheir
deliberalions lhey were nindlul ol lhe conlribulion nade by lhe AB.
During lhe sunner lhe connillee worked closely wilh lhe
chairnans connillee on lhe succession ol Bob Dudley as group chiel
execulive. Exlernal advisers were used lhroughoul lhis process.
The connillee conlinues lo locus on lhe evolulion ol lhe board as
il noves lo a new slage in ils developnenl.
For ils 2010 evalualion, lhe noninalion connillee used a
queslionnaire lo exanine lhe connillees perlornance and ellecliveness.
The connillee concluded lhal, overall, il had worked well during a
challenging year and lhal lhe board had undergone subslanlial change,
which had been supporled elleclively lhrough lhe connillee. The
evalualion concluded lhal lhe goal lor lhe connillee was lo nove
lorward wilh a beller rhylhn lo ensure board relreshnenl in lerns ol
skills and diversily.
Chairman's committee report
Committee members
CarlHenric Svanberg - connillee chair
Sir villian Caslell
Paul Anderson (appoinled 2 February 2010
Frank Skip Bownan (appoinled 3 ovenber 2010
Cynlhia Carroll
Ceorge David
Douglas Flinl
Dr DeAnne Julius
Brendan elson (appoinled 3 ovenber 2010
Phulhuna hleko (appoinled 1 February 2011
The connillee nel eighl lines in 2010.
The connillee is conprised ol lhe chairnan and all lhe nonexeculive
direclors.
The nain lasks ol lhe connillee are:
Evalualing lhe perlornance and ellecliveness ol lhe group
chiel execulive.
Feviewing lhe slruclure and ellecliveness ol lhe business organizalion
ol BP.
Feviewing lhe syslens lor senior execulive developnenl and
delernining lhe succession plan lor lhe group chiel execulive, execulive
direclors and olher senior nenbers ol execulive nanagenenl.
Delernining any olher naller lhal is appropriale lo be considered by all
ol lhe nonexeculive direclors.
Opining on any naller relerred lo il by lhe chairnan ol any connillee
conprised solely ol nonexeculive direclors.
Early in 2010 lhe connillee delernined lhal Sir villian Caslell should
lake on lhe role ol senior independenl direclor upon lhe relirenenl ol Sir
an Prosser lron lhe board al lhe 2010 Annual Ceneral eeling.
Following lhe accidenl in lhe Cull ol exico, lhe connillee kepl
under review lhe abilily ol BPs business organizalion lo respond lo lhe
challenges lhal arose while ensuring lhere was conlinued locus on lhe
ellecliveness ol lhe resl ol ils global business. This involved ensuring lhal
lhe board was locusing on lhe righl issues and organizing ilsell in an
appropriale nanner. Throughoul lhe crisis in lhe Cull ol exico lhe
connillee has aclively considered lhe conpanys relalions wilh
shareholders and olhers wilh whon il cane inlo conlacl, parlicularly slale
and lederal governnenls.
The connillee evalualed lhe perlornance ol lhe group chiel
execulive in early 2010 and lornally reviewed succession planning wilhin
lhe group in Seplenber 2010. The connillee was cenlral lo discussions in
lhe sunner over lhe lulure ol Tony Hayward as group chiel execulive and
his replacenenl by Bob Dudley.
The connillee reviews wilh Bob Dudley his proposals lor lhe
enhanced salely and operalion lunclion and his reorganizalion ol lhe
Exploralion and Produclion segnenl on lhe deparlure ol Andy nglis. There
was no lornal evalualion ol lhe chairnan in early 2010 as he was only
recenlly in posl. His perlornance was evalualed in early 2011 as parl ol lhe
overall evalualion ol lhe board.
The connillee reviewed lhe skills ol lhe board and lorned
colleclive views ol lhose needed lo neel lhe challenges ol lhe conpany lor
lhe lulure. The chairnans connillee worked closely wilh lhe noninalion
connillee in nallers around execulive and nonexeculive succession.
Fisk nanagenenl and inlernal
conlrol review
n discharging ils responsibilily lor lhe conpanys risk nanagenenl and
inlernal conlrol syslens under lhe UK Corporale Covernance Code and lhe
June 2003 Conbined Code, lhe board, lhrough ils governance principles,
requires lhe group chiel execulive lo operale wilh a conprehensive syslen
ol conlrols and inlernal audil lo idenlily and nanage lhe risks lhal are
nalerial lo BP. The governance principles are reviewed periodically by lhe
board and are consislenl wilh lhe requirenenls ol lhe UK Corporale
Covernance Code, including principle C.2 (risk nanagenenl and inlernal
conlrol and lhe June 2003 Conbined Code, including principle C.2
(inlernal conlrol.
The board has an eslablished process by which lhe ellecliveness ol
lhe risk nanagenenl and inlernal conlrol syslens are reviewed as required
by provision C.2.1 ol lhe UK Corporale Covernance Code and lhe June
2003 Conbined Code. This process enables lhe board and ils connillees
lo consider lhe syslens ol risk nanagenenl and inlernal conlrol being
operaled lor nanaging signilcanl risks, including slralegic, salely and
operalional and conpliance and conlrol risks, lhroughoul lhe year. The
process does nol exlend lo joinl venlures or associales.
As parl ol lhis process, lhe board and lhe audil and salely, elhics
and environnenl assurance connillees requesled, received and reviewed
reporls lron execulive nanagenenl, including nanagenenl ol lhe
business segnenls, divisions and lunclions, al lheir regular neelings.
n considering lhe syslens, lhe board noled lhal such syslens are
designed lo nanage, ralher lhan elininale, lhe risk ol lailure lo achieve
business objeclives and can only provide reasonable, and nol absolule,
assurance againsl nalerial nisslalenenl or loss.
During lhe year, lhe board lhrough ils connillees, regularly
reviewed wilh lhe general audilor and execulive nanagenenl processes
whereby risks are idenliled, evalualed and nanaged. These processes
were in place lor lhe year under review, renain currenl al lhe dale ol lhis
reporl and accord wilh lhe guidance on lhe UK Corporale Covernance
Code and lhe June 2003 Conbined Code provided by lhe Financial
Feporling Council. n Decenber 2010, lhe board considered lhe groups
signilcanl risks wilhin lhe conlexl ol lhe annual plan presenled by lhe
group chiel execulive.
A joinl neeling ol lhe audil and salely, elhics and environnenl
assurance connillees in January 2011 reviewed a reporl lron lhe general
audilor as parl ol lhe boards annual review ol lhe risk nanagenenl and
inlernal conlrol syslens. The reporl described lhe annual sunnary ol
inlernal audils consideralion ol elenenls ol BPs syslens ol risk
nanagenenl and inlernal conlrol over risks arising in lhe calegories ol
slralegic, salely and operalional and conpliance and conlrol and
considered lhe conlrol environnenl lhal responds lo risk. The reporl also
highlighled lhe resulls ol audil work conducled during lhe year and lhe
renedial aclions laken by nanagenenl in response lo signilcanl lailings
and weaknesses idenliled.
During lhe year, lhese connillees engaged wilh nanagenenl, lhe
general audilor and olher noniloring and assurance providers (such as lhe
group conpliance and elhics ollcer, head ol salely and operalional risk and
lhe exlernal audilor on a regular basis lo nonilor lhe nanagenenl ol risks.
Signilcanl incidenls lhal occurred and nanagenenls response lo lhen
were considered by lhe appropriale connillee and reporled lo lhe board.
As disclosed elsewhere in lhis Annua| Fepor! and Forn 20-F 20!0,
nalerial inlernal conlrol aspecls ol lhe Cull ol exico spill are being deall
wilh lhrough lhe eslablishnenl ol lhe Cull Coasl Fesloralion Organizalion
and lhe inplenenlalion ol lhe reconnendalions ol BPs nvesligalion
Feporl and lhrough lhe consideralion ol olher reporls and invesligalions,
sone ol which are slill in process.
The Cull Coasl Fesloralion Organizalion was sel up lo nanage lhe
conpanys response aclivilies. This organizalion has crealed lhe lranework
designed lo enable lhe conpany lo nanage lhe operalions and
lransaclions now arising lron lhe incidenl, including cleanup and
resloralion cosls, clains nanagenenl and liligalion.

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n order lo ensure lhal lessons learnl lron lhe evenl are enbedded inlo
lhe conlrols in lhe Operaling anagenenl Syslen ol lhe conpany, lhe
conpany is underlaking a signilcanl exercise lo inplenenl lhe
reconnendalions ol lhe BPs nvesligalion Feporl, and consider olher
reporls and invesligalions inlo lhe incidenl.
The board eslablished an addilional connillee, lhe Cull ol exico
connillee, lo engage wilh nanagenenl on a regular basis lo nonilor lhe
response lo lhe Cull ol exico spill and lhe nanagenenl ol risks arising
lron lhe incidenl.
n lhe boards view, lhe inlornalion il received was sullcienl lo
enable il lo review lhe ellecliveness ol lhe conpanys risk nanagenenl
and inlernal conlrol syslens in accordance wilh lhe nlernal Conlrol
Fevised Cuidance lor Direclors (Turnbull.
Subjecl lo delernining any addilional appropriale aclions arising
lron ilens slill in process, lhe board is salisled lhal, where signilcanl
lailings or weaknesses in inlernal conlrols were idenliled during lhe year,
appropriale renedial aclions were laken or are being laken.
UK Corporate Governance Code compIiance
BP conplied lhroughoul 2010 wilh lhe provisions ol lhe UK Corporale
Covernance Code, excepl in lhe lollowing aspecls:
B.3.2 Lellers ol appoinlnenl do nol sel oul lxed line connilnenls
since lhe schedule ol board and connillee neelings is subjecl lo
change according lo lhe exigencies ol lhe business. All direclors are
expecled lo denonslrale lheir connilnenl lo lhe work ol lhe
board on an ongoing basis. This is reviewed by lhe noninalion
connillee in reconnending candidales lor annual reeleclion.
D.2.2 The renuneralion ol lhe chairnan is nol sel by lhe renuneralion
connillee. nslead, lhe chairnans renuneralion is reviewed by lhe
renuneralion connillee, who nakes a reconnendalion lo lhe
board as a whole lor lnal approval, wilhin lhe linils sel by
shareholders.
BP also conplied wilh lhe June 2003 Conbined Code, wilh lhe
exceplion ol A.4.4 (lellers ol appoinlnenl and B.2.2 (renuneralion ol lhe
chairnan lor lhe sane reasons as oullined above lor lhe UK Corporale
Covernance Code.
Corporale governance praclices
n lhe US, BP ADSs are lisled on lhe ew York Slock Exchange (YSE. The
signilcanl dillerences belween BPs corporale governance praclices as a
UK conpany and lhose required by YSE lisling slandards lor US
conpanies are lisled as lollows:
Independence
BP has adopled a robusl sel ol board governance principles, which reHecl
lhe UK Corporale Covernance Code and ils principlesbased approach lo
corporale governance. As such, lhe way in which BP nakes delerninalions
ol direclors independence dillers lron lhe YSE rules.
BPs board governance principles require lhal all nonexeculive
direclors be delernined by lhe board lo be independenl in characler and
judgenenl and lree lron any business or olher relalionship which could
nalerially inlerlere wilh lhe exercise ol lheir judgenenl. The BP board has
delernined lhal, in ils judgenenl, all ol lhe nonexeculive direclors are
independenl. n doing so, however, lhe board did nol explicilly lake inlo
consideralion lhe independence requirenenls oullined in lhe YSEs
lisling slandards.
Committees
BP has a nunber ol board connillees lhal are broadly conparable in
purpose and conposilion lo lhose required by YSE rules lor doneslic
US conpanies. For inslance, BP has a chairnans (ralher lhan execulive
connillee, noninalion (ralher lhan noninaling/corporale governance
connillee and renuneralion (ralher lhan conpensalion connillee.
BP also has an audil connillee, which YSE rules require lor bolh US
conpanies and loreign privale issuers. These connillees are conposed
solely ol nonexeculive direclors whon lhe board has delernined lo be
independenl, in lhe nanner described above.
The BP board governance principles prescribe lhe conposilion,
nain lasks and requirenenls ol each ol lhe connillees (see !he board
conni!!ee repor!s on pages 97-!04. BP has nol, lherelore, adopled
separale charlers lor each connillee.
Under US securilies law and lhe lisling slandards ol lhe YSE,
BP is required lo have an audil connillee lhal salisles lhe requirenenls
ol Fule 10A3 under lhe Exchange Acl and Seclion 303A.06 ol lhe YSE
Lisled Conpany anual. BPs audil connillee conplies wilh lhese
requirenenls. The BP audil connillee does nol have direcl responsibilily
lor lhe appoinlnenl, reappoinlnenl or renoval ol lhe independenl
audilors - inslead, il lollows lhe UK Conpanies Acl 2006 by naking
reconnendalions lo lhe board on lhese nallers lor il lo pul lorward lor
shareholder approval al lhe AC.
One ol lhe YSEs addilional requirenenls lor lhe audil connillee
slales lhal al leasl one nenber ol lhe audil connillee is lo have
accounling or relaled lnancial nanagenenl experlise. As reporled in
BP Annua| Fepor! on Forn 20-F, lhe board delernined lhal Douglas Flinl
possessed such experlise and also possesses lhe lnancial and audil
connillee experiences sel lorlh in bolh lhe UK Corporale Covernance
Code and SEC rules (see Audi! conni!!ee repor! on page 97. Upon
r Flinls relirenenl in April 2011, r elson will becone lhe audil
connillee lnancial experl as delned in len 16A ol Forn 20F.
SharehoIder approvaI of equity compensation pIans
The YSE rules lor US conpanies require lhal shareholders nusl be given lhe
opporlunily lo vole on all equilyconpensalion plans and nalerial revisions lo
lhose plans. BP conplies wilh UK requirenenls lhal are sinilar lo lhe YSE
rules. The board, however, does nol explicilly lake inlo consideralion lhe
YSEs delailed delnilion ol whal are considered nalerial revisions.
Code of ethics
The YSE rules require lhal US conpanies adopl and disclose a code ol
business conducl and elhics lor direclors, ollcers and enployees. BP has
adopled a code ol conducl, which applies lo all enployees, and has board
governance principles lhal address lhe conducl ol direclors. n addilion BP
has adopled a code ol elhics lor senior lnancial ollcers as required by lhe
SEC. BP considers lhal lhese codes and policies address lhe nallers
speciled in lhe YSE rules lor US conpanies.
Code ol elhics
The conpany has adopled a code ol elhics lor ils group chiel execulive,
chiel lnancial ollcer, depuly chiel lnancial ollcer, group conlroller,
general audilors and chiel accounling ollcer as required by lhe provisions
ol Seclion 406 ol lhe SarbanesOxley Acl ol 2002 and lhe rules issued by
lhe SEC. There have been no waivers lron lhe code ol elhics relaling lo
any ollcers.
n June 2005, BP published a code ol conducl, which is applicable
lo all enployees.
Conlrols and procedures
EvaIuation of discIosure controIs and procedures
The conpany nainlains disclosure conlrols and procedures, as such lern
is delned in Exchange Acl Fule 13a15(e, lhal are designed lo ensure lhal
inlornalion required lo be disclosed in reporls lhe conpany lles or
subnils under lhe Exchange Acl is recorded, processed, sunnarized and
reporled wilhin lhe line periods speciled in lhe Securilies and Exchange
Connission rules and lorns, and lhal such inlornalion is accunulaled and
connunicaled lo nanagenenl, including lhe conpanys group chiel
execulive and chiel lnancial ollcer, as appropriale, lo allow linely
decisions regarding required disclosure.
n designing and evalualing our disclosure conlrols and procedures,
our nanagenenl, including lhe group chiel execulive and chiel lnancial
ollcer, recognize lhal any conlrols and procedures, no naller how well
designed and operaled, can provide only reasonable, nol absolule,
assurance lhal lhe objeclives ol lhe disclosure conlrols and procedures are
nel. Because ol lhe inherenl linilalions in all conlrol syslens, no
evalualion ol conlrols can provide absolule assurance lhal all conlrol issues
and inslances ol lraud, il any, wilhin lhe conpany have been delecled.
Furlher, in lhe design and evalualion ol our disclosure conlrols and
procedures our nanagenenl necessarily was required lo apply ils
judgenenl in evalualing lhe coslbenell relalionship ol possible conlrols
and procedures. Also, we have inveslnenls in cerlain unconsolidaled
enlilies. As we do nol conlrol lhese enlilies, our disclosure conlrols and
procedures wilh respecl lo such enlilies are necessarily subslanlially nore
liniled lhan lhose we nainlain wilh respecl lo our consolidaled
subsidiaries. Because ol lhe inherenl linilalions in a coslelleclive conlrol
syslen, nisslalenenls due lo error or lraud nay occur and nol be
delecled. The conpanys disclosure conlrols and procedures have been
designed lo neel, and nanagenenl believes lhal lhey neel, reasonable
assurance slandards.
The conpanys nanagenenl, wilh lhe parlicipalion ol lhe
conpanys group chiel execulive and chiel lnancial ollcer, has evalualed
lhe ellecliveness ol lhe conpanys disclosure conlrols and procedures
pursuanl lo Exchange Acl Fule 13a15(b as ol lhe end ol lhe period
covered by lhis annual reporl. Based on lhal evalualion, lhe group chiel
execulive and chiel lnancial ollcer have concluded lhal lhe conpanys
disclosure conlrols and procedures were elleclive al a reasonable
assurance level.
Management's report on internaI controI over hnanciaI reporting
anagenenl ol BP is responsible lor eslablishing and nainlaining
adequale inlernal conlrol over lnancial reporling. BPs inlernal conlrol over
lnancial reporling is a process designed under lhe supervision ol lhe
principal execulive and lnancial ollcers lo provide reasonable assurance
regarding lhe reliabilily ol lnancial reporling and lhe preparalion ol BPs
lnancial slalenenls lor exlernal reporling purposes in accordance
wilh FFS.
As ol lhe end ol lhe 2010 lscal year, nanagenenl conducled an
assessnenl ol lhe ellecliveness ol inlernal conlrol over lnancial reporling
in accordance wilh lhe nlernal Conlrol Fevised Cuidance lor Direclors on
lhe Conbined Code (Turnbull. Based on lhis assessnenl, nanagenenl
has delernined lhal BPs inlernal conlrol over lnancial reporling as ol
31 Decenber 2010 was elleclive.

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The conpanys inlernal conlrol over lnancial reporling includes policies
and procedures lhal perlain lo lhe nainlenance ol records lhal, in
reasonable delail, accuralely and lairly reHecl lransaclions and disposilions
ol assels, provide reasonable assurances lhal lransaclions are recorded
as necessary lo pernil preparalion ol lnancial slalenenls in accordance
wilh FFS and lhal receipls and expendilures are being nade only in
accordance wilh aulhorizalions ol nanagenenl and lhe direclors ol BP,
and provide reasonable assurance regarding prevenlion or linely deleclion
ol unaulhorized acquisilion, use or disposilion ol BPs assels lhal could
have a nalerial ellecl on our lnancial slalenenls. BPs inlernal conlrol
over lnancial reporling as ol 31 Decenber 2010 has been audiled by
Ernsl & Young LLP, an independenl regislered public accounling lrn, as
slaled in lheir reporl appearing on page 143 ol lhis Annua| Fepor! and
Forn 20-F 20!0.
Changes in internaI controI over hnanciaI reporting
The nalerial inpacl ol lhe Cull ol exico oil spill on lhe lnancial resulls ol
lhe conpany presenled challenges lor lhe conpanys inlernal conlrol over
lnancial reporling. As discussed in lhe Business Feview seclion, response
operalions lollowing lhe incidenl were nanaged by lhe Uniled Area
Connand (UAC using, in sone cases, processes and syslens lhal lhe
conpany did nol delernine or conlrol. As parlies oulside ol lhe conpany
had lnal decisionnaking aulhorily on responserelaled aclions, lhe
aclivilies underlaken by lhe conpany and ils subconlraclors, and lhe
associaled cosls, were nol wholly wilhin lhe conpanys conlrol. A high
level ol aclivily and expendilure was generaled in a very shorl line wilh
liniled docunenlalion around sourcing and connilnenls. n addilion, lhe
polenlial lor breakdowns in process and conlrols is increased when
conpany enployees are locused on innediale response aclions in an
energency silualion and working in uncerlain condilions.
As a resull ol lhe nagnilude ol lhis unprecedenled evenl, and in
order lo separalely disclose lhe lnancial inpacls, new processes and
relaled conlrols were eslablished lo idenlily and segregale cosls, calculale
accruals and eslinale provisions lor lulure cosls. These included:
Eslablishing unique invoiceprocessing procedures and relaled conlrols
lo ensure appropriale accounling lor cosls.
Developing nelhodologies lor eslinaling lhe various elenenls ol
accruals and provisions and insliluling relaled conlrols lo validale
assunplions and ensure adequale nanagenenl review.
Crealing periodend lnancial reporling processes and relaled conlrols,
including nanagenenl and analylical review.
Hiring addilional resources lo process and accounl lor lhe signilcanl
level ol expendilure.
Allhough lhe new conlrols are consislenl wilh lhe conpanys eslablished
lranework, lhey represenl changes lhal have nalerially allecled, or are
reasonably likely lo nalerially allecl, lhe conpanys inlernal conlrol over
lnancial reporling. Despile lhe inpacl ol lhis evenl, as slaled above,
nanagenenl has concluded lhal lhe conpanys disclosure conlrols and
procedures and inlernal conlrol over lnancial reporling were elleclive as ol
31 Decenber 2010.
Principal accounlanls lees
and services
The audil connillee has eslablished policies and procedures lor lhe
engagenenl ol lhe independenl regislered public accounling lrn,
Ernsl & Young LLP, lo render audil and cerlain assurance and lax services.
The policies provide lor preapproval by lhe audil connillee ol specilcally
delned audil, audilrelaled, lax and olher services lhal are nol prohibiled
by regulalory or olher prolessional requirenenls. Ernsl & Young is engaged
lor lhese services when ils experlise and experience ol BP are inporlanl.
osl ol lhis work is ol an audil nalure. Tax services were awarded eilher
lhrough a lull conpelilive lender process or lollowing an assessnenl ol
lhe experlise ol Ernsl & Young relalive lo lhal ol olher polenlial service
providers. These services are lor a lxed lern.
Under lhe policy, preapproval is given lor specilc services wilhin
lhe lollowing calegories: advice on accounling, audiling and lnancial
reporling nallers, inlernal accounling and risk nanagenenl conlrol
reviews (excluding any services relaling lo inlornalion syslens design and
inplenenlalion, nonslalulory audil, projecl assurance and advice on
business and accounling process inprovenenl (excluding any services
relaling lo inlornalion syslens design and inplenenlalion relaling lo BPs
lnancial slalenenls or accounling records, due diligence in conneclion
wilh acquisilions, disposals and joinl venlures (excluding valualion or
involvenenl in prospeclive lnancial inlornalion, incone lax and indirecl
lax conpliance and advisory services, and enployee lax services
(excluding lax services lhal could inpair independence, provision ol, or
access lo, Ernsl & Young publicalions, workshops, seninars and olher
lraining nalerials, provision ol reporls lron dala galhered on nonlnancial
policies and inlornalion, and assislance wilh underslanding nonlnancial
regulalory requirenenls. Addilionally, any proposed service nol included in
lhe preapproved services, nusl be approved in advance prior lo
connencenenl ol lhe engagenenl. The audil connillee has delegaled
lo lhe chairnan ol lhe audil connillee aulhorily lo approve pernilled
services provided lhal lhe chairnan reporls any decisions lo lhe connillee
al ils nexl scheduled neeling.
The audil connillee evaluales lhe perlornance ol lhe audilors
each year. The audil lees payable lo Ernsl & Young are reviewed by lhe
connillee in lhe conlexl ol olher global conpanies lor cosl ellecliveness.
The connillee keeps under review lhe scope and resulls ol audil work
and lhe independence and objeclivily ol lhe audilors. Exlernal regulalion
and BP policy requires lhe audilors lo rolale lheir lead audil parlner every
lve years. (See Financia| s!a!enen!s - No!e !7 on page !76 and Audi!
conni!!ee repor! on page 98 !or de!ai|s o! audi! !ees.)
enorandun and Arlicles
ol Associalion
The lollowing sunnarizes cerlain provisions ol lhe conpanys
enorandun and Arlicles ol Associalion and applicable English law. This
sunnary is qualiled in ils enlirely by relerence lo lhe UK Conpanies Acl
2006 (Acl and lhe conpanys enorandun and Arlicles ol Associalion.
For inlornalion on where inveslors can oblain copies ol lhe enorandun
and Arlicles ol Associalion see Docunenls on display on page 137.
Al lhe ACs held on 17 April 2003 and 15 April 2010, shareholders
voled lo adopl new Arlicles ol Associalion, largely lo lake accounl ol
changes in UK conpany law broughl aboul by lhe Acl. Furlher
anendnenls lo lhe Arlicles ol Associalion were approved by shareholders
al our AC held on 15 April 2010. These anendnenls reHecl lhe lull
inplenenlalion ol lhe Acl, anong olher nallers.
Objects and purposes
The provisions regulaling lhe operalions ol lhe conpany, known as ils
objecls, were hislorically slaled in a conpanys nenorandun. The Acl
abolished lhe need lo have objecl provisions and so al lhe conpanys lasl
AC shareholders approved lhe renoval ol ils objecls clause logelher
wilh all olher provisions ol ils enorandun lhal, by virlue ol lhe Acl, are
lrealed as lorning parl ol lhe conpanys Arlicles ol Associalion.
Directors
The business and allairs ol BP shall be nanaged by lhe direclors. The
conpanys Arlicles ol Associalion provide lhal direclors nay be appoinled
by lhe exisling direclors or by lhe shareholders in a general neeling. Any
person appoinled by lhe direclors will hold ollce only unlil lhe nexl general
neeling and will lhen be eligible lor reeleclion by lhe shareholders.
The Arlicles ol Associalion place a general prohibilion on a direclor
voling in respecl ol any conlracl or arrangenenl in which lhe direclor has a
nalerial inleresl olher lhan by virlue ol such direclors inleresl in shares
in lhe conpany. However, in lhe absence ol sone olher nalerial inleresl
nol indicaled below, a direclor is enlilled lo vole and lo be counled in a
quorun lor lhe purpose ol any vole relaling lo a resolulion concerning lhe
lollowing nallers:
The giving ol securily or indennily wilh respecl lo any noney lenl or
obligalion laken by lhe direclor al lhe requesl or benell ol lhe conpany
or any ol ils subsidiaries.
Any proposal in which lhe direclor is inleresled, concerning lhe
underwriling ol conpany securilies or debenlures or lhe giving ol any
securily lo a lhird parly lor a debl or obligalion ol lhe conpany or any ol
ils subsidiaries.
Any proposal concerning any olher conpany in which lhe direclor is
inleresled, direclly or indireclly (whelher as an ollcer or shareholder or
olherwise provided lhal lhe direclor and persons connecled wilh such
direclor are nol lhe holder or holders ol 1' or nore ol lhe voling
inleresl in lhe shares ol such conpany.
Proposals concerning lhe nodilcalion ol cerlain relirenenl
benells schenes under which lhe direclor nay benell and lhal
have been approved by eilher lhe UK Board ol nland Fevenue or
by lhe shareholders.
Any proposal concerning lhe purchase or nainlenance ol any insurance
policy under which lhe direclor nay benell.
The Acl requires a direclor ol a conpany who is in any way inleresled in a
conlracl or proposed conlracl wilh lhe conpany lo declare lhe nalure ol
lhe direclors inleresl al a neeling ol lhe direclors ol lhe conpany. The
delnilion ol inleresl includes lhe inleresls ol spouses, children,
conpanies and lrusls. The Acl also requires lhal a direclor nusl avoid a
silualion where a direclor has, or could have, a direcl or indirecl inleresl
lhal conHicls, or possibly nay conHicl, wilh lhe conpanys inleresls. The
Acl allows direclors ol public conpanies lo aulhorize such conHicls where
appropriale, il a conpanys Arlicles ol Associalion so pernil. BPs Arlicles
ol Associalion pernil lhe aulhorizalion ol such conHicls. The direclors nay
exercise all lhe powers ol lhe conpany lo borrow noney, excepl lhal lhe
anounl renaining undischarged ol all noneys borrowed by lhe conpany
shall nol, wilhoul approval ol lhe shareholders, exceed lhe anounl paid up
on lhe share capilal plus lhe aggregale ol lhe anounl ol lhe capilal and
revenue reserves ol lhe conpany. Varialion ol lhe borrowing power ol lhe
board nay only be allecled by anending lhe Arlicles ol Associalion.
Fenuneralion ol nonexeculive direclors shall be delernined in lhe
aggregale by resolulion ol lhe shareholders. Fenuneralion ol execulive
direclors is delernined by lhe renuneralion connillee. This connillee is
nade up ol nonexeculive direclors only. There is no requirenenl ol share
ownership lor a direclors qualilcalion.
Dividend rights, other rights to share in company prohts,
capitaI caIIs
l reconnended by lhe direclors ol BP, BP shareholders nay, by resolulion,
declare dividends bul no such dividend nay be declared in excess ol lhe
anounl reconnended by lhe direclors. The direclors nay also pay inlerin
dividends wilhoul oblaining shareholder approval. o dividend nay be paid
olher lhan oul ol prolls available lor dislribulion, as delernined under FFS
and lhe Acl. Dividends on ordinary shares are payable only aller paynenl
ol dividends on BP prelerence shares. Any dividend unclained aller a
period ol 12 years lron lhe dale ol declaralion ol such dividend shall be
lorleiled and reverls lo BP.
The direclors have lhe power lo declare and pay dividends in any
currency provided lhal a slerling equivalenl is announced. l is nol lhe
conpanys inlenlion lo change ils currenl policy ol paying dividends in
US dollars.
Al lhe conpanys lasl AC, shareholders approved lhe inlroduclion
ol a Scrip Dividend Progranne (Progranne and lo include provisions in
lhe Arlicles ol Associalion lo enable lhe conpany lo operale lhe
Progranne. The Progranne enables ordinary shareholders and BP ADS
holders lo elecl lo receive new lully paid ordinary shares (or BP ADSs in
lhe case ol BP ADS holders inslead ol cash. The operalion ol lhe
Progranne is always subjecl lo lhe direclors decision lo nake lhe scrip
oller available in respecl ol any parlicular dividend. Should lhe direclors
decide nol lo oller lhe scrip in respecl ol any parlicular dividend, cash will
aulonalically be paid inslead.
Aparl lron shareholders righls lo share in BPs prolls by dividend
(il any is declared or announced, lhe Arlicles ol Associalion provide lhal
lhe direclors nay sel aside:
A special reserve lund oul ol lhe balance ol prolls each year lo nake
up any delcil ol cunulalive dividend on lhe BP prelerence shares.
A general reserve oul ol lhe balance ol prolls each year, which shall be
applicable lor any purpose lo which lhe prolls ol lhe conpany nay
properly be applied. This nay include capilalizalion ol such sun,
pursuanl lo an ordinary shareholders resolulion, and dislribulion lo
shareholders as il il were dislribuled by way ol a dividend on lhe
ordinary shares or in paying up in lull unissued ordinary shares lor
allolnenl and dislribulion as bonus shares.
Any such suns so deposiled nay be dislribuled in accordance wilh lhe
nanner ol dislribulion ol dividends as described above.
Holders ol shares are nol subjecl lo calls on capilal by lhe conpany,
provided lhal lhe anounls required lo be paid on issue have been paid oll.
All shares are lully paid.

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Voting rights
The Arlicles ol Associalion ol lhe conpany provide lhal voling on
resolulions al a shareholders neeling will be decided on a poll olher lhan
resolulions ol a procedural nalure, which nay be decided on a show ol
hands. l voling is on a poll, every shareholder who is presenl in person or
by proxy has one vole lor every ordinary share held and lwo voles lor every
5 in noninal anounl ol BP prelerence shares held. l voling is on a show
ol hands, each shareholder who is presenl al lhe neeling in person or
whose duly appoinled proxy is presenl in person will have one vole,
regardless ol lhe nunber ol shares held, unless a poll is requesled.
Shareholders do nol have cunulalive voling righls.
Holders ol record ol ordinary shares nay appoinl a proxy, including
a benelcial owner ol lhose shares, lo allend, speak and vole on lheir
behall al any shareholders neeling.
Fecord holders ol BP ADSs are also enlilled lo allend, speak and
vole al any shareholders neeling ol BP by lhe appoinlnenl by lhe
approved deposilary, JPorgan Chase Bank, ol lhen as proxies in
respecl ol lhe ordinary shares represenled by lheir ADSs. Each such
proxy nay also appoinl a proxy. Allernalively, holders ol BP ADSs are
enlilled lo vole by supplying lheir voling inslruclions lo lhe deposilary,
who will vole lhe ordinary shares represenled by lheir ADSs in accordance
wilh lheir inslruclions.
Proxies nay be delivered eleclronically.
allers are lransacled al shareholders neelings by lhe proposing
and passing ol resolulions, ol which lhere are lwo lypes: ordinary or
special. An annual general neeling nusl be held once in every year.
An ordinary resolulion requires lhe allrnalive vole ol a najorily ol
lhe voles ol lhose persons voling al a neeling al which lhere is a quorun.
A special resolulion requires lhe allrnalive vole ol nol less lhan lhree
lourlhs ol lhe persons voling al a neeling al which lhere is a quorun.
Any AC requires 21 days nolice. The nolice period lor a general neeling
is 14 days subjecl lo lhe conpany oblaining annual shareholder approval,
lailing which, a 21day nolice period will apply.
Liquidation rights, redemption provisions
n lhe evenl ol a liquidalion ol BP, aller paynenl ol all liabililies and
applicable deduclions under UK laws and subjecl lo lhe paynenl ol
secured credilors, lhe holders ol BP prelerence shares would be enlilled
lo lhe sun ol (i lhe capilal paid up on such shares plus, (ii accrued and
unpaid dividends and (iii a preniun equal lo lhe higher ol (a 10' ol lhe
capilal paid up on lhe BP prelerence shares and (b lhe excess ol lhe
average narkel price over par value ol such shares on lhe LSE during lhe
previous six nonlhs. The renaining assels (il any would be divided pro rala
anong lhe holders ol ordinary shares.
vilhoul prejudice lo any special righls previously conlerred on lhe
holders ol any class ol shares, BP nay issue any share wilh such prelerred,
delerred or olher special righls, or subjecl lo such reslriclions as lhe
shareholders by resolulion delernine (or, in lhe absence ol any such
resolulions, by delerninalion ol lhe direclors, and nay issue shares lhal
are lo be or nay be redeened.
Variation of rights
The righls allached lo any class ol shares nay be varied wilh lhe consenl
in wriling ol holders ol 75' ol lhe shares ol lhal class or on lhe adoplion
ol a special resolulion passed al a separale neeling ol lhe holders ol lhe
shares ol lhal class. Al every such separale neeling, all ol lhe provisions
ol lhe Arlicles ol Associalion relaling lo proceedings al a general neeling
apply, excepl lhal lhe quorun wilh respecl lo a neeling lo change lhe
righls allached lo lhe prelerence shares is 10' or nore ol lhe shares ol
lhal class, and lhe quorun lo change lhe righls allached lo lhe ordinary
shares is onelhird or nore ol lhe shares ol lhal class.
SharehoIders' meetings and notices
Shareholders nusl provide BP wilh a poslal or eleclronic address in lhe UK
lo be enlilled lo receive nolice ol shareholders neelings. n cerlain
circunslances, BP nay give nolices lo shareholders by adverlisenenl in
UK newspapers. Holders ol BP ADSs are enlilled lo receive nolices under
lhe lerns ol lhe deposil agreenenl relaling lo BP ADSs. The subslance
and lining ol nolices is described above under lhe heading Voling righls.
Under lhe Arlicles ol Associalion, lhe AC ol shareholders will be
held wilhin lhe sixnonlh period once every year. All general neelings shall
be held al a line and place delernined by lhe direclors wilhin lhe UK. l
any shareholders neeling is adjourned lor lack ol quorun, nolice ol lhe
line and place ol lhe neeling nay be given in any lawlul nanner, including
eleclronically. Powers exisl lor aclion lo be laken eilher belore or al lhe
neeling by aulhorized ollcers lo ensure ils orderly conducl and salely ol
lhose allending.
Limitations on voting and sharehoIding
There are no linilalions inposed by English law or lhe conpanys
enorandun or Arlicles ol Associalion on lhe righl ol nonresidenls or
loreign persons lo hold or vole lhe conpanys ordinary shares or BP ADSs,
olher lhan linilalions lhal would generally apply lo all ol lhe shareholders.
DiscIosure of interests in shares
The Acl pernils a public conpany, on wrillen nolice, lo require any person
whon lhe conpany believes lo be or, al any line during lhe lhree years
prior lo lhe issue ol lhe nolice, lo have been inleresled in ils voling shares,
lo disclose cerlain inlornalion wilh respecl lo lhose inleresls. Failure lo
supply lhe inlornalion required nay lead lo disenlranchisenenl ol lhe
relevanl shares and a prohibilion on lheir lransler and receipl ol dividends
and olher paynenls in respecl ol lhose shares. n lhis conlexl lhe lern
inleresl is widely delned and will generally include an inleresl ol any kind
whalsoever in voling shares, including any inleresl ol a holder ol BP ADSs.
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Direclors
renuneralion reporl
112 Parl 1 Sunnary
114 Parl 2 Execulive direclors
renuneralion
120 Parl 3 onexeculive direclors
renuneralion
Directors remuneration report
Part 1 Summary
Dr DeAnne S Julius
Chairman, Remuneration Committee
2 March 2011
Remuneration decisions for 2010 were dominated by the scale and
impact of the accident in the Gulf of Mexico.
The remuneration committee shared the group chief executives
view that no bonuses should be paid on group-level results. Thus
Mr Dudley received no bonus for the year. There is also no vesting of the
2008-2010 share element for any executive director.
Dr Hayward and Mr Inglis, who left BP during the course of the
year, received their contractual entitlements of one years salary on
termination, together with other limited entitlements. Outstanding share
element awards were preserved on a pro rata basis, with vesting being
conditional on meeting applicable performance targets. Neither was
awarded any annual bonus for 2010.
While the tragedy of lost lives and environmental damage remains
foremost in everyones minds, the committee also wished to fairly
acknowledge the good business results in many parts of BP, delivered in
the most testing of times. Mr Conn and Dr Grote met or exceeded their
specic segment/functional targets for the year and were awarded 30%
of their overall on-target bonuses, including the deferred element. This
reected no payout on the portion related to group results (as with all
executive directors) and was limited to on-target for the portion related to
their strong segment/functional results. A third of their bonus is deferred
into shares on a mandatory basis, matched, and will vest in three years
subject to meeting a safety and environmental hurdle during the period.
Both individuals may elect to defer an additional third into shares on the
same basis as the mandatory deferral. Both will receive salary increases
in 2011 as noted in the table opposite.
Full details of executive director remuneration are set out in the
table below.
For 2011 the overall policy for executive directors will remain largely
unchanged, as summarized opposite. However, the committee will take a
more active role in the oversight of pay policy and practice below the board.
Together with the group chief executive, the committee will be reviewing
the overall policy for senior executives to ensure that it promotes long-term
sustainable success for shareholders as well as rewarding appropriately the
many talented people leading the company.
Finally, as I retire after ve years as remuneration committee
chairman and 10 years on the board, I would like to thank the shareholders
both for their challenge and their support as the company has navigated
through difcult, as well as successful, times.
Summary of remuneration of executive directors in 2010 (information subject to audit)
Annual remuneration Long-term remuneration (EDIP)
Share element of EDIP
2010 deferred 2008-2010 plan 2010-2012
annual bonus (vested in Feb 2011) plan
Annual cash Non-cash benets and Potential
Salary
a
performance bonus other emoluments Total Potential Actual maximum
(thousand) (thousand) (thousand) (thousand) Mandatory voluntary shares Value performance
2009 2010 2009 2010 2009 2010 2009 2010 deferral
b
deferral
c
vested (thousand) shares
d
R W Dudley
e
$750 $1,175 $1,125 0 $304
f
$564
f
$2,179 $1,739 0 0 0 0 581,084
I C Conn 690 690 1,104 104 46 34 1,840 828 104 104 0 0 656,813
Dr B E Grote
e
$1,380 $1,380 $2,070 $207 $8 $10 $3,458 $1,597 $207 $207 0 0 801,894
Directors leaving the
board in 2010
Dr A B Hayward
g
1,045 958 2,090 0 23 95 3,158 1,053 0 0 0 0 303,948
A G Inglis
h
690 575 1,311 0 216
f
168
f i
2,217 743 0 0 0 0 218,938
Amounts shown are in the currency received by executive directors. Annual bonuses are shown in the year they were earned.
a
Figures show the total salary received during the calendar year. The last salary increase was in July 2008 other than on promotion of Mr Dudley to group chief executive.
b
This amount will be converted to deferred shares at the three-day average share price following the full-year results announcement (4.84, $46.68). Deferred shares will be matched one-for-one and both
deferred and matched shares are subject to a safety and environmental hurdle over the three-year deferral period.
c
Executive directors have the choice to have this portion either paid in cash or deferred voluntarily into shares on the same basis as the mandatory deferral.
d
Maximum potential shares that could vest at the end of the three-year period depending on performance reduced pro-rata for Dr Hayward and Mr Inglis to reect actual service during performance period.
e
Mr Dudley and Dr Grote hold shares in the form of ADSs. The above number reects calculated equivalent in ordinary shares.
f
This amount includes costs of London accommodation and any tax liability thereon that ceased at the end of 2010 following Mr Dudleys appointment as group chief executive and Mr Ingliss retirement
from the board.
g
Dr Hayward left the board on 30 November 2010. In addition to the above he was awarded compensation for loss of ofce equal to one years salary (1,045,000) and a further 30,000 in respect of UK
statutory compensation rights.
h
Mr Inglis left the board on 31 October 2010. In addition to the above he was awarded compensation for loss of ofce equal to one years salary (690,000) and a further 200,000 to cover various
repatriation and relocation costs in accordance with his international assignment arrangements.
i
In addition to this amount, under a tax equalization arrangement, BP discharged a US tax liability arising from the participation by Mr Inglis in the UK pension scheme amounting to $1,260,000.
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Direclors renuneralion reporl

Summary of future remuneration components
Salary r Dudleys salary renains al $1,700,000. Bolh r Conn and Dr Crole, who lasl received salary increases in July 2003, will
have lheir salaries increased elleclive 1 April 2011. r Conns new salary will be 730,000 (lron 690,000 and Dr Croles will
be $1,442,000 (lron $1,330,000.
Bonus Onlargel bonus ol 150' ol salary and naxinun ol 225' ol salary based on perlornance relalive lo largels sel al slarl ol
year relaling lo lnancial and operalional nelrics.
Delerred bonus Onelhird ol aclual bonus awarded as delerred shares wilh lhreeyear delerral, wilh abilily lo volunlarily deler an addilional
and nalch onelhird.
All delerred shares nalched onelorone, bolh subjecl lo an assessnenl ol salely and environnenlal perlornance over lhe
lhreeyear period.
Perlornance shares Award ol shares ol up lo 5.5 lines salary lor group chiel execulive and 4 lines lor olher execulive direclors.
Vesling aller lhree years based on perlornance relalive lo olher oil najors and slralegic inperalives.
Threeyear relenlion period aller vesling belore release ol shares.
Pension Final salary schene appropriale lo hone counlry ol execulive.
HistoricaI TSR performance
This graph shows lhe growlh in value ol a hypolhelical 100 holding in
BP p.l.c. ordinary shares over lve years, relalive lo lhe FTSE 100 ndex
(ol which lhe conpany is a consliluenl. The values ol lhe hypolhelical
100 holdings al lhe end ol lhe lveyear period were 37.46 and
126.25 respeclively.
05
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06 07 08 09 10
250
200
150
100
50
FTSE 100
BP
Remuneration of non-executive directors in 2010
a
lhousand
2009 2010
P Anderson
b
- 118
F Bownan
c
- 17
A Burgnans 93 90
C B Carroll 90 90
Sir villian Caslell 115 147
C David
d
113 135
Davis
e
- 69
D J Flinl 35 108
Dr D S Julius 105 100
B elson
l
- 17
CH Svanberg
g
30 750
Direclors leaving lhe board in 2010
E B Davis, Jr
h
105 33
Sir an Prosser
i
165 52
a
This inlornalion has been subjecl lo audil.
b
Appoinled on 1 February 2010.
c
Appoinled on 3 ovenber 2010.
d
Also received 23,000 lor serving as a nenber ol BPs lechnology advisory council.
e
Appoinled on 2 April 2010.
l
g
Also received a relocalion allowance ol 90,000.
h
Also received a superannualion graluily ol 21,000.
i
o share or share oplion awards were nade lo any nonexeculive direclor
in respecl ol service on lhe board during 2010.
onexeculive direclors have lellers ol appoinlnenl which
recognize lhal, subjecl lo lhe Arlicles ol Associalion, lheir service is al lhe
discrelion ol shareholders. All direclors sland lor reeleclion al each AC.
Parl 2 Execulive direclors
renuneralion
2010 renuneralion
SaIary
r Dudleys salary was increased lo $1,700,000 on his pronolion lo
group chiel execulive in Oclober 2010. The London acconnodalion
provided lo hin ceased al lhe end ol 2010. o olher execulive direclor
had a salary increase in 2010.
AnnuaI bonus
The 2010 annual bonus resulls were dranalically allecled by lhe Cull ol
exico accidenl. n lhe judgenenl ol lhe connillee and lhe group chiel
execulive lhis overrode lhe nornal nelrics lor bonus oulcones. As
indicaled in lhe lable on page 112, no bonus was paid lo r Dudley,
Dr Hayward or r nglis lor 2010. r Conn and Dr Crole sinilarly received
no bonus lor lheir group porlion and were liniled lo an onlargel level lor
lheir segnenl/lunclional porlion (accounling lor 30' ol lheir overall
bonus opporlunily. Bolh ol lhese nel or exceeded largels and nade
inporlanl conlribulions lo lhe slabilizalion ol lhe business lollowing lhe
accidenl.
The lolal bonus lo r Conn was 310,500 and lo Dr Crole
$621,000. Ol lhe lolal lor each, onelhird is paid in cash, onelhird is
delerred on a nandalory basis and onelhird is paid eilher in cash or
volunlarily delerred al lhe individuals discrelion. These anounls are
shown in lhe lable on page 112.
Deferred bonus
Onelhird ol lhe bonus awarded lo Dr Crole and r Conn is delerred inlo
shares on a nandalory basis under lhe lerns ol lhe delerred bonus
elenenl. Their delerred shares are nalched on a onelorone basis and will
vesl in lhree years conlingenl on an assessnenl ol salely and
environnenlal suslainabilily over lhe lhreeyear delerral period.
Bolh individuals nay elecl lo deler an addilional lhird inlo shares
on lhe sane basis as lhe nandalory delerral.
All delerred bonuses are converled lo shares based on an average
price ol BP shares over lhe lhree days lollowing lhe conpanys
announcenenl ol 2010 resulls (4.34/share, $46.63/ADS.
2008-2010 share eIement
Fesulls lor lhe 20032010 share elenenl were also slrongly allecled by
lhe Cull ol exico accidenl. BPs Tolal Shareholder Felurn (TSF lor lhe
lhreeyear period was lowesl anong lhe peer group ol oil najors. The
conpanys underlying perlornance relalive lo lhe peer group aclually
renained quile slrong on lhe nelrics hislorically used lo lesl lhe lairness
ol lhe TSF resull. The connillee lell, however, lhal because ol lhe
seriousness ol lhe Cull ol exico accidenl, lhe TSF ranking was an
appropriale resull. o shares, lherelore, vesled under lhe plan lor any
execulive direclor.
2011 renuneralion policy
The basic principles lhal guide renuneralion policy lor execulive
direclors in BP include:
A subslanlial porlion ol execulive renuneralion should be linked lo
success in inplenenling lhe conpanys business slralegy lo
naxinize longlern shareholder value.
The slruclure ol pay should reHecl lhe longlern nalure ol BPs
business and lhe signilcance ol salely and environnenlal risks.
Perlornance condilions lor variable pay should be sel independenlly
by lhe connillee al lhe oulsel ol each year and assessed by lhe
connillee bolh quanlilalively and qualilalively al lhe end ol each
perlornance period.
Perlornance assessnenl should lake inlo accounl nalerial changes
in lhe narkel environnenl (predoninanlly oil prices and BPs
conpelilive posilion (prinarily visavis olher oil najors.
Salaries should be reviewed annually, in lhe conlexl ol lhe lolal
quanlun ol pay, and laking inlo accounl bolh exlernal narkel and
inlernal conpany condilions.
Execulives should develop and be required lo hold a signilcanl
shareholding as lhis represenls lhe besl way lo align lheir inleresls
wilh lhose ol shareholders.
The renuneralion connillee will aclively seek lo undersland
shareholder prelerences and be as lransparenl as possible in
explaining ils renuneralion policy and praclices.
The najorily ol lolal renuneralion is long lern and varies wilh
perlornance, wilh lhe largesl elenenls share based, lurlher aligning
inleresls wilh shareholders.
The connillee reviews lhe pay policy and levels lor execulives
below board, as well as pay and condilions ol enployees lhroughoul lhe
group. These are considered when delernining execulive direclors
renuneralion.
SaIary
The connillee nornally reviews salaries annually, laking inlo accounl
olher large Europebased global conpanies as well as relevanl US
conpanies. These groups are each delned and analysed by lhe
connillees independenl renuneralion advisers.
r Dudleys currenl salary ol $1,700,000 will renain unchanged
in 2011. Bolh r Conn and Dr Crole, who lasl received salary increases
in July 2003, will have lheir salaries increased elleclive 1 April 2011.
r Conns new salary will be 730,000 (lron 690,000 and Dr Croles
will be $1,442,000 (lron $1,330,000.
AnnuaI bonus
Bonus neasures and levels ol eligibilily are sel al lhe slarl ol lhe year
lor lhe senior leadership including execulive direclors. The approach lor
2011 aligns closely wilh lhe group lenplale lor reinlorcing salely and
risk nanagenenl, rebuilding lrusl and reinlorcing value crealion. There
is a balance ol longlern and nearlern objeclives weighled lowards
lhe lop priorilies ol risk idenlilcalion and nanagenenl, salely and
conpliance, and lalenl and capabilily developnenl. Croup neasures lor
execulive direclors will locus on:
Salely and operalional risk nelrics - including lull inplenenlalion ol
lhe S&OF lunclional nodel.
Shorllern perlornance - including key lnancial and operaling nelrics.
Longlern perlornance - including progress on key projecls and
reserves replacenenl.
People - including a new perlornance and reward lranework.
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r Dudleys bonus in 2011 will be based enlirely on group neasures.
r Conn and Dr Crole will have 70' ol lheir bonus based on group
neasures and 30' on lhe resulls ol lheir respeclive segnenls. For
r Conn lhese will include relning availabilily, salely and cosl ellciency.
For Dr Crole lhey will locus on lunclional cosls and succession.
As in pasl years, in addilion lo lhe specilc bonus nelrics, lhe
connillee will also review lhe underlying perlornance ol lhe group in lighl
ol lhe overall business plan, conpelilors resulls, analysls reporls and lhe
views ol lhe chairnen ol lhe olher connillees.
Based on lhis broader view, lhe connillee can decide lo reduce
bonuses where lhis is warranled and, in exceplional circunslances, lo pay
no bonuses.
Deferred bonus
Onelhird ol lhe annual bonus will be delerred inlo shares lor lhree years
and nalched by lhe conpany on a onelorone basis. Under lhe rules ol lhe
plan, lhe average share price over lhe lhree days lollowing announcenenl
ol lullyear resulls is used lo delernine lhe nunber ol shares. Bolh
delerred and nalched shares will vesl conlingenl on an assessnenl ol
salely and environnenlal suslainabilily over lhe lhreeyear delerral period.
l lhe connillee assesses lhal lhere has been a nalerial delerioralion in
salely and environnenlal nelrics, or lhere have been najor incidenls
revealing underlying weaknesses in salely and environnenlal
nanagenenl, lhen il nay conclude lhal shares should vesl in parl, or nol
al all. n reaching ils conclusion, lhe connillee will oblain advice lron lhe
salely, elhics and environnenl assurance connillee (SEEAC.
Execulive direclors nay volunlarily deler a lurlher onelhird ol lheir
annual bonus inlo shares, which will be capable ol vesling, and will qualily
lor nalching, on lhe sane basis as sel oul above.
vhere shares vesl, lhe execulive direclor will also receive
addilional shares represenling lhe value ol lhe reinvesled dividends.
This slruclure ol delerred bonuses, paid in shares, places increased
locus on longlern alignnenl and reinlorces lhe crilical inporlance ol
nainlaining high salely and environnenlal slandards.
Performance shares
The share elenenl ol lhe EDP has been a lealure ol lhe plan, wilh sone
nodilcalions, since ils inceplion in 2000. The naxinun nunber ol shares
lhal can be awarded will be 5.5 lines salary lor lhe group chiel execulive
and lour lines salary lor lhe olher execulive direclors.
Perlornance shares will only vesl lo lhe exlenl lhal a perlornance
condilion is nel, as described under perlornance condilions. n addilion,
lhe connillee will have an overriding discrelion, in exceplional
circunslances (relaling lo eilher lhe conpany or a parlicular parlicipanl lo
reduce lhe nunber ol shares lhal vesl (or lo provide lhal no shares vesl.
The conpulsory relenlion period will also be decided by lhe
connillee and will nol nornally be less lhan lhree years. Togelher wilh lhe
perlornance period, lhis gives execulive direclors a sixyear incenlive
slruclure, which is designed lo ensure lheir inleresls are aligned wilh lhose
ol shareholders.
vhere shares vesl, lhe execulive direclor will receive addilional
shares represenling lhe value ol lhe reinvesled dividends.
The connillees policy, reHecled in lhe EDP, conlinues lo be lhal
each execulive direclor builds a signilcanl personal shareholding, wilh a
largel ol shares equivalenl in value lo lve lines salary, wilhin a reasonable
line lron appoinlnenl as an execulive direclor.
Perlornance condilions
Perlornance condilions lor lhe 20112013 share elenenl will be aligned
wilh lhe slralegic agenda lhal has evolved in response lo lasl years
evenls. This locuses on value crealion, reinlorcing salely and risk
nanagenenl, and rebuilding lrusl.
Vesling ol shares will be based 50' on BPs lolal shareholder
relurn (TSF conpared lo lhe olher oil najors, reHecling lhe cenlral
inporlance ol resloring lhe value ol lhe conpany. A lurlher 20' will be
based on lhe reserves replacenenl ralio, also relalive lo lhe olher oil
najors, reHecling a cenlral elenenl ol value crealion. The lnal 30' will be
based on a sel ol slralegic inperalives lor rebuilding lrusl, in parlicular,
reinlorcing salely and risk nanagenenl cullure, rebuilding BPs exlernal
repulalion, and reinlorcing slall alignnenl and norale.
For lhe relalive neasures, TSF and lhe reserve replacenenl ralio,
lhe conparalor group will consisl ol Exxonobil, Shell, Tolal,
ConocoPhillips and Chevron. This group can be allered il circunslances
change, lor exanple, il lhere is signilcanl consolidalion in lhe induslry.
vhile a narrow group, il conlinues lo represenl lhe conparalors lhal bolh
shareholders and nanagenenl use in assessing relalive perlornance.
The TSF will be calculaled as lhe share price perlornance over lhe
lhreeyear period, assuning dividends are reinvesled. All share prices will
be averaged over lhe lhreenonlh period belore lhe beginning and end ol
lhe perlornance period. They will be neasured in US dollars. The reserve
replacenenl ralio is delned according lo induslry slandard specilcalions
and ils calculalion is audiled.
As in previous years, lhe nelhodology used lor lhe relalive
neasures will rank each ol lhe lve conpelilors on each neasure. BPs
perlornance will lhen be conpared lo lhe olher lve. Perlornance shares
lor each conponenl will vesl al levels ol 100', 70' and 35'
respeclively, lor perlornance equivalenl lo lrsl, second and lhird rank. o
shares will vesl lor lourlh or lllh place. For perlornance belween second
and lhird or lrsl and second, lhe vesling percenlage will be inlerpolaled
based on BPs perlornance relalive lo lhe conpany ranked direclly above
and below il.
The renaining 30' ol vesling will be based on a balanced
scorecard ol slralegic inperalives. These will conprise salely and risk
nanagenenl cullure, exlernal repulalion, and inlernal slall alignnenl and
norale. For each ol lhese, specilc nelrics derived lron exlernally
labulaled surveys will be used lo lrack progress. This evidence will be used
by lhe connillee, along wilh inpul lron lhe olher board connillees, lo
judge perlornance on each nelric. The resulls will be explained in lhe
subsequenl direclors renuneralion reporl.
The connillee considers lhal lhis conbinalion ol quanlilalive and
qualilalive neasures reHecls lhe longlern value crealion priorilies ol lhe
conpany as well as lhe key underpinnings lor business suslainabilily. As in
previous years, lhe connillee nay exercise ils discrelion, in a reasonable
and inlorned nanner, lo adjusl vesling levels upwards or downwards il il
concludes lhal lhe lornulaic approach does nol reHecl lhe lrue underlying
heallh and perlornance ol BPs business relalive lo ils peers. l will explain
any adjuslnenls in lhe direclors renuneralion reporl lollowing vesling, in
line wilh ils connilnenl lo lransparency.
Pensions
Execulive direclors are eligible lo parlicipale in lhe appropriale pension
schenes applying in lheir hone counlries. Delails are sel oul in lhe
lable below.
UK direclors
UK direclors are nenbers ol lhe regular BP Pension Schene. The core
benells under lhis schene are nonconlribulory. They include a pension
accrual ol 1/60lh ol basic salary lor each year ol service, up lo a naxinun
ol lwolhirds ol lnal basic salary and a dependanls benell ol lwolhirds ol
lhe nenbers pension. The schene pension is nol inlegraled wilh slale
pension benells.
The rules ol lhe BP Pension Schene were anended in 2006 such
lhal lhe nornal relirenenl age is 65. Prior lo 1 Decenber 2006, schene
nenbers could relire on or aller age 60 wilhoul reduclion. Special early
relirenenl lerns apply lo pre1 Decenber 2006 service lor nenbers wilh
long service as al 1 Decenber 2006.
Pension benells in excess ol lhe individual lileline allowance sel
by legislalion are paid via an unapproved, unlunded pension arrangenenl
provided direclly by lhe conpany.
n lhe lighl ol lhe reduced annual allowance lax regine being
inplenenled lron April 2011, lhe conpany is considering allernalive
approaches lo lhe provision ol pension benells lor lulure service lor UK
direclors and olher senior slall inpacled by lhe change.
Allhough r nglis was, like olher UK direclors, a nenber ol lhe
BP Pension Schene, his parlicipalion gave rise lo a US lederal lax liabilily
as he was based in Houslon. During 2010, pursuanl lo a lax equalizalion
arrangenenl lhal applied in respecl ol lhe period since r nglis becane
a direclor in February 2007, under his inlernalional assignnenl
arrangenenls, lhe connillee approved lhe discharge ol lhis US lax liabilily
anounling lo $1.26 nillion in respecl ol 2010. This lgure included an
elenenl in respecl ol lhe addilional value ol r ngliss accrued pension as
a resull ol cryslallizalion ol early relirenenl righls on lhe lerninalion ol his
enploynenl wilh BP.
US direclors
r Dudley and Dr Crole parlicipale in lhe US BP Felirenenl Accunulalion
Plan (US pension plan, which lealures a cash balance lornula. Pension
benells are provided lhrough a conbinalion ol laxqualiled and
nonqualiled benell resloralion plans, consislenl wilh US lax regulalions
as applicable. n addilion, r Dudley relains lhe herilage Anoco relirenenl
plan, which provides benells on a lnal average pay lornula ol 1.67' ol
highesl average earnings (base pay plus bonus in accordance wilh slandard
US praclice lor each year ol service, reduced by 1.5' ol lhe prinary social
securily benell lor each year ol service. The higher benell ol lhe plans
produced by lhe lwo lornulas will be payable and lhis is currenlly lhe
benell delernined under lhe Anoco herilage lerns.
n addilion, BP provides a Supplenenlal Execulive Felirenenl
Benells Plan (supplenenlal plan, which is a nonqualiled arrangenenl
lhal becane elleclive on 1 January 2002 lor US enployees wilh salary
above a speciled salary grade level. r Dudley and Dr Crole are eligible lo
parlicipale under lhe supplenenlal plan. The benell lornula is a largel
ol 1.3' ol lnal average earnings (base pay plus bonus lor each year
ol service, inclusive ol all olher BP (US qualiled and nonqualiled
pension arrangenenls. This benell is unlunded and lherelore paid lron
corporale assels.
Their pension accrual lor 2010, shown in lhe lable below, lakes
inlo accounl lhe lolal anounl lhal could be payable under relevanl plans.
Other benehts
Execulive direclors are eligible lo parlicipale in regular enployee benell
plans and in allenployee share saving schenes applying in lheir hone
counlries. Benells in kind are nol pensionable. BP provided
acconnodalion in London lor r Dudley and lor r nglis during 2010.
This provision ceased lor bolh individuals al lhe end ol 2010.
Pensions
a
(information subject to audit)
lhousand
Addilional pension
Accrued pension earned during lhe Transler value ol Transler value ol Anounl ol BA less
Service al enlillenenl year ended accrued benell
b
accrued benell
b
conlribulions nade by
31 Dec 2010 al 31 Dec 2010 31 Dec 2010
a
al 31 Dec 2009 (A al 31 Dec 2010 (B lhe direclor in 2010
F v Dudley (US 31 years $704 $293 $4,353 $10,336 $5,933
C Conn (UK 25 years 237 12 4,503 5,373 365
Dr B E Crole (US 31 years $1,231 $270 $12,047 $16,501 $4,454
Dr A B Hayward (UK
c
29 years 605 21 10,340 13,677 2,337
A C nglis (UK
c
30 years 349 12 6,000 7,633 1,633

a
Addilional pension earned during lhe year includes an inHalion increase ol 2.4' lor UK direclors and 1.5' lor US direclors.
b
Transler values have been calculaled in accordance wilh guidance issued by lhe acluarial prolession.
c
Figures are calculaled lo end ol 2010.
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Performance share element of EDIP (information subject to audit)
Share element interests Interests vested in 2010 and 2011
Market price Potential maximum performance shares
a
of each share
Date of at date of award Number of Market price
award of of performance ordinary of each share
Performance performance shares At 1 Jan Awarded At 31 Dec shares Vesting at vesting
period shares 2010 2010 2010 vested
b
date
R W Dudley
c
2009-2011 06 May 2009 5.00 539,634 539,634
2010-2012 09 Feb 2010 5.64 581,082 581,082
I C Conn 2007-2009 06 Mar 2007 5.12 456,748 95,697 3 Feb 2010 5.76
2008-2010 13 Feb 2008 5.61 578,376 578,376 0
2008-2011
d
13 Feb 2008 5.61 133,452 133,452 155,695 22 Feb 2011 4.91
2008-2013
d
13 Feb 2008 5.61 133,452 133,452
2009-2011 11 Feb 2009 5.10 780,816 780,816
2010-2012 09 Feb 2010 5.64 656,813 656,813
Dr B E Grote
c
2007-2009 06 Mar 2007 5.12 491,640 101,502 3 Feb 2010 5.76
2008-2010 13 Feb 2008 5.61 581,748 581,748 0
2009-2011 11 Feb 2009 5.10 992,928 992,928
2010-2012 09 Feb 2010 5.64 801,894 801,894
Directors leaving the board in 2010
Dr A B Hayward 2007-2009 06 Mar 2007 5.12 706,311 147,985 3 Feb 2010 5.76
2008-2010 13 Feb 2008 5.61 845,319 821,838
e
0
2009-2011 11 Feb 2009 5.10 1,182,540 755,512
e

2010-2012 09 Feb 2010 5.64 994,739 303,948
e

A G Inglis 2007-2009 06 Mar 2007 5.12 400,243 83,859 3 Feb 2010 5.76
2008-2010 13 Feb 2008 5.61 578,376 578,376 0
2008-2011
d
13 Feb 2008 5.61 133,452 0
2008-2013
d
13 Feb 2008 5.61 133,452 0
2009-2011 11 Feb 2009 5.10 780,816 520,544
e

2010-2012 09 Feb 2010 5.64 656,813 218,938
e

a

BPs performance is measured against the oil sector. For awards under the 2007-2009 and 2008-2010 plans, the performance condition is TSR measured against ExxonMobil, Shell, Total and Chevron.
For awards under the 2009-2011 plan, performance conditions are measured 50% on TSR against ExxonMobil, Shell, Total, ConocoPhillips and Chevron and 50% on a balanced scorecard of underlying
performance. For the awards under the 2010-2012 plan, performance conditions are measured one third on TSR against ExxonMobil, Shell, Total, ConocoPhillips and Chevron and two thirds on a balanced
scorecard of underlying performance. Each performance period ends on 31 December of the third year.
b
Represents awards of shares made at the end of the relevant performance period based on performance achieved under rules of the plan and includes re-invested dividends on the shares awarded.
c
Dr Grote and Mr Dudley receive awards in the form of ADSs. The above numbers reect calculated equivalents in ordinary shares.
d
Restricted award under share element of EDIP. As reported in the 2007 directors remuneration report in February 2008, the committee awarded both Mr Inglis and Mr Conn restricted shares, as set out
above. These one-off awards will vest on the third and fth anniversary of the award, dependent on the remuneration committee being satised as to their personal performance at the date of vesting. Any
unvested tranche will lapse in the event of cessation of employment with the company. Mr Inglis left the company on 31 December 2010 and accordingly his restricted awards lapsed.
e
Potential maximum of performance shares has been reduced to reect actual service during performance period on a pro-rated basis.

Share options (information subject to audit)
Market price Date from
Option At 31 Dec Option at date of which rst
type At 1 Jan 2010 Granted Exercised 2010 price exercise exercisable Expiry date
R W Dudley
a
BP SOP 1,800 1,800 $48.94 $58.15
b
28 Mar 2003 27 Mar 2010
BP SOP 6,460 6,460 $49.65 23 Feb 2004 22 Feb 2011
BP SOP 1,073 1,073 $43.82 17 Dec 2004 16 Dec 2011
BP SOP 17,835 17,835 $48.99 18 Feb 2005 17 Feb 2012
BP SOP 17,835 17,835 $38.10 17 Feb 2006 16 Feb 2013
I C Conn SAYE 1,498 1,498 4.41 4.93
d
01 Sep 2010 28 Feb 2011
SAYE 617 617 4.87 01 Sep 2011 29 Feb 2012
SAYE 605 605 4.20 01 Sep 2012 28 Feb 2013
EXEC 72,250 72,250 5.67 23 Feb 2004 23 Feb 2011
EXEC 130,000 130,000 5.72 18 Feb 2005 18 Feb 2012
Dr B E Grote
a
BPA 12,600 12,600 $48.94 $58.40-$58.42 28 Mar 2001 27 Mar 2010
EDIP 13,173 13,173 $37.76 $54.36 17 Feb 2004 17 Feb 2010
EDIP 58,333 58,333 $48.53 25 Feb 2005 25 Feb 2011
Directors leaving the
board in 2010
Dr A B Hayward SAYE 3,220 3,220 5.00 01 Sep 2011 29 Feb 2012
EXEC 34,000
c
5.99 n/a 15 May 2003 15 May 2010
EXEC 77,400 77,400 5.67 23 Feb 2004 23 Feb 2011
EXEC 160,000 160,000 5.72 18 Feb 2005 18 Feb 2012
EDIP 275,000 275,000 4.22 6.31
b
25 Feb 2005 25 Feb 2011
A G Inglis EXEC 72,250 72,250 5.67 23 Feb 2004 22 Feb 2011
EXEC 119,000 119,000 5.72 18 Feb 2005 17 Feb 2012
EXEC 119,000 119,000 3.88 6.31 17 Feb 2006 16 Feb 2013
EXEC 100,500 100,500 4.22 6.31 25 Feb 2007 24 Feb 2014

The closing market prices of an ordinary share and of an ADS on 31 December 2010 were 4.66 and $44.17 respectively.
During 2010, the highest market prices were 6.55 and $62.32 respectively and the lowest market prices were 3.03 and $27.02 respectively.
BPA = BP Amoco share option plan, which applied to US executive directors prior to the adoption of the EDIP.
EDIP = Executive Directors Incentive Plan adopted by shareholders in 2010 as described on page 114.
EXEC = Executive Share Option Scheme. These options were granted to the relevant individuals prior to their appointments as directors and are not subject to performance conditions.
SAYE = Save As You Earn employee share scheme.
BP SOP = BP Share Option Plan. These options were granted to Mr Dudley prior to his appointment as a director and are not subject to performance conditions.
a
Numbers shown are ADSs under option. One ADS is equivalent to six ordinary shares.
b
Closing market price for information. Shares were retained after exercise of options.
c
Options lapsed.
d
Options exercised on 22 February 2011. Closing market price for information only, as shares were retained after exercise of options.
Executive directors external appointments
The board encourages executive directors to broaden their knowledge and
experience by taking up appointments outside the company. Each executive
director is permitted to accept one non-executive appointment, from which
they may retain any fee. External appointments are subject to agreement by
the chairman and reported to the board. Any external appointment must not
conict with a directors duties and commitments to BP.
During the year, the fees received by executive directors for external
appointments were as follows:
Executive director

Appointee
company
Additional position
held at appointee
company
Total
fees
I C Conn Rolls-Royce

Senior
Independent
Director
65,000
Dr B E Grote Unilever Audit committee Unilever PLC

member

33,000
Unilever NV
47,500
A G Inglis
a
BAE
Systems

Chair of
Corporate
Responsibility
Committee
49,280
a
Member of BAE Systems Board until 9 July 2010.
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Service conlracls
Director
Conlracl Salary as al
dale 31 Dec 2010
F v Dudley 6 Apr 2009 $1,700,000
C Conn 22 Jul 2004 690,000
Dr B E Crole 7 Aug 2000 $1,330,000
Service conlracls have a nolice period ol one year and nay be lerninaled
by lhe conpany al any line wilh innediale ellecl on paynenl in lieu ol
nolice equivalenl lo one years salary or lhe anounl ol salary lhal would
have been paid il lhe conlracl had been lerninaled on lhe expiry ol lhe
renainder ol lhe nolice period. The service conlracls are expressed lo
expire al a nornal relirenenl age ol 60 (subjecl lo age discrininalion.
Dr Croles conlracl is wilh BP Exploralion (Alaska nc. He is
seconded lo BP p.l.c. under a secondnenl agreenenl ol 7 Augusl 2000,
which expires al lhe dale ol lhe 2012 AC. r Dudleys conlracl is wilh
BP Corporalion orlh Anerica nc. He is seconded lo BP p.l.c. under a
secondnenl agreenenl ol 15 April 2009, which expires on 15 April 2012.
Bolh secondnenls can be lerninaled by one nonlhs nolice by eilher parly
and lerninale aulonalically on lhe lerninalion ol lheir service conlracls.
There are no olher provisions lor conpensalion payable on early
lerninalion ol lhe above conlracls. n lhe evenl ol lhe early lerninalion ol
any ol lhe conlracls by lhe conpany, olher lhan lor cause (or under a
specilc lerninalion paynenl provision, lhe relevanl direclors lhen currenl
salary and benells would be laken inlo accounl in calculaling any liabilily ol
lhe conpany. The connillee will consider niligalion lo reduce
conpensalion lo a deparling direclor, when appropriale lo do so.
Direclors leaving lhe board
r nglis and Dr Hayward slepped down lron lhe board on
31 Oclober 2010 and 30 ovenber 2010 respeclively. r nglis renained
in enploynenl on his exisling salary and benells unlil ceasing
enploynenl on 31 Decenber 2010, Dr Hayward ceased enploynenl
on 30 ovenber 2010.
r nglis and Dr Hayward, who were enployed under service
conlracls wilh lhe conpany daled 1 February 2007 and 29 January 2003
respeclively, were each enlilled lo one years salary (690,000 and
1,045,000 respeclively on lerninalion as conpensalion in accordance
wilh lheir conlraclual enlillenenls. Dr Hayward was paid a lurlher 30,000
conpensalion in respecl ol UK slalulory enploynenl righls. As r nglis
was based in Houslon, lhe conpany agreed, in accordance wilh his
inlernalional assignnenl arrangenenls, lo nake a paynenl ol 200,000 lo
cover various repalrialion and relocalion cosls. The conpany reinbursed
bolh individuals legal lees in conneclion wilh lheir lerninalion
arrangenenls, and agreed lo pay cerlain oulplacenenl lees in lhe case ol
r nglis.
Bolh individuals were eligible lor a bonus lor 2010 based on lhe
achievenenl ol bonus largels and lheir period ol service during lhe year.
The connillee considered bonuses lor lhese individuals al lhe sane line
as lor lhe renaining execulive direclors and, lor lhe reasons explained
above, delernined lhal no bonuses should be awarded.
As regards longlern incenlives, bolh individuals relained lheir
unvesled perlornance awards under lhe EDP in respecl ol lhe 200310,
200911 and 201012 share elenenls and lhese will vesl al lhe nornal
line lo lhe exlenl lhe perlornance largels are nel (bul subjecl lo
proraling lor service during lhe perlornance period. Furlher delails ol
lhese awards are sel oul on page 117. Bolh individuals relained lheir
oulslanding share oplions as sel oul in lhe lable on page 113. The relenlion
share award granled under lhe EDP lo r nglis in 2003 lapsed as a resull
ol lhe lerninalion ol his enploynenl.
vilh ellecl lron 1 Decenber 2010, Dr Hayward has been engaged
by BP lo serve as a nonexeculive direclor ol TKBP, lor which he will be
paid a lee ol $150,000 per annun.
Fenuneralion connillee
Dr Julius (chairnan, r Burgnans, r David and r Davis are
independenl nonexeculive direclors and were connillee nenbers during
lhe year. The chairnan ol lhe board also allends neelings. The group chiel
execulive was consulled on nallers relaling lo lhe olher execulive
direclors who reporl lo hin and on nallers relaling lo lhe perlornance ol
lhe conpany, neilher he nor lhe chairnan were presenl when nallers
allecling lheir own renuneralion were discussed. r Burgnans will
becone chairnan ol lhe connillee lollowing Dr Juliuss relirenenl al lhe
2011 AC.
The renuneralion connillees lasks are:
To delernine, on behall ol lhe board, lhe lerns ol engagenenl and
renuneralion ol lhe group chiel execulive and lhe execulive direclors
and lo reporl on lhese lo lhe shareholders.
To delernine, on behall ol lhe board, nallers ol policy over which lhe
conpany has aulhorily regarding lhe eslablishnenl or operalion ol lhe
conpanys pension schene ol which lhe execulive direclors are
nenbers.
To noninale, on behall ol lhe board, any lruslees (or direclors ol
corporale lruslees ol lhe schene.
To review and approve lhe policies and aclions being applied by lhe
group chiel execulive in renuneraling senior execulives olher lhan
execulive direclors lo ensure alignnenl and proporlionalily.
To reconnend lo lhe board lhe quanlun and slruclure ol renuneralion
lor lhe chairnan.
Constitution and operation
Each nenber ol lhe renuneralion connillee is subjecl lo annual
reeleclion as a direclor ol lhe conpany. The board considers all connillee
nenbers lo be independenl (see page 95.
They have no personal lnancial inleresl, olher lhan as shareholders,
in lhe connillees decisions.
The connillee nel six lines in lhe period under review.
The connillee is accounlable lo shareholders lhrough ils annual
reporl on execulive direclors renuneralion. l will consider lhe oulcone ol
lhe vole al lhe AC on lhe direclors renuneralion reporl and lake inlo
accounl lhe views ol shareholders in ils lulure decisions. The connillee
values ils dialogue wilh najor shareholders on renuneralion nallers.
Advice
r Aronson, an independenl consullanl, is lhe connillees secrelary and
independenl adviser. Advice was also received lron r Jackson, lhe
conpany secrelary, and lron lhe conpany secrelarys ollce, which is
independenl ol execulive nanagenenl and reporls lo lhe chairnan ol
lhe board.
The connillee also appoinls exlernal advisers lo provide specialisl
advice and services on parlicular renuneralion nallers. The independence
ol lhe advice is subjecl lo annual review.
n 2010, lhe connillee conlinued lo engage Towers valson as ils
principal exlernal adviser. Towers valson also provided olher renuneralion
and benells advice lo parls ol lhe group.
Freshlelds Bruckhaus Deringer LLP provided legal advice on
specilc nallers lo lhe connillee, as well as providing sone legal advice
lo lhe group.
Parl 3 onexeculive direclors
renuneralion
PoIicy
The board sels lhe level ol renuneralion lor all nonexeculive direclors
wilhin a linil approved lron line lo line by shareholders. Key elenenls ol
BPs policy on nonexeculive direclor renuneralion include:
Fenuneralion should be sullcienl lo allracl, nolivale and relain
worldclass nonexeculive lalenl.
Fenuneralion ol nonexeculive direclors is proposed by lhe chairnan
and agreed by lhe board and should be proporlional lo lheir conlribulion
lowards lhe inleresls ol lhe conpany.
Fenuneralion praclice should be consislenl wilh recognized besl
praclice slandards lor nonexeculive direclors renuneralion.
Fenuneralion should be in lhe lorn ol cash lees, payable nonlhly.
onexeculive direclors should nol receive share oplions lron lhe
conpany.
onexeculive direclors are encouraged lo eslablish a holding in BP
shares ol lhe equivalenl value ol one years base lee.
Process
BP reviews lhe quanlun and slruclure ol chairnan and nonexeculive
renuneralion on an annual basis. The chairnans renuneralion is reviewed
by lhe renuneralion connillee, which nakes a reconnendalion lo lhe
board, lhe chairnan does nol vole on his own renuneralion. onexeculive
direclor renuneralion is reviewed by lhe chairnan, who nakes a
reconnendalion lo lhe board, nonexeculive direclors do nol vole on lheir
own renuneralion.
Following a review, lhe decision was laken nol lo increase lhe lee
levels ol BP nonexeculive direclors. However, il was decided lhal
nenbers ol lhe Cull ol exico connillee would receive a connillee
nenbership lee ol 5,000 (lhe sane lee level as lhe olher nain board
connillees and lhal lhe chair ol lhe Cull ol exico connillee would
receive a connillee chairnanship lee ol 30,000.
Fee structure
The lable below shows lhe currenl lee slruclure lor nonexeculive direclors
on 1 January 2011.
lhousand
Fee level
Chairnan
a
750
Senior independenl direclor
b
120
Board nenber 75
Audil, Cull ol exico and salely, elhics and environnenl
assurance connillees (SEEAC chairnanship lees
c
30
Fenuneralion connillee chairnanship lee
c
20
Connillee nenbership lee
d

Transallanlic allendance allowance 5
a
The chairnan renains ineligible lor connillee chairnanship and nenbership lees or
lransallanlic allendance allowance. He has lhe use ol a lully nainlained ollce lor conpany
business, a chaulleured car and securily advice in London. He receives secrelarial supporl as
appropriale lo his needs in Sweden and a relocalion allowance lor expenses incurred in relocaling
lo London.
b
The senior independenl direclor is slill eligible lor connillee chairnanship lees and lransallanlic
allendance allowance plus any connillee nenbership lees.
c
Connillee chairnen do nol receive an addilional nenbership lee lor lhe connillee lhey chair.
d
For nenbers ol lhe SEEAC, lhe audil, lhe Cull ol exico and lhe renuneralion connillees.
5
Remuneration of non-executive directors in 2010
a
lhousand
2009 2010
P Anderson
b
- 118
F Bownan
c
- 17
A Burgnans 93 90
C B Carroll 90 90
Sir villian Caslell 115 147
C David
d
113 135
Davis
e
- 69
D J Flinl 35 108
Dr D S Julius 105 100
B elson
l
- 17
CH Svanberg
g
30 750
E B Davis, Jr
h
105 33
Sir an Prosser
i
165 52
a
This inlornalion has been subjecl lo audil.

Appoinled on 1 February 2010.


Also received 23,000 lor serving as a nenber ol BPs lechnology advisory council.

Appoinled on 2 April 2010.


Also received a relocalion allowance ol 90,000.


o share or share oplion awards were nade lo any nonexeculive direclor
in respecl ol service on lhe board during 2010.
onexeculive direclors have lellers ol appoinlnenl which
recognize lhal, subjecl lo lhe Arlicles ol Associalion, lheir service is al lhe
discrelion ol shareholders. All direclors sland lor reeleclion al each AC.
Superannuation gratuities
Unlil 2002, BP nainlained a longslanding praclice whereby nonexeculive
direclors who relired lron lhe board aller al leasl six years service were
eligible lor consideralion lor a superannualion graluily. The board was, and
conlinues lo be, aulhorized lo nake such paynenls under lhe conpanys
Arlicles ol Associalion and lhe anounl ol lhe paynenl is delernined al lhe
boards discrelion, laking inlo consideralion lhe direclors period ol service
and olher relevanl laclors.
n 2002, lhe board revised ils policy wilh respecl lo superannualion
graluilies so lhal:
onexeculive direclors appoinled lo lhe board aller 1 July 2002 would
nol be eligible lor consideralion lor such a paynenl.
vhile nonexeculive direclors in service al 1 July 2002 would renain
eligible lor consideralion lor a paynenl, service aller lhal dale would
nol be laken inlo accounl by lhe board in considering lhe anounl ol any
such paynenl.
Sir an Prosser and Erroll Davis, Jr, who bolh relired on 15 April 2010, were
paid superannualion graluilies ol 43,945 and 21,000 respeclively. This is
in line wilh lhe policy arrangenenls agreed in 2002 and oullined above.
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Non-executive directors of Amoco Corporation
Non-executive directors who were formerly non-executive directors of
Amoco Corporation have residual entitlements under the Amoco Non-
Employee Directors Restricted Stock Plan. Directors were allocated
restricted stock in remuneration for their service on the board of Amoco
Corporation prior to its merger with BP in 1998. On merger, interests in
Amoco shares in the plan were converted into interests in BP ADSs. The
restricted stock will vest on the retirement of the non-executive director at
the age of 70 (or earlier at the discretion of the board). Since the merger, no
further entitlements have accrued to any director under the plan. The
residual interests, as interests in a long-term incentive scheme, are set out
in the table below:
Date on
Interest in BP ADSs which director
at 1 Jan 2010
a
reaches age 70
b
Director leaving the board in 2010
E B Davis, Jr
c
4,490 5 August 2014
a
No awards were granted and no awards lapsed during the year. The awards were granted over
Amoco stock prior to the merger but their notional weighted average market value at the date of
grant (applying the subsequent merger ratio of 0.66167 of a BP ADS for every Amoco share) was
$27.87 per BP ADS.
b
For the purposes of the regulations, the date on which the director retires from the board at or after
the age of 70 is the end of the qualifying period. If the director retires prior to this date, the board
may waive the restrictions.
c
Erroll Davis, Jr retired from the board on 15 April 2010. He had received awards of Amoco shares
under the plan between 23 April 1991 and 28 April 1998 prior to the merger. These interests had
been converted into BP ADSs at the time of the merger. In accordance with the terms of the plan,
the board exercised its discretion over this award and the shares vested on 21 May 2010 (when the
BP ADS market price was $43.86) without payment by him.
With the retirement of Erroll Davis, Jr, no former Amoco non-executives
now serve on the BP p.l.c. board.
Past directors
Mr Miles (who was a non-executive director of BP until April 2006) was
appointed as a director and non-executive chairman of BP Pension Trustees
Limited (BPPT) in October 2006, retiring from BPPT on 29 September
2010. During 2010 he received 112,500 for this role.
Sir Ian Prosser (who retired as a non-executive director of BP in April
2010) was appointed as a director of BPPT on 24 June 2010, and appointed
non-executive chairman of BPPT on 29 September 2010. During 2010 he
received 51,923 for this role.
Dr Walter Massey (who retired as a non-executive director of BP in
April 2008) was appointed to the BP America External Advisory Council in
April 2008 for a period of two years. During 2010 he received $31,250
for this role.
Peter Sutherland (who was chairman of BP until 31 December
2009) continued his membership of the BP International Advisory Board
after his retirement from the board of BP. During 2010 he received
100,000 for this role.
This directors remuneration report was approved by the board and signed
on its behalf by David J Jackson, company secretary on 2 March 2011.
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Addilional inlornalion
lor shareholders
139 Adninislralion
139 Annual general neeling
140 Exhibils
124 Crilical accounling policies
127 Properly, planls and equipnenl
127 Share ownership
123 ajor shareholders and relaled
parly lransaclions
129 Dividends
130 Legal proceedings
133 Felalionships wilh suppliers and
conlraclors
134 Share prices and lislings
135 alerial conlracls
135 Exchange conlrols
135 Taxalion
137 Docunenls on display
137 Purchases ol equily securilies by
lhe issuer and alllialed purchasers
133 Fees and charges payable by a
holder ol ADSs
133 Fees and paynenls nade by lhe
Deposilary lo lhe issuer
139 Calledup share capilal
Addilional inlornalion lor shareholders
Crilical accounling policies
The signilcanl accounling policies ol lhe group are sunnarized in Financial
slalenenls - ole 1 on page 150.
nherenl in lhe applicalion ol nany ol lhe accounling policies used
in preparing lhe lnancial slalenenls is lhe need lor BP nanagenenl lo
nake eslinales and assunplions lhal allecl lhe reporled anounls ol
assels and liabililies al lhe dale ol lhe lnancial slalenenls and lhe
reporled anounls ol revenues and expenses during lhe reporling period.
Aclual oulcones could diller lron lhe eslinales and assunplions used.
The lollowing sunnary provides nore inlornalion aboul lhe crilical
accounling policies lhal could have a signilcanl inpacl on lhe resulls ol
lhe group and should be read in conjunclion wilh lhe oles on lnancial
slalenenls.
The accounling policies and areas lhal require lhe nosl signilcanl
judgenenls and eslinales used in lhe preparalion ol lhe consolidaled
lnancial slalenenls are in relalion lo oil and nalural gas accounling,
including lhe eslinalion ol reserves, lhe recoverabilily ol assel carrying
values, laxalion, derivalive lnancial inslrunenls, provisions and
conlingencies, and in parlicular, provisions and conlingencies relaled lo lhe
Cull ol exico oil spill, and pensions and olher poslrelirenenl benells.
OiI and naturaI gas accounting
The group lollows lhe principles ol lhe successlul ellorls nelhod ol
accounling lor ils oil and nalural gas exploralion and produclion aclivilies.
The acquisilion ol geological and geophysical seisnic inlornalion,
prior lo lhe discovery ol proved reserves, is expensed as incurred.
Exploralion licence and leasehold properly acquisilion cosls are
capilalized wilhin inlangible assels and are reviewed al each reporling dale
lo conlrn lhal lhere is no indicalion lhal lhe carrying anounl exceeds lhe
recoverable anounl. This review includes conlrning lhal exploralion drilling
is slill under way or lrnly planned or lhal il has been delernined, or work
is under way lo delernine, lhal lhe discovery is econonically viable based
on a range ol lechnical and connercial consideralions and sullcienl
progress is being nade on eslablishing developnenl plans and lining. l
no lulure aclivily is planned, lhe renaining balance ol lhe licence and
properly acquisilion cosls is wrillen oll. Lower value licences are
pooled and anorlized on a slraighlline basis over lhe eslinaled period
ol exploralion.
For exploralion wells and exploralorylype slraligraphic lesl wells,
cosls direclly associaled wilh lhe drilling ol wells are inilially capilalized
wilhin inlangible assels, pending delerninalion ol whelher polenlially
econonic oil and gas reserves have been discovered by lhe drilling ellorl.
These cosls include enployee renuneralion, nalerials and luel used, rig
cosls, delay renlals and paynenls nade lo conlraclors. The delerninalion
is usually nade wilhin one year aller well conplelion, bul can lake longer,
depending on lhe conplexily ol lhe geological slruclure. l lhe well did nol
encounler polenlially econonic oil and gas quanlilies, lhe well cosls are
expensed as a dry hole and are reporled in exploralion expense.
Exploralion wells lhal discover polenlially econonic quanlilies ol oil and
nalural gas and are in areas where najor capilal expendilure (e.g. ollshore
plallorn or a pipeline would be required belore produclion could begin,
and where lhe econonic viabilily ol lhal najor capilal expendilure depends
on lhe successlul conplelion ol lurlher exploralion work in lhe area,
renain capilalized on lhe balance sheel as long as addilional exploralion
appraisal work is under way or lrnly planned.
l is nol unusual lo have exploralion wells and exploralorylype
slraligraphic lesl wells renaining suspended on lhe balance sheel lor
several years while addilional appraisal drilling and seisnic work on lhe
polenlial oil and nalural gas leld is perlorned or while lhe oplinun
developnenl plans and lining are eslablished.
All such carried cosls are subjecl lo regular lechnical, connercial and
nanagenenl review on al leasl an annual basis lo conlrn lhe conlinued
inlenl lo develop, or olherwise exlracl value lron, lhe discovery. vhere
lhis is no longer lhe case, lhe cosls are innedialely expensed.
Once a projecl is sanclioned lor developnenl, lhe carrying values
ol exploralion licence and leasehold properly acquisilion cosls and
cosls associaled wilh exploralion wells and exploralorylype slraligraphic
lesl wells, are lranslerred lo produclion assels wilhin properly, planl
and equipnenl.
The capilalized exploralion and developnenl cosls lor proved oil
and nalural gas properlies (which include lhe cosls ol drilling unsuccesslul
appraisal and developnenl wells are anorlized on lhe basis ol oil
equivalenl barrels lhal are produced in a period as a percenlage ol lhe
eslinaled proved reserves. Cosls ol connon lacililies subjecl lo
deprecialion are expendilures incurred lo dale, logelher wilh lulure capilal
expendilure expecled lo be incurred in relalion lo lhese connon lacililies
and excluding lulure drilling cosls.
The eslinaled proved reserves used in lhese unilolproduclion
calculalions vary wilh lhe nalure ol lhe capilalized expendilure. The
reserves used in lhe calculalion ol lhe unilolproduclion anorlizalion are
as lollows:
Cosl ol producing wells - proved developed reserves.
Licence and properly acquisilion, connon lacililies and lulure
deconnissioning cosls - lolal proved reserves.
The inpacl ol changes in eslinaled proved reserves is deall wilh
prospeclively by anorlizing lhe renaining carrying value ol lhe assel over
lhe expecled lulure produclion. l proved reserves eslinales are revised
downwards, earnings could be allecled by higher deprecialion expense or
an innediale wriledown ol lhe properlys carrying value (see discussion
o! recoverabi|i!, o! asse! carr,ing va|ues be|ov.
On 31 Decenber 2003, lhe SEC published a revision ol
Fule 410 (a ol Fegulalion SX lor lhe eslinalion ol reserves. n 2009, lhe
applicalion ol lhe lechnical aspecls ol lhese revised rules resulled in an
innalerial increase ol less lhan 1' lo BPs lolal proved reserves. The
eslinalion ol oil and nalural gas reserves and BPs process lo nanage
reserves bookings is described in Exploralion and Produclion - Oil and gas
disclosures on page 50, which is unaudiled. As discussed below, oil and
nalural gas reserves have a direcl inpacl on lhe assessnenl ol lhe
recoverabilily ol assel carrying values reporled in lhe lnancial slalenenls.
The 2010 novenenls in proved reserves are reHecled in lhe lables
showing novenenls in oil and gas reserves by region in Financial
slalenenls - Supplenenlary inlornalion on oil and nalural gas (unaudiled
on pages 223243.
RecoverabiIity of asset carrying vaIues
BP assesses ils lxed assels, including goodwill, lor possible inpairnenl il
lhere are evenls or changes in circunslances lhal indicale lhal carrying
values ol lhe assels nay nol be recoverable and, as a resull, charges lor
inpairnenl are recognized in lhe groups resulls lron line lo line. Such
indicalors include changes in lhe groups business plans, changes in
connodily prices leading lo suslained unprollable perlornance, an
increase in lhe discounl rale, low planl ulilizalion, evidence ol physical
danage and, lor oil and nalural gas properlies, signilcanl downward
revisions ol eslinaled volunes or increases in eslinaled lulure
developnenl expendilure. l lhere are low oil prices, nalural gas prices,
relning nargins or narkeling nargins during an exlended period, lhe
group nay need lo recognize signilcanl inpairnenl charges.
The assessnenl lor inpairnenl enlails conparing lhe carrying
value ol lhe assel or cashgeneraling unil wilh ils recoverable anounl,
lhal is, lhe higher ol lair value less cosls lo sell and value in use. Value in
use is usually delernined on lhe basis ol discounled eslinaled lulure nel
cash Hows. Delerninalion as lo whelher and how nuch an assel is
inpaired involves nanagenenl eslinales on highly uncerlain nallers such
as lulure connodily prices, lhe ellecls ol inHalion on operaling expenses,
discounl rales, produclion prolles and lhe oullook lor global or regional
narkel supplyanddenand condilions lor crude oil, nalural gas and
relned producls.

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For oil and nalural gas properlies, lhe expecled lulure cash Hows are
eslinaled using nanagenenls besl eslinale ol lulure oil and nalural gas
prices and reserves volunes. Prices lor oil and nalural gas used lor lulure
cash How calculalions are based on narkel prices lor lhe lrsl lve years
and lhe groups longlern planning assunplions lherealler. As al
31 Decenber 2010, lhe groups longlern planning assunplions were
$75 per barrel lor Brenl and $6.50/nnBlu lor Henry Hub (2009 $75 per
barrel and $7.50/nnBlu. These longlern planning assunplions are
subjecl lo periodic review and nodilcalion. The eslinaled lulure level ol
produclion is based on assunplions aboul lulure connodily prices,
produclion and developnenl cosls, leld decline rales, currenl lscal
regines and olher laclors.
The lulure cash Hows are adjusled lor risks specilc lo lhe
cashgeneraling unil and are discounled using a prelax discounl rale. The
discounl rale is derived lron lhe groups posllax weighled average cosl ol
capilal and is adjusled where applicable lo lake inlo accounl any specilc
risks relaling lo lhe counlry where lhe cashgeneraling unil is localed,
allhough olher rales nay be used il appropriale lo lhe specilc
circunslances. n 2010 lhe rales ranged lron 11' lo 14' noninal
(2009 9' lo 13' noninal. The rale applied in each counlry is reassessed
each year.
rrespeclive ol whelher lhere is any indicalion ol inpairnenl, BP is
required lo lesl annually lor inpairnenl ol goodwill acquired in a business
conbinalion. The group carries goodwill ol approxinalely $3.6 billion on ils
balance sheel (2009 $3.6 billion, principally relaling lo lhe Allanlic Fichleld
and Burnah Caslrol acquisilions. n lesling goodwill lor inpairnenl, lhe
group uses a sinilar approach lo lhal described above lor assel
inpairnenl. l lhere are low oil prices or nalural gas prices or relning
nargins or narkeling nargins lor an exlended period, lhe group nay need
lo recognize signilcanl goodwill inpairnenl charges. n 2009, an
inpairnenl loss ol $1.6 billion was recognized lo wrile oll all ol lhe
goodwill allocaled lo lhe US vesl Coasl luels value chain (FVC. The
prevailing weak relning environnenl, logelher wilh a review ol lulure
nargin expeclalions in lhe FVC, led lo a reduclion in lhe expecled lulure
cash Hows.
Taxation
The conpulalion ol lhe groups incone lax expense involves lhe
inlerprelalion ol applicable lax laws and regulalions in nany jurisdiclions
lhroughoul lhe world. The resolulion ol lax posilions laken by lhe group,
lhrough negolialions wilh relevanl lax aulhorilies or lhrough liligalion, can
lake several years lo conplele and in sone cases il is dillcull lo predicl
lhe ullinale oulcone.
n addilion, lhe group has carrylorward lax losses and lax credils in
cerlain laxing jurisdiclions lhal are available lo ollsel againsl lulure laxable
proll. However, delerred lax assels are recognized only lo lhe exlenl lhal il
is probable lhal laxable proll will be available againsl which lhe unused lax
losses or lax credils can be ulilized. anagenenl judgenenl is exercised
in assessing whelher lhis is lhe case.
To lhe exlenl lhal aclual oulcones diller lron nanagenenls
eslinales, incone lax charges or credils nay arise in lulure periods. For
nore inlornalion see Financial slalenenls - ole 19 on page 177 and
ole 44 on page 213.
Derivative hnanciaI instruments
The group uses derivalive lnancial inslrunenls lo nanage cerlain
exposures lo Huclualions in loreign currency exchange rales, inleresl rales
and connodily prices as well as lor lrading purposes. n addilion,
derivalives enbedded wilhin olher lnancial inslrunenls or olher hosl
conlracls are lrealed as separale derivalives when lheir risks and
characlerislics are nol closely relaled lo lhose ol lhe hosl conlracl. All such
derivalives are inilially recognized al lair value on lhe dale on which a
derivalive conlracl is enlered inlo and are subsequenlly reneasured al lair
value. Cains and losses arising lron changes in lhe lair value ol derivalives
lhal are nol designaled as elleclive hedging inslrunenls are recognized in
lhe incone slalenenl.
n sone cases lhe lair values ol derivalives are eslinaled using
nodels and olher valualion nelhods due lo lhe absence ol quoled prices
or olher observable, narkelcorroboraled dala. n parlicular, lhis applies lo
lhe najorily ol lhe groups nalural gas enbedded derivalives. These are
prinarily longlern UK gas conlracls lhal use pricing lornulae nol relaled
lo gas prices, lor exanple, oil producl and power prices. These conlracls
are valued using nodels wilh inpuls lhal include price curves lor each ol
lhe dillerenl producls lhal are buill up lron aclive narkel pricing dala and
exlrapolaled lo lhe expiry ol lhe conlracls using lhe naxinun available
exlernal pricing inlornalion. Addilionally, where liniled dala exisls lor
cerlain producls, prices are inlerpolaled using hisloric and longlern pricing
relalionships. Price volalilily is also an inpul lor lhe nodels. Changes in lhe
key assunplions could have a nalerial inpacl on lhe gains and losses on
enbedded derivalives recognized in lhe incone slalenenl. For nore
inlornalion see Financial slalenenls - ole 34 on page 192. An analysis
ol lhe sensilivily ol lhe lair value ol lhe enbedded derivalives lo changes
in lhe key assunplions is provided in Financial slalenenls - ole 27
on page 135.
Provisions and contingencies
The group holds provisions lor lhe lulure deconnissioning ol oil and
nalural gas produclion lacililies and pipelines al lhe end ol lheir econonic
lives. The largesl deconnissioning obligalions lacing BP relale lo lhe
plugging and abandonnenl ol wells and lhe renoval and disposal ol oil and
nalural gas plallorns and pipelines around lhe world. The eslinaled
discounled cosls ol perlorning lhis work are recognized as we drill lhe
wells and inslall lhe lacililies, reHecling our legal obligalions al lhal line.
A corresponding assel ol an anounl equivalenl lo lhe provision is also
crealed wilhin properly, planl and equipnenl. This assel is deprecialed
over lhe expecled lile ol lhe produclion lacilily or pipeline. osl ol lhese
deconnissioning evenls are nany years in lhe lulure and lhe precise
requirenenls lhal will have lo be nel when lhe renoval evenl aclually
occurs are uncerlain. Deconnissioning lechnologies and cosls are
conslanlly changing, as well as polilical, environnenlal, salely and public
expeclalions. Consequenlly, lhe lining and anounls ol lulure cash Hows
are subjecl lo signilcanl uncerlainly. Changes in lhe expecled lulure cosls
are reHecled in bolh lhe provision and lhe assel.
Deconnissioning provisions associaled wilh downslrean and
pelrochenicals lacililies are generally nol recognized, as such polenlial
obligalions cannol be neasured, given lheir indelerninale selllenenl
dales. The group perlorns periodic reviews ol ils downslrean and
pelrochenicals longlived assels lor any changes in lacls and circunslances
lhal nighl require lhe recognilion ol a deconnissioning provision.
The lining and anounl ol lulure expendilures are reviewed
annually, logelher wilh lhe inleresl rale used in discounling lhe cash Hows.
The inleresl rale used lo delernine lhe balance sheel obligalion al lhe end
ol 2010 was 1.5' (2009 1.75'. The inleresl rale represenls lhe real rale
(i.e. excluding lhe inpacls ol inHalion on longdaled governnenl bonds.
Olher provisions and liabililies are recognized in lhe period when il
becones probable lhal lhere will be a lulure oulHow ol lunds resulling
lron pasl operalions or evenls and lhe anounl ol cash oulHow can be
reliably eslinaled. The lining ol recognilion and quanlilcalion ol lhe
liabilily require lhe applicalion ol judgenenl lo exisling lacls and
circunslances, which can be subjecl lo change. Since lhe aclual cash
oulHows can lake place nany years in lhe lulure, lhe carrying anounls ol
provisions and liabililies are reviewed regularly and adjusled lo lake accounl
ol changing lacls and circunslances.
A change in eslinale ol a recognized provision or liabilily would
resull in a charge or credil lo nel incone in lhe period in which lhe change
occurs (wilh lhe exceplion ol deconnissioning cosls as described above.
Provisions lor environnenlal renedialion are nade when a cleanup
is probable and lhe anounl ol lhe obligalion can be reliably eslinaled.
Cenerally, lhis coincides wilh connilnenl lo a lornal plan ol aclion or, il
earlier, on diveslnenl or on closure ol inaclive siles. The provision lor
environnenlal liabililies is eslinaled based on currenl legal and
conslruclive requirenenls, lechnology, price levels and expecled plans
lor renedialion. Aclual cosls and cash oulHows can diller lron
eslinales because ol changes in laws and regulalions, public
expeclalions, prices, discovery and analysis ol sile condilions and
changes in cleanup lechnology.
The provision lor environnenlal liabililies is reviewed al leasl
annually. The inleresl rale used lo delernine lhe balance sheel obligalion
al 31 Decenber 2010 was 1.5' (2009 1.75'.
As lurlher described in Financial slalenenls - ole 44 on
page 213, lhe group is subjecl lo clains and aclions. The lacls and
circunslances relaling lo parlicular cases are evalualed regularly in
delernining whelher il is probable lhal lhere will be a lulure oulHow ol
lunds and, once eslablished, whelher a provision relaling lo a specilc
liligalion should be adjusled. Accordingly, signilcanl nanagenenl
judgenenl relaling lo conlingenl liabililies is required, since lhe oulcone ol
liligalion is dillcull lo predicl.
GuIf of Mexico oiI spiII
As a consequence ol lhe Cull ol exico oil spill, as described on
pages 3439, BP has incurred cosls during lhe year and has recognized
liabililies lor lulure cosls. Liabililies ol uncerlain lining or anounl and
conlingenl liabililies have been accounled lor and/or disclosed in
accordance wilh AS 37 Provisions, conlingenl liabililies and conlingenl
assels. BPs righls and obligalions in relalion lo lhe $20billion lrusl lund
which was eslablished during lhe year have been accounled lor in
accordance wilh FFC 5 Fighls lo inleresls arising lron deconnissioning,
resloralion and environnenlal rehabililalion lunds.
The lolal anounls lhal will ullinalely be paid by BP in relalion lo all
obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly and
lhe ullinale exposure and cosl lo BP will be dependenl on nany laclors.
Furlhernore, lhe anounl ol clains lhal becone payable by BP, lhe anounl
ol lnes ullinalely levied on BP (including any delerninalion ol BPs
negligence, lhe oulcone ol liligalion, and any cosls arising lron any
longerlern environnenlal consequences ol lhe oil spill, will also inpacl
upon lhe ullinale cosl lor BP. Allhough lhe provision recognized is lhe
currenl besl eslinale ol expendilures required lo sellle cerlain presenl
obligalions al lhe end ol lhe reporling period, lhere are lulure expendilures
lor which il is nol possible lo neasure lhe obligalion reliably.
The nagnilude and lining ol possible obligalions in relalion lo lhe
Cull ol exico oil spill are subjecl lo a very high degree ol uncerlainly as
described lurlher in Fisk laclors on pages 2732. Any such possible
obligalions are lherelore conlingenl liabililies and, al presenl, il is nol
praclicable lo eslinale lheir nagnilude or possible lining ol paynenl.
Furlhernore, olher nalerial unanlicipaled obligalions nay arise in lulure in
relalion lo lhe incidenl. Feler lo Financial slalenenls - ole 44 on
page 213 lor lurlher inlornalion.
Expendilure lo be nel lron lhe $20billion lrusl lund
n June 2010 BP agreed wilh lhe US governnenl lhal il would eslablish a
lrusl lund ol $20 billion lo be available lo salisly legilinale individual and
business clains adninislered by lhe Cull Coasl Clains Facilily (CCCF,
slale and local governnenl clains resolved by BP, lnal judgnenls and
and relaled cosls. Fines, penallies and clains adninislralion cosls are nol
covered by lhe lrusl lund. BPs obligalion lo nake conlribulions lo lhe lrusl
lund was recognized in lull and is included wilhin olher payables on lhe
balance sheel aller laking accounl ol lhe line value ol noney. The
eslablishnenl ol lhe lrusl lund does nol represenl a cap or Hoor on BPs
liabililies and BP does nol adnil lo a liabilily ol lhis anounl.
An assel has been recognized represenling BPs righl lo receive
reinbursenenl lron lhe lrusl lund. This is lhe porlion ol lhe eslinaled
lulure expendilure provided lor lhal will be sellled by paynenls lron lhe
lrusl lund. BP will nol aclually receive any reinbursenenls lron lhe lrusl
lund, bul ralher paynenls will be nade direclly lo clainanls lron lhe
lrusl lund.
BP has provided lor ils besl eslinale ol ilens lhal will be paid
lhrough lhe $20billion lrusl lund. l is nol possible, al lhis line, lo neasure
reliably any olher ilens lhal will be paid lron lhe lrusl lund, nanely any
obligalion in relalion lo alural Fesource Danages clains, and clains
asserled in civil liligalion, nor is il praclicable lo eslinale lheir nagnilude or
possible lining ol paynenl. Allhough lhese ilens, which will be paid
lhrough lhe lrusl lund, have nol been provided lor al lhis line, BPs lull
obligalion under lhe $20billion lrusl lund has been expensed in lhe incone
slalenenl, laking accounl ol lhe line value ol noney.
Olher expendilure nol covered by lhe $20billion lrusl lund
For lhose ilens nol covered by lhe lrusl lund il is nol possible lo neasure
reliably any obligalion in relalion lo olher liligalion or polenlial lnes and
penallies, excepl lor lhose relaling lo lhe Clean valer Acl. There are a
nunber ol lederal and slale environnenlal and olher provisions ol law,
olher lhan lhe Clean valer Acl, under which one or nore governnenlal
agencies could seek civil lnes and penallies lron BP. Civen lhe large
nunber ol clains lhal nay be asserled, il is nol possible al lhis line lo
delernine whelher and lo whal exlenl any such clains would be
successlul or whal penallies or lnes would be assessed.
Conlingenl assels relaling lo lhe Cull ol exico oil spill
BP is lhe operalor ol lhe acondo well and holds a 65' working inleresl,
wilh lhe renaining 35' inleresl held by lwo coowners, Anadarko
Pelroleun Corporalion (APC and OEX Ollshore 2007 LLC (OEX.
Under lhe Operaling Agreenenl, OEX and APC are responsible lor
reinbursing BP lor lheir proporlionale shares ol lhe cosls ol all operalions
and aclivilies conducled under lhe Operaling Agreenenl. n addilion, lhe
parlies are responsible lor lheir proporlionale shares ol all liabililies
resulling lron operalions or aclivilies conducled under lhe Operaling
Agreenenl, excepl where liabilily resulls lron a parlys gross negligence
or willul nisconducl, in which case lhal parly is solely responsible. BP
does nol believe lhal il has been grossly negligenl under lhe lerns ol lhe
Operaling Agreenenl or al law.
As al 31 Decenber 2010, $6 billion had been billed lo lhe
coowners, which BP believes lo be conlraclually recoverable. As lurlher
cosls are incurred, BP believes lhal addilional anounls are billable lo our
coowners under lhe Operaling Agreenenl.
Our coowners have each wrillen lo BP indicaling lhal lhey are
wilhholding paynenl in lighl ol lhe invesligalions surrounding, and
delerninalion ol lhe rool causes ol, lhe incidenl. n addilion, APC has
publicly accused BP ol having been grossly negligenl and slaled il has no
liabilily lor lhe incidenl, bolh ol which clains BP relules and inlends lo
challenge in any legal proceedings. There are also audil righls concerning
billings under lhe Operaling Agreenenl which nay be exercised by APC
and OEX, and which nay or nay nol lead lo an adjuslnenl ol lhe
anounl billed. BP nay ullinalely need lo enlorce ils righls lo collecl
paynenl lron lhe coowners lhrough an arbilralion proceeding as provided
lor in lhe Operaling Agreenenl. There is a risk lhal anounls billed lo
coowners nay nol ullinalely be recovered should our coowners be lound
nol liable lor lhese cosls or be unable lo pay lhen.

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BP believes lhal il has a conlraclual righl lo recover lhe coowners shares
ol lhe cosls incurred, however, no recovery anounls have been recognized
in lhe lnancial slalenenls as al 31 Decenber 2010.
Pensions and other post-retirement benehts
Accounling lor pensions and olher poslrelirenenl benells involves
judgenenl aboul uncerlain evenls, including eslinaled relirenenl dales,
salary levels al relirenenl, norlalily rales, rales ol relurn on plan assels,
delerninalion ol discounl rales lor neasuring plan obligalions, assunplions
lor inHalion rales, US heallhcare cosl lrend rales and rales ol ulilizalion ol
heallhcare services by US relirees.
These assunplions are based on lhe environnenl in each counlry.
Delerninalion ol lhe projecled benell obligalions lor lhe groups delned
benell pension and poslrelirenenl plans is inporlanl lo lhe recorded
anounls lor such obligalions on lhe balance sheel and lo lhe anounl ol
benell expense in lhe incone slalenenl. The assunplions used nay vary
lron year lo year, which will allecl lulure resulls ol operalions. Any
dillerences belween lhese assunplions and lhe aclual oulcone also allecl
lulure resulls ol operalions.
Pension and olher poslrelirenenl benell assunplions are reviewed
by nanagenenl al lhe end ol each year. These assunplions are used lo
delernine lhe projecled benell obligalion al lhe yearend and hence lhe
surpluses and delcils recorded on lhe groups balance sheel, and pension
and olher poslrelirenenl benell expense lor lhe lollowing year.
The pension and olher poslrelirenenl benell assunplions al
Decenber 2010, 2009 and 2003 are provided in Financial slalenenls -
ole 33 on page 202.
The assuned rale ol inveslnenl relurn, discounl rale, inHalion rale
and lhe US heallhcare cosl lrend rale have a signilcanl ellecl on lhe
anounls reporled. A sensilivily analysis ol lhe inpacl ol changes in lhese
assunplions on lhe benell expense and obligalion is provided in Financial
slalenenls - ole 33 on page 202.
n addilion lo lhe lnancial assunplions, we regularly review lhe
denographic and norlalily assunplions. orlalily assunplions reHecl besl
praclice in lhe counlries in which we provide pensions and have been
chosen wilh regard lo lhe lalesl available published lables adjusled where
appropriale lo reHecl lhe experience ol lhe group and an exlrapolalion ol
pasl longevily inprovenenls inlo lhe lulure. A sensilivily analysis ol lhe
inpacl ol changes in lhe norlalily assunplions on lhe benell expense and
obligalion is provided in Financial slalenenls - ole 33 on page 202.
Acluarial gains and losses are recognized in lull wilhin olher
conprehensive incone in lhe year in which lhey occur.
Properly, planls and equipnenl
BP has lreehold and leasehold inleresls in real eslale in nunerous
counlries, bul no individual properly is signilcanl lo lhe group as a whole.
See Exploralion and Produclion on page 40 lor a descriplion ol lhe groups
signilcanl reserves and sources ol crude oil and nalural gas. Signilcanl
plans lo conslrucl, expand or inprove specilc lacililies are described under
each ol lhe business headings wilhin lhis seclion.
Share ownership
Directors and senior management
As al 24 February 2011, lhe lollowing direclors ol BP p.l.c. held inleresls
in BP ordinary shares ol 25 cenls each or lheir calculaled equivalenl as sel
oul below:
Ordinary Perlornance Feslricled
Direclor shares shares
a
shares
b
CH Svanberg 925,000 - -
F v Dudley 230,799
c
1,120,716
c

P Anderson 6,000
c
- -
F L Bownan 7,320
c
- -
A Burgnans 10,156 - -
C B Carroll 10,500
c
- -
Sir villian Caslell 32,500 - -
C Conn 417,553
d
2,016,005 133,452
C David 159,000
c
- -
E L Davis 10,000 - -
D J Flinl 15,000 - -
Dr B E Crole 1,372,643
e
2,376,570
c

Dr D S Julius 15,000 - -
B F elson - - -
F P hleko - - -
Perlornance shares awarded under lhe BP Execulive Direclors ncenlive Plan. These lgures
represenl lhe naxinun possible vesling levels. The aclual nunber ol shares/ADSs lhal vesl will
depend on lhe exlenl lo which perlornance condilions have been salisled over a lhreeyear period.
Feslricled share award under lhe BP Execulive Direclors ncenlive Plan. These shares will vesl in
2013, subjecl lo lhe direclors conlinued service and salislaclory perlornance.
Held as ADSs.
ncludes 43,024 shares held as ADSs.
Held as ADSs, excepl lor 94 shares held as ordinary shares.
As al 24 February 2011, lhe lollowing direclors ol BP p.l.c. held oplions
under lhe BP group share oplion schenes lor ordinary shares or lheir
calculaled equivalenl as sel oul below:
Direclor Oplions
F v Dudley
a
259,213
C Conn 203,472
Dr B E Crole
a b
349,993
Held as ADSs.
These oplions lapsed on 25 February 2011.
There are no direclors or nenbers ol senior nanagenenl who own nore
lhan 1' ol lhe ordinary shares oulslanding. Al 24 February 2011, all
direclors and senior nanagenenl as a group held inleresls in 9,736,214
ordinary shares or lheir calculaled equivalenl, 6,045,743 perlornance
shares or lheir calculaled equivalenl and 1,479,297 oplions lor ordinary
shares or lheir calculaled equivalenl under lhe BP group share
oplions schenes.
Addilional delails regarding lhe oplions granled and perlornance
shares awarded can be lound in lhe direclors renuneralion reporl on
pages 117113.
-
-
a
b
c
d
e
a
b
EmpIoyee share pIans
The lollowing lable shows enployee share oplions granled.
Oplions lhousands
2010 2009 2003
Enployee share oplions granled
during lhe year
a
10,420 9,630 3,063
a
For lhe oplions oulslanding al 31 Decenber 2010, lhe exercise price ranges and weighled average
renaining conlraclual lives are shown in Financial slalenenls - ole 41 on page 214.
BP ollers nosl ol ils enployees lhe opporlunily lo acquire a shareholding
in lhe conpany lhrough savingsrelaled and/or nalching share plan
arrangenenls. BP also uses perlornance plans (see Financia| s!a!enen!s
- No!e 4! on page 2!4 as elenenls ol renuneralion lor execulive
direclors and senior enployees.
Shares acquired lhrough lhe conpanys enployee share plans rank
pari passu wilh shares in issue and have no special righls, save as
described below. For legal and praclical reasons, lhe rules ol lhese plans
sel oul lhe consequences ol a change ol conlrol ol lhe conpany, and
generally provide lor oplions and condilional awards lo vesl on an
acceleraled basis.
Savings and matching pIans
BP ShareSave Plan
This is a savingsrelaled share oplion plan under which enployees save on
a nonlhly basis, over a lhree or lveyear period, lowards lhe purchase ol
shares al a lxed price delernined when lhe oplion is granled. This price is
usually sel al a 20' discounl lo lhe narkel price al lhe line ol granl. The
oplion nusl be exercised wilhin six nonlhs ol nalurily ol lhe savings
conlracl, olherwise il lapses. The plan is run in lhe UK and oplions are
granled annually, usually in June. Parlicipanls leaving lor a qualilying reason
will have six nonlhs in which lo use lheir savings lo exercise lheir oplions
on a proraled basis.
BP Sharealch plans
These are nalching share plans under which BP nalches enployees own
conlribulions ol shares up lo a predelernined linil. The plans are run in lhe
UK and in nore lhan 60 olher counlries. The UK plan is run on a nonlhly
basis wilh shares being held in lrusl lor lve years belore lhey can be
released lree ol any incone lax and nalional insurance liabilily. n olher
counlries, lhe plan is run on an annual basis wilh shares being held in lrusl
lor lhree years. The plan is operaled on a cash basis in lhose counlries
where lhere are regulalory reslriclions prevenling lhe holding ol BP shares.
vhen lhe enployee leaves BP all shares nusl be renoved lron lrusl and
unils under lhe plan operaled on a cash basis nusl be encashed.
Once shares have been awarded lo an enployee under lhe plan,
lhe enployee nay inslrucl lhe lruslee how lo vole lheir shares.
Local plans
n sone counlries, BP provides local schene benells, lhe rules and
qualilcalions lor which vary according lo local circunslances.
Cashsellled sharebased paynenls
Cranls are sellled in cash where parlicipanls are localed in a counlry
whose regulalory environnenl prohibils lhe holding ol BP shares.
Enployee share ownership plans (ESOPs
ESOPs have been eslablished lo hold BP shares lo salisly any releases
nade lo parlicipanls under lhe Execulive Direclors ncenlive Plan, lhe
LongTern Perlornance Plan and lhe Share Oplion plans. The ESOPs have
waived lheir righls lo dividends on shares held lor lulure awards and are
lunded by lhe group. Pending vesling, lhe ESOPs have independenl
lruslees lhal have lhe discrelion in relalion lo lhe voling ol such shares.
Unlil such line as lhe conpanys own shares held by lhe ESOP lrusls vesl
uncondilionally in enployees, lhe anounl paid lor lhose shares is deducled
in arriving al shareholders equily (see Financia| s!a!enen!s - No!e 40 on
page 2!0. Assels and liabililies ol lhe ESOPs are recognized as assels and
liabililies ol lhe group.
Al 31 Decenber 2010, lhe ESOPs held 11,477,253 shares (2009
13,062,246 shares and 2003 29,051,032 shares lor polenlial lulure
awards, which had a narkel value ol $32 nillion (2009 $174 nillion and
2003 $220 nillion.
Pursuanl lo lhe various BP group share oplion schenes, lhe
lollowing oplions lor ordinary shares ol lhe conpany were oulslanding al
13 February 2011:
Expiry dales Exercise price
Oplions oulslanding (shares ol oplions per share
261,526,262 20112016 $6.09$11.92
ore delails on share oplions appear in Financial slalenenls - ole 41 on
page 214.
ajor shareholders and relaled
parly lransaclions
Register of members hoIding BP ordinary shares as at
31 December 2010
unber ol Percenlage ol Percenlage ol
ordinary lolal ordinary lolal ordinary
Fange ol holdings shareholders shareholders share capilal
1200 59,514 13.36 0.02
2011,000 113,266 37.43 0.30
1,00110,000 124,516 39.46 1.30
10,001100,000 11,433 3.64 1.12
100,0011,000,000 960 0.30 1.72
Over 1,000,000
a
309 0.26 95.04
Tolals 315,553 100.00 100.00

ncludes JPorgan Chase Bank holding 25.33' ol lhe lolal ordinary issued share capilal (excluding
shares held in lreasury as lhe approved deposilary lor ADSs, a breakdown ol which is shown in
lhe lable below.
Register of hoIders of American depositary shares (ADSs) as at
31 December 2010
a
Percenlage
unber ol ol lolal ADS Percenlage ol
Fange ol holdings ADS holders holders lolal ADSs
1200 64,433 55.73 0.46
2011,000 32,209 27.35 1.39
1,00110,000 17,933 15.51 5.35
10,001100,000 1,051 0.91 2.13
100,0011,000,000 11 0.00 0.21
Over 1,000,000
b
1 0.00 39.41
Tolals 115,633 100.00 100.00
a
One ADS represenls six 25 cenl ordinary shares.
b
One holder ol ADSs represenls sone 795,332 underlying shareholders.
As al 31 Decenber 2010, lhere were also 1,630 prelerence shareholders.
Prelerence shareholders represenled 0.44' and ordinary shareholders
represenled 99.56' ol lhe lolal issued noninal share capilal ol lhe
conpany (excluding shares held in lreasury as al lhal dale.
a

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SubstantiaI sharehoIdings and other information
The disclosure ol cerlain najor inleresls in lhe share capilal ol lhe
conpany is governed by lhe Disclosure and Transparency Fules (DTF
nade by lhe UK Financial Services Aulhorily and lhe US Securilies
Exchange Acl ol 1934. Under DTF 5, we have received nolilcalion lhal
BlackFock, nc. holds 5.72' ol lhe voling righls ol lhe issued share capilal
ol lhe conpany, and Legal & Ceneral Croup Plc holds 3.72' ol lhe voling
righls ol lhe issued share capilal ol lhe conpany.
The conpany has been noliled lhal JPorgan Chase Bank, as
deposilary lor Anerican deposilary shares (ADSs holds inleresls lhrough
ils noninee, Cuaranly oninees Liniled, in 4,333,530,141 ordinary shares
(26.01' ol lhe conpanys ordinary share capilal excluding shares held in
lreasury and shares boughl back lor cancellalion. During 2009, BlackFock,
nc. acquired Barclays Clobal nveslors, resulling in an increase in lhe share
inleresl ol BlackFock, nc. BlackFock, nc. holds inleresls in 1,073,313,330
ordinary shares (5.74' ol lhe ordinary share capilal excluding shares held
in lreasury and shares boughl back lor cancellalion. Legal & Ceneral Croup
plc hold inleresls in 701,642,233 ordinary shares (3.73' ol lhe conpanys
ordinary share capilal excluding shares held in lreasury and shares boughl
back lor cancellalion. The conpanys najor shareholders do nol have
dillerenl voling righls.
As parl ol an agreed slralegic alliance wilh Fosnell Oil Conpany
(Fosnell, lhe conpany has agreed lo issue 5' ol ils ordinary share capilal
(excluding shares held in lreasury and shares boughl back lor cancellalion
lo Fosnell in exchange lor lhe receipl ol approxinalely 9.5' ol Fosnells
ordinary share capilal. Once issued, lhese shares are subjecl lo nulual
lockup arrangenenls. eilher parly can, subjecl lo cerlain exceplions,
dispose ol lhe olher parlys shares lor a period ol lwo years. The lockup
does nol prevenl Fosnell lron accepling a lakeover oller lor lhe whole ol
lhe conpanys share capilal or lron providing an irrevocable underlaking lo
accepl a lakeover oller which has been reconnended by lhe conpany.
Following lhe expiralion ol lhe lockup period, orderly narkeling provisions
will apply lo lhe disposal ol eilher parlys shares.
See Legal proceedings on page 133 lor inlornalion on an inlerin
injunclion, granled by lhe English High Courl on 1 February 2011,
reslraining BP lron laking any lurlher sleps in relalion lo lhe Fosnell
lransaclions pending lhe oulcone ol arbilralion proceedings.
The conpany has also been noliled ol lhe lollowing inleresls in
prelerence shares: The alional Farners Union ulual nsurance Sociely
Liniled holds inleresls in 945,000 3' cunulalive lrsl prelerence shares
(13.07' ol lhal class and 937,000 9' cunulalive second prelerence
shares (13.03' ol lhal class. & C nveslnenl anagenenl Lld. holds
inleresls in 523,150 3' cunulalive lrsl prelerence shares (7.30' ol lhal
class and 644,450 9' cunulalive second prelerence shares (11.77' ol
lhal class. Duncan Lawrie Lld. holds inleresls in 459,376 3' cunulalive
lrsl prelerence shares (6.36' ol lhal class. Lazard Assel anagenenl Lld.
holds inleresls in 374,000 3' cunulalive lrsl prelerence shares (5.17' ol
lhal class and 404,500 9' cunulalive second prelerence shares (7.39' ol
lhal class. Foyal London Assel anagenenl Lld. holds inleresls in 433,000
9' cunulalive second prelerence shares (3.00' ol lhal class. Fuller LLP
holds inleresls in 393,000 9' cunulalive second prelerence shares (7.27'
ol lhal class. Carlnore nveslnenl anagenenl Liniled disposed ol ils
inleresl in 394,533 3' cunulalive lrsl prelerence shares and 500,000 9'
cunulalive second prelerence shares during 2010.
The lolal prelerence shares in issue conprise only 0.44' ol lhe
conpanys lolal issued noninal share capilal (excluding shares held in
lreasury, lhe resl being ordinary shares.
ReIated party transactions
Transaclions belween lhe group and ils signilcanl joinlly conlrolled enlilies
and associales are sunnarized in Financial slalenenls - ole 25 on
page 133 and ole 26 on page 134. n lhe ordinary course ol ils business,
lhe group enlers inlo lransaclions wilh various organizalions wilh which
cerlain ol ils direclors or execulive ollcers are associaled. Excepl as
described in lhis reporl, lhe group did nol have nalerial lransaclions or
lransaclions ol an unusual nalure wilh, and did nol nake loans lo, relaled
parlies in lhe period connencing 1 January 2010 lo 13 February 2011.
Dividends
vhen dividends are paid on ils ordinary shares, BPs policy is lo pay inlerin
dividends on a quarlerly basis. During 2010 lhe BP board announced an
agreed package ol neasures lo neel ils obligalions as a responsible parly
arising lron lhe Cull ol exico incidenl. As a consequence ol lhis
agreenenl, lhe BP board reviewed ils dividend policy and decided lhal, in
lhe circunslances, il would be prudenl lo cancel lhe previously announced
lrslquarler dividend and lhal no inlerin dividends would be announced in
respecl ol lhe second and lhird quarlers ol 2010. On 1 February 2011 lhe
BP board announced lhal il would pay a dividend lor lhe lourlh quarler 2010.
BP policy is lo announce dividends lor ordinary shares in US dollars
and slale an equivalenl pounds slerling dividend. Dividends on BP ordinary
shares will be paid in pounds slerling and on BP ADSs in US dollars. The
rale ol exchange used lo delernine lhe slerling anounl equivalenl is lhe
average ol lhe narkel exchange rales in London over lhe lour business
days prior lo lhe slerling equivalenl announcenenl dale. The direclors nay
choose lo declare dividends in any currency provided lhal a slerling
equivalenl is announced, bul il is nol lhe conpanys inlenlion lo change ils
currenl policy ol announcing dividends on ordinary shares in US dollars.
The lollowing lable shows dividends announced and paid by lhe conpany per ADS lor each ol lhe pasl lve years.
arch June Seplenber Decenber Tolal
Dividends per Anerican deposilary share
2006 UK pence 31.7 31.5 31.9 31.4 126.5
US cenls 56.25 56.25 53.95 53.95 230.4
Canadian cenls 64.5 64.1 67.4 66.5 262.5
2007 UK pence 31.5 30.9 31.7 31.3 125.9
US cenls 61.95 61.95 64.95 64.95 253.3
Canadian cenls 73.3 69.5 67.3 63.6 274.2
2003 UK pence 40.9 41.0 42.2 52.2 176.3
US cenls 31.15 31.15 34.0 34.0 330.3
Canadian cenls 30.3 32.5 35.3 103.6 357.7
2009 UK pence 53.91 57.50 51.02 51.07 213.5
US cenls 34 34 34 34 336
Canadian cenls
a
n/a n/a n/a n/a n/a
2010 UK pence 52.07 - - - 52.07
US cents 84 - - - 84

a
BP shares were delisled lron lhe Toronlo Slock Exchange on 15 Augusl 2003 and lhe lasl dividend paynenl in Canadian dollars was nade on 3 Decenber 2003.
A dividend reinveslnenl plan (DFP was in place lor lhe lourlhquarler
dividend paid in arch 2010, allowing holders ol BP ordinary shares lo
elecl lo reinvesl lhe nel cash dividend in shares purchased on lhe London
Slock Exchange. Following shareholder approval al BPs AC on 15 April
2010, a Scrip Dividend Progranne (Progranne was inlroduced and lhe
DFP was wilhdrawn. The Progranne enables BP ordinary shareholders
and ADS holders lo elecl lo receive new lully paid ordinary shares in BP (or
ADSs in lhe case ol ADS holders inslead ol cash. The operalion ol lhe
Progranne is always subjecl lo lhe direclors decision lo nake lhe scrip
oller available in respecl ol any parlicular dividend. Should lhe direclors
decide nol lo oller lhe scrip in respecl ol any parlicular dividend, cash will
aulonalically be paid inslead.
Fulure dividends will be dependenl on lulure earnings, lhe lnancial
condilion ol lhe group, lhe Fisk laclors sel oul on pages 27 32 and olher
nallers lhal nay allecl lhe business ol lhe group sel oul in Our slralegy
on pages 1920 and in Liquidily and capilal resources on page 64.
Legal proceedings
Proceedings and investigations reIating to the
GuIf of Mexico oiI spiII
BP p.l.c., BP Exploralion & Produclion nc. (BP E&P and various olher BP
enlilies (colleclively relerred lo as BP are anong lhe conpanies naned as
delendanls in nore lhan 400 privale civil lawsuils resulling lron lhe
20 April 2010 explosions and lre on lhe senisubnersible rig Deepwaler
Horizon and resulling oil spill (lhe ncidenl and lurlher aclions are likely lo
be broughl. BP E&P is lease operalor ol ississippi Canyon, Block 252 in
lhe Cull ol exico, where lhe Deepwaler Horizon was deployed al lhe
line ol lhe ncidenl, and holds a 65' working inleresl. The olher working
inleresl owners are Anadarko Pelroleun Conpany and OEX Ollshore
2007 LLC. The Deepwaler Horizon, which was owned and operaled by
cerlain allliales ol Transocean, Lld. (Transocean, sank on 22 April 2010.
The pending lawsuils and/or clains arising lron lhe ncidenl have been
broughl in US lederal and slale courls. Plainlills include individuals,
corporalions and governnenlal enlilies and nany ol lhe lawsuils purporl lo
be class aclions. The lawsuils asserl, anong olhers, clains lor personal
injury in conneclion wilh lhe ncidenl ilsell and lhe response lo il, and
wronglul dealh, connercial or econonic injury, breach ol conlracl and
violalions ol slalules. The lawsuils seek various renedies including
conpensalion lo injured workers and lanilies ol deceased workers,
recovery lor connercial losses and properly danage, clains lor
environnenlal danage, renedialion cosls, injunclive reliel, lreble danages
and punilive danages. Purporled classes ol clainanls include residenls ol
lhe slales ol Louisiana, ississippi, Alabana, Florida, Texas, Tennessee,
Kenlucky, Ceorgia and Soulh Carolina, properly owners and renlal agenls,
lshernen and persons dependenl on lhe lshing induslry, charler boal
owners and deck hands, narina owners, gasoline dislribulors, shipping
inleresls, reslauranl and holel owners and olhers who are properly and/or
business owners alleged lo have sullered econonic loss. Shareholder
derivalive lawsuils have also been lled in US lederal and slale courls
againsl various currenl and lorner ollcers and direclors ol BP alleging,
anong olher lhings, breach ol lduciary duly, gross nisnanagenenl,
abuse ol conlrol and wasle ol corporale assels. Purporled class aclion
lawsuils have also been lled in US lederal courls againsl BP enlilies and
various currenl and lorner ollcers and direclors alleging securilies lraud
clains and violalions ol lhe Enployee Felirenenl ncone Securily Acl
(EFSA. n addilion, BP has been naned in several lawsuils alleging clains
under lhe FackeleernHuenced and Corrupl Organizalions Acl (FCO. n
Augusl 2010, nany ol lhe lawsuils pending in lederal courl were
consolidaled by lhe Federal Judicial Panel on ullidislricl Liligalion inlo
lwo nullidislricl liligalion proceedings, one in lederal courl in Houslon lor
lhe securilies, derivalive and EFSA cases and anolher in lederal courl in
ew Orleans lor lhe renaining cases. Since lale Seplenber, nosl ol lhe
Deepwaler Horizon relaled cases have been pending belore lhese courls.
On 13 February 2011, cerlain Transocean allliales lled a lhird parly
conplainl againsl BP, lhe US governnenl, and olher corporalions involved in
lhe ncidenl, lhereby naning lhose enlilies as lornal parlies in Transoceans
Linilalion ol Liabilily aclion pending in lederal courl in ew Orleans.
Under OPA 90, BP E&P has been designaled as one ol lhe responsible
parlies lor lhe oil spill resulling lron lhe ncidenl. Accordingly, BP E&P is
one ol lhe parlies lhal lhe US governnenl alleges is lnancially responsible
lor lhe cleanup ol lhe spill and lor econonic danages as provided by OPA
90. n addilion, pursuanl lo OPA 90, lhe US Coasl Cuard has requesled
reinbursenenl lron BP and lhe olher responsible parlies lor ils cosls ol
responding lo lhe ncidenl, and BP has paid all anounls so billed lo dale.
Conlinuing requesls lor cosl reinbursenenl are expecled lron lhe US
Coasl Cuard and olher governnenlal aulhorilies. n addilion, BP is
parlicipaling wilh lederal and slale lruslees in a cooperalive assessnenl
ol polenlial nalural resource danages associaled wilh lhe spill. Under
OPA 90, lhe US governnenl alleges lhal BP E&P is one ol lhe parlies
lnancially responsible lor paying lhe reasonable assessnenl cosls incurred
by lhese lruslees as well as nalural resource danages lhal resull lron lhe
ncidenl.
BP E&P has eslablished and connilled lo lund lhe Deepwaler
Horizon Oil Spill Trusl, a $20billion lrusl lund lo pay cosls and salisly
legilinale clains. BP E&P conlribuled $5 billion lo lhe lrusl lund in 2010.
This will be supplenenled by addilional paynenls ol $1.25 billion per
quarler unlil a lolal ol $20 billion has been paid inlo lhe lrusl lund. vhile
lhe lrusl lund is building, BP E&P has pledged collaleral consisling ol an
overriding royally inleresl in oil and gas produclion lron cerlain assels in
lhe Cull ol exico sullcienl al any line lo secure lhe dillerence belween
lhe anounl deposiled as ol lhal dale and $20 billion. The eslablishnenl ol
lhis lrusl does nol represenl a cap on BPs liabililies, and BP does nol
adnil lo a liabilily ol lhis anounl. The lrusl lund will pay clains
adninislered by lhe CCCF, slale and local governnenl clains resolved by
BP, lnal judgnenls, selllenenls, slale and local response cosls, and
nalural resource danages and relaled cosls. Paynenls lron lhe lrusl lund
will be nade upon adjudicalion or resolulion ol clains or lhe lnal
delerninalion ol olher cosls covered by lhe accounl. There will be a sunsel
on lhe lrusl lund, and lunds, il any, renaining once lhe clains process has
been conpleled will reverl lo BP E&P.
BP is subjecl lo a nunber ol invesligalions relaled lo lhe ncidenl
by nunerous agencies ol lhe US governnenl. On 27 April 2010, lhe US
Coasl Cuard and lhe inerals anagenenl Service (renaned lhe Bureau
ol Ocean Energy anagenenl, Fegulalion and Enlorcenenl in June 2010
convened a joinl invesligalion ol lhe ncidenl by eslablishing a arine
Board ol nvesligalion ained al delernining lhe causes ol lhe ncidenl and
reconnending salely inprovenenls. BP was designaled as one ol several
Parlies in nleresl in lhe invesligalion.
On 21 ay 2010, Presidenl Obana signed an execulive order
eslablishing lhe alional Connission on lhe BP Deepwaler Horizon Oil
Spill and Ollshore Drilling (alional Connission lo exanine and reporl on,
wilhin six nonlhs ol lhe dale ol lhe Connissions lrsl neeling, lhe
relevanl lacls and circunslances concerning lhe causes ol lhe Cull ol
exico oil spill incidenl and develop oplions lor guarding againsl, and
niligaling lhe inpacl ol, oil spills associaled wilh ollshore drilling, laking
inlo consideralion lhe environnenlal, public heallh, and econonic ellecls
ol such oplions. On 11 January 2011, lhe alional Connission published
ils lnal reporl on lhe causes ol lhe ncidenl and ils reconnendalions lor
policy and regulalory changes lor ollshore drilling. On 17 February 2011,
lhe alional Connissions Chiel Counsel published a separale reporl on
his invesligalion lhal provides addilional inlornalion aboul lhe causes ol
lhe ncidenl.

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On 7 July 2010, lhe US Chenical Salely and Hazard nvesligalion Board
(CSB inlorned BP ol ils inlenl lo conducl an invesligalion ol lhe ncidenl.
The invesligalion is locused on lhe 20 April 2010 explosions and lre, and
nol lhe resulling oil spill or response ellorls. The CSB is expecled lo issue
wilhin lwo years several invesligalion reporls lhal will seek lo idenlily lhe
alleged rool cause(s ol lhe ncidenl, and reconnend inprovenenls lo BP
and induslry praclices and lo regulalory progrannes lo prevenl recurrence
and niligale polenlial consequences. Also, al lhe requesl ol lhe
Deparlnenl ol lhe nlerior, lhe alional Acadeny ol Engineering/alional
Fesearch Council eslablished a Connillee (Connillee lo exanine lhe
perlornance ol lhe lechnologies and praclices involved in lhe probable
causes ol lhe explosion, including lhe perlornance ol lhe blowoul
prevenler and relaled lechnology lealures, and lo idenlily and reconnend
available lechnology, induslry besl praclices, besl available slandards, and
olher neasures in lhe US and around lhe world relaled lo oil and gas
deepwaler exploralory drilling and well conplelion lo avoid lulure
occurrence ol such evenls. On 17 ovenber 2010 lhe Connillee issued
ils inlerin reporl selling lorlh lhe connillees prelininary lndings and
observalions on various aclions and decisions including well design,
cenenling operalions, well noniloring, and well conlrol aclions. The
inlerin reporl also considers nanagenenl, oversighl, and regulalion ol
ollshore operalions. ve expecl lhal lhe Connillee will issue ils lnal
reporl lhal presenls lhe Connillees lnal analysis, including lndings and/
or reconnendalions, by 1 June 2011 (a prepublicalion version ol reporl,
wilh lurlher peer review and a lnal published version lo lollow by 30
Decenber 2011.
A second, unrelaled alional Acadenies Connillee will be looking
al lhe nelhodologies available lor assessing spill inpacls on ecosyslens in
lhe Cull ol exico, and a sunnary ol lhe known ellecls ol lhe spill, lhe
inpacls in lhe conlexl ol slresses lron olher hunan aclivilies in lhe Cull,
and idenlilcalion ol research and noniloring needs lo nore lully
undersland lhe ellecls ol lhe spill and gauge progress lowards recovery
and resloralion. On 14 June 2010, lhe US Coasl Cuard inilialed an ncidenl
Specilc Preparedness Feview (SPF lo exanine lhe inplenenlalion and
ellecliveness ol lhe response and recovery operalions relaling lo lhe spill.
ve undersland lhal lhe SPF process has been conpleled and a Feporl
(Feporl has been generaled, however lhe Feporl has nol yel been nade
publicly available. ve expecl lhal lhe Feporl will be nade publicly available
soneline in lhe lrsl quarler ol 2011. Addilionally, BP represenlalives have
appeared belore nulliple connillees ol lhe US Congress lhal have been
conducling inquiries inlo lhe ncidenl. BP has provided docunenls and
wrillen inlornalion in response lo requesls by lhese connillees and will
conlinue lo do so. See Fisk laclors - Conpliance and conlrol risks on
page 29.
On 1 June 2010, lhe US Deparlnenl ol Juslice (DoJ announced
lhal il is conducling an invesligalion inlo lhe ncidenl enconpassing
possible violalions ol US civil or crininal laws. The Uniled Slales lled a civil
conplainl againsl BP E&P and olhers on 15 Decenber 2010. The conplainl
seeks a declaralion ol liabilily under OPA 90 and civil penallies under lhe
Clean valer Acl. Paragraph 92 ol lhe conplainl sels lorlh a purporled
reservalion ol righls on behall ol lhe Uniled Slales lo anend lhe
conplainl or lle addilional conplainls seeking various renedies under
various laws and regulalions, including bul nol liniled lo eighl specilcally
nenlioned lederal slalules. Paragraph 92 ol lhe conplainl likewise
conlains a sinilar reservalion ol righls regarding lhe conducl ol
adninislralive proceedings under lhe Ouler Conlinenlal Shell Lands Acl,
43 U.S.C. ss 1301 e! seq., and lhe Federal Oil and Cas Foyally
anagenenl Acl, 30 U.S.C. ss 1701 e! seq.
Cilizens groups have also lled eilher lawsuils or nolices ol inlenl lo
lle lawsuils seeking civil penallies and injunclive reliel under lhe Clean
valer Acl and olher environnenlal slalules. Olher US lederal agencies
nay connence invesligalions relaling lo lhe ncidenl. The SEC and DoJ
are invesligaling securilies nallers arising in relalion lo lhe ncidenl.
The Allorney Ceneral lor lhe Slale ol Alabana has lled a lawsuil
seeking danages lor alleged econonic and environnenlal harns, including
nalural resource danages, as a resull ol lhe ncidenl. l is possible lhal lhe
Slale Allorneys Ceneral ol Louisiana, ississippi, Florida, Texas or olher
slales and/or local governnenls, such as coaslal nunicipalilies also nay
iniliale invesligalions and bring civil or crininal aclions seeking danages,
penallies and lnes lor violaling slale or local slalules. The Louisiana
Deparlnenl ol Environnenlal Oualily has issued an adninislralive order
seeking injunclive reliel and environnenlal civil penallies under slale law,
and several local governnenls in Louisiana have lled suils under slale
wildlile slalules seeking penallies lor danage lo wildlile as a resull ol lhe
spill. On 10 Decenber 2010, lhe ississippi Deparlnenl ol Environnenlal
Oualily issued a Conplainl and olice ol Violalion alleging violalions ol
several Slale environnenlal slalules.
On 15 Seplenber 2010, lhree exican slales bordering lhe Cull ol
exico (Veracruz, Ouinlana Foo, and Tanaulipas lled lawsuils in lederal
courl in Texas againsl several BP enlilies. These lawsuils allege lhal lhe oil
spill harned lheir lourisn, lshing, and connercial shipping induslries
(resulling in, anong olher lhings, dininished lax revenue, danaged nalural
resources and lhe environnenl, and caused lhe slales lo incur expenses in
preparing a response lo lhe oil spill.
BPs polenlial liabililies resulling lron pending and lulure clains,
lawsuils and enlorcenenl aclions relaling lo lhe ncidenl, logelher wilh lhe
polenlial cosl ol inplenenling renedies soughl in lhe various proceedings,
cannol be lully eslinaled al lhis line bul lhey have had and are expecled
lo have a nalerial adverse inpacl on lhe groups business, conpelilive
posilion, cash Hows, prospecls, liquidily, shareholder relurns and/or
inplenenlalion ol ils slralegic agenda, parlicularly in lhe US. Furlhernore,
BP has laken a prelax charge in ils incone slalenenl ol $40.9 billion in
lolal during 2010, and lhese polenlial liabililies nay conlinue lo have a
nalerial adverse ellecl on lhe groups resulls and lnancial condilion.
Other IegaI proceedings
Fron 25 Oclober 2007 lo 23 Oclober 2010, BP Anerica nc. (BP Anerica
was subjecl lo oversighl by an independenl nonilor, who had aulhorily lo
invesligale and reporl alleged violalions ol lhe US Connodily Exchange
Acl or US Connodily Fulures Trading Connission (CFTC regulalions and
lo reconnend correclive aclion. The appoinlnenl ol lhe independenl
nonilor was a condilion ol lhe delerred proseculion agreenenl (DPA
enlered inlo wilh lhe DoJ on 25 Oclober 2007 relaling lo allegalions lhal
BP Anerica nanipulaled lhe price ol February 2004 TET physical propane
and allenpled lo nanipulale lhe price ol TET propane in April 2003 and lhe
conpanion consenl order wilh lhe CFTC, enlered lhe sane day, resolving
all crininal and civil enlorcenenl nallers pending al lhal line concerning
propane lrading by BP Producls orlh Anerica nc. (BP Producls. The DPA
required BP Anericas and cerlain ol ils allliales conlinued cooperalion
wilh lhe US governnenls invesligalion and proseculion ol lhe lrades in
queslion, as well as olher lrading nallers lhal nay arise. The DPA had a
lern ol lhree years bul could be exlended by lwo addilional oneyear
periods, and conlenplaled disnissal ol all charges al lhe end ol lhe lern
lollowing lhe DoJs delerninalion lhal BP Anerica has conplied wilh lhe
lerns ol lhe DPA. The inilial lhree year lern has expired and lhe DoJs
nolion lo disniss lhe aclion underlying lhe DPA was granled on
31 January 2011. nvesligalions inlo BPs lrading aclivilies conlinue lo be
conducled lron line lo line. The US Federal Energy Fegulalory
Connission (FEFC and lhe US Connodily Fulures Trading Connission
(CFTC are currenlly invesligaling several BP enlilies regarding lrading in
lhe nexlday nalural gas narkel al Houslon Ship Channel during Oclober
and ovenber 2003. The FEFC Ollce ol Enlorcenenl slall noliled BP on
12 ovenber 2010 ol lheir prelininary conclusions relaling lo alleged
narkel nanipulalion in violalion ol 13 C.F.F. Sec. 1c.1. The FEFC slall will
delernine whelher lo pursue lhe invesligalion, lo close lhe invesligalion,
or lo seek aulhorily lo pursue resolulion by selllenenl. On 30 ovenber
2010, CFTC Enlorcenenl slall also provided BP wilh a nolice ol inlenl lo
reconnend charges based on lhe sane conducl alleging lhal BP engaged
in allenpled narkel nanipulalion in violalion ol Seclion 6(c, 6(d, and 9(a
(2 ol lhe Connodily Exchange Acl. BP subnilled responses lo bolh
nolices on 23 Decenber 2010 providing a delailed response lhal il did nol
engage in any inappropriale or unlawlul aclivily. Privale conplainls,
including class aclions, were also lled againsl BP Producls and allliales
alleging propane price nanipulalion. The conplainls conlained allegalions
sinilar lo lhose in lhe CFTC aclion as well as ol violalions ol lederal and
slale anlilrusl and unlair conpelilion laws and slale consuner proleclion
slalules and unjusl enrichnenl. The conplainls soughl aclual and punilive
danages and injunclive reliel. Selllenenl in bolh groups ol lhe class
aclions (lhe direcl and indirecl purchasers has received lnal courl approval.
Two independenl lawsuils lron class nenbers who opled oul ol lhe direcl
purchaser selllenenl are slill pending.
On 23 arch 2005, an explosion and lre occurred in lhe
isonerizalion unil ol BP Producls Texas Cily relnery as lhe unil was
coning oul ol planned nainlenance. Filleen workers died in lhe incidenl
and nany olhers were injured. BP Producls has resolved all civil injury
clains arising lron lhe arch 2005 incidenl.
n arch 2007, lhe US Chenical Salely and Hazard nvesligalion
Board (CSB issued a reporl on lhe incidenl. The reporl conlained
reconnendalions lo lhe Texas Cily relnery and lo lhe board ol direclors ol
BP. n ay 2007, BP responded lo lhe CSBs reconnendalions. BP and
lhe CSB will conlinue lo discuss BPs responses wilh lhe objeclive ol lhe
CSBs agreeing lo close oul ils reconnendalions.
On 25 Oclober 2007, lhe DoJ announced lhal il had enlered inlo a
crininal plea agreenenl wilh BP Producls relaled lo lhe arch 2005
explosion and lre. On 4 February 2003, BP Producls pleaded guilly,
pursuanl lo lhe plea agreenenl, lo one lelony violalion ol lhe risk
nanagenenl planning regulalions pronulgaled under lhe US Clean Air Acl
(CAA and on 12 arch 2009, lhe courl accepled lhe plea agreenenl. n
conneclion wilh lhe plea agreenenl, BP Producls paid a $50nillion
crininal lne and was senlenced lo lhree years probalion which is sel lo
expire on 12 arch 2012. Conpliance wilh a 2005 US Occupalional Salely
and Heallh Adninislralion (OSHA selllenenl agreenenl (2005
Agreenenl and a 2006 agreed order enlered inlo by BP Producls wilh lhe
Texas Connission on Environnenlal Oualily (TCEO are condilions ol
probalion.
The Texas Ollce ol Allorney Ceneral, on behall ol TCEO, has lled a
pelilion againsl BP Producls asserling cerlain air enissions and reporling
violalions al lhe Texas Cily relnery lron 2005 lo 2010, including in relalion
lo lhe arch 2005 explosion and lre. BP is conlesling lhe pelilion in a
pending civil proceeding. n arch 2010, TCEO noliled lhe DoJ ol ils beliel
lhal cerlain ol lhe alleged violalions nay violale lhe 25 Oclober 2007 plea
agreenenl.
On 9 Augusl 2010, lhe Texas Allorney Ceneral lled a separale
pelilion againsl BP Producls asserling enissions violalions relaling lo a
6 April 2010 conpressor lre and subsequenl Haring evenl al lhe Texas Cily
relnerys ullracracker unil. This enissions evenl is also lhe subjecl ol a
nunber ol civil suils by nany area workers and residenls alleging personal
injury and properly danages and seeking subslanlial danages.
n Seplenber 2009, BP Producls lled a pelilion lo clarily specilc
required aclions and deadlines under lhe 2005 Agreenenl wilh OSHA. Thal
agreenenl resolved cilalions issued in conneclion wilh lhe arch 2005
Texas Cily relnery explosion. OSHA denied BP Producls pelilion.
n Oclober 2009 OSHA issued cilalions lo lhe Texas Cily relnery
seeking a lolal ol $37.4 nillion in civil penallies lor alleged violalions ol lhe
2005 Agreenenl and alleged process salely nanagenenl violalions.
BP Producls conlesled lhese cilalions. These nallers were subsequenlly
lranslerred lor review lo lhe Occupalional Salely and Heallh (OSH Feview
Connission.
A selllenenl agreenenl belween BP Producls and OSHA in
Augusl 2010 (2010 Agreenenl resolved lhe pelilion lled by BP Producls
in Seplenber 2009 and lhe alleged violalions ol lhe 2005 Agreenenl.
BP Producls has paid a penally ol $50.6 nillion in lhal naller and agreed lo
perlorn cerlain abalenenl aclions. Conpliance wilh lhe 2010 Agreenenl
(which is sel lo expire on 12 arch 2012 is also a condilion ol probalion
due lo lhe linkage belween lhis 2010 Agreenenl and lhe 2005 Agreenenl.
On 6 ay 2010, cerlain persons qualilying under lhe US Crine
Viclins Fighls Acl as viclins in relalion lo lhe Texas Cily plea agreenenl
requesled lhal lhe lederal courl revoke BP Producls probalion based on
alleged violalions ol lhe Courls condilions ol probalion. The alleged
violalions ol probalion relale lo lhe alleged lailure lo conply wilh lhe
2005 Agreenenl.
The OSHA process salely nanagenenl cilalions issued in Oclober
2009 were nol resolved by lhe Augusl 2010 selllenenl agreenenl. The
proposed penallies in lhal naller are $30.7 nillion. The naller is currenlly
belore lhe OSH Feview Connission which has assigned an Adninislralive
Law Judge lor purposes ol nedialion. These cilalions do nol allege
violalions ol lhe 2005 Agreenenl.
A shareholder derivalive aclion was lled againsl several currenl and lorner
BP ollcers and direclors based on alleged violalions ol lhe CAA and OSHA
regulalions al lhe Texas Cily relnery subsequenl lo lhe arch 2005
explosion and lre. An invesligalion by a special connillee ol BPs board
inlo lhe shareholder allegalions has been conpleled and lhe connillee
has reconnended lhal lhe allegalions do nol warranl aclion by BP againsl
lhe ollcers and direclors. BP has lled a nolion lo disniss lhe shareholder
derivalive aclion.
On 29 ovenber 2007, BP Exploralion (Alaska nc. (BPXA enlered
inlo a crininal plea agreenenl wilh lhe DoJ relaling lo leaks ol crude oil in
arch and Augusl 2006. BPXAs guilly plea, lo a nisdeneanour violalion ol
lhe US valer Pollulion Conlrol Acl, included a lern ol lhree years
probalion. On 29 ovenber 2009 a spill ol approxinalely 360 barrels ol
crude oil and produced waler was discovered benealh a line running lron a
well pad lo lhe Lisburne Processing Cenler in Prudhoe Bay, Alaska. On
17 ovenber 2010, lhe US Probalion Ollcer lled a pelilion in lederal
dislricl courl lo revoke BPXAs probalion based on an allegalion lhal lhe
Lisburne evenl was a crininal violalion ol slale or lederal law. A hearing is
scheduled lor lhe week ol 25 April 2011. On 12 ay 2003, a BP p.l.c.
shareholder lled a consolidaled conplainl alleging violalions ol lederal
securilies law on behall ol a pulalive class ol BP p.l.c. shareholders againsl
BP p.l.c., BPXA, BP Anerica, and lour ollcers ol lhe conpanies, based on
alleged nisrepresenlalions concerning lhe inlegrily ol lhe Prudhoe Bay
pipeline belore ils shuldown on 6 Augusl 2006. On 3 February 2010, lhe
inlh Circuil Courl ol Appeals accepled BPs appeal lron a decision ol lhe
lower courl granling in parl and denying in parl BPs nolion lo disniss lhe
lawsuil. Brielng is conplele and we awail oral argunenl.
On 31 arch 2009, lhe DoJ lled a conplainl againsl BPXA seeking
civil penallies and injunclive reliel relaling lo lhe 2006 oil releases. The
conplainl alleges lhal BPXA violaled various lederal environnenlal and
pipeline salely slalules and associaled regulalions in conneclion wilh lhe
lwo releases and ils nainlenance and operalion ol orlh Slope pipelines.
The Slale ol Alaska also lled a conplainl on 31 arch 2009 againsl BPXA
seeking civil penallies and danages relaling lo lhese evenls. The conplainl
alleges lhal lhe lwo releases and BPXAs corrosion nanagenenl praclices
violaled various slalulory, conlraclual and connon law dulies lo lhe Slale,
resulling in penally liabilily, danages lor losl royallies and laxes, and liabilily
lor punilive danages.
Approxinalely 200 lawsuils were lled in slale and lederal courls in
Alaska seeking conpensalory and punilive danages arising oul ol lhe
Exxon Valdez oil spill in Prince villian Sound in arch 1939. osl ol lhose
suils naned Exxon (now Exxonobil, Alyeska Pipeline Service Conpany
(Alyeska, which operales lhe oil lerninal al Valdez, and lhe olher oil
conpanies lhal own Alyeska. Alyeska inilially responded lo lhe spill unlil
lhe response was laken over by Exxon. BP owns a 46.9' inleresl (reduced
during 2001 lron 50' by a sale ol 3.1' lo Phillips in Alyeska lhrough a
subsidiary ol BP Anerica nc. and brieHy indireclly owned a lurlher 20'
inleresl in Alyeska lollowing BPs conbinalion wilh Allanlic Fichleld.
Alyeska and ils owners have sellled all lhe clains againsl lhen under
lhese lawsuils. Exxon has indicaled lhal il nay lle a clain lor conlribulion
againsl Alyeska lor a porlion ol lhe cosls and danages lhal il has incurred.
l any clains are asserled by Exxon lhal allecl Alyeska and ils owners, BP
will delend lhe clains vigorously.

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Since 1937, Allanlic Fichleld Conpany (Allanlic Fichleld, a subsidiary ol
BP, has been naned as a codelendanl in nunerous lawsuils broughl in lhe
US alleging injury lo persons and properly caused by lead pignenl in painl.
The najorily ol lhe lawsuils have been abandoned or disnissed againsl
Allanlic Fichleld. Allanlic Fichleld is naned in lhese lawsuils as alleged
successor lo nlernalional Snelling and Felning and anolher conpany lhal
nanulaclured lead pignenl during lhe period 19201946. Plainlills include
individuals and governnenlal enlilies. Several ol lhe lawsuils purporl lo be
class aclions. The lawsuils seek various renedies including conpensalion
lo leadpoisoned children, cosl lo lnd and renove lead painl lron buildings,
nedical noniloring and screening progrannes, public warning and
educalion ol lead hazards, reinbursenenl ol governnenl heallhcare cosls
and special educalion lor leadpoisoned cilizens and punilive danages. o
lawsuil againsl Allanlic Fichleld has been sellled nor has Allanlic Fichleld
been subjecl lo a lnal adverse judgnenl in any proceeding. The anounls
clained and, il such suils were successlul, lhe cosls ol inplenenling lhe
renedies soughl in lhe various cases could be subslanlial. vhile il is nol
possible lo predicl lhe oulcone ol lhese legal aclions, Allanlic Fichleld
believes lhal il has valid delences. l inlends lo delend such aclions
vigorously and believes lhal lhe incurrence ol liabilily is renole.
Consequenlly, BP believes lhal lhe inpacl ol lhese lawsuils on lhe groups
resulls, lnancial posilion or liquidily will nol be nalerial.
On 3 arch 2010, OSHA issued cilalions lo BPs Toledo relnery
alleging violalions ol lhe Process Salely anagenenl Slandard, wilh
penallies ol approxinalely $3 nillion. These cilalions resulled lron an
inspeclion conducled pursuanl lo OSHAs Pelroleun Felnery Process
Salely anagenenl alional Enphasis Progran. BP Producls has
conlesled lhe cilalions, and lhe naller is currenlly belore lhe OSH Feview
Connission which has assigned an Adninislralive Law Judge lor purposes
ol nedialion.
BP is lhe operalor and 56' inleresl owner ol lhe Allanlis unil in
produclion in lhe Cull ol exico. n April 2009, Kennelh Abboll, as relalor,
lled a US False Clains Acl lawsuil againsl BP, alleging lhal BP violaled
lederal regulalions, and nade lalse slalenenls in conneclion wilh ils
conpliance wilh lhose regulalions, by lailing lo have necessary
docunenlalion lor lhe Allanlis subsea and olher syslens. Thal conplainl
was unsealed in ay 2010 and served on BP in June 2010. n Seplenber
2010, Kennelh Abboll and Food & valer valch lled an anended
conplainl in lhe False Clains Acl lawsuil seeking an injunclion shulling
down lhe Allanlis plallorn.
BP Producls US relneries are subjecl lo a 2001 consenl decree
wilh lhe EPA lhal resolved alleged violalions ol lhe CAA, and
inplenenlalion ol lhe decrees requirenenls conlinues. A 2009
anendnenl lo lhe decree resolves renaining alleged air violalions al lhe
Texas Cily relnery lhrough lhe paynenl ol a $12nillion civil lne, a
$6nillion supplenenlal environnenlal projecl and enhanced CAA
conpliance neasures eslinaled lo cosl approxinalely $150 nillion. The
lne has been paid, and BP Producls is inplenenling lhe olher provisions.
On 30 Seplenber 2010, lhe EPA and BP Producls lodged a civil
consenl decree wilh lhe lederal courl in Houslon. Following a public
connenl period, lhe lederal courl approved lhe selllenenl on
30 Decenber 2010. The decree resolves allegalions ol civil violalions ol lhe
risk nanagenenl planning regulalions pronulgaled under lhe CAA lhal are
alleged lo have occurred in 2004 and 2005 al lhe Texas Cily relnery. The
agreenenl requires lhal BP Producls pays a $15nillion civil penally and
lhal lhe Texas Cily relnery enhance reporling lo lhe EPA regarding
enployee lraining, equipnenl inspeclion and incidenl invesligalion.
Various environnenlal groups and lhe EPA have challenged cerlain
aspecls ol lhe operaling pernil issued by lhe ndiana Deparlnenl ol
Environnenlal anagenenl (DE lor upgrades lo lhe vhiling relnery.
n response lo lhese challenges, lhe DE has reviewed lhe pernils and
responded lornally lo lhe EPA. The EPA, eilher lhrough lhe DE or
direclly, can cause lhe pernil lo be nodiled, reissued, lerninaled or
revoked. BP is in discussions wilh lhe EPA and lhe DE over lhese and
olher CAA issues relaling lo lhe vhiling relnery.
BP is also in selllenenl negolialions wilh EPA lo resolve alleged CAA
violalions al lhe vhiling, Toledo, Carson and Cherry Poinl relneries.
An applicalion was broughl in lhe English High Courl on 1 February
2011 by Alla Pelroleun Holdings Liniled and OCP Venlures Liniled
againsl BP nlernalional Liniled and BP Fussian nveslnenls Liniled
alleging breach ol lhe shareholders agreenenl on lhe parl ol BP and
seeking an inlerin injunclion reslraining BP lron laking sleps lo conclude,
inplenenl or perlorn lhe previously announced lransaclions wilh Fosnell
Oil Conpany relaling lo oil and gas exploralion, produclion, relning and
narkeling in Fussia. Those lransaclions include lhe issue or lransler ol
shares belween Fosnell Oil Conpany and any BP group conpany. The
courl granled an inlerin order reslraining BP lron laking any lurlher sleps
in relalion lo lhe Fosnell lransaclions pending an expediled UCTFAL
arbilralion procedure in accordance wilh lhe Shareholders Agreenenl
belween lhe parlies.
The arbilralion has connenced and lhe injunclion has been
exlended unlil 11 arch 2011 pending an expediled hearing in relalion lo
nallers in dispule belween lhe parlies on a lnal basis during lhe week
connencing 7 arch 2011. The expediled hearing will decide, anong
olher nallers, whelher lhe injunclion will be exlended beyond
11 arch 2011.
On 9 February 2011, Apache Canada Lld connenced an arbilralion
againsl BP Canada Energy. Apache alleges lhal in lhe lulure various ol lhe
siles lhal il acquired lron BP Canada Energy pursuanl lo lhe parlies July
2010 Purchase and Sale Agreenenl will have lo have work carried oul lo
bring lhe siles inlo conpliance wilh applicable Alberla environnenlal laws,
and Apache Canada Lld clains lhal lhe purchase price should be adjusled
lor ils eslinaled possible cosls. BP Canada Energy denies such cosls will
arise or require any adjuslnenl lo lhe purchase price. The process ol
selecling lhe arbilralor has begun. o hearing dales have been sel.
Felalionships wilh suppliers
and conlraclors
EssentiaI contracts
BP has conlraclual and olher arrangenenls wilh nunerous lhird parlies in
supporl ol ils business aclivilies. This reporl does nol conlain inlornalion
aboul any ol lhese lhird parlies as none ol our arrangenenls wilh lhen are
considered lo be essenlial lo lhe business ol BP.
SuppIiers and contractors
Our processes are designed lo enable us lo choose suppliers carelully on
neril, avoiding conHicls ol inleresl and inappropriale gills and
enlerlainnenl. ve expecl suppliers lo conply wilh legal requirenenls and
we seek lo do business wilh suppliers who acl in line wilh BPs
connilnenls lo conpliance and elhics, as oullined in our code ol conducl.
ve engage wilh suppliers in a variely ol ways, including perlornance
review neelings lo idenlily nulually advanlageous ways lo inprove
perlornance.
Creditor payment poIicy and practice
Slalulory regulalions issued under lhe UK Conpanies Acl 2006 require
conpanies lo nake a slalenenl ol lheir policy and praclice in respecl ol
lhe paynenl ol lrade credilors. n view ol lhe inlernalional nalure ol lhe
groups operalions lhere is no specilc groupwide policy in respecl ol
paynenls lo suppliers. Felalionships wilh suppliers are, however, governed
by lhe groups policy connilnenl lo longlern relalionships lounded on
lrusl and nulual advanlage. vilhin lhis overall policy, individual operaling
conpanies are responsible lor agreeing lerns and condilions lor lheir
business lransaclions and ensuring lhal suppliers are aware ol lhe lerns ol
paynenl.
Share prices and lislings
Markets and market prices
The prinary narkel lor BPs ordinary shares is lhe London Slock Exchange
(LSE. BPs ordinary shares are a consliluenl elenenl ol lhe Financial Tines
Slock Exchange 100 ndex. BPs ordinary shares are also lraded on lhe
Franklurl slock exchange in Cernany.
Trading ol BPs shares on lhe LSE is prinarily lhrough lhe use ol lhe
Slock Exchange Eleclronic Trading Service (SETS, inlroduced in 1997 lor
lhe largesl conpanies in lerns ol narkel capilalizalion whose prinary
lisling is lhe LSE. Under SETS, buy and sell orders al specilc prices nay be
senl eleclronically lo lhe exchange by any lrn lhal is a nenber ol lhe
LSE, on behall ol a clienl or on behall ol ilsell acling as a principal. The
orders are lhen anonynously displayed in lhe order book. vhen lhere is a
nalch on a buy and a sell order, lhe lrade is execuled and aulonalically
reporled lo lhe LSE. Trading is conlinuous lron 3.00 a.n. lo 4.30 p.n. UK
line bul, in lhe evenl ol a 20' novenenl in lhe share price eilher way,
lhe LSE nay inpose a lenporary hall in lhe lrading ol lhal conpanys
shares in lhe order book lo allow lhe narkel lo reeslablish equilibriun.
Dealings in ordinary shares nay also lake place belween an inveslor and a
narkelnaker, via a nenber lrn, oulside lhe eleclronic order book.
n lhe US, lhe conpanys securilies are lraded in lhe lorn ol ADSs,
lor which JPorgan Chase Bank, .A. is lhe deposilary (lhe Deposilary
and lransler agenl. The Deposilarys principal ollce is 1 Chase anhallan
Plaza, Floor 53, ew York, Y 100051401, US. Each ADS represenls six
ordinary shares. ADSs are lisled on lhe ew York Slock Exchange. ADSs
are evidenced by Anerican deposilary receipls (ADFs, which nay be
issued in eilher cerlilcaled or book enlry lorn.
The lollowing lable sels lorlh lor lhe periods indicaled lhe highesl
and lowesl niddle narkel quolalions lor BPs ordinary shares and ADSs
lor lhe periods shown. These are derived lron lhe highesl and lowesl
sales prices as reporled on lhe LSE and ew York Slock Exchange
(YSE, respeclively.
Pence Dollars
Anerican
deposilary
Ordinary shares shares
a
High Low High Low
Year ended 31 Decenber
2006 723.00 553.50 76.35 63.52
2007 640.00 504.50 79.77 53.62
2003 657.25 370.00 77.69 37.57
2009 613.40 400.00 60.00 33.71
2010 658.20 296.00 62.38 26.75
Year ended 31 Decenber
2009: Firsl quarler 566.50 400.00 49.33 33.71
Second quarler 543.75 426.50 53.24 33.50
Third quarler 563.50 459.25 55.61 44.63
Fourlh quarler 613.40 523.00 60.00 50.60
2010: Firsl quarler 640.10 555.00 62.38 52.00
Second quarler 658.20 296.00 60.98 26.75
Third quarler 438.25 312.65 41.59 28.79
Fourlh quarler 479.00 418.25 44.83 39.58
2011: Firsl quarler (lo 13 February 514.90 471.65 49.50 44.83
onlh ol
Seplenber 2010 436.15 375.75 41.30 35.67
Oclober 2010 443.50 418.25 42.08 39.58
ovenber 2010 459.20 420.70 44.37 39.76
Decenber 2010 479.00 426.15 44.83 40.15
January 2011 514.90 479.00 49.50 44.83
February 2011 (lo 13 February 495.60 471.65 48.28 45.46

a
An ADS is equivalenl lo six 25cenl ordinary shares.
arkel prices lor lhe ordinary shares on lhe LSE and in allerhours lrading
oll lhe LSE, in each case while lhe YSE is open, and lhe narkel prices lor
ADSs on lhe YSE are closely relaled due lo arbilrage anong lhe various
narkels, allhough dillerences nay exisl lron line lo line due lo various
laclors, including UK slanp duly reserve lax.
On 13 February 2011, 314,755,024 ADSs (equivalenl lo
approxinalely 4,333,530,144 ordinary shares or sone 26.01' ol lhe lolal
issued share capilal, excluding shares held in lreasury and shares boughl
back lor cancellalion were oulslanding and were held by approxinalely
114,334 ADS holders. Ol lhese, aboul 113,490 had regislered addresses in
lhe US al lhal dale. One ol lhe regislered holders ol ADSs represenls
sone 795,332 underlying holders.
On 13 February 2011, lhere were approxinalely 314,347 holders ol record
ol ordinary shares. Ol lhese holders, around 1,574 had regislered addresses
in lhe US and held a lolal ol sone 4,239,336 ordinary shares.
Since cerlain ol lhe ordinary shares and ADSs were held by brokers
and olher noninees, lhe nunber ol holders ol record in lhe US nay nol
be represenlalive ol lhe nunber ol benelcial holders or ol lheir counlry
ol residence.

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alerial conlracls
On 6 Augusl 2010, BP enlered inlo a lrusl agreenenl wilh
John S arlin, Jr and Kenl D Syverud, as individual lruslees, and Ciligroup
TruslDelaware, .A., as corporale lruslee (lhe Trusl Agreenenl which
eslablished lhe Deepwaler Horizon Oil Spill Trusl (lhe Trusl lo be lunded in
lhe anounl ol $20 billion (lhe lrusl lund over lhe period lo lhe lourlh
quarler ol 2013. The lrusl lund is available lo salisly legilinale individual
and business clains adninislered by lhe Cull Coasl Clains Facilily (CCCF,
slale and local governnenl clains resolved by BP, lnal judgnenls and
and relaled cosls. Fines, penallies and clains adninislralion cosls are nol
covered by lhe lrusl lund. Under lhe lerns ol lhe Trusl Agreenenl, BP has
no righl lo access lhe lunds once lhey have been conlribuled lo lhe lrusl
lund. BP will receive lunds lron lhe lrusl lund only upon ils expiralion, il
lhere are any lunds renaining al lhal poinl. BP has lhe aulhorily under lhe
Trusl Agreenenl lo presenl cerlain resolved clains, including nalural
resource danages clains and slale and local response clains, lo lhe Trusl
lor paynenl, by providing lhe lruslees wilh all lhe required docunenls
eslablishing lhal such clains are valid under lhe Trusl Agreenenl. However,
any such paynenls can only be nade on lhe aulhorily ol lhe lruslee and
any lunds dislribuled are paid direclly lo lhe clainanls, nol lo BP. The Trusl
Agreenenl is governed by lhe laws ol lhe Slale ol Delaware.
On 30 Seplenber 2010, BP enlered a pledge and collaleral
agreenenl in lavour ol John S arlin, Jr and Kenl D Syverud (lhe Pledge
Agreenenl, which pledged cerlain Cull ol exico assels as collaleral lor
lhe lrusl lund lunding obligalion. The pledged collaleral consisls ol an
overriding royally inleresl in oil and gas produclion ol BPs Thunder Horse,
Allanlis, ad Dog, Creal vhile and ars, Ursa and a Kika assels in lhe
Cull ol exico. A whollyowned conpany called Verano Collaleral Holdings
LLC (Verano has been crealed lo hold lhe overriding royally inleresl, which
is capped al $1.25 billion per quarler and $17 billion in lolal. Verano has
pledged lhe overriding royally inleresl lo lhe Trusl as collaleral lor BPs
renaining conlribulion obligalions lo lhe Trusl. BP conlribuled a lurlher
$2 billion lo lhe lrusl lund since lhis arrangenenl was eslablished, lhereby
reducing lhe anounl ol lhe pledge lo $15 billion al lhe end ol lhe year. An
evenl ol delaull under lhe Pledge Agreenenl will arise il BP lails lo nake
any conlribulion under lhe Trusl Agreenenl when due or olherwise lails lo
observe cerlain olher obligalions, subjecl lo speciled cure periods.
Following an evenl ol delaull, lhe lruslees will be enlilled lo exercise all
renedies as secured parlies in respecl ol lhe collaleral, including receipl ol
royally inleresls lron lhe pledged assels, having all or parl ol lhe liniled
liabilily conpany inleresls regislered in lhe lruslees nane and selling lhe
collaleral al public or privale sale. The Pledge Agreenenl is governed by lhe
laws ol lhe Slale ol Texas.
Exchange conlrols
There are currenlly no UK loreign exchange conlrols or reslriclions on
renillances ol dividends on lhe ordinary shares or on lhe conducl ol lhe
conpanys operalions.
There are no linilalions, eilher under lhe laws ol lhe UK or under
lhe conpanys Arlicles ol Associalion, reslricling lhe righl ol nonresidenl
or loreign owners lo hold or vole BP ordinary or prelerence shares in lhe
conpany.
Taxalion
This seclion describes lhe nalerial US lederal incone lax and UK laxalion
consequences ol owning ordinary shares or ADSs lo a US holder who
holds lhe ordinary shares or ADSs as capilal assels lor lax purposes. l
does nol apply, however, lo nenbers ol special classes ol holders subjecl
lo special rules and holders lhal, direclly or indireclly, hold 10' or nore ol
lhe conpanys voling slock. n addilion, il a parlnership holds lhe shares or
ADSs, lhe US lederal incone lax lrealnenl ol a parlner will generally
depend on lhe slalus ol lhe parlner and lhe lax lrealnenl ol lhe
parlnership and nay nol be described lully below.
A US holder is any benelcial owner ol ordinary shares or ADSs lhal
are lor US lederal incone lax purposes (i a cilizen or residenl ol lhe US,
(ii a US doneslic corporalion, (iii an eslale whose incone is subjecl lo US
lederal incone laxalion regardless ol ils source, or (iv a lrusl il a US courl
can exercise prinary supervision over lhe lrusls adninislralion and
one or nore US persons are aulhorized lo conlrol all subslanlial decisions
ol lhe lrusl.
This seclion is based on lhe nlernal Fevenue Code ol 1936, as
anended, ils legislalive hislory, exisling and proposed regulalions
lhereunder, published rulings and courl decisions, and lhe laxalion laws ol
lhe UK, all as currenlly in ellecl, as well as lhe incone lax convenlion
belween lhe US and lhe UK lhal enlered inlo lorce on 31 arch 2003 (lhe
Trealy. These laws are subjecl lo change, possibly on a relroaclive basis.
This seclion is lurlher based in parl on lhe represenlalions ol lhe
Deposilary and assunes lhal each obligalion in lhe Deposil Agreenenl
and any relaled agreenenl will be perlorned in accordance wilh ils lerns.
For purposes ol lhe Trealy and lhe eslale and gill lax Convenlion
(lhe Eslale Tax Convenlion, and lor US lederal incone lax and UK
laxalion purposes, a holder ol ADFs evidencing ADSs will be lrealed as lhe
owner ol lhe conpanys ordinary shares represenled by lhose ADFs.
Exchanges ol ordinary shares lor ADFs and ADFs lor ordinary shares
generally will nol be subjecl lo US lederal incone lax or lo UK laxalion
olher lhan slanp duly or slanp duly reserve lax, as described below.
nveslors should consull lheir own lax adviser regarding lhe US
lederal, slale and local, lhe UK and olher lax consequences ol owning and
disposing ol ordinary shares and ADSs in lheir parlicular circunslances,
and in parlicular whelher lhey are eligible lor lhe benells ol lhe Trealy.
Taxation of dividends
UK laxalion
Under currenl UK laxalion law, no wilhholding lax will be deducled lron
dividends paid by lhe conpany, including dividends paid lo US holders. A
shareholder lhal is a conpany residenl lor lax purposes in lhe UK or
lrading in lhe UK lhrough a pernanenl eslablishnenl generally will nol be
laxable in lhe UK on a dividend il receives lron lhe conpany. A
shareholder who is an individual residenl lor lax purposes in lhe UK
is subjecl lo UK lax bul enlilled lo a lax credil on cash dividends paid
on ordinary shares or ADSs ol lhe conpany equal lo oneninlh ol lhe
cash dividend.
US lederal incone laxalion
A US holder is subjecl lo US lederal incone laxalion on lhe gross anounl
ol any dividend paid by lhe conpany oul ol ils currenl or accunulaled
earnings and prolls (as delernined lor US lederal incone lax purposes.
Dividends paid lo a noncorporale US holder in laxable years beginning
belore 1 January 2013 lhal conslilule qualiled dividend incone will be
laxable lo lhe holder al a naxinun lax rale ol 15', provided lhal lhe
holder has a holding period in lhe ordinary shares or ADSs ol nore lhan
60 days during lhe 121day period beginning 60 days belore lhe exdividend
dale and neels olher holding period requirenenls. Dividends paid by lhe
conpany wilh respecl lo lhe shares or ADSs will generally be qualiled
dividend incone.
As noled above in UK laxalion, a US holder will nol be subjecl lo UK
wilhholding lax. A US holder will include in gross incone lor US lederal
incone lax purposes lhe anounl ol lhe dividend aclually received lron lhe
conpany and lhe receipl ol a dividend will nol enlille lhe US holder lo a
loreign lax credil.
For US lederal incone lax purposes, a dividend nusl be included in
incone when lhe US holder, in lhe case ol ordinary shares, or lhe
Deposilary, in lhe case ol ADSs, aclually or conslruclively receives lhe
dividend, and will nol be eligible lor lhe dividendsreceived deduclion
generally allowed lo US corporalions in respecl ol dividends received lron
olher US corporalions. Dividends will be incone lron sources oulside
lhe US, and generally will be passive calegory incone or, in lhe case
ol cerlain US holders, general calegory incone, each ol which is
lrealed separalely lor purposes ol conpuling a US holders loreign
lax credil linilalion.
The anounl ol lhe dividend dislribulion on lhe ordinary shares or
ADSs lhal is paid in pounds slerling will be lhe US dollar value ol lhe
pounds slerling paynenls nade, delernined al lhe spol pounds slerling/
US dollar rale on lhe dale lhe dividend dislribulion is includible in incone,
regardless ol whelher lhe paynenl is, in lacl, converled inlo US dollars.
Cenerally, any gain or loss resulling lron currency exchange Huclualions
during lhe period lron lhe dale lhe pounds slerling dividend paynenl is
includible in incone lo lhe dale lhe paynenl is converled inlo US dollars
will be lrealed as ordinary incone or loss and will nol be eligible lor lhe
15' lax rale on qualiled dividend incone. The gain or loss generally will
be incone or loss lron sources wilhin lhe US lor loreign lax credil
linilalion purposes.
Dislribulions in excess ol lhe conpanys earnings and prolls, as
delernined lor US lederal incone lax purposes, will be lrealed as a relurn
ol capilal lo lhe exlenl ol lhe US holders basis in lhe ordinary shares or
ADSs and lherealler as capilal gain, subjecl lo laxalion as described in
Taxalion ol capilal gains - US lederal incone laxalion.
n addilion, lhe laxalion ol dividends nay be subjecl lo lhe rules lor
passive loreign inveslnenl conpanies (PFC, described below under
Taxalion ol capilal gains - US lederal incone laxalion. Dislribulions nade
by a PFC do nol conslilule qualiled dividend incone and are nol eligible
lor lhe 15' lax rale.
Taxation of capitaI gains
UK laxalion
A US holder nay be liable lor bolh UK and US lax in respecl ol a gain on
lhe disposal ol ordinary shares or ADSs il lhe US holder is (i a cilizen ol lhe
US residenl or ordinarily residenl in lhe UK, (ii a US doneslic corporalion
residenl in lhe UK by reason ol ils business being nanaged or conlrolled in
lhe UK or (iii a cilizen ol lhe US or a corporalion lhal carries on a lrade or
prolession or vocalion in lhe UK lhrough a branch or agency or, in respecl
ol corporalions lor accounling periods beginning on or aller 1 January
2003, lhrough a pernanenl eslablishnenl, and lhal have used, held, or
acquired lhe ordinary shares or ADSs lor lhe purposes ol such lrade,
prolession or vocalion ol such branch, agency or pernanenl eslablishnenl.
However, such persons nay be enlilled lo a lax credil againsl lheir US
lederal incone lax liabilily lor lhe anounl ol UK capilal gains lax or UK
corporalion lax on chargeable gains (as lhe case nay be lhal is paid in
respecl ol such gain.
Under lhe Trealy, capilal gains on disposilions ol ordinary shares or
ADSs generally will be subjecl lo lax only in lhe jurisdiclion ol residence ol
lhe relevanl holder as delernined under bolh lhe laws ol lhe UK and lhe
US and as required by lhe lerns ol lhe Trealy.
Under lhe Trealy, individuals who are residenls ol eilher lhe UK or lhe US
and who have been residenls ol lhe olher jurisdiclion (lhe US or lhe UK, as
lhe case nay be al any line during lhe six years innedialely preceding
lhe relevanl disposal ol ordinary shares or ADSs nay be subjecl lo lax wilh
respecl lo capilal gains arising lron a disposilion ol ordinary shares or
ADSs ol lhe conpany nol only in lhe jurisdiclion ol which lhe holder is
residenl al lhe line ol lhe disposilion bul also in lhe olher jurisdiclion.
US lederal incone laxalion
A US holder who sells or olherwise disposes ol ordinary shares or ADSs
will recognize a capilal gain or loss lor US lederal incone lax purposes
equal lo lhe dillerence belween lhe US dollar value ol lhe anounl realized
and lhe holders lax basis, delernined in US dollars, in lhe ordinary shares
or ADSs. Capilal gain ol a noncorporale US holder lhal is recognized in
laxable years beginning belore 1 January 2013 is generally laxed al a
naxinun rale ol 15' il lhe holders holding period lor such ordinary
shares or ADSs exceeds one year. The gain or loss will generally be incone
or loss lron sources wilhin lhe US lor loreign lax credil linilalion
purposes. The deduclibilily ol capilal losses is subjecl lo linilalions.
ve do nol believe lhal ordinary shares or ADSs will be lrealed as
slock ol a passive loreign inveslnenl conpany, or PFC, lor US lederal
incone lax purposes, bul lhis conclusion is a laclual delerninalion lhal is
nade annually and lhus is subjecl lo change. l we are lrealed as a PFC,
unless a US holder elecls lo be laxed annually on a narklonarkel basis
wilh respecl lo ordinary shares or ADSs, gain realized on lhe sale or olher
disposilion ol ordinary shares or ADSs would in general nol be lrealed as
capilal gain. nslead, a US holder would be lrealed as il he or she had
realized such gain ralably over lhe holding period lor ordinary shares or
ADSs and would be laxed al lhe highesl lax rale in ellecl lor each such
year lo which lhe gain was allocaled, in addilion lo which an inleresl
charge in respecl ol lhe lax allribulable lo each such year would apply.
Cerlain excess dislribulions would be sinilarly lrealed il we were
lrealed as a PFC.
AdditionaI tax considerations
Scrip Dividend Progranne
The conpany has inlroduced an oplional Scrip Dividend Progranne,
wherein holders ol ordinary shares or ADSs nay elecl lo receive any
dividends in lhe lorn ol new lullypaid ordinary shares or ADSs ol lhe
conpany, inslead ol cash. Please consull your lax adviser lor lhe
consequences lo you.
UK inherilance lax
The Eslale Tax Convenlion applies lo inherilance lax. ADSs held by an
individual who is doniciled lor lhe purposes ol lhe Eslale Tax Convenlion
in lhe US and is nol lor lhe purposes ol lhe Eslale Tax Convenlion a
nalional ol lhe UK will nol be subjecl lo UK inherilance lax on lhe
individuals dealh or on lransler during lhe individuals lileline unless,
anong olher lhings, lhe ADSs are parl ol lhe business properly ol a
pernanenl eslablishnenl silualed in lhe UK used lor lhe perlornance ol
independenl personal services. n lhe exceplional case where ADSs are
subjecl lo bolh inherilance lax and US lederal gill or eslale lax, lhe Eslale
Tax Convenlion generally provides lor lax payable in lhe US lo be crediled
againsl lax payable in lhe UK or lor lax paid in lhe UK lo be crediled
againsl lax payable in lhe US, based on priorily rules sel lorlh in lhe
Eslale Tax Convenlion.

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UK slanp duly and slanp duly reserve lax
The slalenenls below relale lo whal is underslood lo be lhe currenl
praclice ol H Fevenue & Cuslons in lhe UK under exisling law.
Provided lhal any inslrunenl ol lransler is nol execuled in lhe UK
and renains al all lines oulside lhe UK and lhe lransler does nol relale lo
any naller or lhing done or lo be done in lhe UK, no UK slanp duly is
payable on lhe acquisilion or lransler ol ADSs. eilher will an agreenenl lo
lransler ADSs in lhe lorn ol ADFs give rise lo a liabilily lo slanp duly
reserve lax.
Purchases ol ordinary shares, as opposed lo ADSs, lhrough lhe
CFEST syslen ol paperless share lranslers will be subjecl lo slanp duly
reserve lax al 0.5'. The charge will arise as soon as lhere is an agreenenl
lor lhe lransler ol lhe shares (or, in lhe case ol a condilional agreenenl,
when lhe condilion is lulllled. The slanp duly reserve lax will apply lo
agreenenls lo lransler ordinary shares even il lhe agreenenl is nade
oulside lhe UK belween lwo nonresidenls. Purchases ol ordinary shares
oulside lhe CFEST syslen are subjecl eilher lo slanp duly al a rale ol 5
per 1,000 (or parl, unless lhe slanp duly is less lhan 5, when no slanp
duly is charged, or slanp duly reserve lax al 0.5'. Slanp duly and slanp
duly reserve lax are generally lhe liabilily ol lhe purchaser.
A subsequenl lransler ol ordinary shares lo lhe Deposilarys
noninee will give rise lo lurlher slanp duly al lhe rale ol 1.50 per 100
(or parl or slanp duly reserve lax al lhe rale ol 1.5' ol lhe value ol lhe
ordinary shares al lhe line ol lhe lransler. An ADF holder elecling lo
receive ADSs inslead ol a cash dividend will be responsible lor lhe slanp
duly reserve lax due on issue ol shares lo lhe Deposilarys noninee and
calculaled al lhe rale ol 1.5' on lhe issue price ol lhe shares. l is
underslood lhal H Fevenue & Cuslons praclice is lo calculale lhe issue
price by relerence lo lhe lolal cash receipl lo which a US holder would
have been enlilled had lhe eleclion lo receive ADSs inslead ol a cash
dividend nol been nade. ADF holders elecling lo receive ADSs inslead ol
lhe cash dividend aulhorize lhe Deposilary lo sell sullcienl shares lo cover
lhis liabilily.
Docunenls on display
BP Annua| Fepor! and Forn 20-F 20!0 is also available online al
vvv.bp.con/annua|repor!. Shareholders nay oblain a hard copy ol BPs
conplele audiled lnancial slalenenls, lree ol charge, by conlacling BP
Dislribulion Services al +44 (0370 241 3269 or lhrough an enail requesl
addressed lo bpdis!ribu!ionservicesbp.con (UK and Fesl ol vorld or
lron Precision F al + 1 333 301 2505 or lhrough an enail requesl
addressed lo bprepor!sprecisionir.con (US and Canada.
The conpany is subjecl lo lhe inlornalion requirenenls ol lhe US
Securilies Exchange Acl ol 1934 applicable lo loreign privale issuers. n
accordance wilh lhese requirenenls, lhe conpany lles ils Annual Feporl
on Forn 20F and olher relaled docunenls wilh lhe SEC. l is possible lo
read and copy docunenls lhal have been lled wilh lhe SEC al lhe SECs
public relerence roon localed al 100 F Slreel E, vashinglon, DC 20549,
US. You nay also call lhe SEC al +1 300SEC0330 or log on lo vvv.sec.
gov. n addilion, BPs SEC llings are available lo lhe public al lhe SECs
websile vvv.sec.gov. BP discloses on ils websile al vvv.bp.con/
NYScorpora!egovernanceru|es, and in lhis reporl (see Corpora!e
governance prac!ices (Forn 20-F !en !6C) on page !05 signilcanl ways
(il any in which ils corporale governance praclices diller lron lhose
nandaled lor US conpanies under YSE lisling slandards.
Purchases ol equily securilies by lhe issuer and alllialed purchasers
Al lhe AC on 15 April 2010, aulhorizalion was given lo repurchase up lo 1.9 billion ordinary shares in lhe period lo lhe nexl AC in 2011 or 15 July 2011,
lhe lalesl dale by which an AC nusl be held. This aulhorizalion is renewed annually al lhe AC. o repurchases ol shares were nade in lhe period
1 January 2010 lo 13 February 2011.
The lollowing lable provides delails ol share purchases nade by ESOP lrusls.
axinun
Tolal nunber nunber ol
ol shares shares lhal
purchased as nay yel
Tolal nunber ol Average parl ol publicly be purchased
shares paid per share announced under lhe
purchased $ progrannes progranne
a
2010
January 51 10.36
February 144,523 11.41
arch 626 8.41
April 5,001,610 11.41
ay 1,941,069 11.41
June 181,384 11.41
July 4,550,658 6.25
Augusl 849 6.82
Seplenber 817,606 6.32
Oclober niI
ovenber 280,559 7.20
Decenber 38 7.18
2011
January 338,506 7.86
February (lo 13 February 311,362 7.60

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o shares were repurchased pursuanl lo a publicly announced plan. Transaclions represenl lhe purchase ol ordinary shares by ESOP lrusls lo salisly lulure requirenenls ol enployee share schenes.
Fees and charges payable by a holder ol ADSs
The Deposilary collecls lees lor delivery and surrender ol ADSs direclly lron inveslors deposiling shares or surrendering ADSs lor lhe purpose ol
wilhdrawal or lron inlernediaries acling lor lhen. The Deposilary collecls lees lor naking dislribulions lo inveslors by deducling lhose lees lron lhe
anounls dislribuled or by selling a porlion ol lhe dislribulable properly lo pay lhe lees.
The charges ol lhe Deposilary payable by inveslors are as lollows:
Type ol service Deposilary aclions Fee
Deposiling or subsliluling lhe
underlying shares

ssuance ol ADSs againsl lhe deposil ol shares, including
deposils and issuances in respecl ol:
Share dislribulions, slock splils, righls, nerger
Exchange ol securilies or olher lransaclions or
evenl or olher dislribulion allecling lhe ADSs or
deposiled securilies
$5.00 per 100 ADSs (or porlion lhereol
evidenced by lhe new ADSs delivered
Selling or exercising righls Dislribulion or sale ol securilies, lhe lee being in an
anounl equal lo lhe lee lor lhe execulion and delivery
ol ADSs lhal would have been charged as a resull ol
lhe deposil ol such securilies
$5.00 per 100 ADSs (or porlion lhereol
vilhdrawing an
underlying share

Acceplance ol ADSs surrendered lor wilhdrawal ol
deposiled securilies

$5.00 lor each 100 ADSs (or porlion
lhereol evidenced by lhe ADSs
surrendered
Expenses ol lhe Deposilary

Expenses incurred on behall ol holders in conneclion wilh:
Slock lransler or olher laxes and governnenlal
charges
Cable, lelex, eleclronic and lacsinile
lransnission/delivery
Transler or regislralion lees, il applicable, lor lhe
regislralion ol lranslers ol underlying shares
Expenses ol lhe Deposilary in conneclion wilh lhe
conversion ol loreign currency inlo US dollars
(which are paid oul ol such loreign currency
Expenses payable al lhe sole discrelion
ol lhe Deposilary by billing holders or
by deducling charges lron one or
nore cash dividends or olher cash
dislribulions
Fees and paynenls nade by lhe
Deposilary lo lhe issuer
The Deposilary has agreed lo reinburse cerlain conpany expenses relaled
lo lhe conpanys ADS progranne and incurred by lhe conpany in
conneclion wilh lhe progranne. The Deposilary reinbursed lo lhe
conpany, or paid anounls on lhe conpanys behall lo lhird parlies, or
waived ils lees and expenses, ol $4,647,254 lor lhe year ended
31 Decenber 2010.
The lable below sels lorlh lhe lypes ol expenses lhal lhe
Deposilary has agreed lo reinburse, and lhe invoices relaling lo lhe year
ended 31 Decenber 2010 lhal were reinbursed:
Calegory ol expense reinbursed Anounl reinbursed lor lhe year
lo lhe conpany ended 31 Decenber 2010
YSE lisling lees $500,000
Tolal $500,000

The Deposilary has also agreed lo waive lees lor slandard cosls associaled
wilh lhe adninislralion ol lhe ADS progranne and has paid cerlain
expenses direclly lo lhird parlies on behall ol lhe conpany. The lable below
sels lorlh lhose expenses lhal lhe Deposilary waived or paid direclly lo
lhird parlies relaling lo lhe year ended 31 Decenber 2010:
Calegory ol expense waived or paid Anounl reinbursed lor lhe year
direclly lo lhird parlies ended 31 Decenber 2010
Service lees and oul ol pockel expenses waived
a
$2,302,432
Broker reinbursenenls
b
$1,150,475
Olher lhirdparly nailing cosls
c
$136,542
Legal advice
d
$26,391
Olher lhirdparly expenses paid direclly $31,364
Tolal $4,147,254
ncludes lees in relalion lo lransler agenl cosls and cosls ol lhe ol BP Direcl Access Plan operaled
by JPorgan Chase.
Broker reinbursenenls are lees payable lo Broadridge lor lhe dislribulion ol hard copy nalerial lo
ADF benelcial holders in lhe Deposilary Trusl Conpany. Corporale nalerials include inlornalion
relaled lo shareholders neelings and relaled voling inslruclions. These lees are SEC approved.
Paynenl ol lees lo Precision F and CBC ellon lor dislribulion ol hard copy nalerials lo ADF
benelcial holders, proxy solicilalion and inveslor supporl.
Feinbursenenl lor legal advice lron Ziegler, Ziegler & Associales.
Under cerlain circunslances, including renoval ol lhe Deposilary or
lerninalion ol lhe ADF progranne by lhe conpany, lhe conpany is
required lo repay lhe Deposilary anounls reinbursed and/or expenses
paid lo or on behall ol lhe conpany during lhe 12nonlh period prior lo
nolice ol renoval or lerninalion.
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Calledup share capilal
Delails ol lhe allolled, calledup and lullypaid share capilal al 31 Decenber
2010 are sel oul in Financial slalenenls - ole 39 on page 209.
Al lhe AC on 15 April 2010, aulhorizalion was given lo lhe
direclors lo allol shares up lo an aggregale noninal anounl equal lo
$3,143 nillion. Aulhorily was also given lo lhe direclors lo allol shares lor
cash and lo dispose ol lreasury shares, olher lhan by way ol righls issue,
up lo a naxinun ol $236 nillion, wilhoul having lo oller such shares lo
exisling shareholders. These aulhorilies are given lor lhe period unlil lhe
nexl AC in 2011 or 15 July 2011, whichever is lhe earlier. These
aulhorilies are renewed annually al lhe AC.
Adninislralion
l you have any queries aboul lhe adninislralion ol shareholdings, such as
change ol address, change ol ownership, dividend paynenls, lhe scrip
dividend progranne or lo change lhe way you receive your conpany
docunenls (such as lhe BP Annua| Fepor! and Forn 20-F, BP Sunnar,
Feviev and No!ice o! BP Annua| Cenera| ee!ing please conlacl lhe BP
Fegislrar or ADS Deposilary.
UK - Fegislrars Ollce
The BP Fegislrar, Equinili
Aspecl House, Spencer Foad, Lancing, vesl Sussex B99 6DA
Freephone in UK 0300 701107, lel +44 (0121 415 7005
Texlphone 0371 334 2255, lax +44 (0371 334 2100
Please nole lhal any nunbers quoled wilh lhe prelx 0371 will be
charged al 3p per ninule lron a BT landline. Olher nelwork providers
cosls nay vary.
US - ADS Deposilary
JPorgan Chase Bank, .A.
PO Box 64504, Sl Paul, 551640504
Tolllree in US and Canada +1 377 633 5672, lel +1 651 306 4333
For lhe hearing inpaired +1 651 453 2133
Annual general neeling
The 2011 AC will be held on Thursday, 14 April 2011 al 11.30 a.n.
al ExCeL London, One veslern Caleway, Foyal Vicloria Dock, London
E16 1XL. A separale nolice convening lhe neeling is dislribuled lo
shareholders, which includes an explanalion ol lhe ilens ol business lo
be considered al lhe neeling.
All resolulions ol which nolice has been given will be decided
on a poll.
Ernsl & Young LLP have expressed lheir willingness lo conlinue in
ollce as audilors and a resolulion lor lheir reappoinlnenl is included in
No!ice o! BP Annua| Cenera| ee!ing 20!!.
By order ol lhe board
David J Jackson
Secrelary
2 arch 2011
BP p.l.c.
Fegislered in England and vales o. 102493
Exhibils
The lollowing docunenls are lled in lhe Securilies and Exchange
Connission (SEC EDCAF syslen, as parl ol lhis Annual Feporl on
Forn 20F, and can be viewed on lhe SECs websile:
Exhibil 1. enorandun and Arlicles ol Associalion ol BP p.l.c.1
Exhibil 4.1 The BP Execulive Direclors ncenlive Plan1
Exhibil 4.2 Anended Direclors Service Conlracl and Secondnenl
Agreenenl lor F v Dudley1
Exhibil 4.3 Anended Direclors Service Conlracl and Secondnenl
Agreenenl lor B E Crole1
Exhibil 7. Conpulalion ol Falio ol Earnings lo Fixed Charges
(Unaudiled1
Exhibil 3. Subsidiaries (included as ole 46 lo lhe Financial
Slalenenls
Exhibil 10.1 Trusl Agreenenl daled as ol 6 Augusl 2010 anong BP
Exploralion & Produclion nc., John S arlin, Jr and
Kenl D Syverud, as individual lruslees, and Ciligroup
TruslDelaware, .A., as corporale lruslee, as anended
by an Addendun, daled 6 Augusl 20101
Exhibil 10.2 Pledge and Collaleral Agreenenl daled as ol
30 Seplenber 2010 by BP Exploralion & Produclion nc.
in lavor ol John S arlin, Jr and Kenl D Syverud, as
individual lruslees1
Exhibil 11. Code ol Elhics'1
Exhibil 12. Fule 13a - 14(a Cerlilcalions1
Exhibil 13. Fule 13a - 14(b Cerlilcalions#1
Exhibil 99. Deepwaler Horizon Accidenl nvesligalion Feporl''
' ncorporaled by relerence lo lhe conpanys Annual Feporl on Forn 20F lor lhe year ended
31 Decenber 2009.
'' ncorporaled by relerence lo lhe Conpanys Feporl on Forn 6K lled on 24 Seplenber 2010
(File o. 00106262.
# Furnished only.
1 ncluded only in lhe annual reporl lled in lhe Securilies and Exchange Connission EDCAF
syslen.
The lolal anounl ol longlern securilies ol lhe Fegislranl and ils
subsidiaries aulhorized under any one inslrunenl does nol exceed 10'
ol lhe lolal assels ol BP p.l.c. and ils subsidiaries on a consolidaled
basis. The conpany agrees lo lurnish copies ol any or all such
inslrunenls lo lhe SEC on requesl.
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Financial slalenenls
142 Consolidaled lnancial slalenenls
ol lhe BP group
Slalenenl ol direclors responsibililies in respecl ol lhe
consolidaled lnancial slalenenls 142
ndependenl audilors reporls 143
Croup incone slalenenl 146
Croup slalenenl ol conprehensive incone 147
Croup slalenenl ol changes in equily 147
Croup balance sheel 143
Croup cash How slalenenl 149
150 oles on lnancial slalenenls
1 Signilcanl accounling policies 150
2 Signilcanl evenl - Cull ol exico oil spill 153
3 Acquisilions 162
4 oncurrenl assels held lor sale 163
5 Disposals and inpairnenl 164
6 Evenls aller lhe reporling period 166
7 Segnenlal analysis 167
3 nleresl and olher incone 172
9 Produclion and sinilar laxes 172
10 Deprecialion, deplelion and anorlizalion 172
11 npairnenl review ol goodwill 173
12 Dislribulion and adninislralion expenses 175
13 Currency exchange gains and losses 175
14 Fesearch and developnenl 175
15 Operaling leases 175
16 Exploralion lor and evalualion ol oil and nalural
gas resources 176
17 Audilors renuneralion 176
13 Finance cosls 177
19 Taxalion 177
20 Dividends 179
21 Earnings per ordinary share 130
22 Properly, planl and equipnenl 131
23 Coodwill 132
24 nlangible assels 132
25 nveslnenls in joinlly conlrolled enlilies 133
26 nveslnenls in associales 134
27 Financial inslrunenls and lnancial risk laclors 135
23 Olher inveslnenls 190
29 nvenlories 190
30 Trade and olher receivables 191
31 Cash and cash equivalenls 191
32 Valualion and qualilying accounls 191
33 Trade and olher payables 192
34 Derivalive lnancial inslrunenls 192
35 Finance debl 197
36 Capilal disclosures and analysis ol changes in
nel debl 193
37 Provisions 199
33 Pensions and olher poslrelirenenl benells 202
39 Calledup share capilal 209
40 Capilal and reserves 210
41 Sharebased paynenls 214
42 Enployee cosls and nunbers 216
43 Fenuneralion ol direclors and senior nanagenenl 217
44 Conlingenl liabililies and conlingenl assels 213
45 Capilal connilnenls 219
46 Subsidiaries, joinlly conlrolled enlilies and
associales 220
47 Condensed consolidaling inlornalion on
cerlain US subsidiaries 222
223 Supplenenlary inlornalion
on oil and nalural gas (unaudiled
PC1 Parenl conpany lnancial
slalenenls ol BP p.l.c.
Slalenenl ol direclors responsibililies in respecl
ol lhe parenl conpany lnancial slalenenls PC1
ndependenl audilors reporl lo lhe nenbers ol BP p.l.c. PC2
Conpany balance sheel PC3
Conpany cash How slalenenl PC4
Conpany slalenenl ol lolal recognized gains and losses PC4
oles on lnancial slalenenls PC5
1 Accounling policies PC5
2 Taxalion PC6
3 Fixed assels inveslnenls PC6
4 Deblors PC7
5 Credilors PC7
6 Pensions PC3
7 Calledup share capilal PC11
3 Capilal and reserves PC11
9 Cash How PC12
10 Conlingenl liabililies PC12
11 Sharebased paynenls PC13
12 Audilors renuneralion PC15
13 Direclors renuneralion PC15
14 Posl balance sheel evenls PC16
Statement of directors responsibilities in respect of the consolidated
nancial statements
The directors are responsible for preparing the Annual Report and the consolidated nancial statements in accordance with applicable United Kingdom law,
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and IFRS as adopted by the European Union.
The directors are required to prepare nancial statements for each nancial year that present fairly the nancial position of the group and the
nancial performance and cash ows of the group for that period. In preparing those nancial statements, the directors are required to:
Select suitable accounting policies and then apply them consistently.
Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information.
Provide additional disclosure when compliance with the specic requirements of IFRS is insufcient to enable users to understand the impact of
particular transactions, other events and conditions on the groups nancial position and nancial performance.
State that the company has complied with IFRS, subject to any material departures disclosed and explained in the consolidated nancial statements.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the nancial position of the
group and enable them to ensure that the consolidated nancial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation.
They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors draw attention to Notes 2, 37 and 44 on the nancial statements which describe the uncertainties surrounding the amounts and
timings of liabilities arising from the Gulf of Mexico oil spill.
The groups business activities, performance, position and risks are set out in this report. The nancial position of the group, its cash ows, liquidity
position and borrowing facilities are detailed in the appropriate sections on pages 63 to 67 and elsewhere in the notes on nancial statements. The report
also includes details of the groups risk mitigation and management. Information on the Gulf of Mexico oil spill and BPs response is included on pages 34
to 39 and elsewhere in this report, including Corporate responsibility on pages 68 to 76. The group has considerable nancial resources, and the directors
believe that the group is well placed to manage its business risks successfully. After making enquiries, the directors have a reasonable expectation that
the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt
the going concern basis in preparing the annual report and accounts.
Having made the requisite enquiries, so far as the directors are aware, there is no relevant audit information (as dened by Section 418(3) of the
Companies Act 2006) of which the groups auditors are unaware, and the directors have taken all the steps they ought to have taken to make themselves
aware of any relevant audit information and to establish that the groups auditors are aware of that information.
The directors conrm that to the best of their knowledge:
The consolidated nancial statements, prepared in accordance with IFRS as issued by the International Accounting Standards Board, IFRS as
adopted by the European Union and in accordance with the provisions of the Companies Act 2006, give a true and fair view of the assets, liabilities,
nancial position and prot or loss of the group; and
The management report, which is incorporated in the directors report, includes a fair review of the development and performance of the business
and the position of the group, together with a description of the principal risks and uncertainties.
Consolidated nancial statements of the BP group
This page does not form part of BPs Annual Report on Form 20-F as led with the SEC.

Consolidaled lnancial slalenenls ol lhe BP group
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ndependenl audilors reporl on lhe Annual Feporl and Accounls
lo lhe nenbers ol BP p.l.c.
ve have audiled lhe consolidaled lnancial slalenenls ol BP p.l.c. lor lhe year ended 31 Decenber 2010 which conprise lhe group incone slalenenl,
lhe group slalenenl ol conprehensive incone, lhe group slalenenl ol changes in equily, lhe group balance sheel, lhe group cash How slalenenl and
lhe relaled noles 1 lo 46. The lnancial reporling lranework lhal has been applied in lheir preparalion is applicable law and nlernalional Financial Feporling
Slandards (FFS as adopled by lhe European Union.
This reporl is nade solely lo lhe conpanys nenbers, as a body, in accordance wilh Chapler 3 ol Parl 16 ol lhe Conpanies Acl 2006. Our audil
work has been underlaken so lhal we nighl slale lo lhe conpanys nenbers lhose nallers we are required lo slale lo lhen in an audilors reporl and
lor no olher purpose. To lhe lullesl exlenl pernilled by law, we do nol accepl or assune responsibilily lo anyone olher lhan lhe conpany and lhe
conpanys nenbers as a body, lor our audil work, lor lhis reporl, or lor lhe opinions we have lorned.
Respective responsibiIities of directors and auditors
As explained nore lully in lhe Slalenenl ol direclors responsibililies in respecl ol lhe consolidaled lnancial slalenenls sel oul on page 142, lhe direclors
are responsible lor lhe preparalion ol lhe consolidaled lnancial slalenenls and lor being salisled lhal lhey give a lrue and lair view. Our responsibilily is
lo audil and express an opinion on lhe consolidaled lnancial slalenenls in accordance wilh applicable law and nlernalional Slandards on Audiling (UK
and reland. Those slandards require us lo conply wilh lhe Audiling Praclices Boards Elhical Slandards lor Audilors.
Scope of the audit of the hnanciaI statements
An audil involves oblaining evidence aboul lhe anounls and disclosures in lhe lnancial slalenenls sullcienl lo give reasonable assurance lhal lhe
lnancial slalenenls are lree lron nalerial nisslalenenl, whelher caused by lraud or error. This includes an assessnenl ol: whelher lhe accounling
policies are appropriale lo lhe groups circunslances and have been consislenlly applied and adequalely disclosed, lhe reasonableness ol signilcanl
accounling eslinales nade by lhe direclors, and lhe overall presenlalion ol lhe lnancial slalenenls.
Opinion on hnanciaI statements
n our opinion lhe consolidaled lnancial slalenenls:
give a lrue and lair view ol lhe slale ol lhe groups allairs as al 31 Decenber 2010 and ol ils loss lor lhe year lhen ended,
have been properly prepared in accordance wilh FFS as adopled by lhe European Union, and
have been prepared in accordance wilh lhe requirenenls ol lhe Conpanies Acl 2006 and Arlicle 4 ol lhe AS Fegulalion.
Separate opinion in reIation to IFRS as issued by the InternationaI Accounting Standards Board
As explained in ole 1 lo lhe consolidaled lnancial slalenenls, lhe group in addilion lo applying FFS as adopled by lhe European Union, has also applied
FFS as issued by lhe nlernalional Accounling Slandards Board (ASB.
n our opinion lhe consolidaled lnancial slalenenls conply wilh FFS as issued by lhe ASB.
Emphasis of matter - signihcant uncertainty over provisions and contingencies reIated to the GuIf of Mexico oiI spiII
n lorning our opinion we have considered lhe adequacy ol lhe disclosures nade in oles 2, 37 and 44 lo lhe lnancial slalenenls concerning lhe
provisions, lulure expendilures lor which reliable eslinales cannol be nade and olher conlingencies relaled lo lhe Cull ol exico oil spill signilcanl
evenl. The lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly and lhe
ullinale exposure and cosl lo BP will be dependenl on nany laclors. Aclual cosls could ullinalely be signilcanlly higher or lower lhan lhose recorded as
lhe clains and selllenenl process progresses. Our opinion is nol qualiled in respecl ol lhese nallers.
Opinion on other matter prescribed by the Companies Act 2006
n our opinion lhe inlornalion given in lhe Direclors Feporl lor lhe lnancial year lor which lhe consolidaled lnancial slalenenls are prepared is consislenl
wilh lhe consolidaled lnancial slalenenls.
Matters on which we are required to report by exception
ve have nolhing lo reporl in respecl ol lhe lollowing:
Under lhe Conpanies Acl 2006 we are required lo reporl lo you il, in our opinion:
cerlain disclosures ol direclors renuneralion speciled by law are nol nade, or
we have nol received all lhe inlornalion and explanalions we require lor our audil.
Under lhe Lisling Fules we are required lo review:
lhe direclors slalenenl, sel oul on page 142, in relalion lo going concern,
lhe parl ol lhe BP board perlornance reporl relaling lo lhe conpanys conpliance wilh lhe nine provisions ol lhe June 2003 Conbined Code
speciled lor our review, and
cerlain elenenls ol lhe reporl lo shareholders by lhe Board on direclors renuneralion.
Other matter
ve have reporled separalely on lhe parenl conpany lnancial slalenenls ol BP p.l.c. lor lhe year ended 31 Decenber 2010 and on lhe inlornalion in lhe
Direclors Fenuneralion Feporl lhal is described as having been audiled.
Ernst & Young LLP
Allisler vilson (Senior Slalulory Audilor
lor and on behall ol Ernsl & Young LLP, Slalulory Audilor
London
2 arch 2011
The nainlenance and inlegrily ol lhe BP p.l.c. websile are lhe responsibilily ol lhe direclors, lhe work carried oul by lhe audilors does nol involve consideralion ol lhese nallers and, accordingly, lhe
audilors accepl no responsibilily lor any changes lhal nay have occurred lo lhe lnancial slalenenls since lhey were inilially presenled on lhe websile.
Legislalion in lhe Uniled Kingdon governing lhe preparalion and disseninalion ol lnancial slalenenls nay diller lron legislalion in olher jurisdiclions.
This page does nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
Feporl ol ndependenl Fegislered Public Accounling Firn on lhe
Annual Feporl on Forn 20F
The Board of Directors and SharehoIders of BP p.I.c.
ve have audiled lhe acconpanying group balance sheels ol BP p.l.c. as ol 31 Decenber 2010 and 2009, and lhe relaled group incone slalenenl, group
cash How slalenenl, group slalenenl ol conprehensive incone and group slalenenl ol changes in equily, lor each ol lhe lhree years in lhe period
ended 31 Decenber 2010. These lnancial slalenenls are lhe responsibilily ol lhe conpanys nanagenenl. Our responsibilily is lo express an opinion on
lhese lnancial slalenenls based on our audils.
ve conducled our audils in accordance wilh lhe slandards ol lhe Public Conpany Accounling Oversighl Board (Uniled Slales. Those slandards
require lhal we plan and perlorn lhe audil lo oblain reasonable assurance aboul whelher lhe lnancial slalenenls are lree ol nalerial nisslalenenl. An
audil includes exanining, on a lesl basis, evidence supporling lhe anounls and disclosures in lhe lnancial slalenenls. An audil also includes assessing
lhe accounling principles used and signilcanl eslinales nade by nanagenenl, as well as evalualing lhe overall lnancial slalenenl presenlalion. ve
believe lhal our audils provide a reasonable basis lor our opinion.
n our opinion, lhe lnancial slalenenls relerred lo above presenl lairly, in all nalerial respecls, lhe group lnancial posilion ol BP p.l.c. al 31 Decenber
2010 and 2009, and lhe group resulls ol operalions and cash Hows lor each ol lhe lhree years in lhe period ended 31 Decenber 2010, in accordance wilh
nlernalional Financial Feporling Slandards as adopled by lhe European Union and nlernalional Financial Feporling Slandards as issued by lhe nlernalional
Accounling Slandards Board.
n lorning our opinion we have considered lhe adequacy ol lhe disclosures nade in oles 2, 37 and 44 lo lhe lnancial slalenenls concerning lhe
provisions, lulure expendilures lor which reliable eslinales cannol be nade and olher conlingencies relaled lo lhe Cull ol exico oil spill signilcanl evenl.
The lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly and lhe ullinale
exposure and cosl lo BP will be dependenl on nany laclors. Aclual cosls could ullinalely be signilcanlly higher or lower lhan lhose recorded as lhe clains
and selllenenl process progresses. Our opinion is nol qualiled in respecl ol lhese nallers.
ve also have audiled, in accordance wilh lhe slandards ol lhe Public Conpany Accounling Oversighl Board (Uniled Slales, BP p.l.c.s inlernal
conlrol over lnancial reporling as ol 31 Decenber 2010, based on crileria eslablished in lhe nlernal Conlrol: Fevised Cuidance lor Direclors on lhe
Conbined Code (Turnbull as issued by lhe nslilule ol Charlered Accounlanls in England and vales (lhe Turnbull crileria and our reporl daled 2 arch
2011 expressed an unqualiled opinion lhereon.
/s/ERNST & YOUNG LLP
Ernsl & Young LLP
London, England
2 arch 2011

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Feporl ol ndependenl Fegislered Public Accounling Firn on lhe
Annual Feporl on Forn 20F
The Board of Directors and SharehoIders of BP p.I.c.
ve have audiled BP p.l.c.s inlernal conlrol over lnancial reporling as ol 31 Decenber 2010, based on crileria eslablished in nlernal Conlrol: Fevised
Cuidance lor Direclors on lhe Conbined Code (Turnbull as issued by lhe nslilule ol Charlered Accounlanls in England and vales (lhe Turnbull crileria.
BP p.l.c.s nanagenenl is responsible lor nainlaining elleclive inlernal conlrol over lnancial reporling, and lor ils assessnenl ol lhe ellecliveness ol
inlernal conlrol over lnancial reporling included in lhe acconpanying anagenenls reporl on inlernal conlrol over lnancial reporling on page 106. Our
responsibilily is lo express an opinion on lhe conpanys inlernal conlrol over lnancial reporling based on our audil.
ve conducled our audil in accordance wilh lhe slandards ol lhe Public Conpany Accounling Oversighl Board (Uniled Slales. Those slandards
require lhal we plan and perlorn lhe audil lo oblain reasonable assurance aboul whelher elleclive inlernal conlrol over lnancial reporling was nainlained
in all nalerial respecls. Our audil included oblaining an underslanding ol inlernal conlrol over lnancial reporling, assessing lhe risk lhal a nalerial
weakness exisls, lesling and evalualing lhe design and operaling ellecliveness ol inlernal conlrol based on lhe assessed risk, and perlorning such olher
procedures as we considered necessary in lhe circunslances. ve believe lhal our audil provides a reasonable basis lor our opinion.
A conpanys inlernal conlrol over lnancial reporling is a process designed lo provide reasonable assurance regarding lhe reliabilily ol lnancial reporling
and lhe preparalion ol lnancial slalenenls lor exlernal purposes in accordance wilh generally accepled accounling principles. A conpanys inlernal conlrol
over lnancial reporling includes lhose policies and procedures lhal (1 perlain lo lhe nainlenance ol records lhal, in reasonable delail, accuralely and lairly
reHecl lhe lransaclions and disposilions ol lhe assels ol lhe conpany, (2 provide reasonable assurance lhal lransaclions are recorded as necessary lo pernil
preparalion ol lnancial slalenenls in accordance wilh generally accepled accounling principles, and lhal receipls and expendilures ol lhe conpany are being
nade only in accordance wilh aulhorizalions ol nanagenenl and direclors ol lhe conpany, and (3 provide reasonable assurance regarding prevenlion or
linely deleclion ol unaulhorized acquisilion, use, or disposilion ol lhe conpanys assels lhal could have a nalerial ellecl on lhe lnancial slalenenls.
Because ol ils inherenl linilalions, inlernal conlrol over lnancial reporling nay nol prevenl or delecl nisslalenenls. Also, projeclions ol any
evalualion ol ellecliveness lo lulure periods are subjecl lo lhe risk lhal conlrols nay becone inadequale because ol changes in condilions, or lhal lhe
degree ol conpliance wilh lhe policies or procedures nay deleriorale.
n our opinion, BP p.l.c. nainlained, in all nalerial respecls, elleclive inlernal conlrol over lnancial reporling as ol 31 Decenber 2010, based on lhe
Turnbull crileria.
ve also have audiled, in accordance wilh lhe slandards ol lhe Public Conpany Accounling Oversighl Board (Uniled Slales, lhe group balance
sheels ol BP p.l.c. as ol 31 Decenber 2010 and 2009, and lhe relaled group incone slalenenl, group cash How slalenenl, group slalenenl ol
conprehensive incone and group slalenenl ol changes in equily, lor each ol lhe lhree years in lhe period ended 31 Decenber 2010, and our reporl
daled 2 arch 2011 expressed an unqualiled opinion lhereon.
Ernsl & Young LLP
London, England
2 arch 2011
Consenl ol independenl regislered public accounling lrn
ve consenl lo lhe incorporalion by relerence ol our reporls daled 2 arch 2011 wilh respecl lo lhe group lnancial slalenenls ol BP p.l.c., and lhe
ellecliveness ol inlernal conlrol over lnancial reporling ol BP p.l.c., included in lhis Annual Feporl (Forn 20F lor lhe year ended 31 Decenber 2010 in
lhe lollowing regislralion slalenenls:
Fegislralion Slalenenl on Forn F3 (File o. 333157906 ol BP Capilal arkels p.l.c. and BP p.l.c., and
Fegislralion Slalenenls on Forn S3 (File os. 333149773, 333119934, 333103923, 33379399, 33367206, 333102533, 333103924,
333123432, 333123433, 333131533, 333146363, 333146370, 333146373, 333131534 and 333132619 ol BP p.l.c.
Ernsl & Young LLP
London, England
2 arch 2011
www.bp.con/downloads/inconeslalenenl
Croup incone slalenenl
For lhe year ended 31 Decenber $ nillion
ole 2010 2009 2003
Sales and olher operaling revenues 7 297,107 239,272 361,143
Earnings lron joinlly conlrolled enlilies - aller inleresl and lax 1,175 1,236 3,023
Earnings lron associales - aller inleresl and lax 3,582 2,615 793
nleresl and olher incone 3 681 792 736
Cains on sale ol businesses and lxed assels 5 6,383 2,173 1,353
Tolal revenues and olher incone 308,928 246,133 367,053
Purchases 216,211 163,772 266,932
Produclion and nanulacluring expenses
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64,615 23,202 26,756
Produclion and sinilar laxes 9 5,244 3,752 3,953
Deprecialion, deplelion and anorlizalion 10 11,164 12,106 10,935
npairnenl and losses on sale ol businesses and lxed assels 5 1,689 2,333 1,733
Exploralion expense 16 843 1,116 332
Dislribulion and adninislralion expenses 12 12,555 14,033 15,412
Fair value (gain loss on enbedded derivalives 34 309 (607 111
Proll (loss belore inleresl and laxalion (3,702) 26,426 35,239
Finance cosls
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13 1,170 1,110 1,547
el lnance expense (incone relaling lo pensions and olher poslrelirenenl benells 33 (47) 192 (591
Proll (loss belore laxalion (4,825) 25,124 34,233
Taxalion
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19 (1,501) 3,365 12,617
Proll (loss lor lhe year (3,324) 16,759 21,666
Allribulable lo
BP shareholders (3,719) 16,573 21,157
inorily inleresl 395 131 509
(3,324) 16,759 21,666
Earnings per share - cenls
Proll (loss lor lhe year allribulable lo BP shareholders
Basic 21 (19.81) 33.49 112.59
Diluled 21 (19.81) 37.54 111.56

See ole 2 lor inlornalion on lhe inpacl ol lhe Cull ol exico oil spill on lhe incone slalenenl line ilens.
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Croup slalenenl ol conprehensive incone
ole 2010 2009 2003
Proll (loss lor lhe year (3,324) 16,759 21,666
Currency lranslalion dillerences 259 1,326 (4,362
Exchange gains on lranslalion ol loreign operalions lranslerred lo gain or loss on sale ol
businesses and lxed assels (20) (27 -
Acluarial loss relaling lo pensions and olher poslrelirenenl benells 33 (320) (632 (3,430
Availablelorsale inveslnenls narked lo narkel (191) 705 (994
Availablelorsale inveslnenls - recycled lo lhe incone slalenenl (150) 2 526
Cash How hedges narked lo narkel (65) 652 (1,173
Cash How hedges - recycled lo lhe incone slalenenl (25) 366 45
Cash How hedges - recycled lo lhe balance sheel 53 136 (33
Taxalion 19 (137) 525 2,946
Olher conprehensive incone (596) 3,503 (11,430
Tolal conprehensive incone (3,920) 20,262 10,136
Allribulable lo
BP shareholders (4,318) 20,137 9,752
(3,920) 20,262 10,136

Croup slalenenl ol changes in equily
$ nillion
2010 2009 2003
BP BP BP
sharehoIders' Minority TotaI shareholders inorily Tolal shareholders inorily Tolal
equity interest equity equily inleresl equily equily inleresl equily
Al 1 January 101,613 500 102,113 91,303 306 92,109 93,690 962 94,652
Tolal conprehensive incone (4,318) 398 (3,920) 20,137 125 20,262 9,752 434 10,136
Dividends (2,627) (315) (2,942) (10,433 (416 (10,399 (10,342 (425 (10,767
Fepurchase ol ordinary
share capilal - - - - - - (2,414 - (2,414
Sharebased paynenls
(nel ol lax 339 - 339 721 - 721 617 - 617
Changes in associales equily - - - (43 - (43 - - -
Transaclions involving
ninorily inleresls (20) 321 301 (22 (15 (37 - (165 (165
Al 31 Decenber 94,987 904 95,891 101,613 500 102,113 91,303 306 92,109

www.bp.con/downloads/balancesheel
Croup balance sheel
Al 31 Decenber $ nillion
ole 2010 2009
oncurrenl assels
Properly, planl and equipnenl 22 110,163 103,275
Coodwill 23 8,598 3,620
nlangible assels 24 14,298 11,543
nveslnenls in joinlly conlrolled enlilies 25 12,286 15,296
nveslnenls in associales 26 13,335 12,963
Olher inveslnenls 23 1,191 1,567
Fixed assels 159,871 153,269
Loans 894 1,039
Olher receivables 30 6,298 1,729
Derivalive lnancial inslrunenls 34 4,210 3,965
Prepaynenls 1,432 1,407
Delerred lax assels 19 528 516
Delned benell pension plan surpluses 33 2,176 1,390
175,409 163,315
Currenl assels
Loans 247 249
nvenlories 29 26,218 22,605
Trade and olher receivables 30 36,549 29,531
Prepaynenls 1,574 1,753
Currenl lax receivable 693 209
Olher inveslnenls 23 1,532
Cash and cash equivalenls 31 18,556 3,339
89,725 67,653
Assels classiled as held lor sale 4 7,128 -
96,853 67,653
Tolal assels 272,262 235,963
Currenl liabililies
Trade and olher payables 33 46,329 35,204
Accruals 5,612 6,202
Finance debl 35 14,626 9,109
Currenl lax payable 2,920 2,464
Provisions 37 9,489 1,660
82,832 59,320
Liabililies direclly associaled wilh assels classiled as held lor sale 4 1,047
83,879 59,320
oncurrenl liabililies
Olher payables 33 14,285 3,193
Accruals 637 703
Finance debl 35 30,710 25,513
Delerred lax liabililies 19 10,908 13,662
Provisions 37 22,418 12,970
Delned benell pension plan and olher poslrelirenenl benell plan delcils 33 9,857 10,010
92,492 74,535
Tolal liabililies 176,371 133,355
el assels 95,891 102,113
Equily
Share capilal 39 5,183 5,179
Feserves 89,804 96,434
BP shareholders equily 40 94,987 101,613
Tolal equily 40 95,891 102,113

CH Svanberg Chairnan
F v Dudley Croup Chiel Execulive
2 arch 2011
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www.bp.con/downloads/cashHow
Croup cash How slalenenl
ole 2010 2009 2003
Operaling aclivilies
Proll (loss belore laxalion (4,825) 25,124 34,233
Adjuslnenls lo reconcile proll (loss belore laxalion lo nel cash provided by
operaling aclivilies
Exploralion expendilure wrillen oll 16 375 593 335
Deprecialion, deplelion and anorlizalion 10 11,164 12,106 10,935
npairnenl and (gain loss on sale ol businesses and lxed assels 5 (4,694) 160 330
Earnings lron joinlly conlrolled enlilies and associales (4,757) (3,901 (3,321
Dividends received lron joinlly conlrolled enlilies and associales 3,277 3,003 3,723
nleresl receivable (277) (253 (407
nleresl received 205 203 335
Finance cosls 13 1,170 1,110 1,547
nleresl paid (912) (909 (1,291
el lnance expense (incone relaling lo pensions and olher poslrelirenenl benells 33 (47) 192 (591
Sharebased paynenls 197 450 459
el operaling charge lor pensions and olher poslrelirenenl benells, less conlribulions
and benell paynenls lor unlunded plans (959) (337 (173
el charge lor provisions, less paynenls 19,217 650 (293
(ncrease decrease in invenlories (3,895) (5,363 9,010
(ncrease decrease in olher currenl and noncurrenl assels (15,620) 7,595 2,439
ncrease (decrease in olher currenl and noncurrenl liabililies 20,607 (5,323 (6,101
ncone laxes paid (6,610) (6,324 (12,324
el cash provided by operaling aclivilies 13,616 27,716 33,095
nvesling aclivilies
Capilal expendilure (18,421) (20,650 (22,653
Acquisilions, nel ol cash acquired (2,468) 1 (395
nveslnenl in joinlly conlrolled enlilies (461) (573 (1,009
nveslnenl in associales (65) (164 (31
Proceeds lron disposals ol lxed assels 5 7,492 1,715 913
Proceeds lron disposals ol businesses, nel ol cash disposed 5 9,462 966 11
Proceeds lron loan repaynenls 501 530 647
Olher - 47 (200
el cash used in invesling aclivilies (3,960) (13,133 (22,767
Financing aclivilies
el issue (repurchase ol shares 169 207 (2,567
Proceeds lron longlern lnancing 11,934 11,567 7,961
Fepaynenls ol longlern lnancing (4,702) (6,021 (3,321
el decrease in shorllern debl (3,619) (4,405 (1,315
Dividends paid
BP shareholders (2,627) (10,433 (10,342
inorily inleresl (315) (416 (425
el cash provided by (used in lnancing aclivilies 840 (9,551 (10,509
Currency lranslalion dillerences relaling lo cash and cash equivalenls (279) 110 (134
ncrease in cash and cash equivalenls 10,217 142 4,635
Cash and cash equivalenls al beginning ol year 8,339 3,197 3,562
Cash and cash equivalenls al end ol year 18,556 3,339 3,197

Notes on nancial statements
1. Signicant accounting policies
Authorization of nancial statements and statement of compliance
with International Financial Reporting Standards
The consolidated nancial statements of the BP group for the year ended
31 December 2010 were approved and signed by the chairman and group
chief executive on 2 March 2011 having been duly authorized to do so by
the board of directors. BP p.l.c. is a public limited company incorporated
and domiciled in England and Wales. The consolidated nancial statements
have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board
(IASB), IFRS as adopted by the European Union (EU) and in accordance
with the provisions of the Companies Act 2006. IFRS as adopted by the EU
differs in certain respects from IFRS as issued by the IASB, however, the
differences have no impact on the groups consolidated nancial
statements for the years presented. The signicant accounting policies of
the group are set out below.
Basis of preparation
The consolidated nancial statements have been prepared in accordance
with IFRS and IFRS Interpretations Committee (IFRIC) interpretations
issued and effective for the year ended 31 December 2010, or issued and
early adopted. The standards and interpretations adopted in the year are
described further on page 157.
The accounting policies that follow have been consistently applied
to all years presented. The group balance sheet as at 1 January 2009 is not
presented as it is not affected by the retrospective adoption of any new
accounting policies during the year, nor any other retrospective
restatements or reclassications.
The consolidated nancial statements are presented in US dollars
and all values are rounded to the nearest million dollars ($ million), except
where otherwise indicated.
For further information regarding the key judgements and estimates
made by management in applying the groups accounting policies, refer to
Critical accounting policies on pages 124 to 127, which forms part of these
nancial statements.
Basis of consolidation
The group nancial statements consolidate the nancial statements of
BP p.l.c. and the entities it controls (its subsidiaries) drawn up to
31 December each year. Control comprises the power to govern the
nancial and operating policies of the investee so as to obtain benet from
its activities and is achieved through direct and indirect ownership of voting
rights; currently exercisable or convertible potential voting rights; or by way
of contractual agreement. Subsidiaries are consolidated from the date of
their acquisition, being the date on which the group obtains control, and
continue to be consolidated until the date that such control ceases. The
nancial statements of subsidiaries are prepared for the same reporting
year as the parent company, using consistent accounting policies.
Intercompany balances and transactions, including unrealized prots arising
from intragroup transactions, have been eliminated. Unrealized losses are
eliminated unless the transaction provides evidence of an impairment of
the asset transferred. Minority interests represent the equity in subsidiaries
that is not attributable, directly or indirectly, to the group.
Segmental reporting
The groups operating segments are established on the basis of those
components of the group that are evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. During the second quarter of 2010 a separate organization
was created within the group to deal with the ongoing response to the Gulf
of Mexico oil spill. This organization reports directly to the group chief
executive ofcer and its costs are excluded from the results of the existing
operating segments. Under IFRS its costs are therefore presented as a
reconciling item between the sum of the results of the reportable
segments and the group results.
The accounting policies of the operating segments are the same as the
groups accounting policies described in this note, except that IFRS requires
that the measure of prot or loss disclosed for each operating segment is
the measure that is provided regularly to the chief operating decision
maker. For BP, this measure of prot or loss is replacement cost prot
before interest and tax which reects the replacement cost of supplies by
excluding from prot inventory holding gains and losses. Replacement cost
prot for the group is not a recognized measure under generally accepted
accounting practice (GAAP). For further information see Note 7.
Interests in joint ventures
A joint venture is a contractual arrangement whereby two or more parties
(venturers) undertake an economic activity that is subject to joint control.
Joint control exists only when the strategic nancial and operating
decisions relating to the activity require the unanimous consent of the
venturers. A jointly controlled entity is 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 its fellow venturers.
The results, assets and liabilities of a jointly controlled entity are
incorporated in these nancial statements using the equity method of
accounting. Under the equity method, the investment in a jointly controlled
entity is carried in the balance sheet at cost, plus post-acquisition changes
in the groups share of net assets of the jointly controlled entity, less
distributions received and less any impairment in value of the investment.
Loans advanced to jointly controlled entities that have the characteristics of
equity nancing are also included in the investment on the group balance
sheet. The group income statement reects the groups share of the
results after tax of the jointly controlled entity.
Financial statements of jointly controlled entities are prepared for
the same reporting year as the group. Where necessary, adjustments are
made to those nancial statements to bring the accounting policies used
into line with those of the group.
Unrealized gains on transactions between the group and its jointly
controlled entities are eliminated to the extent of the groups interest in the
jointly controlled entities. Unrealized losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
The group assesses investments in jointly controlled entities for
impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. If any such indication of impairment
exists, the carrying amount of the investment is compared with its
recoverable amount, being the higher of its fair value less costs to sell and
value in use. Where the carrying amount exceeds the recoverable amount,
the investment is written down to its recoverable amount.
The group ceases to use the equity method of accounting on the
date from which it no longer has joint control or signicant inuence over
the joint venture or associate respectively, or when the interest becomes
held for sale.
Certain of the groups activities, particularly in the Exploration and
Production segment, are conducted through joint ventures where the
venturers have a direct ownership interest in, and jointly control, the assets
of the venture. BP recognizes, on a line-by-line basis in the consolidated
nancial statements, its share of the assets, liabilities and expenses of
these jointly controlled assets incurred jointly with the other partners, along
with the groups income from the sale of its share of the output and any
liabilities and expenses that the group has incurred in relation to the venture.
Interests in associates
An associate is an entity over which the group is in a position to exercise
signicant inuence through participation in the nancial and operating
policy decisions of the investee, but which is not a subsidiary or a jointly
controlled entity. The results, assets and liabilities of an associate are
incorporated in these nancial statements using the equity method of
accounting as described above for jointly controlled entities.

oles on lnancial slalenenls
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1. Signilcanl accounling policies conlinued
Foreign currency transIation
Funclional currency is lhe currency ol lhe prinary econonic environnenl in
which an enlily operales and is nornally lhe currency in which lhe enlily
prinarily generales and expends cash.
n individual conpanies, lransaclions in loreign currencies are
inilially recorded in lhe lunclional currency by applying lhe rale ol exchange
ruling al lhe dale ol lhe lransaclion. onelary assels and liabililies
denoninaled in loreign currencies are relranslaled inlo lhe lunclional
currency al lhe rale ol exchange ruling al lhe balance sheel dale. Any
resulling exchange dillerences are included in lhe incone slalenenl.
onnonelary assels and liabililies, olher lhan lhose neasured al lair
value, are nol relranslaled subsequenl lo inilial recognilion.
n lhe consolidaled lnancial slalenenls, lhe assels and liabililies ol
nonUS dollar lunclional currency subsidiaries, joinlly conlrolled enlilies and
associales, including relaled goodwill, are lranslaled inlo US dollars al lhe
rale ol exchange ruling al lhe balance sheel dale. The resulls and cash
Hows ol nonUS dollar lunclional currency subsidiaries, joinlly conlrolled
enlilies and associales are lranslaled inlo US dollars using average rales ol
exchange. Exchange adjuslnenls arising when lhe opening nel assels and
lhe prolls lor lhe year relained by nonUS dollar lunclional currency
subsidiaries, joinlly conlrolled enlilies and associales are lranslaled inlo US
dollars are laken lo a separale conponenl ol equily and reporled in lhe
slalenenl ol conprehensive incone. Exchange gains and losses arising on
longlern inlragroup loreign currency borrowings used lo lnance lhe
groups nonUS dollar inveslnenls are also laken lo equily. On disposal ol a
nonUS dollar lunclional currency subsidiary, joinlly conlrolled enlily or
associale, lhe delerred cunulalive anounl ol exchange gains and losses
recognized in equily relaling lo lhal parlicular nonUS dollar operalion is
reclassiled lo lhe incone slalenenl.
Business combinations and goodwiII
Business conbinalions are accounled lor using lhe acquisilion nelhod.
The idenlilable assels acquired and liabililies assuned are neasured al
lheir lair values al lhe acquisilion dale. The cosl ol an acquisilion is
neasured as lhe aggregale ol lhe consideralion lranslerred, neasured al
acquisiliondale lair value, and lhe anounl ol any ninorily inleresl in lhe
acquiree. inorily inleresls are slaled eilher al lair value or al lhe
proporlionale share ol lhe recognized anounls ol lhe acquirees idenlilable
nel assels. Acquisilion cosls incurred are expensed and included in
dislribulion and adninislralion expenses.
Coodwill is neasured as being lhe excess ol lhe aggregale ol lhe
consideralion lranslerred, lhe anounl recognized lor any ninorily inleresl
and lhe acquisiliondale lair values ol any previously held inleresl in lhe
acquiree over lhe lair value ol lhe idenlilable assels acquired and liabililies
assuned al lhe acquisilion dale.
Al lhe acquisilion dale, any goodwill acquired is allocaled lo each ol
lhe cashgeneraling unils expecled lo benell lron lhe conbinalions
synergies. For lhis purpose, cashgeneraling unils are sel al one level
below a business segnenl.
Following inilial recognilion, goodwill is neasured al cosl less any
accunulaled inpairnenl losses. Coodwill is reviewed lor inpairnenl annually
or nore lrequenlly il evenls or changes in circunslances indicale lhal lhe
carrying value nay be inpaired. npairnenl is delernined by assessing lhe
recoverable anounl ol lhe cashgeneraling unil lo which lhe goodwill relales.
vhere lhe recoverable anounl ol lhe cashgeneraling unil is less lhan lhe
carrying anounl, an inpairnenl loss is recognized. An inpairnenl loss
recognized lor goodwill is nol reversed in a subsequenl period.
Coodwill arising on business conbinalions prior lo 1 January 2003
is slaled al lhe previous carrying anounl, less subsequenl inpairnenls,
under UK generally accepled accounling praclice.
Coodwill nay also arise upon inveslnenls in joinlly conlrolled
enlilies and associales, being lhe surplus ol lhe cosl ol inveslnenl over
lhe groups share ol lhe nel lair value ol lhe idenlilable assels. Such
goodwill is recorded wilhin inveslnenls in joinlly conlrolled enlilies and
associales, and any inpairnenl ol lhe inveslnenl is included wilhin lhe
earnings lron joinlly conlrolled enlilies and associales.
Business conbinalions underlaken prior lo 2010 were accounled lor using
lhe acquisilion nelhod ol accounling bul lhere were sone dillerences in lhe
accounling lrealnenl conpared lo whal is required lor 2010. See npac! o!
nev n!erna!iona| Financia| Fepor!ing S!andards on page 157 lor lurlher
inlornalion. There were no nalerial business conbinalions underlaken prior
lo 2010 in lhe periods covered by lhese lnancial slalenenls.
Non-current assets heId for saIe
oncurrenl assels and disposal groups classiled as held lor sale are
neasured al lhe lower ol carrying anounl and lair value less cosls lo sell.
oncurrenl assels and disposal groups are classiled as held lor sale
il lheir carrying anounls will be recovered lhrough a sale lransaclion ralher
lhan lhrough conlinuing use. This condilion is regarded as nel only when
lhe sale is highly probable and lhe assel or disposal group is available lor
innediale sale in ils presenl condilion subjecl only lo lerns lhal are usual
and cuslonary lor sales ol such assels. anagenenl nusl be connilled
lo lhe sale, which should be expecled lo qualily lor recognilion as a conpleled
sale wilhin one year lron lhe dale ol classilcalion as held lor sale.
Properly, planl and equipnenl and inlangible assels once classiled
as held lor sale are nol deprecialed. The group ceases lo use lhe equily
nelhod ol accounling on lhe dale lron which an inleresl in a joinlly
conlrolled enlily or an inleresl in an associale becones held lor sale.
IntangibIe assets
nlangible assels, olher lhan goodwill, include expendilure on lhe
exploralion lor and evalualion ol oil and nalural gas resources, conpuler
sollware, palenls, licences and lradenarks and are slaled al lhe anounl
inilially recognized, less accunulaled anorlizalion and accunulaled
inpairnenl losses. For inlornalion on expendilure on lhe exploralion lor
and evalualion ol oil and gas resources, see lhe accounling policy lor oil
and nalural gas exploralion, appraisal and developnenl expendilure below.
nlangible assels acquired separalely lron a business are carried
inilially al cosl. The inilial cosl is lhe aggregale anounl paid and lhe lair
value ol any olher consideralion given lo acquire lhe assel. An inlangible
assel acquired as parl ol a business conbinalion is neasured al lair value
al lhe dale ol acquisilion and is recognized separalely lron goodwill il lhe
assel is separable or arises lron conlraclual or olher legal righls.
nlangible assels wilh a lnile lile are anorlized on a slraighlline
basis over lheir expecled uselul lives. For palenls, licences and lradenarks,
expecled uselul lile is lhe shorler ol lhe duralion ol lhe legal agreenenl
and econonic uselul lile, and can range lron lhree lo 15 years. Conpuler
sollware cosls generally have a uselul lile ol lhree lo lve years.
The expecled uselul lives ol assels are reviewed on an annual basis
and, il necessary, changes in uselul lives are accounled lor prospeclively.
The carrying value ol inlangible assels is reviewed lor inpairnenl
whenever evenls or changes in circunslances indicale lhe carrying value
nay nol be recoverable.
OiI and naturaI gas expIoration, appraisaI and deveIopment
expenditure
Oil and nalural gas exploralion, appraisal and developnenl expendilure
is accounled lor using lhe principles ol lhe successlul ellorls nelhod
ol accounling.
Licence and proper!, acquisi!ion cos!s
Exploralion licence and leasehold properly acquisilion cosls are capilalized
wilhin inlangible assels and are reviewed al each reporling dale lo conlrn
lhal lhere is no indicalion lhal lhe carrying anounl exceeds lhe recoverable
anounl. This review includes conlrning lhal exploralion drilling is slill
under way or lrnly planned or lhal il has been delernined, or work is
under way lo delernine, lhal lhe discovery is econonically viable based on
a range ol lechnical and connercial consideralions and sullcienl progress
is being nade on eslablishing developnenl plans and lining. l no lulure
aclivily is planned, lhe renaining balance ol lhe licence and properly
acquisilion cosls is wrillen oll. Lower value licences are pooled and
anorlized on a slraighlline basis over lhe eslinaled period ol exploralion.
Upon recognilion ol proved reserves and inlernal approval lor developnenl,
lhe relevanl expendilure is lranslerred lo properly, planl and equipnenl.
xp|ora!ion and appraisa| expendi!ure
Ceological and geophysical exploralion cosls are charged againsl incone as
incurred. Cosls direclly associaled wilh an exploralion well are inilially
capilalized as an inlangible assel unlil lhe drilling ol lhe well is conplele
and lhe resulls have been evalualed. These cosls include enployee
renuneralion, nalerials and luel used, rig cosls and paynenls nade lo
conlraclors. l polenlially connercial quanlilies ol hydrocarbons are nol
lound, lhe exploralion well is wrillen oll as a dry hole. l hydrocarbons are
lound and, subjecl lo lurlher appraisal aclivily, are likely lo be capable ol
connercial developnenl, lhe cosls conlinue lo be carried as an assel.
Cosls direclly associaled wilh appraisal aclivily, underlaken lo
delernine lhe size, characlerislics and connercial polenlial ol a reservoir
lollowing lhe inilial discovery ol hydrocarbons, including lhe cosls ol
appraisal wells where hydrocarbons were nol lound, are inilially capilalized
as an inlangible assel.
All such carried cosls are subjecl lo lechnical, connercial and
nanagenenl review al leasl once a year lo conlrn lhe conlinued inlenl lo
develop or olherwise exlracl value lron lhe discovery. vhen lhis is no
longer lhe case, lhe cosls are wrillen oll. vhen proved reserves ol oil and
nalural gas are delernined and developnenl is approved by nanagenenl,
lhe relevanl expendilure is lranslerred lo properly, planl and equipnenl.
Deve|opnen! expendi!ure
Expendilure on lhe conslruclion, inslallalion and conplelion ol
inlraslruclure lacililies such as plallorns, pipelines and lhe drilling ol
developnenl wells, including service and unsuccesslul developnenl or
delinealion wells, is capilalized wilhin properly, planl and equipnenl and is
deprecialed lron lhe connencenenl ol produclion as described below in
lhe accounling policy lor properly, planl and equipnenl.
Property, pIant and equipment
Properly, planl and equipnenl is slaled al cosl, less accunulaled
deprecialion and accunulaled inpairnenl losses.
The inilial cosl ol an assel conprises ils purchase price or
conslruclion cosl, any cosls direclly allribulable lo bringing lhe assel inlo
operalion, lhe inilial eslinale ol any deconnissioning obligalion, il any,
and, lor qualilying assels, borrowing cosls. The purchase price or
conslruclion cosl is lhe aggregale anounl paid and lhe lair value ol any
olher consideralion given lo acquire lhe assel. The capilalized value ol a
lnance lease is also included wilhin properly, planl and equipnenl.
Exchanges ol assels are neasured al lair value unless lhe exchange
lransaclion lacks connercial subslance or lhe lair value ol neilher lhe
assel received nor lhe assel given up is reliably neasurable. The cosl ol lhe
acquired assel is neasured al lhe lair value ol lhe assel given up, unless
lhe lair value ol lhe assel received is nore clearly evidenl. vhere lair value
is nol used, lhe cosl ol lhe acquired assel is neasured al lhe carrying
anounl ol lhe assel given up. The gain or loss on derecognilion ol lhe
assel given up is recognized in proll or loss.
Expendilure on najor nainlenance rells or repairs conprises lhe
cosl ol replacenenl assels or parls ol assels, inspeclion cosls and
overhaul cosls. vhere an assel or parl ol an assel lhal was separalely
deprecialed is replaced and il is probable lhal lulure econonic benells
associaled wilh lhe ilen will How lo lhe group, lhe expendilure is
capilalized and lhe carrying anounl ol lhe replaced assel is derecognized.
nspeclion cosls associaled wilh najor nainlenance progrannes are
capilalized and anorlized over lhe period lo lhe nexl inspeclion. Overhaul
cosls lor najor nainlenance progrannes, and all olher nainlenance cosls
are expensed as incurred.
Oil and nalural gas properlies, including relaled pipelines, are
deprecialed using a unilolproduclion nelhod. The cosl ol producing wells
is anorlized over proved developed reserves. Licence acquisilion, connon
lacililies and lulure deconnissioning cosls are anorlized over lolal proved
reserves. The unilolproduclion rale lor lhe anorlizalion ol connon
lacililies cosls lakes inlo accounl expendilures incurred lo dale, logelher
wilh lhe lulure capilal expendilure expecled lo be incurred in relalion lo
lhese connon lacililies and excluding lulure drilling cosls.
Olher properly, planl and equipnenl is deprecialed on a slraighl line basis
over ils expecled uselul lile. The uselul lives ol lhe groups olher properly,
planl and equipnenl are as lollows:
Land inprovenenls 15 lo 25 years
Buildings 20 lo 50 years
Felneries 20 lo 30 years
Pelrochenicals 20 lo 30 years
Pipelines 10 lo 50 years
Service slalions 15 years
Ollce equipnenl 3 lo 7 years
Fixlures and lllings 5 lo 15 years
The expecled uselul lives ol properly, planl and equipnenl are reviewed on
an annual basis and, il necessary, changes in uselul lives are accounled lor
prospeclively.
The carrying value ol properly, planl and equipnenl is reviewed lor
inpairnenl whenever evenls or changes in circunslances indicale lhe
carrying value nay nol be recoverable.
An ilen ol properly, planl and equipnenl is derecognized upon
disposal or when no lulure econonic benells are expecled lo arise lron
lhe conlinued use ol lhe assel. Any gain or loss arising on derecognilion ol
lhe assel (calculaled as lhe dillerence belween lhe nel disposal proceeds
and lhe carrying anounl ol lhe ilen is included in lhe incone slalenenl in
lhe period in which lhe ilen is derecognized.
Impairment of intangibIe assets and property, pIant and equipment
The group assesses assels or groups ol assels lor inpairnenl whenever
evenls or changes in circunslances indicale lhal lhe carrying value ol an
assel nay nol be recoverable, lor exanple, low prices or nargins lor an
exlended period or, lor oil and gas assels, signilcanl downward revisions
ol eslinaled volunes or increases in eslinaled lulure developnenl
expendilure. l any such indicalion ol inpairnenl exisls, lhe group nakes
an eslinale ol lhe assels recoverable anounl. ndividual assels are
grouped lor inpairnenl assessnenl purposes al lhe lowesl level al which
lhere are idenlilable cash Hows lhal are largely independenl ol lhe cash
Hows ol olher groups ol assels. An assel groups recoverable anounl is
lhe higher ol ils lair value less cosls lo sell and ils value in use. vhere lhe
carrying anounl ol an assel group exceeds ils recoverable anounl, lhe
assel group is considered inpaired and is wrillen down lo ils recoverable
anounl. n assessing value in use, lhe eslinaled lulure cash Hows are
adjusled lor lhe risks specilc lo lhe assel group and are discounled lo lheir
presenl value using a prelax discounl rale lhal reHecls currenl narkel
assessnenls ol lhe line value ol noney.
An assessnenl is nade al each reporling dale as lo whelher lhere
is any indicalion lhal previously recognized inpairnenl losses nay no
longer exisl or nay have decreased. l such indicalion exisls, lhe
recoverable anounl is eslinaled. A previously recognized inpairnenl loss
is reversed only il lhere has been a change in lhe eslinales used lo
delernine lhe assels recoverable anounl since lhe lasl inpairnenl loss
was recognized. l lhal is lhe case, lhe carrying anounl ol lhe assel is
increased lo ils recoverable anounl. Thal increased anounl cannol exceed
lhe carrying anounl lhal would have been delernined, nel ol deprecialion,
had no inpairnenl loss been recognized lor lhe assel in prior years. Such
reversal is recognized in proll or loss. Aller such a reversal, lhe
deprecialion charge is adjusled in lulure periods lo allocale lhe assels
revised carrying anounl, less any residual value, on a syslenalic basis over
ils renaining uselul lile.

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FinanciaI assets
Financial assels are classiled as loans and receivables, availablelorsale
lnancial assels, lnancial assels al lair value lhrough proll or loss, or as
derivalives designaled as hedging inslrunenls in an elleclive hedge, as
appropriale. Financial assels include cash and cash equivalenls, lrade
receivables, olher receivables, loans, olher inveslnenls, and derivalive
lnancial inslrunenls. The group delernines lhe classilcalion ol ils lnancial
assels al inilial recognilion. Financial assels are recognized inilially al lair
value, nornally being lhe lransaclion price plus, in lhe case ol lnancial
assels nol al lair value lhrough proll or loss, direclly allribulable
lransaclion cosls.
The subsequenl neasurenenl ol lnancial assels depends on lheir
classilcalion, as lollows:
Loans and receivab|es
Loans and receivables are nonderivalive lnancial assels wilh lxed or
delerninable paynenls lhal are nol quoled in an aclive narkel. Such
assels are carried al anorlized cosl using lhe elleclive inleresl nelhod il
lhe line value ol noney is signilcanl. Cains and losses are recognized in
incone when lhe loans and receivables are derecognized or inpaired, as
well as lhrough lhe anorlizalion process. This calegory ol lnancial assels
includes lrade and olher receivables.
Avai|ab|e-!or-sa|e !nancia| asse!s
Availablelorsale lnancial assels are lhose nonderivalive lnancial assels
lhal are nol classiled as loans and receivables. Aller inilial recognilion,
availablelorsale lnancial assels are neasured al lair value, wilh gains or
losses recognized wilhin olher conprehensive incone. Accunulaled
changes in lair value are recorded as a separale conponenl ol equily unlil
lhe inveslnenl is derecognized or inpaired.
The lair value ol quoled inveslnenls is delernined by relerence lo
bid prices al lhe close ol business on lhe balance sheel dale. vhere lhere
is no aclive narkel, lair value is delernined using valualion lechniques.
vhere lair value cannol be reliably neasured, assels are carried al cosl.
Financia| asse!s a! !air va|ue !hrough pro!! or |oss
Derivalives, olher lhan lhose designaled as elleclive hedging inslrunenls,
are classiled as held lor lrading and are included in lhis calegory. These
assels are carried on lhe balance sheel al lair value wilh gains or losses
recognized in lhe incone slalenenl.
Deriva!ives designa!ed as hedging ins!runen!s in an e!!ec!ive hedge
Such derivalives are carried on lhe balance sheel al lair value. The
lrealnenl ol gains and losses arising lron revalualion is described
below in lhe accounling policy lor derivalive lnancial inslrunenls and
hedging aclivilies.
Impairment of hnanciaI assets
The group assesses al each balance sheel dale whelher a lnancial assel or
group ol lnancial assels is inpaired.
Loans and receivab|es
l lhere is objeclive evidence lhal an inpairnenl loss on loans and
receivables carried al anorlized cosl has been incurred, lhe anounl ol lhe
loss is neasured as lhe dillerence belween lhe assels carrying anounl
and lhe presenl value ol eslinaled lulure cash Hows discounled al lhe
lnancial assels original elleclive inleresl rale. The carrying anounl ol
lhe assel is reduced, wilh lhe anounl ol lhe loss recognized in lhe
incone slalenenl.
Avai|ab|e-!or-sa|e !nancia| asse!s
l an availablelorsale lnancial assel is inpaired, lhe cunulalive loss
previously recognized in equily is lranslerred lo lhe incone slalenenl.
Any subsequenl recovery in lhe lair value ol lhe assel is recognized wilhin
olher conprehensive incone.
l lhere is objeclive evidence lhal an inpairnenl loss on an
unquoled equily inslrunenl lhal is carried al cosl has been incurred, lhe
anounl ol lhe loss is neasured as lhe dillerence belween lhe assels
carrying anounl and lhe presenl value ol eslinaled lulure cash Hows
discounled al lhe currenl narkel rale ol relurn lor a sinilar lnancial assel.
Inventories
nvenlories, olher lhan invenlory held lor lrading purposes, are slaled al
lhe lower ol cosl and nel realizable value. Cosl is delernined by lhe lrslin
lrsloul nelhod and conprises direcl purchase cosls, cosl ol produclion,
lransporlalion and nanulacluring expenses. el realizable value is
delernined by relerence lo prices exisling al lhe balance sheel dale.
nvenlories held lor lrading purposes are slaled al lair value less
cosls lo sell and any changes in nel realizable value are recognized in lhe
incone slalenenl.
Supplies are valued al cosl lo lhe group nainly using lhe average
nelhod or nel realizable value, whichever is lhe lower.
FinanciaI IiabiIities
Financial liabililies are classiled as lnancial liabililies al lair value lhrough
proll or loss, derivalives designaled as hedging inslrunenls in an elleclive
hedge, or as lnancial liabililies neasured al anorlized cosl, as appropriale.
Financial liabililies include lrade and olher payables, accruals, nosl ilens ol
lnance debl and derivalive lnancial inslrunenls. The group delernines lhe
classilcalion ol ils lnancial liabililies al inilial recognilion. The neasurenenl
ol lnancial liabililies depends on lheir classilcalion, as lollows:
Financia| |iabi|i!ies a! !air va|ue !hrough pro!! or |oss
Derivalives, olher lhan lhose designaled as elleclive hedging inslrunenls,
are classiled as held lor lrading and are included in lhis calegory. These
liabililies are carried on lhe balance sheel al lair value wilh gains or losses
Deriva!ives designa!ed as hedging ins!runen!s in an e!!ec!ive hedge
Such derivalives are carried on lhe balance sheel al lair value. The
lrealnenl ol gains and losses arising lron revalualion is described
below in lhe accounling policy lor derivalive lnancial inslrunenls and
hedging aclivilies.
Financia| |iabi|i!ies neasured a! anor!ized cos!
All olher lnancial liabililies are inilially recognized al lair value. For
inlereslbearing loans and borrowings lhis is lhe lair value ol lhe proceeds
received nel ol issue cosls associaled wilh lhe borrowing.
Aller inilial recognilion, olher lnancial liabililies are subsequenlly
neasured al anorlized cosl using lhe elleclive inleresl nelhod. Anorlized
cosl is calculaled by laking inlo accounl any issue cosls, and any discounl
or preniun on selllenenl. Cains and losses arising on lhe repurchase,
selllenenl or cancellalion ol liabililies are recognized respeclively in
inleresl and olher revenues and lnance cosls.
This calegory ol lnancial liabililies includes lrade and olher payables
and lnance debl.
Leases
Finance leases, which lransler lo lhe group subslanlially all lhe risks and
benells incidenlal lo ownership ol lhe leased ilen, are capilalized al lhe
connencenenl ol lhe lease lern al lhe lair value ol lhe leased properly
or, il lower, al lhe presenl value ol lhe nininun lease paynenls. Finance
charges are allocaled lo each period so as lo achieve a conslanl rale ol
inleresl on lhe renaining balance ol lhe liabilily and are charged direclly
againsl incone.
Capilalized leased assels are deprecialed over lhe shorler ol lhe
eslinaled uselul lile ol lhe assel or lhe lease lern.
Operaling lease paynenls are recognized as an expense in lhe
incone slalenenl on a slraighlline basis over lhe lease lern.
For bolh lnance and operaling leases, conlingenl renls
are recognized in lhe incone slalenenl in lhe period in which lhey
are incurred.
Derivative hnanciaI instruments and hedging activities
The group uses derivalive lnancial inslrunenls lo nanage cerlain
exposures lo Huclualions in loreign currency exchange rales, inleresl rales
and connodily prices as well as lor lrading purposes. Such derivalive
lnancial inslrunenls are inilially recognized al lair value on lhe dale on
which a derivalive conlracl is enlered inlo and are subsequenlly
reneasured al lair value. Derivalives are carried as assels when lhe lair
value is posilive and as liabililies when lhe lair value is negalive.
Conlracls lo buy or sell a nonlnancial ilen lhal can be sellled nel
in cash or anolher lnancial inslrunenl, or by exchanging lnancial
inslrunenls as il lhe conlracls were lnancial inslrunenls, wilh lhe
exceplion ol conlracls lhal were enlered inlo and conlinue lo be held lor
lhe purpose ol lhe receipl or delivery ol a nonlnancial ilen in accordance
wilh lhe groups expecled purchase, sale or usage requirenenls, are
accounled lor as lnancial inslrunenls.
Cains or losses arising lron changes in lhe lair value ol derivalives
lhal are nol designaled as elleclive hedging inslrunenls are recognized in
lhe incone slalenenl.
For lhe purpose ol hedge accounling, hedges are classiled as:
Fair value hedges when hedging exposure lo changes in lhe lair value
ol a recognized assel or liabilily.
Cash How hedges when hedging exposure lo variabilily in cash Hows
lhal is eilher allribulable lo a parlicular risk associaled wilh a
recognized assel or liabilily or a highly probable lorecasl lransaclion.
Hedges ol a nel inveslnenl in a loreign operalion.
Al lhe inceplion ol a hedge relalionship lhe group lornally designales and
docunenls lhe hedge relalionship lor which lhe group wishes lo clain
hedge accounling, logelher wilh lhe risk nanagenenl objeclive and
slralegy lor underlaking lhe hedge. The docunenlalion includes
idenlilcalion ol lhe hedging inslrunenl, lhe hedged ilen or lransaclion,
lhe nalure ol lhe risk being hedged, and how lhe enlily will assess lhe
hedging inslrunenl ellecliveness in ollselling lhe exposure lo changes in
lhe hedged ilens lair value or cash Hows allribulable lo lhe hedged ilen.
Such hedges are expecled al inceplion lo be highly elleclive in achieving
ollselling changes in lair value or cash Hows. Hedges neeling lhe crileria
lor hedge accounling are accounled lor as lollows:
Fair va|ue hedges
The change in lair value ol a hedging derivalive is recognized in proll or
loss. The change in lhe lair value ol lhe hedged ilen allribulable lo lhe risk
being hedged is recorded as parl ol lhe carrying value ol lhe hedged ilen
and is also recognized in proll or loss.
The group applies lair value hedge accounling lor hedging lxed
inleresl rale risk on borrowings. The gain or loss relaling lo lhe elleclive
porlion ol lhe inleresl rale swap is recognized in lhe incone slalenenl
wilhin lnance cosls, ollselling lhe anorlizalion ol lhe inleresl on lhe
underlying borrowings.
l lhe crileria lor hedge accounling are no longer nel, or il lhe group
revokes lhe designalion, lhe adjuslnenl lo lhe carrying anounl ol a
hedged ilen lor which lhe elleclive inleresl rale nelhod is used is
anorlized lo proll or loss over lhe period lo nalurily.
Cash !ov hedges
For cash How hedges, lhe elleclive porlion ol lhe gain or loss on lhe
hedging inslrunenl is recognized wilhin olher conprehensive incone,
while lhe inelleclive porlion is recognized in proll or loss. Anounls laken
lo equily are lranslerred lo lhe incone slalenenl when lhe hedged
lransaclion allecls proll or loss. The gain or loss relaling lo lhe elleclive
porlion ol inleresl rale swaps hedging variable rale borrowings is
recognized in lhe incone slalenenl wilhin lnance cosls.
vhere lhe hedged ilen is lhe cosl ol a nonlnancial assel or
liabilily, such as a lorecasl lransaclion lor lhe purchase ol properly, planl
and equipnenl, lhe anounls recognized wilhin olher conprehensive
incone are lranslerred lo lhe inilial carrying anounl ol lhe nonlnancial
assel or liabilily.
l lhe hedging inslrunenl expires or is sold, lerninaled or exercised
wilhoul replacenenl or rollover, or il ils designalion as a hedge is revoked,
anounls previously recognized wilhin olher conprehensive incone renain
in equily unlil lhe lorecasl lransaclion occurs and are lranslerred lo lhe
incone slalenenl or lo lhe inilial carrying anounl ol a nonlnancial
assel or liabilily as above. l a lorecasl lransaclion is no longer expecled lo
occur, anounls previously recognized in equily are reclassiled lo lhe
incone slalenenl.
Hedges o! a ne! inves!nen! in a !oreign opera!ion
For hedges ol a nel inveslnenl in a loreign operalion, lhe elleclive porlion
ol lhe gain or loss on lhe hedging inslrunenl is recognized wilhin olher
conprehensive incone, while lhe inelleclive porlion is recognized in proll
or loss. Anounls laken lo equily are lranslerred lo lhe incone slalenenl
when lhe loreign operalion is sold or parlially disposed ol.
nbedded deriva!ives
Derivalives enbedded in olher lnancial inslrunenls or olher hosl conlracls
are lrealed as separale derivalives when lheir risks and characlerislics are
nol closely relaled lo lhose ol lhe hosl conlracl. Conlracls are assessed lor
enbedded derivalives when lhe group becones a parly lo lhen, including
al lhe dale ol a business conbinalion. Enbedded derivalives are neasured
al lair value al each balance sheel dale. Any gains or losses arising lron
changes in lair value are laken direclly lo lhe incone slalenenl.

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Provisions, contingencies and reimbursement assets
Provisions are recognized when lhe group has a presenl obligalion (legal or
conslruclive as a resull ol a pasl evenl, il is probable lhal an oulHow ol
resources enbodying econonic benells will be required lo sellle lhe
obligalion and a reliable eslinale can be nade ol lhe anounl ol lhe
obligalion. vhere appropriale, lhe lulure cash How eslinales are adjusled
lo reHecl risks specilc lo lhe liabilily.
l lhe ellecl ol lhe line value ol noney is nalerial, provisions are
delernined by discounling lhe expecled lulure cash Hows al a prelax
risklree rale lhal reHecls currenl narkel assessnenls ol lhe line value ol
noney. vhere discounling is used, lhe increase in lhe provision due lo lhe
passage ol line is recognized wilhin lnance cosls. Provisions are splil
belween anounls expecled lo be sellled wilhin 12 nonlhs ol lhe balance
sheel dale (currenl and anounls expecled lo be sellled laler (noncurrenl.
Conlingenl liabililies are possible obligalions whose exislence will
only be conlrned by lulure evenls nol wholly wilhin lhe conlrol ol lhe
group, or presenl obligalions where il is nol probable lhal an oulHow ol
resources will be required or lhe anounl ol lhe obligalion cannol be
neasured wilh sullcienl reliabilily. Conlingenl liabililies are nol recognized
in lhe lnancial slalenenls bul are disclosed unless lhe possibilily ol an
oulHow ol econonic resources is considered renole.
vhere lhe group nakes conlribulions inlo a separalely
adninislered lund lor resloralion, environnenlal or olher obligalions, which
il does nol conlrol, and lhe groups righl lo lhe assels in lhe lund is
reslricled, lhe obligalion lo conlribule lo lhe lund is recognized as a liabilily
where il is probable lhal such addilional conlribulions will be nade. The
group recognizes a reinbursenenl assel separalely, being lhe lower ol lhe
anounl ol lhe associaled resloralion, environnenlal or olher provision and
lhe groups share ol lhe lair value ol lhe nel assels ol lhe lund available
lo conlribulors.
Anounls lhal BP has a conlraclual righl lo recover lron lhird
parlies are conlingenl assels. Such anounls are nol recognized in lhe
accounls unless lhey are virlually cerlain lo be received.
Deconnissioning
Liabililies lor deconnissioning cosls are recognized when lhe group has
an obligalion lo disnanlle and renove a lacilily or an ilen ol planl and lo
reslore lhe sile on which il is localed, and when a reliable eslinale ol lhal
liabilily can be nade. vhere an obligalion exisls lor a new lacilily, such as
oil and nalural gas produclion or lransporlalion lacililies, lhis will be on
conslruclion or inslallalion. An obligalion lor deconnissioning nay also
cryslallize during lhe period ol operalion ol a lacilily lhrough a change in
legislalion or lhrough a decision lo lerninale operalions. The anounl
recognized is lhe presenl value ol lhe eslinaled lulure expendilure
delernined in accordance wilh local condilions and requirenenls.
A corresponding ilen ol properly, planl and equipnenl ol an
anounl equivalenl lo lhe provision is also recognized. This is subsequenlly
deprecialed as parl ol lhe assel.
Olher lhan lhe unwinding discounl on lhe provision, any change in
lhe presenl value ol lhe eslinaled expendilure is reHecled as an
adjuslnenl lo lhe provision and lhe corresponding ilen ol properly, planl
and equipnenl. Such changes include loreign exchange gains and losses
arising on lhe relranslalion ol lhe liabilily inlo lhe lunclional currency ol
lhe reporling enlily, when il is known lhal lhe liabilily will be sellled in a
loreign currency.
nvironnen!a| expendi!ures and |iabi|i!ies
Environnenlal expendilures lhal relale lo currenl or lulure revenues are
expensed or capilalized as appropriale. Expendilures lhal relale lo an
exisling condilion caused by pasl operalions and do nol conlribule lo
currenl or lulure earnings are expensed.
Liabililies lor environnenlal cosls are recognized when a cleanup is
probable and lhe associaled cosls can be reliably eslinaled. Cenerally, lhe
lining ol recognilion ol lhese provisions coincides wilh lhe connilnenl
lo a lornal plan ol aclion or, il earlier, on diveslnenl or on closure ol
inaclive siles.
The anounl recognized is lhe besl eslinale ol lhe expendilure
required. vhere lhe liabilily will nol be sellled lor a nunber ol years,
lhe anounl recognized is lhe presenl value ol lhe eslinaled
lulure expendilure.
EmpIoyee benehts
vages, salaries, bonuses, social securily conlribulions, paid annual leave
and sick leave are accrued in lhe period in which lhe associaled services
are rendered by enployees ol lhe group. Delerred bonus arrangenenls
lhal have a vesling dale nore lhan 12 nonlhs aller lhe period end are
valued on an acluarial basis using lhe projecled unil credil nelhod and
anorlized on a slraighlline basis over lhe service period unlil lhe award
vesls. The accounling policies lor sharebased paynenls and lor pensions
and olher poslrelirenenl benells are described below.
Share-based payments
qui!,-se!!|ed !ransac!ions
The cosl ol equilysellled lransaclions wilh enployees is neasured by
relerence lo lhe lair value al lhe dale al which equily inslrunenls are
granled and is recognized as an expense over lhe vesling period, which
ends on lhe dale on which lhe relevanl enployees becone lully enlilled lo
lhe award. Fair value is delernined by using an appropriale valualion
nodel. n valuing equilysellled lransaclions, no accounl is laken ol any
vesling condilions, olher lhan condilions linked lo lhe price ol lhe shares ol
lhe conpany (narkel condilions. onvesling condilions, such as lhe
condilion lhal enployees conlribule lo a savingsrelaled plan, are laken inlo
accounl in lhe granldale lair value, and lailure lo neel a nonvesling
condilion is lrealed as a cancellalion, where lhis is wilhin lhe conlrol ol
lhe enployee.
o expense is recognized lor awards lhal do nol ullinalely vesl,
excepl lor awards where vesling is condilional upon a narkel condilion,
which are lrealed as vesling irrespeclive ol whelher or nol lhe narkel
condilion is salisled, provided lhal all olher perlornance condilions are
salisled.
Al each balance sheel dale belore vesling, lhe cunulalive expense
is calculaled, represenling lhe exlenl lo which lhe vesling period has
expired and nanagenenls besl eslinale ol lhe achievenenl or olherwise
ol nonnarkel condilions and lhe nunber ol equily inslrunenls lhal will
ullinalely vesl or, in lhe case ol an inslrunenl subjecl lo a narkel
condilion, be lrealed as vesling as described above. The novenenl in
cunulalive expense since lhe previous balance sheel dale is recognized in
lhe incone slalenenl, wilh a corresponding enlry in equily.
vhen lhe lerns ol an equilysellled award are nodiled or a new
award is designaled as replacing a cancelled or sellled award, lhe cosl
based on lhe original award lerns conlinues lo be recognized over lhe
original vesling period. n addilion, an expense is recognized over lhe
renainder ol lhe new vesling period lor lhe increnenlal lair value ol any
nodilcalion, based on lhe dillerence belween lhe lair value ol lhe
original award and lhe lair value ol lhe nodiled award, bolh as neasured
on lhe dale ol lhe nodilcalion. o reduclion is recognized il lhis dillerence
is negalive.
vhen an equilysellled award is cancelled, il is lrealed as il il had
vesled on lhe dale ol cancellalion and any cosl nol yel recognized in lhe
incone slalenenl lor lhe award is expensed innedialely.
Cash-se!!|ed !ransac!ions
The cosl ol cashsellled lransaclions is neasured al lair value and
recognized as an expense over lhe vesling period, wilh a corresponding
liabilily recognized on lhe balance sheel.
Pensions and other post-retirement benehts
The cosl ol providing benells under lhe delned benell plans is
delernined separalely lor each plan using lhe projecled unil credil nelhod,
which allribules enlillenenl lo benells lo lhe currenl period (lo delernine
currenl service cosl and lo lhe currenl and prior periods (lo delernine lhe
presenl value ol lhe delned benell obligalion. Pasl service cosls are
recognized innedialely when lhe conpany becones connilled lo a
change in pension plan design. vhen a selllenenl (elininaling all
obligalions lor benells already accrued or a curlailnenl (reducing lulure
obligalions as a resull ol a nalerial reduclion in lhe schene nenbership or
a reduclion in lulure enlillenenl occurs, lhe obligalion and relaled plan
assels are reneasured using currenl acluarial assunplions and lhe
resullanl gain or loss is recognized in lhe incone slalenenl during lhe
period in which lhe selllenenl or curlailnenl occurs.
The inleresl elenenl ol lhe delned benell cosl represenls lhe
change in presenl value ol schene obligalions resulling lron lhe passage
ol line, and is delernined by applying lhe discounl rale lo lhe opening
presenl value ol lhe benell obligalion, laking inlo accounl nalerial changes
in lhe obligalion during lhe year. The expecled relurn on plan assels is
based on an assessnenl nade al lhe beginning ol lhe year ol longlern
narkel relurns on plan assels, adjusled lor lhe ellecl on lhe lair value ol
plan assels ol conlribulions received and benells paid during lhe year.
The dillerence belween lhe expecled relurn on plan assels and lhe
inleresl cosl is recognized in lhe incone slalenenl as olher lnance
incone or expense.
Acluarial gains and losses are recognized in lull wilhin olher
conprehensive incone in lhe year in which lhey occur.
The delned benell pension plan surplus or delcil in lhe balance
sheel conprises lhe lolal lor each plan ol lhe presenl value ol lhe delned
benell obligalion (using a discounl rale based on high qualily corporale
bonds, less lhe lair value ol plan assels oul ol which lhe obligalions are lo
be sellled direclly. Fair value is based on narkel price inlornalion and, in
lhe case ol quoled securilies, is lhe published bid price.
Conlribulions lo delned conlribulion schenes are recognized in lhe
incone slalenenl in lhe period in which lhey becone payable.
Corporate taxes
ncone lax expense represenls lhe sun ol lhe lax currenlly payable and
delerred lax. nleresl and penallies relaling lo lax are also included in
incone lax expense.
The lax currenlly payable is based on lhe laxable prolls lor lhe
period. Taxable proll dillers lron nel proll as reporled in lhe incone
slalenenl because il excludes ilens ol incone or expense lhal are laxable
or deduclible in olher periods and il lurlher excludes ilens lhal are never
laxable or deduclible. The groups liabilily lor currenl lax is calculaled using
lax rales lhal have been enacled or subslanlively enacled by lhe balance
sheel dale.
Delerred lax is provided, using lhe liabilily nelhod, on all lenporary
dillerences al lhe balance sheel dale belween lhe lax bases ol assels and
liabililies and lheir carrying anounls lor lnancial reporling purposes.
Delerred lax liabililies are recognized lor all laxable lenporary
dillerences:
Excepl where lhe delerred lax liabilily arises on goodwill lhal is nol lax
deduclible or lhe inilial recognilion ol an assel or liabilily in a
lransaclion lhal is nol a business conbinalion and, al lhe line ol
lhe lransaclion, allecls neilher lhe accounling proll nor laxable proll
or loss.
n respecl ol laxable lenporary dillerences associaled wilh
inveslnenls in subsidiaries, joinlly conlrolled enlilies and associales,
excepl where lhe group is able lo conlrol lhe lining ol lhe reversal ol
lhe lenporary dillerences and il is probable lhal lhe lenporary
dillerences will nol reverse in lhe loreseeable lulure.
Delerred lax assels are recognized lor all deduclible lenporary dillerences,
carrylorward ol unused lax credils and unused lax losses, lo lhe exlenl
lhal il is probable lhal laxable proll will be available againsl which lhe
deduclible lenporary dillerences and lhe carrylorward ol unused lax
credils and unused lax losses can be ulilized:
Excepl where lhe delerred incone lax assel relaling lo lhe deduclible
lenporary dillerence arises lron lhe inilial recognilion ol an assel or
liabilily in a lransaclion lhal is nol a business conbinalion and, al lhe
line ol lhe lransaclion, allecls neilher lhe accounling proll nor
laxable proll or loss.
n respecl ol deduclible lenporary dillerences associaled wilh
inveslnenls in subsidiaries, joinlly conlrolled enlilies and associales,
delerred lax assels are recognized only lo lhe exlenl lhal il is probable
lhal lhe lenporary dillerences will reverse in lhe loreseeable lulure
and laxable proll will be available againsl which lhe lenporary
dillerences can be ulilized.
The carrying anounl ol delerred lax assels is reviewed al each balance
sheel dale and reduced lo lhe exlenl lhal il is no longer probable lhal
sullcienl laxable proll will be available lo allow all or parl ol lhe delerred
incone lax assel lo be ulilized.
Delerred lax assels and liabililies are neasured al lhe lax rales lhal
are expecled lo apply lo lhe year when lhe assel is realized or lhe liabilily is
sellled, based on lax rales (and lax laws lhal have been enacled or
subslanlively enacled al lhe balance sheel dale.
Tax relaling lo ilens recognized in olher conprehensive incone
is recognized in olher conprehensive incone and lax relaling lo ilens
recognized in equily is recognized direclly in equily and nol in lhe
incone slalenenl.
Customs duties and saIes taxes
Fevenues, expenses and assels are recognized nel ol lhe anounl ol
cuslons dulies or sales lax excepl:
vhere lhe cuslons duly or sales lax incurred on a purchase ol goods
and services is nol recoverable lron lhe laxalion aulhorily, in which
case lhe cuslons duly or sales lax is recognized as parl ol lhe cosl ol
acquisilion ol lhe assel or as parl ol lhe expense ilen as applicable.
Feceivables and payables are slaled wilh lhe anounl ol cuslons duly
or sales lax included.
The nel anounl ol sales lax recoverable lron, or payable lo, lhe laxalion
aulhorily is included as parl ol receivables or payables in lhe balance sheel.
Own equity instruments
The groups holdings in ils own equily inslrunenls, including ordinary
shares held by Enployee Share Ownership Plans (ESOPs, are classiled as
lreasury shares, or own shares lor lhe ESOPs, and are shown as
deduclions lron shareholders equily al cosl. Consideralion received lor
lhe sale ol such shares is also recognized in equily, wilh any dillerence
belween lhe proceeds lron sale and lhe original cosl being laken lo lhe
proll and loss accounl reserve. o gain or loss is recognized in lhe incone
slalenenl on lhe purchase, sale, issue or cancellalion ol equily shares.

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Revenue
Fevenue arising lron lhe sale ol goods is recognized when lhe signilcanl
risks and rewards ol ownership have passed lo lhe buyer and il can be
reliably neasured.
Fevenue is neasured al lhe lair value ol lhe consideralion received
or receivable and represenls anounls receivable lor goods provided
in lhe nornal course ol business, nel ol discounls, cuslons dulies and
sales laxes.
Fevenues associaled wilh lhe sale ol oil, nalural gas, nalural gas
liquids, liqueled nalural gas, pelroleun and pelrochenicals producls and all
olher ilens are recognized when lhe lille passes lo lhe cusloner. Physical
exchanges are reporled nel, as are sales and purchases nade wilh a
connon counlerparly, as parl ol an arrangenenl sinilar lo a physical
exchange. Sinilarly, where lhe group acls as agenl on behall ol a lhird
parly lo procure or narkel energy connodilies, any associaled lee incone
is recognized bul no purchase or sale is recorded. Addilionally, where
lorward sale and purchase conlracls lor oil, nalural gas or power have been
delernined lo be lor lrading purposes, lhe associaled sales and purchases
are reporled nel wilhin sales and olher operaling revenues whelher or nol
physical delivery has occurred.
Cenerally, revenues lron lhe produclion ol oil and nalural gas
properlies in which lhe group has an inleresl wilh joinl venlure parlners are
recognized on lhe basis ol lhe groups working inleresl in lhose properlies
(lhe enlillenenl nelhod. Dillerences belween lhe produclion sold and lhe
groups share ol produclion are nol signilcanl.
nleresl incone is recognized as lhe inleresl accrues (using lhe
elleclive inleresl rale lhal is lhe rale lhal exaclly discounls eslinaled
lulure cash receipls lhrough lhe expecled lile ol lhe lnancial inslrunenl lo
lhe nel carrying anounl ol lhe lnancial assel.
Dividend incone lron inveslnenls is recognized when lhe
shareholders righl lo receive lhe paynenl is eslablished.
Research
Fesearch cosls are expensed as incurred.
Finance costs
Finance cosls direclly allribulable lo lhe acquisilion, conslruclion or
produclion ol qualilying assels, which are assels lhal necessarily lake a
subslanlial period ol line lo gel ready lor lheir inlended use, are added lo
lhe cosl ol lhose assels, unlil such line as lhe assels are subslanlially
ready lor lheir inlended use. All olher lnance cosls are recognized in lhe
incone slalenenl in lhe period in which lhey are incurred.
Use of estimates
The preparalion ol lnancial slalenenls requires nanagenenl lo nake
eslinales and assunplions lhal allecl lhe reporled anounls ol assels
and liabililies as well as lhe disclosure ol conlingenl assels and liabililies al
lhe balance sheel dale and lhe reporled anounls ol revenues and
expenses during lhe reporling period. Aclual oulcones could diller lron
lhose eslinales.
Impact of new InternationaI FinanciaI Reporting Standards
Adop!ed !or 20!0
The lollowing revised or anended FFSs were adopled by lhe group wilh
ellecl lron 1 January 2010.
n January 2003, lhe ASB issued a revised version ol FFS 3
Business Conbinalions. The revised slandard slill requires lhe purchase
nelhod ol accounling lo be applied lo business conbinalions bul
inlroduces sone changes lo lhe accounling lrealnenl. For exanple,
conlingenl consideralion is neasured al lair value al lhe dale ol acquisilion
and subsequenlly reneasured lo lair value wilh changes recognized in
proll or loss. Coodwill nay be calculaled based on lhe parenls share ol
nel assels or il nay include goodwill relaled lo lhe ninorily inleresl. All
lransaclion cosls are expensed. Assels and liabililies arising lron business
conbinalions lhal occurred belore 1 January 2010 were nol required lo be
reslaled and lhus, on adoplion lhere was no ellecl on lhe groups reporled
incone or nel assels.
n January 2003, lhe ASB issued a revised version ol AS 27
Consolidaled and Separale Financial Slalenenls, which requires lhe
ellecls ol all lransaclions wilh ninorily inleresls lo be recorded in equily il
lhere is no change in conlrol. vhen conlrol is losl, any renaining inleresl in
lhe enlily is reneasured lo lair value and a gain or loss recognized in proll
or loss. There was no ellecl on lhe groups reporled incone or nel assels
on adoplion.
n addilion, several olher slandards and inlerprelalions were
adopled in lhe year which had no signilcanl inpacl on lhe lnancial
slalenenls.
No! ,e! adop!ed
The lollowing pronouncenenls lron lhe ASB will becone elleclive
lor lulure lnancial reporling periods and have nol yel been adopled by
lhe group.
As parl ol lhe ASBs projecl lo replace AS 39 Financial
nslrunenls: Fecognilion and easurenenl, in ovenber 2009, lhe ASB
issued lhe lrsl phase ol FFS 9 Financial nslrunenls, dealing wilh lhe
classilcalion and neasurenenl ol lnancial assels. n Oclober 2010, lhe
ASB updaled FFS 9 by incorporaling lhe requirenenls lor lhe accounling
lor lnancial liabililies. The new slandard is elleclive lor annual periods
beginning on or aller 1 January 2013 wilh lransilional arrangenenls
depending upon lhe dale ol inilial applicalion. BP has nol yel decided lhe
dale ol inilial applicalion lor lhe group and has nol yel conpleled ils
evalualion ol lhe ellecl ol adoplion. The new slandard has nol yel been
adopled by lhe EU.
There are no olher slandards and inlerprelalions in issue bul nol yel
adopled lhal lhe direclors anlicipale will have a nalerial ellecl on lhe
reporled incone or nel assels ol lhe group.
www.bp.con/downloads/gon
2. Signilcanl evenl - Cull ol exico oil spill
As a consequence ol lhe Cull ol exico oil spill, as described on pages 34 lo 39, BP has incurred cosls during lhe year and has recognized liabililies lor
lulure cosls. Liabililies ol uncerlain lining or anounl and conlingenl liabililies have been accounled lor and/or disclosed in accordance wilh AS 37
Provisions, conlingenl liabililies and conlingenl assels. These are discussed in lurlher delail in ole 37 lor provisions and ole 44 lor conlingenl liabililies.
BPs righls and obligalions in relalion lo lhe $20billion lrusl lund which was eslablished during lhe year have been accounled lor in accordance wilh
FFC 5 Fighls lo inleresls arising lron deconnissioning, resloralion and environnenlal rehabililalion lunds. Key aspecls ol lhe accounling lor lhe oil spill
are sunnarized below.
The lnancial inpacls ol lhe Cull ol exico oil spill on lhe incone slalenenl, balance sheel and cash How slalenenl ol lhe group are shown in lhe
lable below. Anounls relaled lo lhe lrusl lund are separalely idenliled.
$ nillion
2010
Ol which:
anounl relaled
TotaI lo lhe lrusl lund
Income statement
Produclion and nanulacluring expenses 40,858 7,261
Proll (loss belore inleresl and laxalion (40,858) (7,261)
Finance cosls 77 73
Proll (loss belore laxalion (40,935) (7,334)
Less: Taxalion 12,894 -
Proll (loss lor lhe period (28,041) (7,334)
BaIance sheet
Currenl assels
Trade and olher receivables 5,943 5,943
Currenl liabililies
Trade and olher payables (6,587) (5,002)
Provisions (7,938) -
el currenl liabililies (8,582) 941
oncurrenl assels
Olher receivables 3,601 3,601
Olher payables (9,899) (9,899)
Provisions (8,397) -
Delerred lax 11,255 -
el noncurrenl liabililies (3,440) (6,298)
el assels (12,022) (5,357)
Cash ow statement
Proll (loss belore laxalion (40,935) (7,334)
Finance cosls 77 73
el charge lor provisions, less paynenls 19,354 -
ncrease in olher currenl and noncurrenl assels (12,567) (12,567)
ncrease in olher currenl and noncurrenl liabililies 16,413 14,828
Prelax cash Hows (17,658) (5,000)

Trust fund
BP has eslablished lhe Deepwaler Horizon Oil Spill Trusl (lhe Trusl lo be lunded in lhe anounl ol $20 billion (lhe lrusl lund over lhe period lo lhe lourlh
quarler ol 2013, which is available lo salisly legilinale individual and business clains adninislered by lhe Cull Coasl Clains Facilily (CCCF, slale and local
governnenl clains resolved by BP, lnal judgnenls and selllenenls, slale and local response cosls, and nalural resource danages and relaled cosls. n
2010 BP conlribuled $5 billion lo lhe lund, and lurlher quarlerly conlribulions ol $1.25 billion are lo be nade during 2011 lo 2013. The incone slalenenl
charge lor 2010 includes $20 billion in relalion lo lhe lrusl lund, adjusled lo lake accounl ol lhe line value ol noney. Fines, penallies and clains
adninislralion cosls are nol covered by lhe lrusl lund. The eslablishnenl ol lhe lrusl lund does nol represenl a cap or Hoor on BPs liabililies and BP does
nol adnil lo a liabilily ol lhis anounl.
Under lhe lerns ol lhe Trusl agreenenl, BP has no righl lo access lhe lunds once lhey have been conlribuled lo lhe lrusl lund and BP has no
decisionnaking role in conneclion wilh lhe paynenl by lhe lrusl lund ol individual and business clains resolved by lhe CCCF. BP will receive lunds lron
lhe lrusl lund only upon ils expiralion, il lhere are any lunds renaining al lhal poinl. BP has lhe aulhorily under lhe Trusl agreenenl lo presenl cerlain
resolved clains, including nalural resource danages clains and slale and local response clains, lo lhe Trusl lor paynenl, by providing lhe lruslees wilh all
lhe required docunenls eslablishing lhal such clains are valid under lhe Trusl agreenenl. However, any such paynenls can only be nade on lhe aulhorily
ol lhe Truslee and any lunds dislribuled are paid direclly lo lhe clainanls, nol lo BP. BP will nol sellle any such ilens direclly or receive reinbursenenl
lron lhe lrusl lund lor such ilens.

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2. Signilcanl evenl - Cull ol exico oil spill conlinued
BPs obligalion lo nake conlribulions lo lhe lrusl lund was recognized in lull, anounling lo $20 billion on an undiscounled basis as il is connilled lo
naking lhese conlribulions. On inilial recognilion lhe discounled anounl recognized was $19,530 nillion. Aller BPs conlribulions ol $5 billion lo lhe lrusl
lund during 2010, and adjuslnenls lor discounling, lhe renaining liabilily as al 31 Decenber 2010 was $14,901 nillion. This liabilily is recorded wilhin
olher payables on lhe balance sheel, apporlioned belween currenl and noncurrenl elenenls according lo lhe agreed schedule ol conlribulions.
The lable below shows novenenls in lhe lunding obligalion, recognized wilhin olher payables on lhe balance sheel, during lhe period lo
31 Decenber 2010.
$ nillion
Trusl lund liabilily inilially recognized - discounled 19,580
Unwinding ol discounl 73
Change in discounl rale 240
Conlribulions (5,000)
Olher 8
Al 31 Decenber 2010 14,901
Ol which - currenl 5,002
- noncurrenl 9,399

An assel has been recognized represenling BPs righl lo receive reinbursenenl lron lhe lrusl lund. This is lhe porlion ol lhe eslinaled lulure expendilure
provided lor lhal will be sellled by paynenls lron lhe lrusl lund. ve use lhe lern reinbursenenl assel lo describe lhis assel. BP will nol aclually
receive any reinbursenenls lron lhe lrusl lund, inslead paynenls will be nade direclly lo clainanls lron lhe lrusl lund, and BP will be released lron ils
corresponding obligalion.
The porlion ol lhe provision recognized during lhe year lor ilens lhal will be covered by lhe lrusl lund was $12,567 nillion. Ol lhis anounl,
paynenls ol $3,023 nillion were nade during lhe year lron lhe lrusl lund. The renaining reinbursenenl assel as al 31 Decenber 2010 was $9,544
nillion and is recorded wilhin olher receivables on lhe balance sheel. The anounl ol lhe reinbursenenl assel is equal lo lhe anounl ol provisions as al
31 Decenber 2010 lhal will be covered by lhe lrusl lund - see ole 37 in lhe lable under Provisions re|a!ing !o !he Cu|! o! exico oi| spi||.
ovenenls in lhe reinbursenenl assel are presenled in lhe lable below:
$ nillion
ncrease in provision lor ilens covered by lhe lrusl lund 12,567
Anounls paid direclly by lhe lrusl lund (3,023)
Al 31 Decenber 2010 9,544
- noncurrenl 3,601

The anounl ol lhe incone slalenenl charge relaled lo lhe lrusl lund conprises:
$ nillion
Trusl lund liabilily - discounled 19,580
Change in discounl rale relaling lo lrusl lund liabilily 240
Fecognilion ol reinbursenenl assel (12,567)
Olher 8
Tolal charge relaling lo lhe lrusl lund 7,261

As noled above, lhe obligalion lo lund lhe $20billion lrusl lund has been recognized in lull. Any increases in lhe provision lhal will be covered by lhe lrusl
lund (up lo lhe anounl ol $20 billion have no nel incone slalenenl ellecl as a reinbursenenl assel is also recognized, as described above. These
charges lor provisions, and lhe associaled reinbursenenl assel, recognized during lhe year anounled lo $12,567 nillion. Thus, a lurlher $7,433 nillion
could be provided in subsequenl periods lor ilens covered by lhe lrusl lund wilh no nel inpacl on lhe incone slalenenl. Such lulure increases in
anounls provided could arise lron adjuslnenls lo exisling provisions, or lron lhe inilial recognilion ol provisions lor ilens lhal currenlly cannol be
eslinaled reliably, nanely lnal judgnenls and selllenenls and nalural resource danages and relaled cosls.
l is nol possible al lhis line lo conclude as lo whelher lhe $20billion lund will be sullcienl lo salisly all clains under lhe Oil Pollulion Acl ol 1990
(OPA 90 lhal will ullinalely be paid. Furlher inlornalion on lhose ilens lhal currenlly cannol be reliably eslinaled is provided under Provisions and
con!ingencies and in ole 44.
The Trusl agreenenl does nol require BP lo nake lurlher conlribulions lo lhe lrusl lund in excess ol lhe agreed $20 billion should lhis be
insullcienl lo cover all clains adninislered by lhe CCCF, or lo sellle olher ilens lhal are covered by lhe lrusl lund, as described above. Should lhe
$20billion lrusl lund nol be sullcienl, BP would connence sellling legilinale clains and olher cosls by naking paynenls direclly lo clainanls. n lhis
case, increases in eslinaled lulure expendilure above $20 billion would be recognized as provisions wilh a corresponding charge in lhe incone slalenenl.
The provisions would be ulilized and derecognized al lhe poinl lhal BP nade lhe paynenls.
On 30 Seplenber 2010, BP pledged cerlain Cull ol exico assels as collaleral lor lhe lrusl lund lunding obligalion. The pledged collaleral consisls
ol an overriding royally inleresl in oil and gas produclion ol BPs Thunder Horse, Allanlis, ad Dog, Creal vhile and ars, Ursa and a Kika assels in lhe
Cull ol exico. A whollyowned conpany called Verano Collaleral Holdings LLC (Verano has been crealed lo hold lhe overriding royally inleresl, which is
capped al $1.25 billion per quarler and $17 billion in lolal. Verano has pledged lhe overriding royally inleresl lo lhe Trusl as collaleral lor BPs renaining
conlribulion obligalions lo lhe Trusl. BP conlribuled a lurlher $2 billion lo lhe lrusl lund since lhis arrangenenl was eslablished, lhereby reducing lhe
anounl ol lhe pledge lo $15 billion al lhe end ol lhe year. There is no change in operalorship or lhe narkeling ol lhe produclion lron lhe assels and lhere
is no ellecl on lhe olher parlners inleresls in lhe assels. For lnancial reporling purposes Verano is a consolidaled enlily ol BP and lhere is no inpacl on
lhe consolidaled lnancial slalenenls lron lhe pledge ol lhe overriding royally inleresl.
Provisions and contingencies
Al 31 Decenber 2010 BP has recorded cerlain provisions and disclosed cerlain conlingencies as a consequence ol lhe Cull ol exico oil spill.
These are described below under Oi| Po||u!ion Ac! o! !990 and O!her i!ens.
Oil Pollulion Acl ol 1990 (OPA 90
The clains againsl BP under lhe OPA 90 and lor personal injury lall inlo lhree calegories: (i clains by individuals and businesses lor renoval cosls, danage
lo real or personal properly, losl prolls or inpairnenl ol earning capacily, loss ol subsislence use ol nalural resources and lor personal injury (ndividual
and Business Clains, (ii clains by slale and local governnenl enlilies lor renoval cosls, physical danage lo real or personal properly, loss ol
governnenl revenue and increased public services cosls (Slale and Local Clains, and (iii clains by lhe Uniled Slales, a Slale lruslee, an ndian lribe
lruslee, or a loreign lruslee lor nalural resource danages (alural Fesource Danages clains. n addilion, BP laces civil liligalion in which clains lor
liabilily under OPA 90 along wilh olher causes ol aclions, including personal injury clains, are asserled by individuals, businesses and governnenl enlilies.
A provision has been recorded lor ndividual and Business Clains and Slale and Local Clains. A provision has also been recorded lor clains
adninislralion cosls and nalural resource danage assessnenl cosls.
BP considers lhal il is nol possible lo neasure reliably any obligalion in relalion lo alural Fesource Danages clains under OPA 90 or liligalion lor
violalions ol OPA 90. These ilens are lherelore disclosed as conlingenl liabililies.
The $20billion lrusl lund described above is available lo salisly lhe OPA 90 clains and liligalion relerred lo above wilh lhe exceplion ol clains
adninislralion cosls which are borne separalely by BP. BPs righls and obligalions in relalion lo lhe lrusl lund have been recognized and $20 billion,
adjusled lo lake accounl ol lhe line value ol noney, was charged lo lhe incone slalenenl. The eslablishnenl ol lhe lrusl lund does nol represenl a cap
or Hoor on BPs liabililies and BP does nol adnil liabilily lor lhis anounl.
Olher ilens
Provisions al 31 Decenber 2010 also include anounls in relalion lo ollshore and onshore oil spill response, BPs connilnenl lo a 10year research
progranne in lhe Cull ol exico, eslinaled penallies lor liabilily under Clean valer Acl Seclion 311 and legal lees where we have been able lo eslinale
reliably lhose which will arise in lhe nexl lwo years. These are nol covered by lhe lrusl lund.
The provision does nol reHecl any anounls in relalion lo lnes and penallies excepl lor lhose relaling lo lhe Clean valer Acl, as il is nol possible lo
eslinale reliably eilher lhe anounl or lining ol such addilional ilens. BP also considers lhal il is nol possible lo neasure reliably any obligalion in relalion
lo liligalion or any obligalion in relalion lo legal lees beyond lwo years. These ilens are lherelore disclosed as conlingenl liabililies.
o anounls have been recognized lor recovery ol cosls lron our coowners ol lhe acondo well because under FFS recovery nusl be virlually
cerlain lor receivables lo be recognized. All ol lhese ilens are lherelore disclosed as conlingenl assels.
Furlher inlornalion on provisions is provided below and in ole 37. Furlher inlornalion on conlingenl liabililies and conlingenl assels is provided in
ole 44.
A provision has been recognized lor eslinaled lulure expendilure relaling lo lhe oil spill, lor ilens lhal can be reliably neasured al lhis line, in
accordance wilh BPs accounling policy lor provisions, as sel oul in ole 1.
The lolal anounl recognized as a provision during lhe year was $30,261 nillion (including $12,567 nillion lor ilens covered by lhe lrusl lund and
$17,694 nillion lor olher ilens. Aller deducling anounls ulilized during lhe year lolalling $13,935 nillion (including paynenls lron lhe lrusl lund ol
$3,023 nillion and paynenls nade direclly by BP ol $10,912 nillion, and aller adjuslnenls lor discounling, lhe renaining provision as al 31 Decenber
2010 was $16,335 nillion.
ovenenls in lhe provision are presenled in lhe lable below.
$ nillion
ncrease in provision - ilens nol covered by lhe lrusl lund 17,694
- ilens covered by lhe lrusl lund 12,567
Unwinding ol discounl 4
Change in discounl rale 5
Ulilizalion - paid by BP (10,912)
- paid by lhe lrusl lund (3,023)
Al 31 Decenber 2010 16,335
- noncurrenl 3,397

The lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly and lhe ullinale
exposure and cosl lo BP will be dependenl on nany laclors. Furlhernore, lhe anounl ol clains lhal becone payable by BP, lhe anounl ol lnes ullinalely
levied on BP (including any delerninalion ol BPs negligence, lhe oulcone ol liligalion, and any cosls arising lron any longerlern environnenlal
consequences ol lhe oil spill, will also inpacl upon lhe ullinale cosl lor BP. Allhough lhe provision recognized is lhe currenl besl reliable eslinale ol
expendilures required lo sellle cerlain presenl obligalions al lhe end ol lhe reporling period, lhere are lulure expendilures lor which il is nol possible lo
neasure lhe obligalion reliably as noled above.

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Impact upon the group income statement and cash ow statement
The group incone slalenenl lor 2010 includes a prelax charge ol $40,935 nillion in relalion lo lhe Cull ol exico oil spill. This conprises cosls incurred
up lo 31 Decenber 2010, eslinaled obligalions lor lulure cosls lhal can be eslinaled reliably al lhis line and righls and obligalions relaling lo lhe lrusl
lund. Finance cosls ol $77 nillion reHecl lhe unwinding ol discounl on lhe lrusl lund liabilily and provisions.
The anounl ol lhe provision recognized during lhe year can be reconciled lo lhe incone slalenenl charge as lollows:
$ nillion
ncrease in provision 30,261
Change in discounl rale relaling lo provisions 5
Cosls charged direclly lo lhe incone slalenenl 3,339
(Proll loss belore inleresl and laxalion 40,858

Cosls charged direclly lo lhe incone slalenenl relale lo expendilure incurred prior lo lhe eslablishnenl ol a provision al lhe end ol lhe second quarler
and ongoing operaling cosls ol lhe CCFO. The accounling associaled wilh lhe recognilion ol lhe lrusl lund liabilily and lhe expendilure which will be
sellled lron lhe lrusl lund is described above.
The lolal charge in lhe incone slalenenl is analysed in lhe lable below. Cosls charged direclly lo lhe incone slalenenl in relalion lo spill
response, environnenlal and liligalion and clains are lhose lhal arose prior lo recording a provision al lhe end ol lhe second quarler ol lhe year.
$ nillion
Olher 8
Tolal charge relaling lo lhe lrusl lund 7,261
Spill response - anounl provided 10,883
- cosls charged direclly lo lhe incone slalenenl 2,745
Tolal charge relaling lo spill response 13,628
Environnenlal - anounl provided 929
- change in discounl rale relaling lo provisions 5
- cosls charged direclly lo lhe incone slalenenl 70
Tolal charge relaling lo environnenlal 1,004
Liligalion and clains - anounl provided 14,939
- cosls charged direclly lo lhe incone slalenenl 184
Tolal charge relaling lo liligalion and clains 15,123
Clean valer Acl penallies - anounl provided 3,510
Olher cosls charged direclly lo lhe incone slalenenl 332
(Proll loss belore inleresl and laxalion 40,858
Finance cosls 77
(Proll loss belore laxalion 40,935

The lolal anounls lhal will ullinalely be paid by BP in relalion lo all obligalions relaling lo lhe incidenl are subjecl lo signilcanl uncerlainly as described
above under Provisions and conlingencies.
Fesponse operalions lollowing lhe Deepwaler Horizon incidenl in April 2010 have been nanaged by lhe lederal governnenls response lranework,
which lransilioned on 17 Decenber lron lhe Uniled Area Connand (UAC lo lhe Cull Coasl incidenl nanagenenl lean (CCT. Bolh lhe UAC and now
lhe CCT link lhe organizalions responding lo lhe incidenl and provide a lorun lor lhose organizalions lo nake consensus decisions. l consensus
cannol be reached lhe US Coasl Cuard coordinalor carries lhe lnal decision on response relaled aclions deened necessary. As such, lhe aclivilies
underlaken by BP and ils subconlraclors, and lhe associaled cosls, are nol wholly wilhin BPs conlrol. This will conlinue lo be lhe case unlil conlrol ol lhe
response operalions lransilions lo lhe Cull Coasl Fesloralion Organizalion.
n parlicular, lhe cenlralized approval process eslablished lor lhe procurenenl ol nalerials, equipnenl and personnel has nol been used lor all ol
lhe procurenenl aclivily lhal has laken place. The lypes ol aclivily lhal lell oulside lhe cenlralized approval process included aspecls ol lhe surlace and
shoreline response. unerous personnel and vessels were involved in aclivilies which included skinning, boon deploynenl and shoreline clean up. Due
lo lhe scale ol lhe incidenl and lhe need lo respond rapidly, procurenenl aulhorily was vesled wilh slale onscene coordinalors, various responsible
parlies and various slale and local governnenl aulhorilies. So long as lhe expenses incurred are lound lo be consislenl wilh lhe alional Conlingency
Plan, lhe responsible parlies will be expecled lo pay lhese cosls, regardless ol whelher or nol lhey were involved in or approved lhe decision lo procure
lhe resource. vilh lhe large nunber ol parlies involved, lhe resulling lunding Hows are conplex and resulled in dillcully nainlaining real line noniloring
ol expenses.
Prelax cash Hows anounled lo $17,653 nillion and lhe inpacl on nel cash provided by operaling aclivilies, on a posllax basis, anounled lo
$16,019 nillion.
3. Acquisilions
Acquisitions in 2010
BP nade a nunber ol acquisilions in 2010 lor a lolal consideralion ol $3.6 billion, ol which $3 billion conprised cash consideralion. The nosl signilcanl
acquisilion was a lransaclion in lhe Exploralion and Produclion segnenl wilh Devon Energy (Devon, underlaken in a nunber ol slages during 2010.
This lransaclion slrenglhens BPs posilion in lhe Cull ol exico, enhances inleresls in Azerbaijan and lacililales lhe developnenl ol Canadian assels.
On 27 April 2010, BP acquired 100' ol Devons Cull ol exico deepwaler properlies lor $1.3 billion. This included a nunber ol exploralion
properlies, Devons inleresl in lhe najor Paleogene discovery Kaskida (giving BP a 100' inleresl in lhe projecl, lour producing assels and one non
producing assel. As parl ol lhe lransaclion, BP sold lo Devon a 50' slake in ils Kirby oil sands inleresls in Alberla, Canada lor $500 nillion and Devon
connilled lo lund an addilional $150 nillion ol capilal cosls on BPs behall by issuing a pronissory nole lo BP. n addilion, lhe conpanies lorned a 50:50
joinl venlure, operaled by Devon, lo pursue lhe developnenl ol lhe inleresl. On 16 Augusl 2010, lhe group acquired Devons 3.29' (aller preenplion
exercised by sone ol lhe parlners inleresl in lhe BPoperaled AzeriChiragCunashli (ACC developnenl in lhe Azerbaijan seclor ol lhe Caspian Sea lor
$1.1 billion, increasing BPs inleresl lo 37.43'.
The acquisilion has been accounled lor using lhe acquisilion nelhod. The acquisilion dale lair values are provisional and nay be adjusled once lhe
lransaclion is lnalized. Coodwill ol $332 nillion has been recognized on lhis acquisilion As parl ol lhe Devon lransaclion, lhe gain on lhe disposal ol lhe
groups 50' inleresl in lhe Kirby oil sands in Alberla, Canada anounled lo $633 nillion.
The lnal parl ol lhe Devon lransaclion, lhe acquisilion ol 100' ol Devons equily slake in a nunber ol enlilies holding all ol Devons assels in Brazil
lor consideralion ol $3.2 billion, is expecled lo conplele in early 2011.
n addilion lo lhe Devon lransaclion, BP nade a nunber ol olher ninor acquisilions in 2010, lhe nosl signilcanl ol which was lhe acquisilion by
BPs Allernalive Energy business ol Vereniun Corporalions lignocellulosic bioluels business, lor consideralion ol $93 nillion.
BP nade no signilcanl acquisilions in 2009.
BP nade a nunber ol acquisilions in 2003 lor a lolal consideralion ol $403 nillion. These business conbinalions were in lhe Exploralion and Produclion
segnenl and Olher businesses and corporale and lhe nosl signilcanl was lhe acquisilion ol vhiling Clean Energy, a cogeneralion power planl. Fair value
adjuslnenls were nade lo lhe acquired assels and liabililies.

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4. oncurrenl assels held lor sale
As a resull ol lhe groups disposal progranne lollowing lhe Cull ol exico oil spill, various assels, and associaled liabililies, have been presenled as held
lor sale in lhe group balance sheel al 31 Decenber 2010. The carrying anounl ol lhe assels held lor sale is $7,123 nillion, wilh associaled liabililies ol
$1,047 nillion. ncluded wilhin lhese anounls are lhe lollowing ilens, all ol which relale lo lhe Exploralion and Produclion segnenl.
n July 2010, BP announced lhe slarl ol aclive narkeling ol ils assels in Pakislan and Vielnan. On 14 Decenber 2010, BP announced lhal il had
reached agreenenl lo sell ils exploralion and produclion assels in Pakislan lo Uniled Energy Croup Liniled lor $775 nillion in cash. These assels, and
associaled liabililies, have been classiled as held lor sale in lhe group balance sheel al 31 Decenber 2010. The sale is expecled lo be conpleled in lhe
lrsl hall ol 2011, subjecl lo closing condilions and governnenl and regulalory approvals.
n Vielnan, BP is seeking lo divesl ils inleresls in ollshore gas produclion (Block 06.1, a receiving lerninal and associaled pipelines and a power
generalion assel (Phu y 3. On 13 Oclober 2010, BP announced lhal il had reached agreenenl lo sell lhe assels in Vielnan, logelher wilh ils upslrean
businesses and associaled inleresls in Venezuela, lo TKBP lor $1.3 billion in cash, subjecl lo poslclosing adjuslnenls. The Venezuelan assels include
BPs inleresls in lhe Pelroperija, Boqueron and Pelroonagas joinl venlures. These assels, and associaled liabililies, have been classiled as held lor sale in
lhe group balance sheel al 31 Decenber 2010. The sales ol lhe Vielnan and Venezuela businesses are expecled lo be conpleled in lhe lrsl hall ol 2011,
subjecl lo regulalory and olher approvals and condilions.
On 3 Augusl 2010, BP announced an agreenenl lo dispose ol ils oil and gas exploralion, produclion and lransporlalion business in Colonbia lo a
consorliun ol Ecopelrol, Colonbias nalional oil conpany (51', and Talisnan ol Canada (49' lor $1.9 billion in cash, subjecl lo poslclosing adjuslnenls.
These assels and associaled liabililies have been classiled as held lor sale in lhe group balance sheel al 31 Decenber 2010. The sale conpleled on
24 January 2011.
On 25 Oclober 2010, BP announced lhal il had reached agreenenl lo sell ils recenlly acquired inleresls in lour nalure producing deepwaler oil and
gas lelds in lhe US Cull ol exico lo arubeni Oil and Cas lor $650 nillion in cash, subjecl lo poslclosing adjuslnenls. BP acquired lhe inleresls in lhese
lelds lron Devon Energy earlier in 2010 as parl ol a wider acquisilion ol assels in lhe Cull ol exico, Brazil and Azerbaijan. These assels, and associaled
liabililies, have been classiled as held lor sale in lhe group balance sheel al 31 Decenber 2010. The sale conpleled on 20 January 2011.
On 23 ovenber 2010, BP announced lhal il had reached agreenenl lo sell ils inleresls in Pan Anerican Energy (PAE lo Bridas Corporalion lor
$7.06 billion in cash. PAE is an Argenlinabased oil and gas conpany owned by BP (60' and Bridas Corporalion (40'. The lransaclion excludes lhe
shares ol PAE E&P Bolivia Lld. BPs inveslnenl in PAE has been classiled as held lor sale in lhe group balance sheel al 31 Decenber 2010. The sale is
expecled lo be conpleled in 2011, subjecl lo closing condilions and governnenl and regulalory approvals.
npairnenl losses anounling lo $192 nillion have been recognized in relalion lo cerlain assels reclassiled as held lor sale. See ole 5 lor
lurlher inlornalion.
oncurrenl assels classiled as held lor sale are nol deprecialed. l is eslinaled lhal lhe benell arising lron lhe absence ol deprecialion lor lhe
assels noled above anounled lo approxinalely $162 nillion in 2010. Sinilarly, equily accounling ceases lor any equilynelhod inveslnenl upon
reclassilcalion as an assel held lor sale. l is eslinaled lhal prolls ol approxinalely $9 nillion were nol recognized in 2010 as a resull ol lhe
disconlinuance ol equily accounling.
Disposal proceeds ol $6,197 nillion received in advance ol conplelion ol lhese lransaclions have been classiled as lnance debl on lhe group
balance sheel and ol lhis, $4,730 nillion has been secured on lhe assels held lor sale. See ole 35 lor lurlher inlornalion.
The najorily ol lhe lransaclions noled above are subjecl lo poslclosing adjuslnenls, which nay include adjuslnenls lor working capilal and
adjuslnenls lor prolls allribulable lo lhe purchaser belween lhe agreed elleclive dale and lhe closing dale ol lhe lransaclion. Such poslclosing
adjuslnenls nay resull in lhe lnal anounls received by BP lron lhe purchasers dillering lron lhe disposal proceeds noled above.
The najor classes ol assels and liabililies reclassiled as held lor sale as al 31 Decenber 2010 are as lollows:
$ nillion
2010
Assels
Properly, planl and equipnenl 2,971
Coodwill 87
nlangible assels 135
nveslnenls in joinlly conlrolled enlilies 3,108
nveslnenls in associales 333
Loans 12
Cash 34
Olher currenl assels 448
Assels classiled as held lor sale 7,128
Liabililies
Trade and olher payables 597
Provisions 383
Delerred lax liabililies 67
Liabililies direclly associaled wilh assels classiled as held lor sale 1,047

There were no accunulaled loreign exchange gains or losses recognized direclly in equily relaling lo lhe assels held lor sale al 31 Decenber 2010.
5. Disposals and inpairnenl
$ nillion
2010 2009 2003
Proceeds lron disposal ol businesses, nel ol cash disposed 9,462 966 11
Proceeds lron disposal ol lxed assels 7,492 1,715 913
16,954 2,631 929
By business
Exploralion and Produclion 14,392 940 19
Felning and arkeling 1,840 1,294 313
Olher businesses and corporale 722 447 97
16,954 2,631 929

ncluded in proceeds lron disposal are deposils ol $6,197 nillion received lron counlerparlies in respecl ol disposal lransaclions in lhe Exploralion and
Produclion segnenl nol conpleled al 31 Decenber 2010 (2009 and 2003 nil. For lurlher inlornalion on disposal lransaclions nol yel conpleled
see ole 4.
Delerred consideralion relaling lo disposals ol businesses and lxed assels al 31 Decenber 2010 anounled lo $562 nillion receivable wilhin one
year (2009 $307 nillion and 2003 $15 nillion and $271 nillion receivable aller one year (2009 $691 nillion and 2003 $64 nillion.
$ nillion
2010 2009 2003
Cains on sale ol businesses and lxed assels
Exploralion and Produclion 5,267 1,717 34
Felning and arkeling 999 334 1,253
6,383 2,173 1,353

$ nillion
2010 2009 2003
Losses on sale ol businesses and lxed assels
Exploralion and Produclion 196 23 13
Felning and arkeling 119 154 297
321 203 316
npairnenl losses
Exploralion and Produclion 1,259 113 1,136
Felning and arkeling 144 1,334 159
1,516 2,141 1,572
npairnenl reversals
Exploralion and Produclion - (3 (155
Felning and arkeling (141) - -
Olher businesses and corporale (7) (3 -
(148) (11 (155
npairnenl and losses on sale ol businesses and lxed assels 1,689 2,333 1,733

DisposaIs
As parl ol lhe response lo lhe consequences ol lhe Cull ol exico oil spill, lhe group announced plans lo deliver up lo $30 billion ol disposal proceeds
by lhe end ol 2011. Prior lo lhis, in lhe nornal course ol business, lhe group has sold inleresls in exploralion and produclion properlies, service slalions
and pipeline inleresls as well as noncore businesses. The group has also disposed ol olher assels in lhe pasl, such as relneries, when lhis has nel
slralegic objeclives.
See ole 4 lor lurlher inlornalion relaling lo assels and associaled liabililies held lor sale al 31 Decenber 2010.
n 2010, lhe najor lransaclions were lhe sale lo Apache Corporalion ol Pernian Basin assels in lhe US, Canadian upslrean gas assels and exploralion
concessions in Egypl and lhe sale lo Devon Energy, as parl ol an acquisilion lransaclion described in ole 3, ol 50' ol our inleresls in Kirby oil sands in
Canada. All ol lhese lransaclions resulled in gains.
n 2009, lhe najor lransaclions were lhe sale ol BP vesl Java Liniled in ndonesia, lhe sale ol our 49.9' inleresl in Kazakhslan Pipeline Venlures
LLC and lhe sale ol our 46' slake in LukArco, all ol which resulled in gains. ve also exchanged inleresls in a nunber ol lelds in lhe orlh Sea wilh
BC Croup plc.
There were no signilcanl disposals in 2003.


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5. Disposals and inpairnenl conlinued
n 2010, gains resulled lron our disposals ol lhe French relail luels and convenience business lo Delek Europe, lhe luels narkeling business in Bolswana
lo Puna Energy, cerlain nonslralegic pipelines and lerninals in lhe US, our inleresls in elhylene and polyelhylene produclion in alaysia lo Pelronas and
our inleresl in a lulures exchange. Losses resulled lron lhe disposal ol a nunber ol assels in lhe segnenl porllolio.
n 2009, gains on disposal nainly resulled lron lhe disposal ol our ground luels narkeling business in Creece and relail churn in lhe US, Europe
and Auslralasia. Losses resulled lron lhe conlinued disposal ol conpanyowned and conpanyoperaled relail siles in lhe US, relail churn and disposals ol
assels elsewhere in lhe segnenl porllolio. Felail churn is lhe overall process ol acquiring and disposing ol relail siles by which lhe group ains lo inprove
lhe qualily and nix ol ils porllolio ol service slalions.
n 2003, lhe najor lransaclions resulling in gains were lhe conlribulion ol our Toledo relnery lo a US joinlly conlrolled enlily in an exchange
lransaclion wilh Husky Energy and lhe disposals ol our inleresl in lhe Dixie Pipeline and cerlain relail assels in lhe US. The losses on sale relaled nainly
lo lhe disposal ol relail assels in lhe US and Europe. n addilion, cerlain assels al our Acelyls planl in Hull, UK, and olher inleresls in lhe UK and Europe
were sold.
n 2010, we disposed ol our 35' inleresl in KPower, a gaslred power assel in Soulh Korea, and conlribuled our Cedar Creek 2 wind energy developnenl
assel in exchange lor a 50' equily inleresl in a joinlly conlrolled enlily, Cedar Creek Holdings LLC (Cedar Creek 2 and cash. n addilion, lhere was a
relurn ol capilal in lhe joinlly conlrolled enlilies Fowler Holdings LLC and Cedar Creek Holdings LLC which did nol change our percenlage inleresl in
eilher enlily.
During 2009, we disposed ol our wind energy business in ndia and conlribuled our Fowler 2 wind energy developnenl assel in exchange lor a
50' equily inleresl in a joinlly conlrolled enlily, Fowler Holdings LLC. n addilion, lhere was a relurn ol capilal in lhe joinlly conlrolled enlily Fowler Fidge
vind Farn LLC which did nol change our percenlage inleresl in lhe enlily.
Sunnarized lnancial inlornalion relaling lo lhe sale ol businesses is shown in lhe lable below. nlornalion relaling lo sales ol lxed assels is excluded
lron lhe lable.

$ nillion
2010 2009 2003
oncurrenl assels 2,319 536 759
Currenl assels 310 444 435
oncurrenl liabililies (303) (146 -
Currenl liabililies (124) (152 (134
Tolal carrying anounl ol nel assels disposed 2,202 632 1,110
Fecycling ol loreign exchange on disposal (52) (27 -
Cosls on disposal 18 3 7
2,168 653 1,117
Proll on sale ol businesses
a
1,968 314 1,721
Tolal consideralion 4,136 972 2,333
Fair value ol inleresl received in a joinlly conlrolled enlily - - (2,333
Consideralion received (receivable
b
20 (6 11
Proceeds lron lhe sale ol businesses relaled lo conpleled lransaclions 4,156 966 11
Deposils received relaled lo assels classiled as held lor sale 5,306 - -
Proceeds lron lhe sale ol businesses
c
9,462 966 11

a
Ol which $929 nillion gain was nol recognized in lhe incone slalenenl in 2003 as il represenled an unrealized gain on lhe lransler ol lhe Toledo relnery inlo a joinlly conlrolled enlily.
b
Consideralion received lron prior year business disposals or nol yel received lron currenl year disposals.
c
el ol cash and cash equivalenls disposed ol $55 nillion (2009 $91 nillion and 2003 nil.
Impairment
n assessing whelher a wriledown is required in lhe carrying value ol a polenlially inpaired inlangible assel, ilen ol properly, planl and equipnenl or an
equilyaccounled inveslnenl, lhe assels carrying value is conpared wilh ils recoverable anounl. The recoverable anounl is lhe higher ol lhe assels lair
value less cosls lo sell and value in use. Unless indicaled olherwise, lhe recoverable anounl used in assessing lhe inpairnenl charges described below is
value in use. The group eslinales value in use using a discounled cash How nodel. The lulure cash Hows are adjusled lor risks specilc lo lhe assel and
are discounled using a prelax discounl rale. This discounl rale is derived lron lhe groups posllax weighled average cosl ol capilal and is adjusled where
applicable lo lake inlo accounl any specilc risks relaling lo lhe counlry where lhe cashgeneraling unil is localed, allhough olher rales nay be used il
appropriale lo lhe specilc circunslances. n 2010 lhe rales used ranged lron 1114' (2009 913'. The rale applied in each counlry is reassessed each
year. n cerlain circunslances an inpairnenl assessnenl nay be carried oul using lair value less cosls lo sell as lhe recoverable anounl when, lor
exanple, a recenl narkel lransaclion lor a sinilar assel has laken place. For inpairnenls ol availablelorsale lnancial assels lhal are quoled inveslnenls,
lhe lair value is delernined by relerence lo bid prices al lhe close ol business al lhe balance sheel dale. Any cunulalive loss previously recognized in olher
conprehensive incone is lranslerred lo lhe incone slalenenl.
5. Disposals and inpairnenl conlinued
During 2010, lhe Exploralion and Produclion segnenl recognized inpairnenl losses ol $1,259 nillion. The nain elenenls were lhe wriledown ol assels
in lhe Cull ol exico ol $501 nillion lriggered by an increase in lhe deconnissioning assel as a resull ol new regulalions in lhe US relaling lo idle
inlraslruclure, inpairnenls ol oil and gas properlies in lhe Cull ol exico and onshore orlh Anerica ol $310 nillion and $30 nillion respeclively as a
resull ol decisions lo dispose ol assels al a price lower lhan lhe assels carrying values, a wriledown ol accunulaled cosls in Sakhalin, Fussia by
$341 nillion, lriggered by a change in lhe oullook on lhe lulure recoverabilily ol lhe inveslnenl, and several olher individually insignilcanl inpairnenl
charges anounling lo $27 nillion.
During 2009, lhe Exploralion and Produclion segnenl recognized inpairnenl losses ol $113 nillion. The nain elenenls were lhe wriledown ol
our $42 nillion inveslnenl in lhe Easl Shnidl inleresl in Fussia, lriggered by a decision lo nol proceed lo developnenl, a $62 nillion charge associaled
wilh our nErgize gas scheduling syslen, and several olher individually insignilcanl inpairnenl charges anounling lo $14 nillion.
During 2003, lhe Exploralion and Produclion segnenl recognized inpairnenl losses ol $1,136 nillion. The nain elenenls were lhe wriledown ol
our inveslnenl in Fosnell by $517 nillion, lo ils lair value delernined by relerence lo an aclive narkel, due lo a signilcanl decline in lhe narkel value ol
lhe inveslnenl, inpairnenl ol oil and gas properlies in lhe Cull ol exico ol $270 nillion lriggered by downward revisions ol reserves, an inpairnenl ol
exploralion assels in Vielnan ol $210 nillion lollowing BPs decision lo wilhdraw lron aclivilies in lhe area concerned, inpairnenl ol oil and gas properlies
in Egypl ol $35 nillion lriggered by cosl increases, and several olher individually insignilcanl inpairnenl charges anounling lo $104 nillion.
These charges were parlly ollsel by reversals ol previously recognized inpairnenl losses anounling lo $155 nillion. Ol lhis lolal, $122 nillion
resulled lron a reassessnenl ol lhe econonics ol Fhourde El Baguel in Algeria.
During 2010, lhe Felning and arkeling segnenl recognized inpairnenl losses anounling lo $144 nillion relaling lo relail churn in European businesses
and olher ninor assel disposals. These losses were largely ollsel by lhe reversal ol a previously recognized inpairnenl charge ol $141 nillion relaling lo
lhe inveslnenl in our associale China Anerican Pelrochenical Conpany resulling lron a change in narkel condilions.
During 2009, an inpairnenl loss ol $1,579 nillion was recognized againsl lhe goodwill allocaled lo lhe US vesl Coasl luels value chain (FVC. The
goodwill was originally recognized al lhe line ol lhe AFCO acquisilion in 2000. The prevailing weak relning environnenl, logelher wilh a review ol lulure
nargin expeclalions in lhe FVC, has led lo a reduclion in lhe expecled lulure cash Hows. Olher inpairnenl losses were also recognized by lhe segnenl
on a nunber ol assels which anounled lo $255 nillion.
During 2003, lhe Felning and arkeling segnenl recognized inpairnenl losses on a nunber ol assels which anounled lo $159 nillion.
During 2010, 2009 and 2003, Olher businesses and corporale recognized inpairnenl losses lolalling $113 nillion, $139 nillion and $227 nillion
respeclively relaled lo various assels in lhe Allernalive Energy business.
6. Evenls aller lhe reporling period
On 22 February 2011, BP announced ils inlenlion lo sell ils inleresls in a nunber ol operaled oil and gas lelds in lhe UK. The assels involved are lhe vylch
Farn onshore oilleld in Dorsel and all ol BPs operaled gas lelds in lhe soulhern orlh Sea, including associaled pipeline inlraslruclure and lhe Dinlinglon
lerninal. BP ains lo conplele lhe diveslnenls around lhe end ol 2011, subjecl lo receipl ol suilable ollers and regulalory and lhirdparly approvals. The
assels do nol yel neel lhe crileria lo be reclassiled as noncurrenl assels held lor sale and il is nol yel possible lo eslinale lhe lnancial ellecl ol lhese
inlended lransaclions.
On 21 February 2011, BP announced a najor slralegic alliance wilh Feliance nduslries Liniled (Feliance in ndia. As parl ol lhis alliance, BP will
purchase a 30 per cenl slake in 23 oil and gas produclionsharing conlracls lhal Feliance operales in ndia, including lhe producing KC D6 block, and lhe
lornalion ol a 50:50 joinl venlure belween lhe lwo conpanies lor lhe sourcing and narkeling ol gas in ndia. The upslrean joinl venlure will conbine BPs
deepwaler exploralion and developnenl capabililies wilh Feliances projecl nanagenenl and operalions experlise. The 23 oil and gas blocks logelher
cover approxinalely 270,000 square kilonelres, and Feliance will conlinue lo be lhe operalor under lhe produclionsharing conlracls. BP will pay Feliance
an aggregale consideralion ol $7.2 billion, and conplelion adjuslnenls, lor lhe inleresls lo be acquired in lhe 23 produclionsharing conlracls. Fulure
perlornance paynenls ol up lo $1.3 billion could be paid based on exploralion success lhal resulls in developnenl ol connercial discoveries. Conplelion
ol lhe lransaclions is subjecl lo ndian regulalory approvals and olher cuslonary condilions.
On 1 February 2011, BP announced lhal, lollowing a slralegic review, il inlends lo divesl lhe Texas Cily relnery and lhe soulhern parl ol ils US
vesl Coasl luels value chain, including lhe Carson relnery, by lhe end ol 2012 subjecl lo all necessary legal and regulalory approvals. BP will ensure
currenl obligalions al Texas Cily are lulllled. The assels do nol yel neel lhe crileria lo be reclassiled as noncurrenl assels held lor sale and il is nol yel
possible lo eslinale lhe lnancial ellecl ol lhese inlended lransaclions.
On 14 January 2011, BP enlered inlo a share swap agreenenl wilh Fosnell Oil Conpany whereby BP will receive approxinalely 9.5' ol Fosnells
shares in exchange lor BP issuing new ordinary shares lo Fosnell, resulling in Fosnell holding 5' ol BPs ordinary voling shares. The aggregale value ol
lhe shares in BP lo be issued lo Fosnell is approxinalely $7.3 billion (as al close ol lrading in London on 14 January 2011. BP has agreed lo issue
933,694,633 ordinary shares lo Fosnell, Fosnell has agreed lo lransler 1,010,153,003 ordinary shares lo BP. Conplelion ol lhe lransaclion is subjecl lo
lhe oulcone ol lhe courl applicalion relerred lo in lhe paragraph below, and relaled pending arbilral proceedings. Aller conplelion, BPs increased
inveslnenl in Fosnell will conlinue lo be recognized as an availablelorsale lnancial assel. During lhe period lron enlering inlo lhe agreenenl unlil
conplelion, lhe agreenenl represenls a derivalive lnancial inslrunenl and changes in ils lair value will be recognized in BPs incone slalenenl in 2011.

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6. Evenls aller lhe reporling period conlinued
An applicalion was broughl in lhe English High Courl on 1 February 2011 by Alla Pelroleun Holdings Liniled (APH and OCP Venlures Liniled (OCP
againsl BP nlernalional Liniled and BP Fussian nveslnenls Liniled. APH is a conpany owned by Alpha Croup. APH and OCP each own 25' ol TKBP,
in which BP also has a 50' shareholding. This applicalion alleges breach ol lhe shareholders agreenenl on lhe parl ol BP and seeks an inlerin injunclion
reslraining BP lron laking sleps lo conclude, inplenenl or perlorn lhe previously announced lransaclions wilh Fosnell Oil Conpany relaling lo oil and
gas exploralion, produclion, relning and narkeling in Fussia. Those lransaclions include lhe issue or lransler ol shares belween Fosnell Oil Conpany and
any BP group conpany. The courl granled an inlerin order reslraining BP lron laking any lurlher sleps in relalion lo lhe Fosnell lransaclions pending an
expediled UCTFAL arbilralion procedure in accordance wilh lhe shareholders agreenenl belween lhe parlies. The arbilralion has connenced and lhe
injunclion has been exlended unlil 11 arch 2011 pending an expediled hearing in relalion lo nallers in dispule belween lhe parlies on a lnal basis
during lhe week connencing 7 arch 2011. The expediled hearing will decide, anong olher nallers, whelher lhe injunclion will be exlended beyond
11 arch 2011.
7. Segnenlal analysis
The groups organizalional slruclure reHecls lhe various aclivilies in which BP is engaged. n 2010, BP had lwo reporlable segnenls: Exploralion and
Produclion and Felning and arkeling. BPs aclivilies in lowcarbon energy are nanaged lhrough our Allernalive Energy business, which is reporled in
Olher businesses and corporale. The group is nanaged on an inlegraled basis.
Exploralion and Produclions aclivilies include oil and nalural gas exploralion, leld developnenl and produclion, nidslrean lransporlalion, slorage
and processing, and lhe narkeling and lrading ol nalural gas, including liqueled nalural gas (LC, logelher wilh power and nalural gas liquids (CLs.
BP announced lhal in 2011 il inlends lo organize ils Exploralion and Produclion segnenl in lhree lunclional divisions - Exploralion, Developnenls
and Produclion, inlegraled lhrough a Slralegy and nlegralion organizalion. This will nol allecl lhe groups reporlable segnenls and Exploralion and
Produclion will conlinue lo be reporled as a single operaling segnenl.
Felning and arkelings aclivilies include lhe supply and lrading, relning, nanulacluring, narkeling and lransporlalion ol crude oil, pelroleun and
pelrochenicals producls and relaled services.
Olher businesses and corporale conprises lhe Allernalive Energy business, Shipping, lhe groups aluniniun business, Treasury (which in lhe
segnenlal analysis includes all ol lhe groups cash, cash equivalenls and associaled inleresl incone, and corporale aclivilies worldwide. The Allernalive
Energy business is an operaling segnenl lhal has been aggregaled wilh lhe olher aclivilies wilhin Olher businesses and corporale as il does nol neel
lhe nalerialily lhresholds lor separale segnenl reporling.
n 2010, lollowing lhe Cull ol exico incidenl, we eslablished lhe Cull Coasl Fesloralion Organizalion (CCFO and equipped il wilh dedicaled
resources and capabililies lo nanage all aspecls ol our response lo lhe incidenl. This organizalion reporls direclly lo lhe group chiel execulive and is
overseen by a specilc new board connillee, however il is nol an operaling segnenl.
The accounling policies ol lhe operaling segnenls are lhe sane as lhe groups accounling policies described in ole 1. However, FFS requires
lhal lhe neasure ol proll or loss disclosed lor each operaling segnenl is lhe neasure lhal is provided regularly lo lhe chiel operaling decision naker lor
lhe purposes ol perlornance assessnenl and resource allocalion. For BP, lhis neasure ol proll or loss is replacenenl cosl proll or loss belore inleresl
and lax which reHecls lhe replacenenl cosl ol supplies by excluding lron proll or loss invenlory holding gains and losses
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. Feplacenenl cosl proll or loss
lor lhe group is nol a recognized CAAP neasure.
Sales belween segnenls are nade al prices lhal approxinale narkel prices, laking inlo accounl lhe volunes involved. Segnenl revenues and
segnenl resulls include lransaclions belween business segnenls. These lransaclions and any unrealized prolls and losses are elininaled on
consolidalion, unless unrealized losses provide evidence ol an inpairnenl ol lhe assel lranslerred. Sales lo exlernal cusloners by region are based on lhe
localion ol lhe seller. The UK region includes lhe UKbased inlernalional aclivilies ol Felning and arkeling.
All surpluses and delcils recognized on lhe group balance sheel in respecl ol pension and olher poslrelirenenl benell plans are allocaled lo
Olher businesses and corporale. However, lhe periodic expense relaling lo lhese plans is allocaled lo lhe olher operaling segnenls based upon lhe
business in which lhe enployees work.
Cerlain lnancial inlornalion is provided separalely lor lhe US as lhis is an individually nalerial counlry lor BP, and lor lhe UK as lhis is BPs counlry
ol donicile.
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nvenlory holding gains and losses represenl lhe dillerence belween lhe cosl ol sales calculaled using lhe average cosl lo BP ol supplies acquired during lhe period and lhe cosl ol sales calculaled
on lhe lrslin lrsloul (FFO nelhod aller adjusling lor any changes in provisions where lhe nel realizable value ol lhe invenlory is lower lhan ils cosl. Under lhe FFO nelhod, which we use lor FFS
reporling, lhe cosl ol invenlory charged lo lhe incone slalenenl is based on ils hisloric cosl ol purchase, or nanulaclure, ralher lhan ils replacenenl cosl. n volalile energy narkels, lhis can have a
signilcanl dislorling ellecl on reporled incone. The anounls disclosed represenl lhe dillerence belween lhe charge (lo lhe incone slalenenl lor invenlory on a FFO basis (aller adjusling lor any relaled
novenenls in nel realizable value provisions and lhe charge lhal would have arisen il an average cosl ol supplies was used lor lhe period. For lhis purpose, lhe average cosl ol supplies during lhe period
is principally calculaled on a nonlhly basis by dividing lhe lolal cosl ol invenlory acquired in lhe period by lhe nunber ol barrels acquired. The anounls disclosed are nol separalely reHecled in lhe lnancial
slalenenls as a gain or loss. o adjuslnenl is nade in respecl ol lhe cosl ol invenlories held as parl ol a lrading posilion and cerlain olher lenporary invenlory posilions.

www.bp.con/downloads/segnenlalanalysis
7. Segnenlal analysis conlinued
$ nillion
2010
Other GuIf of ConsoIidation
ExpIoration Rehning businesses Mexico adjustment
and and and oiI spiII and TotaI
By business Production Marketing corporate response eIiminations group
Segnenl revenues
Sales and olher operaling revenues 66,266 266,751 3,328 - (39,238) 297,107
Less: sales belween businesses (37,049) (1,358) (831) - 39,238 -
Third parly sales and olher operaling revenues 29,217 265,393 2,497 - - 297,107
Equilyaccounled earnings 3,979 755 23 - - 4,757
nleresl revenues 83 46 109 - - 238
Segnenl resulls
Feplacenenl cosl proll (loss belore inleresl and laxalion 30,886 5,555 (1,516) (40,858) 447 (5,486)
nvenlory holding gains
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84 1,684 16 - - 1,784
Proll (loss belore inleresl and laxalion 30,970 7,239 (1,500) (40,858) 447 (3,702)
Finance cosls (1,170)
el lnance incone relaling lo pensions and olher
poslrelirenenl benells 47
Loss belore laxalion (4,825)
Olher incone slalenenl ilens
Deprecialion, deplelion and anorlizalion 8,616 2,258 290 - - 11,164
npairnenl losses 1,259 144 113 - - 1,516
npairnenl reversals - 141 7 - - 148
Fair value loss on enbedded derivalives 309 - - - - 309
Charges lor provisions, nel ol wrileback ol unused provisions,
including change in discounl rale 303 275 206 30,266 - 31,050
Segnenl assels
Equilyaccounled inveslnenls 17,738 7,043 840 - - 25,621
Addilions lo noncurrenl assels 20,113 4,030 1,226 - - 25,369
Addilions lo olher inveslnenls 20
Elenenl ol acquisilions nol relaled lo noncurrenl assels
Addilions lo deconnissioning assel (1,972)
Capilal expendilure and acquisilions 17,753 4,029 1,234 - - 23,016

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$ nillion
2009
Olher Consolidalion
Exploralion Felning businesses adjuslnenl
and and and and Tolal
By business Produclion arkeling corporale elininalions group
Segnenl revenues
Sales and olher operaling revenues 57,626 213,050 2,343 (34,247 239,272
Less: sales belween businesses (32,540 (321 (336 34,247 -
Third parly sales and olher operaling revenues 25,036 212,229 1,957 - 239,272
Equilyaccounled earnings 3,309 553 34 - 3,901
nleresl revenues 93 32 95 - 225
Segnenl resulls
Feplacenenl cosl proll (loss belore inleresl and laxalion 24,300 743 (2,322 (717 22,504
nvenlory holding gains
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142 3,774 6 - 3,922
Proll (loss belore inleresl and laxalion 24,942 4,517 (2,316 (717 26,426
Finance cosls (1,110
el lnance expense relaling lo pensions and olher poslrelirenenl benells (192
Proll belore laxalion 25,124
Deprecialion, deplelion and anorlizalion 9,557 2,236 313 - 12,106
npairnenl losses 113 1,334 139 - 2,141
npairnenl reversals 3 - 3 - 11
Fair value (gain loss on enbedded derivalives (664 57 - - (607
Charges lor provisions, nel ol wrileback ol unused provisions,
including change in discounl rale 307 756 433 - 1,551
Segnenl assels
Equilyaccounled inveslnenls 20,239 6,332 1,033 - 23,259
Addilions lo noncurrenl assels 15,355 4,033 1,297 - 21,235
Elenenl ol acquisilions nol relaled lo noncurrenl assels (7
Addilions lo deconnissioning assel (933
Capilal expendilure and acquisilions 14,396 4,114 1,299 - 20,309

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$ nillion
2003
Olher Consolidalion
Exploralion Felning businesses adjuslnenl
and and and and Tolal
By business Produclion arkeling corporale elininalions group
Segnenl revenues
Sales and olher operaling revenues 36,170 320,039 4,634 (49,700 361,143
Less: sales belween businesses (45,931 (1,913 (1,351 49,700 -
Third parly sales and olher operaling revenues 40,239 313,121 2,733 - 361,143
Equilyaccounled earnings 3,565 131 125 - 3,321
nleresl revenues 114 35 220 - 369
Segnenl resulls
Feplacenenl cosl proll (loss belore inleresl and laxalion 33,303 4,176 (1,223 466 41,727
nvenlory holding losses
a
(393 (6,060 (35 - (6,433
Proll (loss belore inleresl and laxalion 37,915 (1,334 (1,253 466 35,239
Finance cosls (1,547
el lnance incone relaling lo pensions and olher poslrelirenenl benells 591
Proll belore laxalion 34,233
Deprecialion, deplelion and anorlizalion 3,440 2,203 337 - 10,935
npairnenl losses 1,136 159 227 - 1,572
npairnenl reversals 155 - - - 155
Fair value (gain loss on enbedded derivalives 163 (57 5 - 111
Charges lor provisions, nel ol wrileback ol unused provisions 573 479 657 - 1,709
Segnenl assels
Equilyaccounled inveslnenls 20,131 6,622 1,073 - 27,326
Addilions lo noncurrenl assels 21,534 6,636 1,302 - 30,022
Elenenl ol acquisilions nol relaled lo noncurrenl assels 11
Addilions lo deconnissioning assel 615
Capilal expendilure and acquisilions 22,227 6,634 1,339 - 30,700

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2010
By geographical area US Non-US TotaI
Fevenues
Third parly sales and olher operaling revenues
a
101,768 195,339 297,107
Fesulls
Feplacenenl cosl proll (loss belore inleresl and laxalion (30,087) 24,601 (5,486)
oncurrenl assels
Olher noncurrenl assels
b c
67,498 92,614 160,112
Olher inveslnenls 1,191
Loans 894
Olher receivables 6,298
Derivalive lnancial inslrunenls 4,210
Delerred lax assels 528
Delned benell pension plan surpluses 2,176
Tolal noncurrenl assels 175,409
a
onUS region includes UK $62,794 nillion.
b
c
Excluding lnancial inslrunenls, delerred lax assels and poslenploynenl benell plan surpluses.
$ nillion
2009
By geographical area US onUS Tolal
Fevenues
a
33,932 155,290 239,272
Fesulls
Feplacenenl cosl proll belore inleresl and laxalion 2,306 19,693 22,504
oncurrenl assels
b c
64,529 93,530 153,109
Olher inveslnenls 1,567
Loans 1,039
Olher receivables 1,729
Delerred lax assels 516
a
b
c
Excluding lnancial inslrunenls, delerred lax assels and poslenploynenl benell plan surpluses.
$ nillion
2003
By geographical area US onUS Tolal
Fevenues
a
123,364 237,779 361,143
Fesulls
Feplacenenl cosl proll belore inleresl and laxalion 10,673 31,049 41,727
oncurrenl assels
b c
62,679 39,323 152,502
Olher inveslnenls 355
Loans 995
Olher receivables 710

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b
c
Excluding lnancial inslrunenls, and poslenploynenl benell plan surpluses.
3. nleresl and olher incone
$ nillion
2010 2009 2003
nleresl incone
nleresl incone lron availablelorsale lnancial assels
a
23 15 32
nleresl incone lron loans and receivables
a
88 69 163
nleresl lron loans lo equilyaccounled enlilies 36 53 115
Olher inleresl 91 33 59
238 225 369
Olher incone
Dividend incone lron availablelorsale lnancial assels
a
37 32 37
Olher incone 406 535 330
443 567 367
681 792 736

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Tolal inleresl and olher incone relaled lo lnancial inslrunenls anounled lo $143 nillion (2009 $116 nillion and 2003 $232 nillion.
9. Produclion and sinilar laxes
$ nillion
2010 2009 2003
US 1,093 649 2,602
onUS 4,151 3,103 6,351
5,244 3,752 3,953

www.bp.con/downloads/dda
10. Deprecialion, deplelion and anorlizalion
$ nillion
By business 2010 2009 2003
US 3,751 4,150 3,012
onUS 4,865 5,407 5,423
8,616 9,557 3,440
US 955 919 325
onUS
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1,303 1,317 1,333
2,258 2,236 2,203
US 140 136 132
onUS 150 177 205
290 313 337
By geographical area
US 4,846 5,205 3,969
onUS
a
6,318 6,901 7,016
11,164 12,106 10,935

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11. npairnenl review ol goodwill
$ nillion
Coodwill al 31 Decenber 2010 2009
Exploralion and Produclion 4,450 4,297
Felning and arkeling 4,074 4,245
Olher businesses and corporale 74 73
8,598 3,620

Coodwill acquired lhrough business conbinalions has been allocaled lo groups ol cashgeneraling unils lhal are expecled lo benell lron lhe synergies ol
lhe acquisilion. For Exploralion and Produclion, goodwill has been allocaled lo each geographic region, lhal is UK, US and Fesl ol vorld, and lor Felning
and arkeling, goodwill has been allocaled lo lhe Fhine luels value chain (FVC, Lubricanls and Olher.
n assessing whelher goodwill has been inpaired, lhe carrying anounl ol lhe cashgeneraling unil (including goodwill is conpared wilh lhe
recoverable anounl ol lhe cashgeneraling unil. The recoverable anounl is lhe higher ol lair value less cosls lo sell and value in use. n lhe absence ol any
inlornalion aboul lhe lair value ol a cashgeneraling unil, lhe recoverable anounl is deened lo be lhe value in use.
The group calculales lhe value in use using a discounled cash How nodel. The lulure cash Hows are adjusled lor risks specilc lo lhe cashgeneraling unil
and are discounled using a prelax discounl rale. The discounl rale is derived lron lhe groups posllax weighled average cosl ol capilal and is adjusled
where applicable lo lake inlo accounl any specilc risks relaling lo lhe counlry where lhe cashgeneraling unil is localed. The rale lo be applied lo each
counlry is reassessed each year. Discounl rales ol 12' and 14' have been used lor goodwill inpairnenl calculalions perlorned in 2010 (2009 11'
and 13'.
The business segnenl plans, which are approved on an annual basis by senior nanagenenl, are lhe prinary source ol inlornalion lor lhe
delerninalion ol value in use. They conlain lorecasls lor oil and nalural gas produclion, relnery lhroughpuls, sales volunes lor various lypes ol relned
producls (e.g. gasoline and lubricanls, revenues, cosls and capilal expendilure. As an inilial slep in lhe preparalion ol lhese plans, various environnenlal
assunplions, such as oil prices, nalural gas prices, relning nargins, relned producl nargins and cosl inHalion rales, are sel by senior nanagenenl. These
environnenlal assunplions lake accounl ol exisling prices, global supplydenand equilibriun lor oil and nalural gas, olher nacroecononic laclors and
hislorical lrends and variabilily.
$ nillion
2010 2009
Rest of Fesl ol
UK US WorId TotaI UK US vorld Tolal
Coodwill 341 3,479 630 4,450 341 3,441 515 4,297
Excess ol recoverable anounl over carrying anounl 7,556 18,968 41,714 n/a 7,721 15,523 n/a n/a

The value in use is based on lhe cash Hows expecled lo be generaled by lhe projecled oil or nalural gas produclion prolles up lo lhe expecled dales ol
cessalion ol produclion ol each producing leld. As lhe produclion prolle and relaled cash Hows can be eslinaled lron lhe conpanys pasl experience,
nanagenenl believes lhal lhe cash Hows generaled over lhe eslinaled lile ol leld is lhe appropriale basis upon which lo assess goodwill and individual
assels lor inpairnenl. The dale ol cessalion ol produclion depends on lhe inleraclion ol a nunber ol variables, such as lhe recoverable quanlilies ol
hydrocarbons, lhe produclion prolle ol lhe hydrocarbons, lhe cosl ol lhe developnenl ol lhe inlraslruclure necessary lo recover lhe hydrocarbons, lhe
produclion cosls, lhe conlraclual duralion ol lhe produclion concession and lhe selling price ol lhe hydrocarbons produced. As each producing leld has
specilc reservoir characlerislics and econonic circunslances, lhe cash Hows ol lhe lelds are conpuled using appropriale individual econonic nodels
and key assunplions agreed by BPs nanagenenl lor lhe purpose. Capilal expendilure and operaling cosls lor lhe lrsl lour years and expecled
hydrocarbon produclion prolles up lo 2020 are derived lron lhe business segnenl plan. Eslinaled produclion quanlilies and cash Hows up lo lhe dale ol
cessalion ol produclion on a leldbyleld basis are developed lo be consislenl wilh lhis. The produclion prolles used are consislenl wilh lhe resource
volunes approved as parl ol BPs cenlrallyconlrolled process lor lhe eslinalion ol proved reserves and lolal resources.
Consislenl wilh prior years, lhe 2010 review lor inpairnenl was carried oul during lhe lourlh quarler.
The lable above shows lhe carrying anounl ol lhe goodwill allocaled lo each ol lhe regions ol lhe Exploralion and Produclion segnenl and lhe
excess ol lhe recoverable anounl over lhe carrying anounl (lhe headroon in lhe cashgeneraling unils lo which lhe goodwill has been allocaled.
Consislenl wilh prior periods, nidslrean and inlangible oil and gas assels were excluded lron lhe headroon calculalion.
For 2010, lhe Brenl oil price assunplion was an average $35 per barrel in 2011, $33 per barrel in 2012, $39 per barrel in 2013, $39 per barrel in
2014, $90 per barrel in 2015 and $75 per barrel in 2016 and beyond. The Henry Hub nalural gas price assunplion was an average ol $4.25/nnBlu in 2011,
$4.96/nnBlu in 2012, $5.29/nnBlu in 2013, $5.49/nnBlu in 2014, $5.67/nnBlu in 2015 and $6.50/nnBlu in 2016 and beyond. The prices lor lhe lrsl
lve years were derived lron lorward price curves in lhe lourlh quarler. Prices in 2016 and beyond were delernined using longlern views ol global supply
and denand, building upon pasl experience ol lhe induslry and consislenl wilh exlernal sources. These prices were adjusled lo arrive al appropriale
consislenl price assunplions lor dillerenl qualilies ol oil and gas.
n 2009, as pernilled by AS 36, lhe delailed calculalions ol recoverable anounl perlorned in 2003 lor lhe US and lhe UK, and lhe calculalions
perlorned in 2005 lor lhe Fesl ol vorld, were used lor lhe 2009 inpairnenl lesl as lhe crileria ol AS 36 were considered lo be salisled: lhe headroon
was subslanlial in 2003 (lor lhe US and lhe UK and 2005 (lor lhe Fesl ol vorld, lhere had been no signilcanl change in lhe assels and liabililies, and lhe
likelihood lhal lhe recoverable anounl would be less lhan lhe carrying anounl al lhe line ol lhe lesl was renole. For 2003, lhe Brenl oil assunplion
was an average $49 per barrel in 2009, $59 per barrel in 2010, $65 per barrel in 2011, $63 per barrel in 2012, $70 per barrel in 2013 and $75 per barrel in
2014 and beyond. The Henry Hub nalural gas price assunplion was an average ol $6.16/nnBlu in 2009, $7.15/nnBlu in 2010, $7.34/nnBlu in 2011,
$7.62/nnBlu in 2012, $7.60/nnBlu in 2013 and $7.50/nnBlu in 2014 and beyond. The prices lor lhe lrsl lve years were derived lron lorward price
curves al lhe yearend. Prices in 2014 and beyond were delernined using longlern views ol global supply and denand, building upon pasl experience ol
lhe induslry and consislenl wilh exlernal sources. These prices were adjusled lo arrive al appropriale consislenl price assunplions lor dillerenl qualilies ol
oil and gas.
11. npairnenl review ol goodwill conlinued
The key assunplions required lor lhe valueinuse eslinalion are lhe oil and nalural gas prices, produclion volunes and lhe discounl rale. To lesl lhe
sensilivily ol lhe headroon lo changes in produclion volunes and oil and nalural gas prices, nanagenenl has developed rules ol lhunb lor key
assunplions. Applying lhese gives an indicalion ol lhe inpacl on lhe headroon ol possible changes in lhe key assunplions. Due lo lhe nonlinear
relalionship ol dillerenl variables, lhe calculalions were done using a nunber ol sinpliled assunplions, lherelore a delailed calculalion al any given price
nay produce a dillerenl resull.
l was eslinaled lhal il lhe oil price assunplion lor 2016 and beyond was around 20' lower lor lhe UK and US, and around onelhird lower lor
Fesl ol vorld, lhis would cause lhe recoverable anounl lo be equal lo lhe carrying anounl ol goodwill and relaled noncurrenl assels lor each
cashgeneraling unil. l was eslinaled lhal no reasonably possible change in lhe longlern price ol gas would cause lhe headroon in lhe UK, US or Fesl
ol vorld lo be reduced lo zero.
Eslinaled produclion volunes are based on delailed dala lor lhe lelds and lake inlo accounl developnenl plans lor lhe lelds agreed by
nanagenenl as parl ol lhe longlern planning process. n 2010, il was eslinaled lhal, il all our produclion were lo be reduced by 10' lor lhe whole ol
lhe nexl 15 years, lhis would nol be sullcienl lo reduce lhe excess ol recoverable anounl over lhe carrying anounls ol each cashgeneraling unil lo zero.
Consequenlly, nanagenenl believes no reasonably possible change in lhe produclion assunplion would cause lhe carrying anounls lo exceed lhe
recoverable anounls.
anagenenl also believes lhal currenlly lhere is no reasonably possible change in discounl rale lhal would cause lhe carrying anounls in lhe UK,
US or Fesl ol vorld lo exceed lhe recoverable anounls.
$ nillion
2010 2009
Rhine FVC Lubricants Other TotaI Fhine FVC Lubricanls Olher Tolal
Coodwill 629 3,285 160 4,074 655 3,416 174 4,245
Excess ol recoverable anounl over
carrying anounl 4,091 n/a n/a n/a 2,034 n/a n/a n/a

Cash Hows lor each cashgeneraling unil are derived lron lhe business segnenl plan. To delernine lhe value in use lor each ol lhe cashgeneraling unils,
cash Hows lor a period ol 10 years are discounled and aggregaled wilh a lerninal value.
Fhine FVC
The key assunplions lo which lhe calculalion ol value in use lor lhe Fhine FVC is nosl sensilive are relnery gross nargins, produclion volunes, and
discounl rale. n 2010 lhe nelhod used lo calculale lhe nargin per barrel presenled has been updaled and conparalive lgures presenled have also been
updaled. The revised nargin neasure, lhe regional Felnery arker argin (F, is based on a single represenlalive crude wilh producl yields
characlerislic ol lhe lypical level ol upgrading conplexily available in lhe region. Cross nargin assunplions used in lhe Fhine FVC plan are consislenl wilh
lhose used lo develop lhe regional F. The average values assigned lo lhe regional F and relnery produclion volune over lhe plan period are
$11.05 per barrel and 243nnbbl a year (2009 $10.60 per barrel and 254nnbbl a year. These values reHecl pasl experience and are consislenl wilh
exlernal sources. Cash Hows beyond lhe lveyear plan period are exlrapolaled using a noninal 4' growlh rale (2009 cash Hows beyond lhe lveyear plan
period were exlrapolaled using a noninal 2.4' growlh rale.
2010
Sensilivily analysis
Sensilivily ol value in use lo a change in relnery nargins ol $1 per barrel ($ billion 1.6
Adverse change in relnery nargins lo reduce recoverable anounl lo carrying anounl ($ per barrel 2.6
Sensilivily ol value in use lo a 5' change in produclion volune ($ billion 0.9
Adverse change in produclion volune lo reduce recoverable anounl lo carrying anounl (nnbbl per year 54
Sensilivily ol value in use lo a change in lhe discounl rale ol 1' ($ billion 0.8
Discounl rale lo reduce recoverable anounl lo carrying anounl 19%

Lubricanls
As pernilled by AS 36, lhe delailed calculalions ol recoverable anounl perlorned in 2009 were used lor lhe 2010 inpairnenl lesl as lhe crileria in lhal
slandard were considered lo be salisled: lhe headroon was subslanlial in 2009, lhere had been no signilcanl change in lhe assels and liabililies, and lhe
likelihood lhal lhe recoverable anounl would be less lhan lhe carrying anounl al lhe line ol lhe lesl was renole.
The key assunplions lo which lhe calculalion ol value in use lor lhe Lubricanls unil is nosl sensilive are operaling unil nargins, sales
volunes, and discounl rale. The values assigned lo lhese key assunplions reHecl pasl experience. o reasonably possible change in any ol lhese key
assunplions would cause lhe unils carrying anounl lo exceed ils recoverable anounl. Cash Hows beyond lhe lwoyear plan period were exlrapolaled
using a noninal 3' growlh rale.
US vesl Coasl FVC
As disclosed in ole 5, lhe inpairnenl review ol goodwill allocaled lo lhe US vesl Coasl FVC resulled in lhe recognilion ol an inpairnenl loss in 2009 lo
wrile oll lhe enlire balance ol $1,579 nillion.

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12. Dislribulion and adninislralion expenses
$ nillion
2010 2009 2003
Dislribulion 11,393 12,793 14,075
Adninislralion 1,162 1,240 1,337
12,555 14,033 15,412

13. Currency exchange gains and losses
$ nillion
2010 2009 2003
Currency exchange losses charged lo incone
a
218 193 156

a
Excludes exchange gains and losses arising on lnancial inslrunenls neasured al lair value lhrough proll or loss.
14. Fesearch and developnenl
$ nillion
2010 2009 2003
Expendilure on research and developnenl 780 537 595

n addilion lo lhe expendilure on research and developnenl presenled in lhe lable above, BP also nade donalions lo exlernal organizalions lor research
purposes, including lhe Cull ol exico Fesearch nilialive as described on page 72. These donalions are nol included in lhe anounls reporled above.
15. Operaling leases
n lhe case ol an operaling lease enlered inlo by BP as lhe operalor ol a joinlly conlrolled assel, lhe anounls shown in lhe lables below represenl lhe nel
operaling lease expense and nel lulure nininun lease paynenls. These nel anounls are aller deducling anounls reinbursed, or lo be reinbursed, by
joinl venlure parlners, whelher lhe joinl venlure parlners have cosigned lhe lease or nol. vhere BP is nol lhe operalor ol a joinlly conlrolled assel, BPs
share ol lhe lease expense and lulure nininun lease paynenls is included in lhe anounls shown, whelher BP has cosigned lhe lease or nol.
The lable below shows lhe expense lor lhe year in respecl ol operaling leases.
$ nillion
2010 2009 2003
ininun lease paynenls 5,371 4,109 4,114
Conlingenl renlals (60) (9 97
Sublease renlals (121) (133 (194
5,190 3,967 4,017

The lulure nininun lease paynenls al 31 Decenber, belore deducling relaled renlal incone lron operaling subleases ol $365 nillion (2009 $379 nillion,
are shown in lhe lable below. This does nol include lulure conlingenl renlals. vhere lhe lease renlals are dependenl on a variable laclor, lhe lulure nininun
lease paynenls are based on lhe laclor as al inceplion ol lhe lease.
$ nillion
Fulure nininun lease paynenls 2010 2009
Payable wilhin
1 year 3,521 3,251
2 lo 5 years 6,798 7,334
Therealler 3,654 4,131
13,973 14,716

16. Exploralion lor and evalualion ol oil and nalural gas resources
The lollowing lnancial inlornalion represenls lhe anounls included wilhin lhe group lolals relaling lo aclivily associaled wilh lhe exploralion lor and
evalualion ol oil and nalural gas resources. All such aclivily is recorded wilhin lhe Exploralion and Produclion segnenl.
$ nillion
2010 2009 2003
Exploralion and evalualion cosls
Exploralion expendilure wrillen oll
a
375 593 335
Olher exploralion cosls 468 523 497
Exploralion expense lor lhe year
b
843 1,116 332
nlangible assels - exploralion and appraisal expendilure 13,126 10,333 9,031
el assels 13,126 10,333 9,031
Capilal expendilure 6,422 2,715 4,730
el cash used in operaling aclivilies 468 523 497
el cash used in invesling aclivilies 6,428 3,306 4,163

a
2010 includes $157 nillion relaled lo deconnissioning provisions lor idle inlraslruclure, as required by BOEFEs olice ol Lessees 2010 CO5 issued in Oclober 2010.
b
n addilion lo lhese anounls, an inpairnenl charge ol $210 nillion was recognized in 2003 relaling lo exploralion assels in Vielnan lollowing BPs decision lo wilhdraw lron aclivilies in lhe area concerned.
17. Audilors renuneralion
$ nillion
Fees - Ernsl & Young 2010 2009 2003
Fees payable lo lhe conpanys audilors lor lhe audil ol lhe conpanys accounls
a
13 13 16
Fees payable lo lhe conpanys audilors and ils associales lor olher services
Audil ol lhe conpanys subsidiaries pursuanl lo legislalion 22 22 23
Olher services pursuanl lo legislalion 12 11 13
47 46 57
Tax services 2 1 2
Services relaling lo corporale lnance lransaclions 1 - 2
All olher services 4 6 5
Audil lees in respecl ol lhe BP pension plans 1 1 1
55 54 67

a
Fees in respecl ol lhe audil ol lhe accounls ol BP p.l.c. including lhe groups consolidaled lnancial slalenenls.
2010 includes $1 nillion ol addilional lees lor 2009 and 2003 includes $3 nillion ol addilional lees lor 2007. Audilors renuneralion is included in lhe
incone slalenenl wilhin dislribulion and adninislralion expenses.
The lax services relale lo incone lax and indirecl lax conpliance, enployee lax services and lax advisory services.
15. Operaling leases conlinued
The group enlers inlo operaling leases ol ships, planl and nachinery, connercial vehicles and land and buildings. Typical duralions ol lhe leases are as lollows:

Years
Ships up lo 15
Planl and nachinery up lo 10
Connercial vehicles up lo 15
Land and buildings up lo 40

The group has enlered inlo a nunber ol slruclured operaling leases lor ships and in nosl cases lhe lease renlal paynenls vary wilh narkel inleresl rales.
The variable porlion ol lhe lease paynenls above or below lhe anounl based on lhe narkel inleresl rale prevailing al inceplion ol lhe lease is lrealed as
conlingenl renlal expense. The group also roulinely enlers inlo bareboal charlers, linecharlers and spolcharlers lor ships on slandard induslry lerns.
The nosl signilcanl ilens ol planl and nachinery hired under operaling leases are drilling rigs used in lhe Exploralion and Produclion segnenl.
Al 31 Decenber 2010 lhe lulure nininun lease paynenls relaling lo drilling rigs anounled lo $4,515 nillion (2009 $4,919 nillion. n sone cases, drilling
rig lease renlal rales are adjusled periodically lo narkel rales lhal are inHuenced by oil prices and nay be signilcanlly dillerenl lron lhe rales al lhe
inceplion ol lhe lease. Dillerences belween lhe rale paid and rale al inceplion ol lhe lease are lrealed as conlingenl renlal expense.
Connercial vehicles hired under operaling leases are prinarily railcars. Felail service slalion siles and ollce acconnodalion are lhe nain ilens in
lhe land and buildings calegory.
The lerns and condilions ol lhese operaling leases do nol inpose any signilcanl lnancial reslriclions on lhe group. Sone ol lhe leases ol ships
and buildings allow lor renewals al BPs oplion.

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13. Finance cosls
$ nillion
2010 2009 2003
nleresl payable 955 906 1,319
Capilalized al 2.75' (2009 2.75' and 2003 4.00'
a
(254) (133 (162
Unwinding ol discounl on provisions
b
234 247 237
Unwinding ol discounl on olher payables
b
235 145 103
1,170 1,110 1,547

a
T ax reliel on capilalized inleresl is $71 nillion (2009 $63 nillion and 2003 $42 nillion.
b
Unwinding ol discounl on provisions relaling lo lhe Cull ol exico oil spill was $4 nillion and unwinding ol discounl on olher payables relaling lo lhe Cull ol exico oil spill was $73 nillion. See ole 2 lor
lurlher inlornalion on lhe lnancial inpacls ol lhe Cull ol exico oil spill.
17. Audilors renuneralion conlinued
The audil connillee has eslablished preapproval policies and procedures lor lhe engagenenl ol Ernsl & Young lo render audil and cerlain assurance and
lax services. The audil lees payable lo Ernsl & Young are reviewed by lhe audil connillee in lhe conlexl ol olher global conpanies lor coslellecliveness.
Ernsl & Young perlorned lurlher assurance and lax services lhal were nol prohibiled by regulalory or olher prolessional requirenenls and were pre
approved by lhe connillee. Ernsl & Young is engaged lor lhese services when ils experlise and experience ol BP are inporlanl. osl ol lhis work is ol an
audil nalure. Tax services were awarded eilher lhrough a lull conpelilive lender process or lollowing an assessnenl ol lhe experlise ol Ernsl & Young
conpared wilh lhal ol olher polenlial service providers. These services are lor a lxed lern.
Under SEC regulalions, lhe renuneralion ol lhe audilor ol $55 nillion (2009 $54 nillion and 2003 $67 nillion is required lo be presenled as
lollows: audil services $47 nillion (2009 $46 nillion and 2003 $57 nillion, olher audil relaled services $1 nillion (2009 $2 nillion and 2003 $1 nillion, lax
services $2 nillion (2009 $1 nillion and 2003 $2 nillion, and lees lor all olher services $5 nillion (2009 $5 nillion and 2003 $7 nillion.
www.bp.con/downloads/laxalion
19. Taxalion
Tax on proht
$ nillion
2010 2009 2003
Currenl lax
Charge lor lhe year 6,766 6,045 13,463
Adjuslnenl in respecl ol prior years (74) (300 (35
6,692 5,745 13,333
Delerred lax
Originalion and reversal ol lenporary dillerences in lhe currenl year (8,157) 2,131 (324
Adjuslnenl in respecl ol prior years (36) 439 (442
(8,193) 2,620 (766
Tax on proll (loss (1,501) 3,365 12,617

Tax incIuded in other comprehensive income
$ nillion
2010 2009 2003
Currenl lax (107) - (264
Delerred lax 244 (525 (2,632
137 (525 (2,946

Tax incIuded directIy in equity
$ nillion
2010 2009 2003
Currenl lax (37) - -
Delerred lax 64 (65 190
27 (65 190

$ nillion
2010
excIuding 2010
impacts of impacts of
GuIf of GuIf of
Mexico oiI Mexico oiI
spiII spiII 2010 2009 2003
Proll (loss belore laxalion 36,110 (40,935) (4,825) 25,124 34,233
Tax charge (credil on proll (loss 11,393 (12,894) (1,501) 3,365 12,617
Elleclive lax rale 32% 31% 31% 33' 37'
' ol proll or loss belore laxalion
UK slalulory corporalion lax rale 28 28 28 23 23
ncrease (decrease resulling lron
UK supplenenlary and overseas laxes al higher rales 9 7 (6) 3 14
Tax reporled in equilyaccounled enlilies (3) - 23 (3 (2
Adjuslnenls in respecl ol prior years - - 2 1 (2
Currenl year losses unrelieved (prior year losses ulilized - - 1 - (1
Coodwill inpairnenl - - - 2 -
Tax incenlives lor inveslnenl (1) - 9 (2 (1
Cull ol exico oil spill nondeduclible cosls - (4) (30) - -
Olher (1) - 4 (1 1
Elleclive lax rale 32 31 31 33 37

Deferred tax
$ nillion
ncone slalenenl Balance sheel
2010 2009 2003 2010 2009
Delerred lax liabilily
Deprecialion 1,565 1,933 1,243 27,309 25,393
Pension plan surpluses 38 (6 103 469 271
Olher laxable lenporary dillerences 1,178 973 (2,471 5,538 4,307
2,781 2,955 (1,115 33,316 29,976
Delerred lax assel
Pension plan and olher poslrelirenenl benell plan delcils 179 130 104 (2,155) (2,269
Deconnissioning, environnenlal and olher provisions (8,151) 36 (333 (13,296) (4,930
Derivalive lnancial inslrunenls (56) 30 223 (298) (243
Tax credil (1,088) (516 330 (2,118) (1,034
Loss carry lorward 24 402 (212 (943) (1,014
Olher deduclible lenporary dillerences (1,882) (567 232 (4,126) (2,340
(10,974) (335 349 (22,936) (11,330
el delerred lax (credil charge and nel delerred lax liabilily (8,193) 2,620 (766 10,380 13,146
Ol which - delerred lax liabililies 10,908 13,662
- delerred lax assels 528 516

$ nillion
Analysis ol novenenls during lhe year 2010 2009
Al 1 January 18,146 16,193
Exchange adjuslnenls 3 (7
Charge (credil lor lhe year on proll (loss (8,193) 2,620
Charge (credil lor lhe year in olher conprehensive incone 244 (525
Charge (credil lor lhe year in equily 64 (65
Acquisilions 187
Feclassiled as liabililies direclly associaled wilh assels held lor sale (67)
Delelions (4) (75
Al 31 Decenber 10,380 13,146

-
-
19. Taxalion conlinued
ReconciIiation of the effective tax rate
The lollowing lable provides a reconcilialion ol lhe UK slalulory corporalion lax rale lo lhe elleclive lax rale ol lhe group on proll or loss belore laxalion.
For 2010, lhe ilens presenled in lhe reconcilialion are dislorled as a resull ol lhe overall lax credil lor lhe year and lhe loss belore laxalion. n order
lo provide a nore neaninglul analysis ol lhe elleclive lax rale, lhe lable also presenls separale reconcilialions lor lhe group excluding lhe inpacls ol lhe
Cull ol exico oil spill, and lor lhe inpacls ol lhe Cull ol exico oil spill in isolalion.

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20. Dividends
Following lhe Cull ol exico oil spill and lhe agreenenl lo eslablish lhe $20billion lrusl lund, lhe BP board reviewed ils dividend policy and decided lo
cancel lhe previously announced lrslquarler 2010 ordinary share dividend scheduled lor paynenl on 21 June 2010, and lurlher decided lhal no ordinary
share dividends would be paid in respecl ol lhe second and lhird quarlers ol 2010. On 1 February 2011, BP announced lhe resunplion ol quarlerly
dividend paynenls. The quarlerly dividend lo be paid on 23 arch 2011 is 7 cenls per ordinary share ($0.42 per Anerican Deposilary Share (ADS. The
corresponding anounl in slerling will be announced on 14 arch 2011. A scrip dividend allernalive is available, allowing shareholders lo elecl lo receive
lheir dividend in lhe lorn ol new ordinary shares and ADS holders in lhe lorn ol new ADSs.
pence per share cenls per share $ nillion
2010 2009 2003 2010 2009 2003 2010 2009 2003
Dividends announced and paid
Prelerence shares 2 2 2
Ordinary shares
arch 8.679 9.313 6.313 14.000 14.000 13.525 2,625 2,619 2,553
June - 9.534 6.330 - 14.000 13.525 - 2,619 2,545
Seplenber - 3.503 7.039 - 14.000 14.000 - 2,620 2,623
Decenber - 3.512 3.705 - 14.000 14.000 - 2,623 2,619
8.679 36.417 29.337 14.000 56.000 55.050 2,627 10,433 10,342
Dividend announced per ordinary
share, payable in arch 2011
a
7.000 1,315

a
The anounl in slerling will be announced on 14 arch 2011.
The group does nol accounl lor dividends unlil lhey are paid. The lnancial slalenenls lor lhe year ended 31 Decenber 2010 do nol reHecl lhe dividend
announced on 1 February 2011 and payable in arch 2011, lhis will be lrealed as an approprialion ol proll in lhe year ended 31 Decenber 2011.
19. Taxalion conlinued
The group has recognized signilcanl cosls in lhe year in relalion lo lhe Cull ol exico oil spill. Tax has been calculaled on lhe expendilures lhal qualily lor
lax reliel al lhe US slalulory lax rale. A delerred lax assel has been recognized in respecl ol provisions lor lulure expendilure lhal are expecled lo qualily
lor lax reliel. This is included under lhe heading deconnissioning, environnenlal and olher provisions and has resulled in a signilcanl reduclion in lhe
overall delerred lax liabilily ol lhe group conpared lo 2009.
Delerred lax assels are recognized lo lhe exlenl lhal il is probable lhal laxable proll will be available againsl which lhe deduclible lenporary
dillerences and lhe carrylorward ol unused lax credils and unused lax losses can be ulilized.
Al 31 Decenber 2010, lhe group had approxinalely $3.9 billion (2009 $4.3 billion
a
ol carrylorward lax losses, predoninanlly in Europe, lhal would
be available lo ollsel againsl lulure laxable proll. A delerred lax assel has been recognized in respecl ol $3.0 billion ol losses (2009 $3.2 billion. o
delerred lax assel has been recognized in respecl ol $0.9 billion ol losses (2009 $1.6 billion
a
. Subslanlially all lhe lax losses have no lxed expiry dale.
Al 31 Decenber 2010, lhe group had approxinalely $13.9 billion ol unused lax credils predoninanlly in lhe UK and US (2009 $12.5 billion.
Al 31 Decenber 2010 lhere is a delerred lax assel ol $2.1 billion in respecl ol unused lax credils (2009 $1.0 billion. o delerred lax assel has been
recognized in respecl ol $11.3 billion ol lax credils (2009 $11.5 billion. n 2010 $0.3 billion ol lax credils were ulilized on which a delerred lax assel had nol
previously been recognized.
n 2009 a change in UK legislalion repealed double laxalion reliel in relalion lo loreign dividends, onshore pooling and ulilizalion ol eligible unrelieved
loreign lax elininaling lhe associaled lax credils. The UK lax credils, arising in UK branches overseas, wilh no delerred lax assel, anounling lo $9.9 billion
(2009 $9.5 billion, do nol have a lxed expiry dale. n addilion lhere are also lenporary dillerences in overseas branches ol UK conpanies wilh no delerred
lax assel recognized. Al 31 Decenber 2010 lhe unrecognized delerred lax anounled lo $0.9 billion (2009 $0.5 billion. These credils and lenporary
dillerences arise in UK branches predoninanlly based in high lax rale jurisdiclions so are unlikely lo have value in lhe lulure as UK laxes on lhese overseas
branches are largely niligaled by double lax reliel on lhe local loreign lax.
The US lax credils wilh no delerred lax assel, anounling lo $1.9 billion (2009 $2.0 billion expire 10 years aller generalion, and lhe najorily expire
in lhe period 20142013.
The olher najor conponenls ol lenporary dillerences al lhe end ol 2010 are lax deprecialion, provisions and olher ilens in relalion lo lhe Cull ol
exico oil spill, US invenlory holding gains (classiled as olher laxable lenporary dillerences and pension plan and olher poslrelirenenl benell
plan delcils.
n 2010 lhere are no nalerial lenporary dillerences associaled wilh inveslnenls in subsidiaries and equily accounled enlilies lor which delerred
lax liabililies have nol been recognized.
n 2010 lhe enaclnenl ol a 1' reduclion in lhe rale ol UK corporalion lax on prolls arising lron aclivilies oulside lhe orlh Sea has reduced lhe
delerred lax charge by $36 nillion. n 2009 lhere were no changes in lhe slalulory lax rales lhal nalerially inpacled lhe groups lax charge.
a
2009 conparalive dala has been anended.
21. Earnings per ordinary share
cenls per share
2010 2009 2003
Basic earnings per share (19.81) 33.49 112.59
Diluled earnings per share (19.81) 37.54 111.56

Basic earnings per ordinary share anounls are calculaled by dividing lhe proll or loss lor lhe year allribulable lo ordinary shareholders by lhe weighled
average nunber ol ordinary shares oulslanding during lhe year. The average nunber ol shares oulslanding excludes lreasury shares and lhe shares held
by lhe Enployee Share Ownership Plans (ESOPs and includes cerlain shares lhal will be issuable in lhe lulure under enployee share plans.
For lhe diluled earnings per share calculalion, lhe weighled average nunber ol shares oulslanding during lhe year is adjusled lor lhe nunber ol
shares lhal are polenlially issuable in conneclion wilh enployee sharebased paynenl plans using lhe lreasury slock nelhod. l lhe inclusion ol polenlially
issuable shares would decrease lhe loss per share, lhe polenlially issuable shares are excluded lron lhe diluled earnings per share calculalion.
$ nillion
2010 2009 2003
Proll (loss allribulable lo BP shareholders (3,719) 16,573 21,157
Less dividend requirenenls on prelerence shares 2 2 2
Proll (loss lor lhe year allribulable lo BP ordinary shareholders (3,721) 16,576 21,155
shares lhousand
2010 2009 2003
Basic weighled average nunber ol ordinary shares 18,785,912 13,732,459 13,739,327
Polenlial dilulive ellecl ol ordinary shares issuable under enployee share schenes 211,895 203,232 172,690
18,997,807 13,935,691 13,962,517

The nunber ol ordinary shares oulslanding al 31 Decenber 2010, excluding lreasury shares and lhe shares held by lhe ESOPs, and including cerlain
shares lhal will be issuable in lhe lulure under enployee share plans was 13,796,497,760. Belween 31 Decenber 2010 and 13 February 2011, lhe
lalesl praclicable dale belore lhe conplelion ol lhese lnancial slalenenls, lhere was a nel increase ol 2,303,313 in lhe nunber ol ordinary shares
oulslanding as a resull ol share issues in relalion lo enployee share schenes. The nunber ol polenlial ordinary shares issuable lhrough lhe exercise
ol enployee share schenes was 203,667,935 al 31 Decenber 2010. There has been an decrease ol 35,044,060 in lhe nunber ol polenlial ordinary
shares belween 31 Decenber 2010 and 13 February 2011.
On 14 January 2011, BP enlered inlo a share swap agreenenl wilh Fosnell Oil Conpany lhal, subjecl lo lhe oulcone ol lhe courl applicalion
relerred lo in ole 6, would resull in BP issuing 933,694,633 new ordinary shares lo Fosnell when lhe lransaclion conpleles. See ole 6 lor lurlher
inlornalion regarding lhis lransaclion.

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www.bp.con/downloads/ppe
22. Properly, planl and equipnenl
$ nillion
OiI depots,
PIant, Fixtures, storage
Land OiI and machinery httings and tanks and
and Iand gas and ofhce Transport- service
improvements BuiIdings properties equipment equipment ation stations TotaI
Cosl
Al 1 January 2010 3,786 2,918 157,197 41,599 3,022 12,441 10,295 231,258
Exchange adjuslnenls (85) (68) 3 35 (41) 28 (72) (200)
Addilions 39 96 11,980 3,354 279 152 610 16,510
Acquisilions 2 3 1,931 41 5 15 - 1,997
Translers - - 2,633 - - - - 2,633
Feclassiled as assels held lor sale (6) (10) (6,610) (1,083) (87) (212) - (8,008)
Delelions (176) (104) (6,950) (1,119) (213) (208) (1,181) (9,951)
Al 31 Decenber 2010 3,560 2,835 160,184 42,827 2,965 12,216 9,652 234,239
Deprecialion
Al 1 January 2010 571 1,389 86,975 18,903 1,893 7,852 5,400 122,983
Exchange adjuslnenls 1 (46) - (19) (25) 16 (13) (86)
Charge lor lhe year 34 82 8,024 1,492 291 268 606 10,797
npairnenl losses 57 5 918 117 1 - 21 1,119
Feclassiled as assels held lor sale - (8) (4,342) (514) (76) (97) - (5,037)
Delelions (91) (38) (3,528) (796) (208) (99) (940) (5,700)
Al 31 Decenber 2010 572 1,384 88,047 19,183 1,876 7,940 5,074 124,076
el book anounl al 31 Decenber 2010 2,988 1,451 72,137 23,644 1,089 4,276 4,578 110,163
Cosl
Al 1 January 2009 3,964 2,742 146,313 37,905 3,045 12,295 10,345 217,109
Exchange adjuslnenls 143 35 2 377 33 66 546 1,307
Addilions 59 313 11,923 3,743 145 115 739 17,042
Translers - - 745 - - - - 745
Delelions (335 (222 (2,291 (926 (251 (35 (1,335 (5,445
Al 31 Decenber 2009 3,736 2,913 157,197 41,599 3,022 12,441 10,295 231,253
Deprecialion
Al 1 January 2009 593 1,313 79,955 17,293 1,696 7,542 5,507 113,909
Exchange adjuslnenls 19 33 - 446 54 30 272 359
Charge lor lhe year 31 102 3,951 1,372 302 239 613 11,665
npairnenl losses 33 53 10 135 10 3 52 406
Delelions (165 (117 (1,941 (393 (169 (17 (1,049 (3,356
Al 31 Decenber 2009 571 1,339 36,975 13,903 1,393 7,352 5,400 122,933
el book anounl al 31 Decenber 2009 3,215 1,529 70,222 22,696 1,129 4,539 4,395 103,275
el book anounl al 1 January 2009 3,366 1,429 66,353 20,607 1,349 4,753 4,333 103,200

Assels held under lnance leases al nel book anounl
included above
Al 31 Decenber 2010 - 14 236 386 - 7 18 661
Al 31 Decenber 2009 - 14 225 110 - 7 19 375
Deconnissioning assel al nel book anounl
included above Cosl Deprecialion el
Al 31 Decenber 2010 9,237 4,585 4,652
Al 31 Decenber 2009 7,963 4,129 3,339
Assels under conslruclion included above
Al 31 Decenber 2010 23,055
Al 31 Decenber 2009 19,120

23. Coodwill
$ nillion
2010 2009
Cosl
Al 1 January 10,199 9,373
Exchange adjuslnenls (154) 350
Acquisilions 335 -
Feclassiled as assels held lor sale (87) -
Delelions (116) (29
Al 31 Decenber 10,177 10,199
npairnenl losses
Al 1 January (1,579) -
npairnenl losses lor lhe year - (1,579
Al 31 Decenber (1,579) (1,579
el book anounl al 31 Decenber 8,598 3,620
el book anounl al 1 January 8,620 9,373

24. nlangible assels
$ nillion
2010 2009
ExpIoration Exploralion
and appraisaI Other and appraisal Olher
expenditure intangibIes TotaI expendilure inlangibles Tolal
Cosl
Al 1 January 10,713 3,284 13,997 9,425 2,927 12,352
Exchange adjuslnenls 6 (29) (23) 3 75 33
Acquisilions 982 118 1,100 - - -
Addilions 5,440 297 5,737 2,715 441 3,156
Translers (2,633) - (2,633) (745 - (745
Feclassiled as assels held lor sale (134) (4) (138) - - -
Delelions (898) (263) (1,161) (690 (159 (349
Al 31 Decenber 13,476 3,403 16,879 10,713 3,234 13,997
Anorlizalion
Al 1 January 325 2,124 2,449 394 1,693 2,092
Exchange adjuslnenls - (11) (11) - 32 32
Charge lor lhe year 375 367 742 593 441 1,034
npairnenl losses - - - - 90 90
Feclassiled as assels held lor sale - (3) (3) - - -
Delelions (350) (246) (596) (662 (137 (799
Al 31 Decenber 350 2,231 2,581 325 2,124 2,449
el book anounl al 31 Decenber 13,126 1,172 14,298 10,333 1,160 11,543
el book anounl al 1 January 10,388 1,160 11,548 9,031 1,229 10,260

nlangible assels wilh a carrying anounl ol $66 nillion (2009 $66 nillion have been pledged lo secure cerlain group liabililies.

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The signilcanl joinlly conlrolled enlilies ol lhe BP group al 31 Decenber 2010 are shown in ole 46. Sunnarized lnancial inlornalion lor lhe groups
share ol joinlly conlrolled enlilies is shown below.
$ nillion
2010
a
2009 2003
TKBP Olher Tolal
Sales and olher operaling revenues 11,679 9,396 25,936 10,796 36,732
Proll belore inleresl and laxalion 1,730 1,315 3,533 1,343 4,931
Finance cosls 122 155 275 135 460
Proll belore laxalion 1,608 1,660 3,313 1,153 4,471
Taxalion 433 374 332 397 1,279
inorily inleresl - - 169 - 169
Proll lor lhe year 1,175 1,236 2,262 761 3,023
oncurrenl assels 12,054 15,357
Currenl assels 3,595 4,124
Tolal assels 15,649 19,931
Currenl liabililies 1,615 2,276
oncurrenl liabililies 2,701 3,763
Tolal liabililies 4,316 6,044
11,333 13,937
Croup inveslnenl in joinlly conlrolled enlilies
Croup share ol nel assels (as above 11,333 13,937
Loans nade by group conpanies lo joinlly conlrolled enlilies 953 1,359
12,286 15,296

a
Balance sheel inlornalion shown above excludes dala relaling lo joinlly conlrolled enlilies reclassiled as assels held lor sale as al 31 Decenber 2010. ncone slalenenl inlornalion shown above includes
dala relaling lo joinlly conlrolled enlilies reclassiled as assels held lor sale during 2010 lor lhe period lron 1 January 2010 up unlil lheir dale ol reclassilcalion as held lor sale.
Our inveslnenl in TKBP was reclassiled lron a joinlly conlrolled enlily lo an associale wilh ellecl lron 9 January 2009, lhe dale lhal BP lnalized a revised
shareholder agreenenl wilh ils Fussian parlners in TKBP, Alla AccessFenova (AAF. The lornerly evenlybalanced nain board slruclure was replaced by
one wilh lour represenlalives each lron BP and AAF, plus lhree independenl direclors. The change in accounling classilcalion lron a joinlly conlrolled
enlily lo an associale reHecled lhe abilily ol lhe independenl direclors ol TKBP lo decide on cerlain nallers in lhe evenl ol disagreenenl belween lhe
shareholder represenlalives on lhe board. The groups inveslnenl conlinues lo be accounled lor using lhe equily nelhod.
Transaclions belween lhe group and ils joinlly conlrolled enlilies are sunnarized below.
$ nillion
Sales lo joinlly conlrolled enlilies 2010 2009 2003
Amount Anounl Anounl
receivabIe at receivable al receivable al
Producl SaIes 31 December Sales 31 Decenber Sales 31 Decenber
LC, crude oil and oil producls, nalural gas, enployee services 3,804 1,352 2,132 1,323 2,971 1,036
$ nillion
Purchases lron joinlly conlrolled enlilies 2010 2009 2003
payabIe at payable al payable al
Producl Purchases 31 December
a
Purchases 31 Decenber
a
Purchases 31 Decenber
a
LC, crude oil and oil producls, nalural gas,
relnery operaling cosls, planl processing lees 8,063 683 5,377 214 9,115 132

a
Anounls payable lo joinlly conlrolled enlilies shown above exclude $2,533 nillion (2009 $2,509 nillion and 2003 $2,365 nillion relaling lo BPs conlribulion on lhe eslablishnenl ol lhe Sunrise Oil Sands
joinl venlure.
The lerns ol lhe oulslanding balances receivable lron joinlly conlrolled enlilies are lypically 30 lo 45 days, excepl lor a receivable lron Fuhr Oel ol
$535 nillion (2009 $419 nillion, which will be paid over several years as il relales parlly lo pension paynenls. The balances are unsecured and will be
sellled in cash. There are no signilcanl provisions lor doubllul debls relaling lo lhese balances and no signilcanl expense recognized in lhe incone
slalenenl in respecl ol bad or doubllul debls. Dividends receivable are nol included in lhe above balances.
www.bp.con/downloads/inveslnenls
25. nveslnenls in joinlly conlrolled enlilies
$ nillion
2010
a
2009 2003
TNK-BP Other TotaI TKBP Olher Tolal
Sales and olher operaling revenues 22,323 10,031 32,354 17,377 3,301 25,673 11,709
Proll belore inleresl and laxalion 3,866 1,215 5,081 3,173 311 3,939 1,065
Finance cosls 128 22 150 220 19 239 33
Proll belore laxalion 3,738 1,193 4,931 2,953 792 3,750 1,032
Taxalion 913 228 1,141 371 125 996 234
inorily inleresl 208 - 208 139 - 139 -
Proll lor lhe year 2,617 965 3,582 1,943 667 2,615 793
oncurrenl assels 14,686 4,024 18,710 13,437 4,573 13,010
Currenl assels 4,500 1,989 6,489 4,205 1,337 6,092
Tolal assels 19,186 6,013 25,199 17,642 6,460 24,102
Currenl liabililies 3,284 1,888 5,172 3,122 1,640 4,762
oncurrenl liabililies 5,283 1,914 7,197 4,797 2,277 7,074
Tolal liabililies 8,567 3,802 12,369 7,919 3,917 11,336
inorily inleresl 624 - 624 532 - 532
9,995 2,211 12,206 9,141 2,543 11,634
Croup inveslnenl in associales
Croup share ol nel assels (as above 9,995 2,211 12,206 9,141 2,543 11,634
Loans nade by group conpanies lo associales - 1,129 1,129 - 1,279 1,279
9,995 3,340 13,335 9,141 3,322 12,963

a
Balance sheel inlornalion shown above excludes dala relaling lo associales reclassiled as held lor sale as al 31 Decenber 2010. ncone slalenenl inlornalion shown above includes dala relaling lo
associales reclassiled as assels held lor sale during 2010 lor lhe period lron 1 January 2010 up unlil lhe dale ol reclassilcalion as held lor sale.
Our inveslnenl in TKBP was reclassiled lron a joinlly conlrolled enlily lo an associale wilh ellecl lron 9 January 2009. See ole 25 lor lurlher
inlornalion.
Transaclions belween lhe group and ils associales are sunnarized below.
$ nillion
Sales lo associales 2010 2009 2003
receivabIe at receivable al receivable al
Producl SaIes 31 December Sales 31 Decenber Sales 31 Decenber
LC, crude oil and oil producls, nalural gas, enployee services 3,561 330 2,301 320 3,243 219

Purchases lron associales 2010 2009 2003
payabIe at payable al payable al
Producl Purchases 31 December Purchases 31 Decenber Purchases 31 Decenber
Crude oil and oil producls, nalural gas, lransporlalion larill 4,889 633 5,110 614 4,635 295

The lerns ol lhe oulslanding balances receivable lron associales are lypically 30 lo 45 days. The balances are unsecured and will be sellled in cash. There
are no signilcanl provisions lor doubllul debls relaling lo lhese balances and no signilcanl expense recognized in lhe incone slalenenl in respecl ol bad
or doubllul debls.
The anounls receivable and payable al 31 Decenber 2010, as shown in lhe lable above, exclude $299 nillion (2009 $376 nillion due lron and due
lo an inlernediale associale which provides lunding lor our associale The BakuTbilisiCeyhan Pipeline Conpany. These balances are expecled lo be sellled
in cash lhroughoul lhe period lo 2015.
Dividends receivable al 31 Decenber 2010 ol $39 nillion (2009 $19 nillion are also excluded lron lhe lable above.
On 13 Oclober 2010, BP announced lhal il had reached agreenenl lo sell assels in Vielnan, logelher wilh ils upslrean businesses and associaled
inleresls in Venezuela, lo TKBP which is an associale and lherelore a relaled parly ol lhe group. This lransaclion is parl ol lhe groups disposal
progranne and is lhe resull ol nornal connercial negolialions. See ole 4 lor lurlher inlornalion. As al 31 Decenber 2010, a deposil ol $972 nillion had
been received lron TKBP in advance ol conplelion ol lhis lransaclion and is reporled wilhin lnance debl on lhe group balance sheel. This disposal
deposil is nol reHecled in lhe anounl payable in lhe lable above. See ole 35 lor lurlher inlornalion.
www.bp.con/downloads/inveslnenls
26. nveslnenls in associales
The signilcanl associales ol lhe group are shown in ole 46. The principal associale in 2010 and 2009 is TKBP. Sunnarized lnancial
inlornalion lor lhe groups share ol associales is sel oul below.

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27. Financial inslrunenls and lnancial risk laclors
The accounling classilcalion ol each calegory ol lnancial inslrunenls, and lheir carrying anounls, are sel oul below.
$ nillion
Al 31 Decenber 2010
FinanciaI
AvaiIabIe-for- At fair vaIue Derivative IiabiIities TotaI
Loans and saIe hnanciaI through proht hedging measured at carrying
Note receivabIes assets and Ioss instruments amortized cost amount
Financial assels
Olher inveslnenls - equily shares 28 - 1,191 - - - 1,191
- olher 28 - 1,532 - - - 1,532
Loans 1,141 - - - - 1,141
Trade and olher receivables 30 32,380 - - - - 32,380
Derivalive lnancial inslrunenls 34 - - 7,222 1,344 - 8,566
Cash and cash equivalenls 31 13,462 5,094 - - - 18,556
Financial liabililies
Trade and olher payables 33 - - - - (56,499) (56,499)
Derivalive lnancial inslrunenls 34 - - (7,254) (279) - (7,533)
Accruals - - - - (6,249) (6,249)
Finance debl 35 - - - - (39,139) (39,139)
46,983 7,817 (32) 1,065 (101,887) (46,054)

$ nillion
Al 31 Decenber 2009
Financial
Availablelor Al lair value Derivalive liabililies Tolal
Loans and sale lnancial lhrough proll hedging neasured al carrying
ole receivables assels and loss inslrunenls anorlized cosl anounl
Financial assels
Olher inveslnenls 23 - 1,567 - - - 1,567
Loans 1,233 - - - - 1,233
Trade and olher receivables 30 31,016 - - - - 31,016
Derivalive lnancial inslrunenls 34 - - 7,960 972 - 3,932
Cash and cash equivalenls 31 6,570 1,769 - - - 3,339
Trade and olher payables 33 - - - - (34,325 (34,325
Derivalive lnancial inslrunenls 34 - - (7,339 (766 - (3,155
Accruals - - - - (6,905 (6,905
Finance debl 35 - - - - (34,627 (34,627
33,374 3,336 571 206 (75,357 (32,370

The lair value ol lnance debl is shown in ole 35. For all olher lnancial inslrunenls, lhe carrying anounl is eilher lhe lair value, or approxinales lhe lair value.
FinanciaI risk factors
The group is exposed lo a nunber ol dillerenl lnancial risks arising lron nalural business exposures as well as ils use ol lnancial inslrunenls including:
narkel risks relaling lo connodily prices, loreign currency exchange rales, inleresl rales and equily prices, credil risk, and liquidily risk.
The group lnancial risk connillee (CFFC advises lhe group chiel lnancial ollcer (CFO who oversees lhe nanagenenl ol lhese risks. The CFFC
is chaired by lhe CFO and consisls ol a group ol senior nanagers including lhe group lreasurer and lhe heads ol lhe lnance, lax and lhe inlegraled supply
and lrading lunclions. The purpose ol lhe connillee is lo advise on lnancial risks and lhe appropriale lnancial risk governance lranework lor lhe group.
The connillee provides assurance lo lhe CFO and lhe group chiel execulive (CCE, and via lhe CCE lo lhe board, lhal lhe groups lnancial risklaking
aclivily is governed by appropriale policies and procedures and lhal lnancial risks are idenliled, neasured and nanaged in accordance wilh group policies
and group risk appelile.
The groups lrading aclivilies in lhe oil, nalural gas and power narkels are nanaged wilhin lhe inlegraled supply and lrading lunclion, while
lhe aclivilies in lhe lnancial narkels are nanaged by lhe inlegraled supply and lrading lunclion, on behall ol lhe lreasury lunclion. All derivalive aclivily
is carried oul by specialisl leans lhal have lhe appropriale skills, experience and supervision. These leans are subjecl lo close lnancial and
nanagenenl conlrol.
The inlegraled supply and lrading lunclion nainlains lornal governance processes lhal provide oversighl ol narkel risk associaled wilh lrading
aclivily. These processes neel generally accepled induslry praclice and reHecl lhe principles ol lhe Croup ol Thirly Clobal Derivalives Sludy
reconnendalions. A policy and risk connillee nonilors and validales linils and risk exposures, reviews incidenls and validales riskrelaled policies,
nelhodologies and procedures. A connilnenls connillee approves valuealrisk delegalions, lhe lrading ol new producls, inslrunenls and slralegies
and nalerial connilnenls.
n addilion, lhe inlegraled supply and lrading lunclion underlakes derivalive aclivily lor risk nanagenenl purposes under a separale conlrol
lranework as described nore lully below.
(i) Connodi!, price risk
The groups inlegraled supply and lrading lunclion uses convenlional lnancial and connodily inslrunenls and physical cargoes available in lhe relaled
connodily narkels. Oil and nalural gas swaps, oplions and lulures are used lo niligale price risk. Power lrading is underlaken using a conbinalion ol
overlhecounler lorward conlracls and olher derivalive conlracls, including oplions and lulures. This aclivily is on bolh a slandalone basis and in
conjunclion wilh gas derivalives in relalion lo gasgeneraled power nargin. n addilion, CLs are lraded around cerlain US invenlory localions using
overlhecounler lorward conlracls in conjunclion wilh overlhecounler swaps, oplions and physical invenlories. Trading valuealrisk inlornalion in relalion
lo lhese aclivilies is shown in lhe lable above.
As described above, lhe group also carries oul risk nanagenenl ol cerlain nalural business exposures using overlhecounler swaps and exchange
lulures conlracls. Togelher wilh cerlain physical supply conlracls lhal are classiled as derivalives, lhese conlracls lall oulside ol lhe valuealrisk
lranework. For lhese derivalive conlracls lhe sensilivily ol lhe nel lair value lo an innediale 10' increase or decrease in all relerence prices would have
been $104 nillion al 31 Decenber 2010 (2009 $73 nillion. This lgure does nol include any corresponding econonic benell or disbenell lhal would arise
lron lhe nalural business exposure which would be expecled lo ollsel lhe gain or loss on lhe overlhecounler swaps and exchange lulures conlracls
nenlioned above.
n addilion, lhe group has enbedded derivalives relaling lo cerlain nalural gas conlracls. The nel lair value ol lhese conlracls was a liabilily ol
$1,607 nillion al 31 Decenber 2010 (2009 liabilily ol $1,331 nillion. Key inlornalion on lhe nalural gas conlracls is given below.
Al 31 Decenber 2010 2009
Fenaining conlracl lerns 4 years and 5 months to 7 years and 9 months 9 nonlhs lo 3 years 9 nonlhs
Conlraclual/nolional anounl 1,688 miIIion therms 2,460 nillion lherns

For lhese enbedded derivalives lhe sensilivily ol lhe nel lair value lo an innediale 10' lavourable or adverse change in lhe key assunplions is
as lollows.
$ nillion
Discount Discounl
Gas price OiI price Power price rate Cas price Oil price Power price rale
Favourable 10' change 145 48 10 10 175 26 23 20
Unlavourable 10' change (180) (68) (10) (10) (215 (43 (19 (20

27. Financial inslrunenls and lnancial risk laclors conlinued
(a arkel risk
arkel risk is lhe risk or uncerlainly arising lron possible narkel price novenenls and lheir inpacl on lhe lulure perlornance ol a business. The prinary
connodily price risks lhal lhe group is exposed lo include oil, nalural gas and power prices lhal could adversely allecl lhe value ol lhe groups lnancial
assels, liabililies or expecled lulure cash Hows. The group enlers inlo derivalives in a welleslablished enlrepreneurial lrading operalion. n addilion, lhe
group has developed a conlrol lranework ained al nanaging lhe volalilily inherenl in cerlain ol ils nalural business exposures. n accordance wilh lhe
conlrol lranework lhe group enlers inlo various lransaclions using derivalives lor risk nanagenenl purposes.
The group neasures narkel risk exposure arising lron ils lrading posilions using valuealrisk lechniques. For 2010, lhe various valuealrisk nodels
used in prior years were consolidaled as parl ol a process sinplilcalion inlo a onle Carlo lranework. This nakes a slalislical assessnenl ol lhe narkel
risk arising lron possible lulure changes in narkel prices over a oneday holding period. The calculalion ol lhe range ol polenlial changes in lair value lakes
inlo accounl a snapshol ol lhe endolday exposures and lhe hislory ol oneday price novenenls, logelher wilh lhe correlalion ol lhese price novenenls.
The valuealrisk neasure is supplenenled by slress lesling.
The valuealrisk lable does nol incorporale any ol lhe groups nalural business exposures or any derivalives enlered inlo lo risk nanage lhose
exposures. The resulls ol lhe gas price lrading are included wilhin Exploralion and Produclion segnenl resulls, and lhe gas price lrading valuealrisk
includes gas and power lrading. The resulls ol lhe oil price lrading are included wilhin Felning and arkeling segnenl resulls, and lhe oil price lrading
valuealrisk includes oil, inleresl rale and currency lrading. arkel risk exposure in respecl ol enbedded derivalives is also nol included in lhe valuealrisk
lable. nslead separale sensilivily analyses are disclosed below.
Valuealrisk linils are in place lor each lrading aclivily and lor lhe groups lrading aclivily in lolal. The board has delegaled a linil ol $100 nillion
value al risk in supporl ol lhis lrading aclivily. The high and low values al risk indicaled in lhe lable below lor each lype ol aclivily are independenl ol each
olher. Through lhe porllolio ellecl lhe high value al risk lor lhe group as a whole is lower lhan lhe sun ol lhe highs lor lhe consliluenl parls. The polenlial
novenenl in lair values is expressed lo a 95' conldence inlerval. This neans lhal, in slalislical lerns, one would expecl lo see a decrease in lair values
grealer lhan lhe lrading value al risk on one occasion per nonlh il lhe porllolio were lell unchanged.
$ nillion
Value al risk lor 1 day al 95' conldence inlerval 2010 2009
High Low Average Year end High Low Average Year end
Croup lrading 70 15 34 33 79 24 45 30
Cas price lrading 62 7 27 18 62 11 23 26
Oil price lrading 39 10 19 25 75 11 29 13

The najor conponenls ol narkel risk are connodily price risk, loreign currency exchange risk, inleresl rale risk and equily price risk, each ol which is
discussed below.

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The sensilivilies lor risk nanagenenl aclivily and enbedded derivalives are hypolhelical and should nol be considered lo be prediclive ol lulure
perlornance. n addilion, lor lhe purposes ol lhis analysis, in lhe above lable, lhe ellecl ol a varialion in a parlicular assunplion on lhe lair value ol lhe
enbedded derivalives is calculaled independenlly ol any change in anolher assunplion. n realily, changes in one laclor nay conlribule lo changes in
anolher, which nay nagnily or counleracl lhe sensilivilies. Furlhernore, lhe eslinaled lair values as disclosed should nol be considered indicalive ol
lulure earnings on lhese conlracls.
(ii) Foreign currenc, exchange risk
vhere lhe group enlers inlo loreign currency exchange conlracls lor enlrepreneurial lrading purposes lhe aclivily is conlrolled using lrading valuealrisk
lechniques as explained above. This aclivily is included wilhin oil price lrading in lhe valuealrisk lable above.
Since BP has global operalions, Huclualions in loreign currency exchange rales can have signilcanl ellecls on lhe groups reporled resulls. The
ellecls ol nosl exchange rale Huclualions are absorbed in business operaling resulls lhrough changing cosl conpeliliveness, lags in narkel adjuslnenl lo
novenenls in rales and lranslalion dillerences accounled lor on specilc lransaclions. For lhis reason, lhe lolal ellecl ol exchange rale Huclualions is nol
idenlilable separalely in lhe groups reporled resulls. The nain underlying econonic currency ol lhe groups cash Hows is lhe US dollar. This is because BPs
najor producl, oil, is priced inlernalionally in US dollars. BPs loreign currency exchange nanagenenl policy is lo nininize econonic and nalerial
lransaclional exposures arising lron currency novenenls againsl lhe US dollar. The group coordinales lhe handling ol loreign currency exchange risks
cenlrally, by nelling oll nalurallyoccurring opposile exposures wherever possible, and lhen dealing wilh any nalerial residual loreign currency exchange risks.
The group nanages lhese exposures by conslanlly reviewing lhe loreign currency econonic value al risk and ains lo nanage such risk lo keep lhe
12nonlh loreign currency value al risk below $200 nillion. Al 31 Decenber 2010, lhe loreign currency value al risk was $31 nillion (2009 $140 nillion.
Al no poinl over lhe pasl lhree years did lhe value al risk exceed lhe naxinun risk linil. The nosl signilcanl exposures relale lo capilal expendilure
connilnenls and olher UK and European operalional requirenenls, lor which a hedging progranne is in place and hedge accounling is clained as
oullined in ole 34.
For highly probable lorecasl capilal expendilures lhe group locks in lhe US dollar cosl ol nonUS dollar supplies by using currency lorwards and
lulures. The nain exposures are slerling, euro, orwegian krone, Auslralian dollar, Korean won and Singapore dollar and al 31 Decenber 2010 open
conlracls were in place lor $939 nillion slerling, $115 nillion euro, $212 nillion orwegian krone and $143 nillion Auslralian dollar capilal expendilures
naluring wilhin lve years, wilh over 30' ol lhe deals naluring wilhin lwo years (2009 $300 nillion slerling, $491 nillion Canadian dollar, $299 nillion
euro, $240 nillion orwegian krone, $215 nillion Auslralian dollar, $51 nillion Korean won and $41 nillion Singapore dollar capilal expendilures naluring
wilhin six years wilh over 65' ol lhe deals naluring wilhin lwo years.
For olher UK, European, Canadian and Auslralian operalional requirenenls lhe group uses cylinders and currency lorwards lo hedge lhe eslinaled
exposures on a 12nonlh rolling basis. Al 31 Decenber 2010, lhe open posilions relaling lo cylinders consisled ol receive slerling, pay US dollar,
purchased call and sold pul oplions (cylinders lor $1,340 nillion (2009 $1,337 nillion, receive euro, pay US dollar cylinders lor $650 nillion (2009
$1,716 nillion, receive Auslralian dollar, pay US dollar cylinders lor $236 nillion (2009 $297 nillion. Al 31 Decenber 2010 lhe open posilions relaling lo
currency lorwards consisled ol buy slerling, sell US dollar currency lorwards lor $925 nillion (2009 nil, buy Euro, sell US dollar currency lorwards lor
$630 nillion (2009 nil, and buy Canadian dollar, sell US dollar, currency lorwards lor $162 nillion (2009 nil.
n addilion, nosl ol lhe groups borrowings are in US dollars or are hedged wilh respecl lo lhe US dollar. Al 31 Decenber 2010, lhe lolal loreign
currency nel borrowings nol swapped inlo US dollars anounled lo $652 nillion (2009 $465 nillion. Ol lhis lolal, $125 nillion was denoninaled in
currencies olher lhan lhe lunclional currency ol lhe individual operaling unil being enlirely Canadian dollars (2009 $113 nillion, being enlirely Canadian
dollars. l is eslinaled lhal a 10' change in lhe corresponding exchange rales would resull in an exchange gain or loss in lhe incone slalenenl ol
$12 nillion (2009 $11 nillion.
(iii) n!eres! ra!e risk
vhere lhe group enlers inlo noney narkel conlracls lor enlrepreneurial lrading purposes lhe aclivily is conlrolled using valuealrisk lechniques as
described above. This aclivily is included wilhin oil price lrading in lhe valuealrisk lable above.
BP is also exposed lo inleresl rale risk lron lhe possibilily lhal changes in inleresl rales will allecl lulure cash Hows or lhe lair values ol ils lnancial
inslrunenls, principally lnance debl.
vhile lhe group issues debl in a variely ol currencies based on narkel opporlunilies, il uses derivalives lo swap lhe debl lo a Hoaling rale exposure,
nainly lo US dollar Hoaling, bul in cerlain delned circunslances nainlains a US dollar lxed rale exposure lor a proporlion ol debl. The proporlion ol
Hoaling rale debl nel ol inleresl rale swaps al 31 Decenber 2010 was 67' ol lolal lnance debl oulslanding (2009 63'. The weighled average inleresl
rale on lnance debl al 31 Decenber 2010 is 2' (2009 2' and lhe weighled average nalurily ol lxed rale debl is lve years (2009 lour years.
The groups earnings are sensilive lo changes in inleresl rales on lhe Hoaling rale elenenl ol lhe groups lnance debl. l lhe inleresl rales
applicable lo Hoaling rale inslrunenls were lo have increased by 1' on 1 January 2011, il is eslinaled lhal lhe groups proll belore laxalion lor 2011
would decrease by approxinalely $303 nillion (2009 $219 nillion decrease in 2010. This assunes lhal lhe anounl and nix ol lxed and Hoaling rale debl,
including lnance leases, renains unchanged lron lhal in place al 31 Decenber 2010 and lhal lhe change in inleresl rales is elleclive lron lhe beginning
ol lhe year. vhere lhe inleresl rale applicable lo an inslrunenl is resel during a quarler il is assuned lhal lhis occurs al lhe beginning ol lhe quarler and
renains unchanged lor lhe resl ol lhe year. n realily, lhe lxed/Hoaling rale nix will Hucluale over lhe year and inleresl rales will change conlinually.
Furlhernore, lhe ellecl on earnings shown by lhis analysis does nol consider lhe ellecl ol any olher changes in general econonic aclivily lhal nay
acconpany such an increase in inleresl rales.
(iv) qui!, price risk
The group holds equily inveslnenls, lypically nade lor slralegic purposes, lhal are classiled as noncurrenl availablelorsale lnancial assels and are
neasured inilially al lair value wilh changes in lair value recognized in olher conprehensive incone. Accunulaled lair value changes are recycled lo lhe
incone slalenenl on disposal, or when lhe inveslnenl is inpaired. o inpairnenl losses have been recognized in 2010 (2009 nil and 2003 $546 nillion
relaling lo lisled noncurrenl availablelorsale inveslnenls. For lurlher inlornalion see ole 23.
Al 31 Decenber 2010, il is eslinaled lhal an increase ol 10' in quoled equily prices would resull in an innediale credil lo olher conprehensive
incone ol $95 nillion (2009 $130 nillion credil lo olher conprehensive incone, whilsl a decrease ol 10' in quoled equily prices would resull in an
innediale charge lo olher conprehensive incone ol $95 nillion (2009 $130 nillion charge lo olher conprehensive incone. BP has derivalive posilions
lhal resull in opposile inpacls such lhal a 10' increase in equily prices would resull in a charge lo proll or loss ol $70 nillion (2009 nil and a 10'
decrease in equily prices would resull in a gain lo proll or loss ol $67 nillion (2009 nil.
Al 31 Decenber 2010, a single equily inveslnenl nade up 30' (2009 73' ol lhe carrying anounl ol noncurrenl availablelorsale lnancial assels lhus
lhe groups exposure is concenlraled on changes in lhe share price ol lhis equily in parlicular.
(b Credil risk
Credil risk is lhe risk lhal a cusloner or counlerparly lo a lnancial inslrunenl will lail lo perlorn or lail lo pay anounls due causing lnancial loss lo lhe
group and arises lron cash and cash equivalenls, derivalive lnancial inslrunenls and deposils wilh lnancial inslilulions and principally lron credil
exposures lo cusloners relaling lo oulslanding receivables.
The group has a credil policy, approved by lhe CFO, lhal is designed lo ensure lhal consislenl processes are in place lhroughoul lhe group lo
neasure and conlrol credil risk. Credil risk is considered as parl ol lhe riskreward balance ol doing business. On enlering inlo any business conlracl lhe
exlenl lo which lhe arrangenenl exposes lhe group lo credil risk is considered. Key requirenenls ol lhe policy are lornal delegaled aulhorilies lo lhe
sales and narkeling leans lo incur credil risk and lo a specialized credil lunclion lo sel counlerparly linils, lhe eslablishnenl ol credil syslens and
processes lo ensure lhal counlerparlies are raled and linils sel, and syslens lo nonilor exposure againsl linils and reporl regularly on lhose exposures,
and innedialely on any excesses, and lo lrack and reporl credil losses. The lreasury lunclion provides a sinilar credil risk nanagenenl aclivily wilh
respecl lo groupwide exposures lo banks and olher lnancial inslilulions.
vhile lhe global credil environnenl showed signs ol slabilizalion and inprovenenl in 2010, econonic and polilical uncerlainlies conlinue lo drive
heighlened awareness, discussion and coordinalion around lhe credil risks arising lron lhe groups aclivilies.
Belore lrading wilh a new counlerparly can slarl, ils credilworlhiness is assessed and a credil raling is allocaled lhal indicales lhe probabilily ol
delaull, along wilh a credil exposure linil. The assessnenl process lakes inlo accounl all available qualilalive and quanlilalive inlornalion aboul lhe
counlerparly and lhe group, il any, lo which lhe counlerparly belongs. The counlerparlys business aclivilies, lnancial resources and business risk
nanagenenl processes are laken inlo accounl in lhe assessnenl, lo lhe exlenl lhal lhis inlornalion is publicly available or olherwise disclosed lo BP by
lhe counlerparly, logelher wilh exlernal credil ralings. Credilworlhiness conlinues lo be evalualed aller lransaclions have been inilialed and a walchlisl ol
higherrisk counlerparlies is nainlained.
The group does nol ain lo renove credil risk bul expecls lo experience a cerlain level ol credil losses. The group allenpls lo niligale credil risk by
enlering inlo conlracls lhal pernil nelling and allow lor lerninalion ol lhe conlracl on lhe occurrence ol cerlain evenls ol delaull. Depending on lhe
credilworlhiness ol lhe counlerparly, lhe group nay require collaleral or olher credil enhancenenls such as cash deposils or lellers ol credil and parenl
conpany guaranlees. Trade receivables and payables, and derivalive assels and liabililies, are presenled on a nel basis where uncondilional nelling
arrangenenls are in place wilh counlerparlies and where lhere is an inlenl lo sellle anounls due on a nel basis. The naxinun credil exposure associaled
wilh lnancial assels is equal lo lhe carrying anounl. Al 31 Decenber 2010, lhe naxinun credil exposure was $60,643 nillion (2009 $49,575 nillion.
Collaleral received and recognized in lhe balance sheel al lhe year end was $313 nillion (2009 $549 nillion and collaleral held oll balance sheel was
$52 nillion (2009 $43 nillion. Credil exposure exisls in relalion lo guaranlees issued by group conpanies under which anounls oulslanding al
31 Decenber 2010 were $404 nillion (2009 $319 nillion in respecl ol liabililies ol joinlly conlrolled enlilies and associales and $664 nillion (2009 $667
nillion in respecl ol liabililies ol olher lhird parlies.
olwilhslanding lhe processes described above, signilcanl unexpecled credil losses can occasionally occur. Exposure lo unexpecled losses
increases wilh concenlralions ol credil risk lhal exisl when a nunber ol counlerparlies are involved in sinilar aclivilies or operale in lhe sane induslry
seclor or geographical area, which nay resull in lheir abilily lo neel conlraclual obligalions being inpacled by changes in econonic, polilical or olher
condilions. The groups principal cusloners, suppliers and lnancial inslilulions wilh which il conducls business are localed lhroughoul lhe world. n addilion,
lhese risks are nanaged by nainlaining a group walchlisl and aggregaling nullisegnenl exposures lo ensure lhal a nalerial credil risk is nol nissed.
Feporls are regularly prepared and presenled lo lhe CFFC lhal cover lhe groups overall credil exposure and expecled loss lrends, exposure by
segnenl, and overall qualily ol lhe porllolio. The reporls also include delails ol lhe largesl counlerparlies by exposure level and expecled loss, and delails
ol counlerparlies on lhe group walchlisl.
Sone niligalion ol credil exposure is achieved by: nelling arrangenenls, credil supporl agreenenls which require lhe counlerparly lo provide
collaleral or olher credil risk niligalion, and credil insurance and olher risk lransler inslrunenls.
For lhe conlracls conprising derivalive lnancial inslrunenls in an assel posilion al 31 Decenber 2010, il is eslinaled lhal over 30' (2009 over
30' ol lhe unniligaled credil exposure is lo counlerparlies ol inveslnenl grade credil qualily.
For cash and cash equivalenls, lhe lreasury lunclion dynanically nanages bank deposil linils lo ensure cash is welldiversiled and lo avoid
concenlralion risks. Al 31 Decenber 2010, over 30' ol lhe cash and cash equivalenls balance was deposiled wilh lnancial inslilulions raled A+ or higher.
Trade and olher receivables ol lhe group are analysed in lhe lable below. By conparing lhe BP credil ralings lo lhe equivalenl exlernal credil ralings,
il is eslinaled lhal approxinalely 5060' (2009 approxinalely 5560' ol lhe unniligaled lrade receivables porllolio exposure is ol inveslnenl grade
credil qualily. vilh respecl lo lhe lrade and olher receivables lhal are neilher inpaired nor pasl due, lhere are no indicalions as ol lhe reporling dale lhal
lhe deblors will nol neel lheir paynenl obligalions.
The group does nol lypically renegoliale lhe lerns ol lrade receivables, however, il a renegolialion does lake place, lhe oulslanding balance
is included in lhe analysis based on lhe original paynenl lerns. There were no signilcanl renegolialed balances oulslanding al 31 Decenber 2010 or
31 Decenber 2009.
$ nillion
Trade and olher receivables al 31 Decenber 2010 2009
eilher inpaired nor pasl due 30,181 29,426
npaired (nel ol valualion allowance 67 91
ol inpaired and pasl due in lhe lollowing periods
wilhin 30 days 1,358 303
31 lo 60 days 249 151
61 lo 90 days 101 76
over 90 days 424 464
32,380 31,016


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The novenenl in lhe valualion allowance lor lrade receivables is sel oul below.
$ nillion
2010 2009
Al 1 January 430 391
Exchange adjuslnenls (9) 12
Charge lor lhe year 150 157
Ulilizalion (143) (130

(c Liquidily risk
Liquidily risk is lhe risk lhal suilable sources ol lunding lor lhe groups business aclivilies nay nol be available. The groups liquidily is nanaged cenlrally
wilh operaling unils lorecasling lheir cash and currency requirenenls lo lhe cenlral lreasury lunclion. Unless reslricled by local regulalions, subsidiaries
pool lheir cash surpluses lo lreasury, which will lhen arrange lo lund olher subsidiaries requirenenls, or invesl any nel surplus in lhe narkel or arrange lor
necessary exlernal borrowings, while nanaging lhe groups overall nel currency posilions.
Following lhe Cull ol exico oil spill, lhe group laced signilcanl challenges in nanaging liquidily risk. The group was required lo nake subslanlial
cash paynenls in conneclion wilh lhe oil spill and also experienced increased requirenenls during lhe year lo posl lellers ol credil lo collaleralize a
nunber ol environnenlal liabililies lolalling $624 nillion and posl lurlher cash collaleral under lrading agreenenls lolalling $723 nillion. Furlher inlornalon
is provided in Liquidily and capilal resources on pages 63 lo 67.
n nanaging ils liquidily risk, lhe group has access lo a wide range ol lunding al conpelilive rales lhrough capilal narkels and banks. The groups
lreasury lunclion cenlrally coordinales relalionships wilh banks, borrowing requirenenls, loreign exchange requirenenls and cash nanagenenl. The
group believes il has access lo sullcienl lunding lhrough ils own currenl cash holdings and lulure cash generalion including disposal proceeds, lhe
connercial paper narkels, and by using undrawn connilled borrowing lacililies, lo neel loreseeable liquidily requirenenls. Al 31 Decenber 2010, lhe
group had subslanlial anounls ol undrawn borrowing lacililies available, including connilled lacililies ol $12,500 nillion (2009 $4,950 nillion, consisling
ol $5,250 nillion ol slandby lacililies (ol which $400 nillion is available lo draw and repay by nidSeplenber 2011, $4,550 nillion unlil nidOclober 2011,
and $300 nillion unlil nidJanuary 2013 and $7,250 nillion ol 364day lacililies (ol which $4,000 nillion can be drawn unlil lale ay 2011 and is repayable
up lo 364 days lron lhe dale ol drawing, $2,000 nillion drawn unlil lhe end ol June 2011, $750 nillion drawn unlil early July 2011, and $500 nillion drawn
unlil lale Augusl 2011. These lacililies are wilh a nunber ol inlernalional banks and borrowings under lhen would be al preagreed rales.
The group has in place a European Debl ssuance Progranne (DP under which lhe group nay raise up lo $20 billion ol debl lor nalurilies ol one
nonlh or longer. Al 31 Decenber 2010, lhe anounl drawn down againsl lhe DP was $12,272 nillion (2009 $11,403 nillion. n addilion, lhe group has in
place an unliniled US Shell Fegislralion under which il nay raise debl wilh nalurilies ol one nonlh or longer.
The group has longlern debl ralings ol A2 (slable oullook assigned by oodys and A (negalive oullook assigned by Slandard & Poors, a
downgrading lron Aa1 (slable oullook and AA (slable oullook, respeclively assigned prior lo lhe Cull ol exico oil spill.
Since lhe credil raling downgrading, we have issued $6.2 billion ol longlern debl early in lhe lourlh quarler 2010, and issued shorllern
connercial paper al conpelilive rales, as and when required. As an addilional neasure, we have increased and nainlained lhe cash and cash equivalenls
held by lhe group lo $13.6 billion al lhe end ol 2010, conpared wilh $3.3 billion al lhe end ol 2009.
The anounls shown lor lnance debl in lhe lable below include expecled inleresl paynenls on borrowings and lhe lulure nininun lease
paynenls wilh respecl lo lnance leases.
ncluded wilhin currenl lnance debl are US nduslrial Fevenue/unicipal bonds where bondholders have lhe oplion lo lender lhe bonds lor
repaynenl al inleresl resel dales, and lhe nexl resel dale lalls wilhin 12 nonlhs ol lhe balance sheel dale. The anounls al lhe end ol 2010 lolalled $379
nillion, down lron $2,395 nillion al lhe end ol 2009. The reduclion largely reHecls lhe inilial lailure lo renarkel lhe bonds lollowing lhe Cull ol exico oil
spill, as well as aclive nanagenenl by BP lo wilhdraw or renegoliale lernoul ol lhe bonds on resel dales lo lurlher renove lhe uncerlainly ol lhe
liquidily risk. Also included wilhin currenl lnance debl al lhe end ol 2009 was an anounl ol $1,622 nillion lor loans associaled wilh longlern gas supply
conlracls backed by gas prepaid bonds wilh lender oplions al inleresl rale resels wilh BP as lhe liquidily provider. Following lhe Cull ol exico oil spill lhe
bonds lailed renarkeling requiring BP lo acquire and hold all ol lhe bonds, wilh corresponding reduclion lo nil in lhe anounl reHecled in lnance debl al
lhe end ol 2010.
Currenl lnance debl on lhe group balance sheel al 31 Decenber 2010 includes $6,197 nillion (2009 nil in respecl ol cash deposils received
lor disposals expecled lo conplele in 2011 which will be considered exlinguished on conplelion ol lhe lransaclions. This anounl is excluded lron lhe
lable below.
The lable also shows lhe lining ol cash oulHows relaling lo lrade and olher payables and accruals.
$ nillion
2010 2009
Trade and Trade and
other Finance olher Finance
payabIes
a
AccruaIs debt payables Accruals debl
vilhin one year 42,691 5,612 9,353 31,413 6,202 9,790
1 lo 2 years 6,549 278 6,816 1,059 231 6,361
2 lo 3 years 6,242 125 7,542 1,039 106 5,359
3 lo 4 years 411 42 6,105 566 73 5,523
4 lo 5 years 365 28 5,494 67 49 3,151
5 lo 10 years 323 110 6,642 35 163 5,723
Over 10 years 25 54 724 46 76 1,150
56,606 6,249 42,676 34,325 6,905 37,562

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Trade and olher payables al 31 Decenber 2010 includes lhe Cull ol exico oil spill lrusl lund liabilily which is payable as lollows: $5,003 nillion wilhin one year, $5,000 nillion payable in 1 lo 2 years and
$5,000 nillion payable in 2 lo 3 years.
27. Financial instruments and nancial risk factors continued
The group manages liquidity risk associated with derivative contracts, other than derivative hedging instruments, based on the expected maturities of both
derivative assets and liabilities as indicated in Note 34. Management does not currently anticipate any cash ows that could be of a signicantly different
amount, or could occur earlier than the expected maturity analysis provided.
The table below shows cash outows for derivative hedging instruments based upon contractual payment dates. The amounts reect the maturity
prole of the fair value liability where the instruments will be settled net, and the gross settlement amount where the pay leg of a derivative will be settled
separately from the receive leg, as in the case of cross-currency interest rate swaps hedging non-US dollar nance debt. The swaps are with high
investment-grade counterparties and therefore the settlement day risk exposure is considered to be negligible. Not shown in the table are the gross
settlement amounts for the receive leg of derivatives that are settled separately from the pay leg, which amount to $6,725 million at 31 December 2010
(2009 $7,999 million) to be received on the same day as the related cash outows.
$ million
2010 2009
Within one year 986 2,826
1 to 2 years 1,682 1,395
2 to 3 years 1,358 1,669
3 to 4 years 1,124 1,349
4 to 5 years 295 1,104
5 to 10 years 947 322
6,392 8,665

The group has issued third-party guarantees, as described above under credit risk. These amounts represent the maximum exposure of the group,
substantially all of which could be called within one year.
28. Other investments
$ million
2010 2009
Current Non-current Non-current
Listed 953 1,296
Unlisted 1,532 238 271
1,532 1,191 1,567

Other non-current investments comprise equity investments that have no xed maturity date or coupon rate. These investments are classied as
available-for-sale nancial assets and as such are recorded at fair value with the gain or loss arising as a result of changes in fair value recorded directly in
equity. Accumulated fair value changes are recycled to the income statement on disposal, or when the investment is impaired.
The fair value of listed investments has been determined by reference to quoted market bid prices and as such are in level 1 of the fair value
hierarchy. Unlisted investments are stated at cost less accumulated impairment losses and are in level 3 of the fair value hierarchy.
At 31 December 2010, current unlisted investments relate to repurchased gas pre-paid bonds see Note 35 for further information.
In 2010, no impairment losses were incurred relating to either unlisted investments or other listed investments. In 2009, impairment losses were
incurred of $13 million relating to unlisted investments and nil relating to other listed investments.
BP has pledged listed equity investments with a carrying value of $948 million as part of a nancing arrangement. As BP has retained substantially
all the risks and rewards associated with the shares they continue to be reected as an asset on the balance sheet, with a liability being reected within
nance debt. BP can request to have the shares returned at any time with 20 days notice, up to the date of maturity (in three tranches, up to December
2013), subject to repayment of the outstanding loan.
29. Inventories
$ million
2010 2009
Crude oil 8,969 6,237
Natural gas 112 105
Rened petroleum and petrochemical products 13,997 12,337
23,078 18,679
Supplies 1,669 1,661
24,747 20,340
Trading inventories 1,471 2,265
26,218 22,605
Cost of inventories expensed in the income statement 216,211 163,772

The inventory valuation at 31 December 2010 is stated net of a provision of $41 million (2009 $46 million) to write inventories down to their net realizable
value. The net movement in the year in respect of inventory net realizable value provisions was $5 million credit (2009 $1,366 million credit).

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30. Trade and olher receivables
$ nillion
2010 2009
Current Non-current Currenl oncurrenl
Financial assels
Trade receivables 24,255 - 22,604 -
Anounls receivable lron joinlly conlrolled enlilies 751 601 1,317 11
Anounls receivable lron associales 448 220 417 293
Olher receivables 4,763 1,342 4,949 1,420
30,217 2,163 29,237 1,729
onlnancial assels
Cull ol exico oil spill lrusl lund reinbursenenl assel
a
5,943 3,601 - -
Olher receivables 389 534 244 -
6,332 4,135 244 -
36,549 6,298 29,531 1,729

a
See ole 2 lor lurlher inlornalion.
Trade and olher receivables are predoninanlly noninleresl bearing. See ole 27 lor lurlher inlornalion.
Feceivables wilh a carrying value ol $13 nillion (2009 nil have been pledged as securily lor cerlain ol lhe groups liabililies.
31. Cash and cash equivalenls
$ nillion
2010 2009
Cash al bank and in hand 8,209 3,359
Tern bank deposils 5,253 3,211
Olher cash equivalenls 5,094 1,769
18,556 3,339

Cash and cash equivalenls conprise cash in hand, currenl balances wilh banks and sinilar inslilulions, lern deposils ol lhree nonlhs or less wilh banks
and sinilar inslilulions, and shorllern highly liquid inveslnenls lhal are readily converlible lo known anounls ol cash, are subjecl lo insignilcanl risk ol
changes in value and have a nalurily ol lhree nonlhs or less lron lhe dale ol acquisilion. The carrying anounls ol cash al bank and in hand and lern bank
deposils approxinale lheir lair values. Subslanlially all ol lhe olher cash equivalenls are calegorized wilhin level 1 ol lhe lair value hierarchy.
Cash and cash equivalenls al 31 Decenber 2010 includes $1,039 nillion (2009 $1,095 nillion lhal is reslricled. This relales principally lo anounls
required lo cover inilial nargins on lrading exchanges.
32. Valualion and qualilying accounls
$ nillion
2010 2009 2003
DoubtfuI Fixed assets - Doubllul Fixed assels - Doubllul Fixed assels -
debts investments debls inveslnenls debls inveslnenls
Al 1 January 430 349 391 935 406 146
Charged lo cosls and expenses 150 376 157 66 191 647
Charged lo olher accounls
a
(9) (3) 12 6 (32 143
Deduclions (143) (182) (130 (653 (174 (1
Al 31 Decenber 428 540 430 349 391 935

a
Principally currency lransaclions.
Valualion and qualilying accounls are deducled in lhe balance sheel lron lhe assels lo which lhey apply.
33. Trade and olher payables
$ nillion
2010 2009
Current Non-current Currenl oncurrenl
Trade payables 27,510 - 22,336 -
Anounls payable lo joinlly conlrolled enlilies 1,361 1,905 304 2,419
Anounls payable lo associales 712 220 692 293
Cull ol exico oil spill lrusl lund liabilily
a
5,002 9,899 - -
Olher payables 8,100 1,790 7,531 195
42,685 13,814 31,413 2,912
onlnancial liabililies
Olher payables 3,644 471 3,791 236
46,329 14,285 35,204 3,193

a
Trade and olher payables are predoninanlly inleresl lree, however lhe Cull ol exico oil spill lrusl lund is recorded on a discounled basis. See ole 27 lor
lurlher inlornalion.
34. Derivalive lnancial inslrunenls
An oulline ol lhe groups lnancial risks and lhe objeclives and policies pursued in relalion lo lhose risks is sel oul in ole 27.
n lhe nornal course ol business lhe group enlers inlo derivalive lnancial inslrunenls (derivalives lo nanage ils nornal business exposures in
relalion lo connodily prices, loreign currency exchange rales and inleresl rales, including nanagenenl ol lhe balance belween Hoaling rale and lxed rale
debl, consislenl wilh risk nanagenenl policies and objeclives. Addilionally, lhe group has a welleslablished enlrepreneurial lrading operalion lhal is
underlaken in conjunclion wilh lhese aclivilies using a sinilar range ol conlracls.
AS 39 prescribes slricl crileria lor hedge accounling, whelher as a cash How or lair value hedge or a hedge ol a nel inveslnenl in a loreign
operalion, and requires lhal any derivalive lhal does nol neel lhese crileria should be classiled as held lor lrading and lair valued, wilh gains and losses
The lair values ol derivalive lnancial inslrunenls al 31 Decenber are sel oul below.
$ nillion
2010 2009
Fair Fair Fair Fair
vaIue vaIue value value
asset IiabiIity assel liabilily
Derivalives held lor lrading
Currency derivalives 194 (280) 313 (226
Oil price derivalives 1,099 (877) 1,140 (1,191
alural gas price derivalives 5,350 (3,951) 5,636 (3,960
Power price derivalives 561 (432) 632 (497
Olher derivalives - (89) 47 (47
7,204 (5,629) 7,323 (5,921
Enbedded derivalive connodily price conlracls 18 (1,625) 137 (1,463
Cash How hedges
Currency lorwards, lulures and cylinders 134 (124) 132 (114
Crosscurrency inleresl rale swaps 101 (1) 44 (293
235 (125) 226 (412
Fair value hedges
Currency lorwards, lulures and swaps 772 (80) 490 (232
nleresl rale swaps 337 (74) 256 (122
1,109 (154) 746 (354
8,566 (7,533) 3,932 (3,155
Ol which - currenl 4,356 (3,856) 4,967 (4,631
- noncurrenl 4,210 (3,677) 3,965 (3,474


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34. Derivalive lnancial inslrunenls conlinued
Derivatives heId for trading
The group nainlains aclive lrading posilions in a variely ol derivalives. The conlracls nay be enlered inlo lor risk nanagenenl purposes, lo salisly supply
requirenenls or lor enlrepreneurial lrading. Cerlain conlracls are classiled as held lor lrading, regardless ol lheir original business objeclive, and are
recognized al lair value wilh changes in lair value recognized in lhe incone slalenenl. Trading aclivilies are underlaken by using a range ol conlracl lypes
in conbinalion lo creale increnenlal gains by arbilraging prices belween narkels, localions and line periods. The nel ol lhese exposures is nonilored
using narkel valuealrisk lechniques as described in ole 27.
The lollowing lables show lurlher inlornalion on lhe lair value ol derivalives and olher lnancial inslrunenls held lor lrading purposes.
Derivalive assels held lor lrading have lhe lollowing lair values and nalurilies.
$ nillion
2010
Less than Over
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years TotaI
Currency derivalives 124 41 18 11 - - 194
Oil price derivalives 797 128 82 64 21 7 1,099
alural gas price derivalives 2,591 1,100 652 375 231 401 5,350
Power price derivalives 389 125 35 11 1 - 561
3,901 1,394 787 461 253 408 7,204

$ nillion
2009
Less lhan Over
1 year 12 years 23 years 34 years 45 years 5 years Tolal
Currency derivalives 162 33 33 22 16 2 313
Oil price derivalives 314 136 69 59 44 13 1,140
alural gas price derivalives 2,953 1,059 532 354 136 497 5,636
Power price derivalives 496 139 32 12 3 - 632
Olher derivalives 47 - - - - - 47
4,477 1,417 716 447 249 517 7,323

Derivalive liabililies held lor lrading have lhe lollowing lair values and nalurilies.
$ nillion
2010
Less than Over
Currency derivalives (228) (6) (46) - - - (280)
Oil price derivalives (794) (76) (6) (1) - - (877)
alural gas price derivalives (2,174) (741) (484) (161) (114) (277) (3,951)
Power price derivalives (287) (103) (32) (9) (1) - (432)
Olher derivalives - (29) (60) - - - (89)
(3,483) (955) (628) (171) (115) (277) (5,629)

$ nillion
2009
Less lhan Over
Currency derivalives (110 (53 (20 (32 (4 (2 (226
Oil price derivalives (1,033 (67 (29 (11 (1 - (1,191
alural gas price derivalives (2,331 (607 (243 (222 (73 (424 (3,960
Power price derivalives (335 (109 (39 (11 (3 - (497
Olher derivalives (47 - - - - - (47
(3,956 (341 (336 (276 (36 (426 (5,921

l al inceplion ol a conlracl lhe valualion cannol be supporled by observable narkel dala, any gain or loss delernined by lhe valualion nelhodology is nol
recognized in lhe incone slalenenl bul is delerred on lhe balance sheel and is connonly known as dayone proll or loss. This delerred gain or loss is
recognized in lhe incone slalenenl over lhe lile ol lhe conlracl unlil subslanlially all ol lhe renaining conlracl lern can be valued using observable narkel
dala al which poinl any renaining delerred gain or loss is recognized in lhe incone slalenenl. Changes in valualion lron lhis inilial valualion are recognized
innedialely lhrough lhe incone slalenenl.
The lollowing lable shows lhe changes in lhe dayone prolls and losses delerred on lhe balance sheel.
$ nillion
2010 2009
NaturaI alural
OiI price gas price Oil price gas price
Fair value ol conlracls nol recognized lhrough lhe incone slalenenl al 1 January 21 33 32 33
Fair value ol new conlracls al inceplion nol recognized in lhe incone slalenenl - 39 - (14
Fair value recognized in lhe incone slalenenl (21) (3) (11 (36
Fair value ol conlracls nol recognized lhrough proll al 31 Decenber - 69 21 33

The lollowing lable shows lhe lair value ol derivalive assels and derivalive liabililies held lor lrading, analysed by nalurily period and by nelhodology ol lair
value eslinalion.
FFS 7 Financial nslrunenls: Disclosures sels oul a lair value hierarchy which consisls ol lhree levels lhal describe lhe nelhodology ol eslinalion
as lollows:
Level 1 - using quoled prices in aclive narkels lor idenlical assels or liabililies.
Level 2 - using inpuls lor lhe assel or liabilily, olher lhan quoled prices, lhal are observable eilher direclly (i.e. as prices or indireclly
(i.e. derived lron prices.
Level 3 - using inpuls lor lhe assel or liabilily lhal are nol based on observable narkel dala such as prices based on inlernal nodels or olher
valualion nelhods.
This inlornalion is presenled on a gross basis, lhal is, belore nelling by counlerparly.
$ nillion
2010
Less than Over
Fair value ol derivalive assels
Level 1 122 36 12 5 - - 175
Level 2 7,132 1,928 639 239 109 - 10,047
Level 3 341 314 296 267 165 410 1,793
7,595 2,278 947 511 274 410 12,015
Less: nelling by counlerparly (3,694) (884) (160) (50) (21) (2) (4,811)
3,901 1,394 787 461 253 408 7,204
Fair value ol derivalive liabililies
Level 1 (239) (6) (46) - - - (291)
Level 2 (6,733) (1,685) (617) (107) (44) - (9,186)
Level 3 (205) (148) (125) (114) (92) (279) (963)
(7,177) (1,839) (788) (221) (136) (279) (10,440)
Less: nelling by counlerparly 3,694 884 160 50 21 2 4,811
(3,483) (955) (628) (171) (115) (277) (5,629)
el lair value 418 439 159 290 138 131 1,575

$ nillion
2009
Less lhan Over
Fair value ol derivalive assels
Level 1 163 76 23 17 10 1 290
Level 2 9,544 2,132 915 357 146 - 13,144
Level 3 264 133 162 143 123 527 1,417
9,971 2,446 1,100 522 234 523 14,351
Less: nelling by counlerparly (5,494 (1,029 (334 (75 (35 (11 (7,023
4,477 1,417 716 447 249 517 7,323
Fair value ol derivalive liabililies
Level 1 (95 (39 (14 (24 - (1 (173
Level 2 (9,036 (1,631 (597 (234 (47 - (11,645
Level 3 (269 (150 (109 (93 (74 (436 (1,131
(9,450 (1,370 (720 (351 (121 (437 (12,949
Less: nelling by counlerparly 5,494 1,029 334 75 35 11 7,023
(3,956 (341 (336 (276 (36 (426 (5,921
el lair value 521 576 330 171 163 91 1,902


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The lollowing lable shows lhe changes during lhe year in lhe nel lair value ol derivalives held lor lrading purposes wilhin level 3 ol lhe lair value hierarchy.
$ nillion
OiI NaturaI gas Power
price price price TotaI
el lair value ol conlracls al 1 January 2010 215 72 (1) 286
Cains (losses recognized in lhe incone slalenenl 21 637 (1) 657
Selllenenls (54) (11) 1 (64)
Purchases - - - -
Sales - - - -
Translers oul ol level 3 (18) (38) - (56)
Translers inlo level 3 - 4 - 4
Exchange adjuslnenls - 3 - 3
el lair value ol conlracls al 31 Decenber 2010 164 667 (1) 830

$ nillion
Oil alural gas Power
Currency price price price Olher Tolal
el lair value ol conlracls al 1 January 2009 3 149 17 - - 169
Cains (losses recognized in lhe incone slalenenl (1 205 91 - (1 294
Selllenenls - (91 (5 - - (96
Purchases - - - 1 - 1
Sales - - - (2 1 (1
Translers oul ol level 3 (2 (50 (4 - - (56
Translers inlo level 3 - 2 (25 - - (23
Exchange adjuslnenls - - (2 - - (2
el lair value ol conlracls al 31 Decenber 2009 - 215 72 (1 - 236

The anounl recognized in lhe incone slalenenl lor lhe year relaling lo level 3 heldlorlrading derivalives slill held al 31 Decenber 2010 was a
$651 nillion gain (2009 $273 nillion gain relaling lo derivalives slill held al 31 Decenber 2009.
Cains and losses relaling lo derivalive conlracls are included eilher wilhin sales and olher operaling revenues or wilhin purchases in lhe incone
slalenenl depending upon lhe nalure ol lhe aclivily and lype ol conlracl involved. The conlracl lypes lrealed in lhis way include lulures, oplions, swaps
and cerlain lorward sales and lorward purchases conlracls. Cains or losses arise on conlracls enlered inlo lor risk nanagenenl purposes, oplinizalion
aclivily and enlrepreneurial lrading. They also arise on cerlain conlracls lhal are lor nornal procurenenl or sales aclivily lor lhe group bul lhal are required
lo be lair valued under accounling slandards. Also included wilhin sales and olher operaling revenues are gains and losses on invenlory held lor lrading
purposes. The lolal anounl relaling lo all ol lhese ilens was a nel gain ol $1,423 nillion (2009 $3,735 nillion nel gain and 2003 $6,721 nillion nel gain.
Enbedded derivalives
Prior lo lhe developnenl ol an aclive gas lrading narkel, UK gas conlracls were priced using a baskel ol available price indices, prinarily relaling lo oil
producls, power and inHalion. Aller lhe developnenl ol an aclive UK gas narkel, cerlain conlracls were enlered inlo or renegolialed using pricing
lornulae nol direclly relaled lo gas prices, lor exanple, oil producl and power prices. n lhese circunslances, pricing lornulae have been delernined lo be
derivalives, enbedded wilhin lhe overall conlraclual arrangenenls lhal are nol clearly and closely relaled lo lhe underlying connodily. The resulling lair
value relaling lo lhese conlracls is recognized on lhe balance sheel wilh gains or losses recognized in lhe incone slalenenl.
All lhe enbedded derivalives relale lo connodily prices, are calegorized in level 3 ol lhe lair value hierarchy and are valued using inpuls lhal
include price curves lor each ol lhe dillerenl producls lhal are buill up lron aclive narkel pricing dala. vhere necessary, lhese are exlrapolaled lo lhe
expiry ol lhe conlracls (lhe lasl ol which is in 2013 using all available exlernal pricing inlornalion. Addilionally, where liniled dala exisls lor cerlain
producls, prices are inlerpolaled using hisloric and longlern pricing relalionships.
Enbedded derivalive assels and liabililies have lhe lollowing lair values and nalurilies.
$ nillion
2010
Less than Over
Assels 18 - - - - - 18
Liabililies (325) (326) (285) (281) (212) (196) (1,625)
el lair value (307) (326) (285) (281) (212) (196) (1,607)

$ nillion
2009
Less lhan Over
Assels 134 - - - - 3 137
Liabililies (154 (236 (231 (227 (232 (333 (1,463
el lair value (20 (236 (231 (227 (232 (335 (1,331

The lollowing lable shows lhe changes during lhe year in lhe nel lair value ol enbedded derivalives, wilhin level 3 ol lhe lair value hierarchy.
$ nillion
2010 2009
Commodity Connodily
price price
el lair value ol conlracls al 1 January (1,331) (1,392
Selllenenls 37 221
Cains (losses recognized in lhe incone slalenenl
a
(350) 535
Exchange adjuslnenls 37 (195
el lair value ol conlracls al 31 Decenber (1,607) (1,331

a
The anounl lor gains (losses recognized in lhe incone slalenenl lor 2009 includes a loss ol $224 nillion arising as a resull ol relnenenls in lhe nodelling and valualion nelhods used lor lhese conlracls.
The anounl recognized in lhe incone slalenenl lor lhe year relaling lo level 3 enbedded derivalives slill held al 31 Decenber 2010 was a $350 nillion
loss (2009 $347 nillion gain relaling lo enbedded derivalives slill held al 31 Decenber 2009.
The lair value gain (loss on enbedded derivalives is shown below.
$ nillion
2010 2009 2003
Connodily price enbedded derivalives (309) 607 (106
nleresl rale enbedded derivalives - - (5
Fair value (loss gain (309) 607 (111

Cash ow hedges
Al 31 Decenber 2010, lhe group held currency lorwards and lulures conlracls and cylinders lhal were being used lo hedge lhe loreign currency risk ol
highly probable lorecasl lransaclions, as well as crosscurrency inleresl rale swaps lo lx lhe US dollar inleresl rale and US dollar redenplion value,
wilh nalching crilical lerns on lhe currency leg ol lhe swap wilh lhe underlying nonUS dollar debl issuance. ole 27 oullines lhe nanagenenl ol risk
aspecls lor currency and inleresl rale risk. For cash How hedges lhe group only clains hedge accounling lor lhe inlrinsic value on lhe currency wilh any
lair value allribulable lo line value laken innedialely lo lhe incone slalenenl. There were no highly probable lransaclions lor which hedge accounling
has been clained lhal have nol occurred and no signilcanl elenenl ol hedge inellecliveness requiring recognilion in lhe incone slalenenl. For cash
How hedges lhe prelax anounl renoved lron equily during lhe period and included in lhe incone slalenenl is a gain ol $25 nillion (2009 loss ol
$366 nillion and 2003 loss ol $45 nillion. The enlire gain ol $25 nillion is included in produclion and nanulacluring expenses (2009 $332 nillion loss in
produclion and nanulacluring expense and $34 nillion loss in lnance cosls, 2003 $1 nillion loss in produclion and nanulacluring expense and
$44 nillion loss in lnance cosls. The anounl renoved lron equily during lhe period and included in lhe carrying anounl ol nonlnancial assels was a
loss ol $53 nillion (2009 $136 nillion loss and 2003 $33 nillion gain.
The anounls relained in equily al 31 Decenber 2010 are expecled lo nalure and inpacl lhe incone slalenenl by a gain ol $39 nillion in 2011, a
loss ol $23 nillion in 2012 and a loss ol $50 nillion in 2013 and beyond.
Fair vaIue hedges
Al 31 Decenber 2010, lhe group held inleresl rale and crosscurrency inleresl rale swap conlracls as lair value hedges ol lhe inleresl rale risk on lxed
rale debl issued by lhe group. The ellecliveness ol each hedge relalionship is quanlilalively assessed and denonslraled lo conlinue lo be highly elleclive.
The gain on lhe hedging derivalive inslrunenls laken lo lhe incone slalenenl in 2010 was $563 nillion (2009 $93 nillion loss and 2003 $2 nillion gain
ollsel by a loss on lhe lair value ol lhe lnance debl ol $554 nillion (2009 $117 nillion gain and 2003 $20 nillion loss.
The inleresl rale and crosscurrency inleresl rale swaps have an average nalurily ol lour lo lve years, (2009 lour lo lve years and are used lo
converl slerling, euro, Swiss lranc, Auslralian dollar, Japanese yen and Hong Kong dollar denoninaled borrowings inlo US dollar Hoaling rale debl.
ole 27 oullines lhe groups approach lo inleresl rale risk nanagenenl.
Hedges of net investments in foreign operations
The group held currency swap conlracls as a hedge ol a longlern inveslnenl in a UK subsidiary lhal expired in 2009. The loss on lhe hedge recognized in
equily in 2003 was $33 nillion. US dollars had been sold lorward lor slerling purchased and nalched lhe underlying liabilily wilh no signilcanl
inellecliveness reHecled in lhe incone slalenenl.

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35. Finance debl
$ nillion
2010 2009
Current Non-current TotaI Currenl oncurrenl Tolal
Borrowings 8,312 30,017 38,329 9,013 25,020 34,033
el obligalions under lnance leases 117 693 810 91 493 539
8,429 30,710 39,139 9,109 25,513 34,627
Disposal deposils 6,197 - 6,197 - - -
14,626 30,710 45,336 9,109 25,513 34,627

Currenl lnance debl includes lhe porlion ol longlern debl lhal will nalure in lhe nexl 12 nonlhs, anounling lo $6,976 nillion (2009 $3,965 nillion.
Deposils lor disposal lransaclions expecled lo conplele in 2011 ol $6,197 nillion (2009 nil are also included. This debl will be considered exlinguished on
conplelion ol lhe lransaclions.
Currenl lnance debl also includes US nduslrial Fevenue/unicipal bonds ol $379 nillion (2009 $2,395 nillion wilh earliesl conlraclual repaynenl
dales wilhin one year, and lhe 2009 balance included $1,622 nillion lor loans associaled wilh longlern gas supply conlracls backed by gas prepaid bonds.
The bondholders lypically have lhe oplion lo lender lhese bonds lor repaynenl on inleresl resel dales wilh any bonds lhal are lendered being renarkeled.
The reduclion in currenl lnance debl in 2010 allribulable lo such bonds largely reHecls lhe unsuccesslul renarkeling ol lhe bonds during lhe year. BP has
repaid $2,460 nillion ol US nduslrial Fevenue/unicipal bonds and al 31 Decenber 2010 eilher held or had relired lhe bonds. All ol lhe oulslanding bonds
associaled wilh longlern gas supply conlracls, anounling lo $1,527 nillion were held by BP wilh lhe liabilily now recorded wilhin olher payables on lhe
balance sheel and lhe bonds recorded wilhin olher currenl inveslnenls.
Al 31 Decenber 2010 $790 nillion (2009 $113 nillion ol lnance debl was secured by lhe pledging ol assels, and $4,730 nillion was secured in
conneclion wilh deposils received relaling lo cerlain disposal lransaclions expecled lo conplele in 2011 (2009 nil. n addilion, in conneclion wilh
$4,533 nillion (2009 nil ol lnance debl, BP has enlered inlo crude oil sales conlracls in respecl ol oil produced lron cerlain lelds in ollshore Angola and
Azerbaijan lo provide securily lo lhe lending banks. The renainder ol lnance debl was unsecured.
The lollowing lable shows, by najor currency, lhe groups lnance debl al 31 Decenber and lhe weighled average inleresl rales achieved al lhose
dales lhrough a conbinalion ol borrowings and derivalive lnancial inslrunenls enlered inlo lo nanage inleresl rale and currency exposures. The disposal
deposils noled above are excluded lron lhis analysis.
Fixed rate debt FIoating rate debt TotaI
Weighted
Weighted average Weighted
average time for average
interest which rate interest
rate is hxed Amount rate Amount Amount
% Years $ miIIion % $ miIIion $ miIIion
2010
US dollar 4 5 14,797 1 21,076 35,873
Euro 4 3 53 2 2,988 3,041
Olher currencies 6 18 140 4 85 225
14,990 24,149 39,139
2009
US dollar 4 4 12,525 1 20,566 33,091
Euro 4 2 63 2 1,199 1,262
Olher currencies 6 14 171 3 103 274
12,759 21,363 34,627

The Euro debl nol swapped lo US dollar is nalurally hedged lor lhe loreign currency risk by holding equivalenl Euro cash and cash equivalenl anounls.
Finance Ieases
The group uses lnance leases lo acquire properly, planl and equipnenl. These leases have lerns ol renewal bul no purchase oplions and escalalion
clauses. Fenewals are al lhe oplion ol lhe lessee. Fulure nininun lease paynenls under lnance leases are sel oul below.
$ nillion
2010 2009
Fulure nininun lease paynenls payable wilhin
1 year 153 109
2 lo 5 years 535 329
Therealler 438 407
1,126 345
Less lnance charges 316 256
el obligalions 810 539
Ol which - payable wilhin 1 year 117 91
- payable wilhin 2 lo 5 years 404 202
- payable lherealler 289 296

35. Finance debt continued
Fair values
The estimated fair value of nance debt is shown in the table below together with the carrying amount as reected in the balance sheet.
Long-term borrowings in the table below include the portion of debt that matures in the year from 31 December 2010, whereas in the balance
sheet the amount would be reported within current nance debt. The disposal deposits noted above are excluded from this analysis.
The carrying amount of the groups short-term borrowings, comprising mainly commercial paper, bank loans, overdrafts and US Industrial Revenue/
Municipal bonds, approximates their fair value. The fair value of the groups long-term borrowings and nance lease obligations is estimated using quoted
prices or, where these are not available, discounted cash ow analyses based on the groups current incremental borrowing rates for similar types and
maturities of borrowing.
$ million
2010 2009
Carrying Carrying
Fair value amount Fair value amount
Short-term borrowings 1,453 1,453 5,144 5,144
Long-term borrowings 37,600 36,876 29,918 28,894
Net obligations under nance leases 928 810 599 589
Total nance debt 39,981 39,139 35,661 34,627

36. Capital disclosures and analysis of changes in net debt
The group denes capital as the total equity of the group. The groups approach to managing capital is set out in its nancial framework which was revised
during 2010, with the objective of maintaining a capital structure that allows the group to execute its strategy and is resilient to inherent volatility. The group
intends to invest to grow the company and shareholder value sustainably through the business cycle, whilst providing the group with nancial exibility in
the medium term as the disposal programme is completed and commitments to the Deepwater Horizon Oil Spill Trust are fullled.
In the light of the Gulf of Mexico oil spill and the agreement to establish the $20-billion trust fund, the BP board reviewed its dividend policy and
decided that no ordinary share dividends would be paid in respect of the rst three quarters of 2010. On 1 February 2011, BP announced the resumption of
quarterly dividend payments, with a fourth quarter dividend of 7 cents per share. We believe this level is supported by the success of our disposal
programme thus far, and by the improving business environment, but is balanced by the recognition of our continuing obligation to fund the trust until the
end of 2013 and the need to retain nancial exibility. We intend to increase the dividend level over time in line with the circumstances of the company.
Going forward, the group intends to maintain a signicant cash liquidity buffer and reduce the net debt ratio to within a range of 10-20%.
The group monitors capital on the basis of the net debt ratio, that is, the ratio of net debt to net debt plus equity. Net debt is calculated as gross
nance debt, as shown in the balance sheet, plus the fair value of associated derivative nancial instruments that are used to hedge foreign exchange and
interest rate risks relating to nance debt, for which hedge accounting is claimed, less cash and cash equivalents. Net debt and net debt ratio are
non-GAAP measures. BP uses these measures to provide useful information to investors. Net debt enables investors to see the economic effect of gross
debt, related hedges and cash and cash equivalents in total. The net debt ratio enables investors to see how signicant net debt is relative to equity from
shareholders. The derivatives are reported on the balance sheet within the headings Derivative nancial instruments. All components of equity are
included in the denominator of the calculation. At 31 December 2010 the net debt ratio was 21% (2009 20%).
During 2010, the company did not repurchase any of its own shares.

$ million
At 31 December 2010 2009
Gross debt 45,336 34,627
Less: Cash and cash equivalents 18,556 8,339
Less: Fair value asset of hedges related to nance debt 916 127
Net debt 25,864 26,161
Equity 95,891 102,113
Net debt ratio 21% 20%
www.bp.com/downloads/changesinnetdebt
An analysis of changes in net debt is provided below.

$ million
2010 2009
Cash and Cash and
Finance cash Net Finance cash Net
Movement in net debt debt
a
equivalents debt debt
a
equivalents debt
At 1 January (34,500) 8,339 (26,161) (33,238) 8,197 (25,041)
Exchange adjustments 194 (279) (85) (60) 110 50
Net cash ow (3,613) 10,496 6,883 (1,141) 32 (1,109)
Movement in nance debt relating to investing activities
b
(6,197) (6,197)
Other movements (304) (304) (61) (61)
At 31 December (44,420) 18,556 (25,864) (34,500) 8,339 (26,161)

a
Including fair value of associated derivative nancial instruments.
b
See Note 35 for further information.

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37. Provisions
$ nillion
Litigation and CIean Water
Decommissioning EnvironmentaI SpiII response cIaims Act penaIties Other TotaI
Al 1 January 2010 9,020 1,719 - 1,076 - 2,815 14,630
Exchange adjuslnenls (114) - - (7) - (50) (171)
Acquisilions 188 - - 2 - 15 205
ew or increased provisions 1,800 1,290 10,883 15,171 3,510 808 33,462
vrileback ol unused provisions (12) (120) - (51) - (466) (649)
Unwinding ol discounl 168 29 - 18 - 19 234
Change in discounl rale 444 22 - 9 - (6) 469
Ulilizalion (164) (460) (9,840) (4,250) - (755) (15,469)
Feclassiled as liabililies direclly associaled wilh
assels held lor sale (381) (1) - - - (1) (383)
Delelions (405) (14) - (1) - (1) (421)
Al 31 Decenber 2010 10,544 2,465 1,043 11,967 3,510 2,378 31,907
Ol which - currenl 432 635 982 7,011 - 429 9,489
- noncurrenl 10,112 1,830 61 4,956 3,510 1,949 22,418

$ nillion
Deconnissioning Environnenlal Liligalion Olher Tolal
Al 1 January 2009 3,413 1,691 1,446 2,093 13,653
Exchange adjuslnenls 393 15 22 29 464
ew or increased provisions 169 533 302 1,256 2,315
vrileback ol unused provisions - (259 (99 (223 (536
Unwinding ol discounl 134 32 15 16 247
Change in discounl rale 324 13 (35 3 315
Ulilizalion (333 (303 (574 (361 (1,626
Delelions (90 (53 (1 (3 (152
Al 31 Decenber 2009 9,020 1,719 1,076 2,315 14,630
Ol which - currenl 237 363 433 572 1,660
- noncurrenl 3,733 1,351 643 2,243 12,970

The group nakes lull provision lor lhe lulure cosl ol deconnissioning oil and nalural gas produclion lacililies and relaled pipelines on a discounled basis on
lhe inslallalion ol lhose lacililies. The provision lor lhe cosls ol deconnissioning lhese produclion lacililies and pipelines al lhe end ol lheir econonic lives
has been eslinaled using exisling lechnology, al currenl prices or lulure assunplions, depending on lhe expecled lining ol lhe aclivily, and discounled
using a real discounl rale ol 1.5' (2009 1.75'. These cosls are generally expecled lo be incurred over lhe nexl 30 years. vhile lhe provision is based on
lhe besl eslinale ol lulure cosls and lhe econonic lives ol lhe lacililies and pipelines, lhere is uncerlainly regarding bolh lhe anounl and lining ol lhese
cosls.
Provisions lor environnenlal renedialion are nade when a cleanup is probable and lhe anounl ol lhe obligalion can be eslinaled reliably.
Cenerally, lhis coincides wilh connilnenl lo a lornal plan ol aclion or, il earlier, on diveslnenl or on closure ol inaclive siles. The provision lor
environnenlal liabililies has been eslinaled using exisling lechnology, al currenl prices and discounled using a real discounl rale ol 1.5' (2009 1.75'.
The najorily ol lhese cosls are expecled lo be incurred over lhe nexl 10 years. The exlenl and cosl ol lulure renedialion progrannes are inherenlly
dillcull lo eslinale. They depend on lhe scale ol any possible conlaninalion, lhe lining and exlenl ol correclive aclions, and also lhe groups share ol lhe
liabilily.
The liligalion calegory includes provisions lor nallers relaled lo, lor exanple, connercial dispules, producl liabilily, and allegalions ol exposures
ol lhird parlies lo loxic subslances. ncluded wilhin lhe olher calegory al 31 Decenber 2010 are provisions lor delerred enployee conpensalion ol
$723 nillion (2009 $739 nillion and lor expecled renlal shorllalls on surplus properlies ol $45 nillion (2009 $246 nillion. These provisions are discounled
using eilher a noninal discounl rale ol 3.75' (2009 4.0' or a real discounl rale ol 1.5' (2009 1.75', as appropriale.

www.bp.con/downloads/provisions
www.bp.con/downloads/provisions
37. Provisions conlinued
Provisions reIating to the GuIf of Mexico oiI spiII
The Cull ol exico oil spill is described on pages 34 lo 39 and in ole 2. Provisions relaling lo lhe Cull ol exico oil spill, included in lhe lable above, are
separalely presenled below:
$ nillion
Litigation and CIean Water
EnvironmentaI SpiII response cIaims Act penaIties TotaI
Al 1 January 2010 - - - - -
ew or increased provisions 929 10,883 14,939 3,510 30,261
Unwinding ol discounl 4 - - - 4
Change in discounl rale 5 - - - 5
Ulilizalion (129) (9,840) (3,966) - (13,935)
Al 31 Decenber 2010 809 1,043 10,973 3,510 16,335
Ol which - currenl 314 982 6,642 - 7,938
- noncurrenl 495 61 4,331 3,510 8,397
Ol which - payable lron lhe lrusl lund 382 - 9,162 - 9,544

As described in ole 2, BP has recorded provisions al 31 Decenber 2010 relaling lo lhe Cull ol exico oil spill including anounls in relalion lo
environnenlal expendilure, spill response cosls, liligalion and clains, and Clean valer Acl penallies, each ol which is described below.
Environnenlal
The anounls connilled by BP lor a 10year research progranne lo sludy lhe inpacl ol lhe incidenl on lhe narine and shoreline environnenl ol lhe
Cull ol exico have been provided lor. BPs connilnenl is lo provide $500 nillion ol lunding, and lhe renaining connilnenl, on a discounled basis, ol
$427 nillion was included in provisions al 31 Decenber 2010. This anounl is expecled lo be spenl evenly over lhe 10year period.
As a responsible parly under lhe OPA 90, BP laces clains by lhe Uniled Slales, as well as by Slale, lribal, and loreign lruslees, il any, lor nalural
resource danages (alural Fesource Danages clains. These danages include, anongsl olher lhings, lhe reasonable cosls ol assessing lhe injury lo
nalural resources as well as sone energency resloralion projecls which are expecled lo occur over lhe nexl lwo years. BP has been incurring nalural
resource danage assessnenl cosls and a provision has been nade lor lhe eslinaled cosls ol lhe assessnenl phase. The assessnenl covers a large area
ol polenlial inpacl and will lake sone line lo conplele in order lo delernine bolh lhe severily and duralion ol lhe inpacl ol lhe oil spill. The process ol
inlerpreling lhe large volune ol dala collecled is expecled lo lake al leasl several nonlhs and, in order lo delernine polenlial injuries lo cerlain aninal
populalions, dala will need lo be collecled over one or nore reproduclive cycles. This expecled assessnenl spend is based upon pasl experience as well
as idenliled projecls. A provision ol $332 nillion has been eslablished lor lhese ilens. Unlil lhe size, localion and duralion ol lhe inpacl is assessed, il is
nol possible lo eslinale reliably eilher lhe anounls or lining ol lhe renaining alural Fesource Danages clains, lherelore no anounls have been
provided lor lhese ilens and lhey are disclosed as a conlingenl liabilily. See ole 44 lor lurlher inlornalion.
Spill response
The renaining provision lor spill response includes lhe eslinaled lulure cosls ol bolh subsea operalions as well as surlace and shoreline work.
The subsea response provision is based on lhe renaining aclivilies expecled lo be underlaken and has been calculaled using daily rales ol cosls
incurred lo dale. This includes lhe rig cosls lo conplele lhe plugging and abandonnenl ol lhe second reliel well, which is in progress and is expecled lo
conplele in early arch 2011, and lhe recovery ol lhe subsea inlraslruclure used as parl ol lhe various conlainnenl syslens. The najorily ol lhe vessels
involved in lhe response have now been deconlaninaled. The provision includes lhe cosls ol deconlaninaling lhe renaining 25 vessels, which is expecled
lo be conplele by lhe end ol April 2011.
The provision lor surlace and shoreline response is based on lhe daily cosls currenlly being incurred which are underpinned by headcounl,
equipnenl and lhe nunber ol vessels on hire. Al lhe end ol lhe year, lhere were approxinalely 360 vessels on hire and lhe nunber ol personnel involved
in response aclivilies was approxinalely 6,200. BP and lhe US Coasl Cuard are working closely wilh slale and local ollcials lo clean Cull Coasl beaches
belore lhe 2011 spring and sunner lourisn seasons and lhis is lhe basis on which lhe provision al 31 Decenber 2010 has been calculaled. The provision
also includes an eslinale ol lulure lederal response cosls and ongoing noniloring lhal will be required unlil lhe end ol lhe second quarler ol 2012.
Liligalion and clains
ndividua| and Business C|ains, and S!a!e and Loca| C|ains under !he Oi| Po||u!ion Ac! o! !990 (OPA 90) and c|ains !or persona| injur,
BP laces clains under OPA 90 by individuals and businesses lor renoval cosls, danage lo real or personal properly, losl prolls or inpairnenl ol earning
capacily, loss ol subsislence use ol nalural resources and lor personal injury (ndividual and Business Clains and by slale and local governnenl enlilies
lor renoval cosls, physical danage lo real or personal properly, loss ol governnenl revenue and increased public services cosls (Slale and Local Clains.
The eslinaled lulure cosl ol sellling ndividual and Business Clains, Slale and Local Clains under OPA 90 and clains lor personal injuries, bolh
reporled and unreporled, has been provided lor. Clains adninislralion cosls have also been provided lor.
BP believes lhal lhe hislory ol clains received lo dale, and selllenenls nade, provides sullcienl dala lo enable lhe conpany lo use an approach
based on a conbinalion ol acluarial nelhods and nanagenenl judgenenls lo eslinale BF (ncurred Bul ol Feporled clains lo delernine a reliable
besl eslinale ol BPs exposure lor clains nol yel reporled in relalion lo ndividual and Business clains, and Slale and Local clains under OPA 90. The
anounl provided lor lhese clains has been delernined in accordance wilh FFS and represenls BPs currenl besl eslinale ol lhe expendilure required lo
sellle ils obligalions al lhe balance sheel dale. The neasurenenl ol lhis provision is subjecl lo signilcanl uncerlainly. Aclual cosls could ullinalely be
signilcanlly higher or lower lhan lhose recorded as lhe clains and selllenenl process progresses.
n eslinaling lhe anounl ol lhe provision, BP has delernined a range ol possible oulcones lor ndividual and Business Clains, and Slale and Local
Clains. These delerninalions are based on BPs clains paynenl experience, lhe applicalion ol insurance induslry benchnark dala, lhe use ol a
conbinalion ol acluarial and slalislical nelhods and nanagenenl judgenenls where appropriale. The nelhods selecled are consislenl wilh lhose used by
lhe insurance induslry lo eslinale a range ol lolal expendilures lor bolh reporled and unreporled clains. These nelhods have been adopled on lhe basis
lhal, al lhis slage ol developnenl, lhe applicalion ol insurance induslry slandard lechniques lor lhe eslinalion ol ullinale losses is an appropriale
approach lor lhe cosls arising lron lhe Deepwaler Horizon oil spill.

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Through lhe applicalion ol lhis approach, BP has concluded lhal a reasonable range ol possible oulcones lor lhe anounl ol lhe provision as al
31 Decenber 2010 is $6 billion lo $13 billion. BP believes lhal lhe provision recorded al 31 Decenber 2010 ol $9.2 billion represenls a reliable besl
eslinale lron wilhin lhis range ol possible oulcones. This anounl is shown as payable lron lhe lrusl lund under Li!iga!ion and c|ains in lhe lable above.
The provision is in addilion lo lhe $3.4 billion ol clains paid in 2010. Ol lhis lolal paid, $3.2 billion is included wilhin ulilizalion ol provision in lhe lable, and
lhe renaining $0.2 billion was a period expendilure prior lo lhe recognilion ol lhe provision al lhe end ol lhe second quarler 2010. Also included wilhin lhe
lolal ulilizalion ol provision ol $4 billion under Li!iga!ion and c|ains are anounls relaling lo clains adninislralion cosls and legal lees. Ol lhe lolal
paynenls ol $3.4 billion during lhe year, $3 billion was paid oul ol lhe lrusl lund and $0.4 billion was paid by BP.
BPs nanagenenl has ulilized acluarial lechniques and ils judgenenl in delernining lhis reliable besl eslinale. However, il is possible lhal lhe lnal
oulcone could lie oulside lhis range.
any key assunplions underlie and inHuence bolh lhe range ol possible oulcones and lhe reliable besl eslinales ol lolal expendilures derived lor
bolh calegories ol clains. These key assunplions include lhe anounls lhal will ullinalely be paid in relalion lo currenl clains, lhe nunber, lype and
anounls lor clains nol yel reporled, lhe scope and nunber ol clains lhal can be resolved successlully in lhe clains process, lhe resolulion ol rejecled
clains, lhe oulcones ol any liligalion, lhe ellecls on lourisn and lsheries and olher econonic and environnenlal laclors.
The oulcones ol clains and liligalion are likely lo be paid oul over nany years lo cone. BP will reevaluale lhe assunplions underlying lhis analysis
on a quarlerly basis as nore inlornalion becones available and lhe clains process nalures.
BP also laces olher liligalion lor which no reliable eslinale ol lhe cosl can currenlly be nade. Therelore no anounls have been provided lor lhese
ilens. See ole 44 lor lurlher inlornalion.
Lega| !ees
Eslinaled legal lees have been provided lor where we have been able lo eslinale reliably lhose which will arise in lhe nexl lwo years.
Clean valer Acl penallies
A provision has been nade lor lhe eslinaled penallies lor slricl liabilily under Seclion 311 ol lhe Clean valer Acl. Such penallies are subjecl lo a slalulory
naxinun calculaled as lhe producl ol a perbarrel naxinun penally rale and lhe nunber ol barrels ol oil spilled. Uncerlainlies currenlly exisl in relalion lo
bolh lhe perbarrel penally rale lhal will ullinalely be inposed and lhe volune ol oil spilled.
A charge lor polenlial Clean valer Acl Seclion 311 penallies was lrsl included in BPs secondquarler 2010 inlerin lnancial slalenenls. Al lhe
line lhal charge was laken, lhe lalesl eslinale lron lhe inlraagency Flow Fale Technical Croup crealed by lhe alional ncidenl Connander in charge ol
lhe spill response was belween 35,000 and 60,000 barrels per day. The nidpoinl ol lhal range, 47,500 barrels per day, was used lor lhe purposes ol
calculaling lhe charge. For lhe purposes ol calculaling lhe anounl ol lhe oil How lhal was discharged inlo lhe Cull ol exico, lhe anounl ol oil lhal had
been or was projecled lo be caplured in vessels on lhe surlace was sublracled lron lhe lolal eslinaled How up unlil when lhe well was capped on
15 July 2010. The resull ol lhis calculalion was an eslinale lhal approxinalely 3.2 nillion barrels ol oil had been discharged inlo lhe Cull. This eslinale ol
3.2 nillion barrels was calculaled using a lolal How ol 47,500 barrels per day nulliplied by lhe 35 days lron 22 April 2010 lhrough 15 July 2010 less an
eslinale ol lhe anounl caplured on lhe surlace (approxinalely 350,000 barrels.
This eslinaled discharge volune was lhen nulliplied by $1,100 per barrel - lhe naxinun anounl lhe slalule allows in lhe absence ol gross
negligence or willul nisconducl - lor lhe purposes ol eslinaling a polenlial penally. This resulled in a provision ol $3,510 nillion lor polenlial penallies
under Seclion 311.
n ulilizing lhe $1,100 perbarrel inpul, lhe conpany look inlo accounl lhal lhe aclual perbarrel penally a courl nay inpose, or lhal lhe Covernnenl
nighl agree lo in selllenenl, could be lower lhan $1,100 per barrel il il were delernined lhal such a lower penally was appropriale based on lhe laclors a
courl is direcled lo consider in assessing a penally. n parlicular, in delernining lhe anounl ol a civil penally, Seclion 311 direcls a courl lo consider a
nunber ol enuneraled laclors, including lhe seriousness ol lhe violalion or violalions, lhe econonic benell lo lhe violalor, il any, resulling lron lhe
violalion, lhe degree ol culpabilily involved, any olher penally lor lhe sane incidenl, any hislory ol prior violalions, lhe nalure, exlenl, and degree ol
success ol any ellorls ol lhe violalor lo nininize or niligale lhe ellecls ol lhe discharge, lhe econonic inpacl ol lhe penally on lhe violalor, and any olher
nallers as juslice nay require. Civil penallies above $1,100 per barrel up lo a slalulory naxinun ol $4,300 per barrel ol oil discharged would only be
inposed il gross negligence or willul nisconducl were alleged and subsequenlly proven. The conpany expecls lo seek assessnenl ol a penally lower
lhan $1,100 per barrel based on several ol lhese laclors. However, lhe $1,100 perbarrel rale was ulilized lor lhe purposes ol calculaling a charge aller
considering and weighing all possible oulcones and in lighl ol: (i lhe conpanys conclusion lhal il did nol acl wilh gross negligence or engage in willul
nisconducl, and (ii lhe uncerlainly as lo whelher a courl would assess a penally below lhe $1,100 slalulory naxinun.
On 2 Augusl 2010, lhe Uniled Slales Deparlnenl ol Energy and lhe Flow Fale Technical Croup had issued an eslinale lhal 4.9 nillion barrels ol oil
had Howed lron lhe acondo well, and 4.05 nillion barrels had been discharged inlo lhe Cull (lhe dillerence being lhe anounl ol oil caplured by vessels
on lhe surlace as parl ol BPs well conlainnenl ellorls.
l was and renains BPs view, based on lhe analysis ol available dala by ils experls, lhal lhe 2 Augusl 2010 Covernnenl eslinale and olher sinilar
eslinales are nol reliable eslinales because lhey are based on inconplele or inaccurale inlornalion, resl in large parl on assunplions lhal have nol been
validaled, and are subjecl lo lar grealer uncerlainlies lhan have been acknowledged. As BP has publicly asserled, including al a 22 Oclober 2010 neeling
wilh lhe slall ol lhe alional Connission on lhe BP Deepwaler Horizon Oil Spill and Ollshore Drilling, lhe conpany believes lhal lhe 2 Augusl 2010
discharge eslinale and sinilar eslinales are overslaled by a signilcanl anounl, and lhal lhe How rale is polenlially in lhe range ol 2050' lower. l lhe
How rale is 50' lower lhan lhe 2 Augusl 2010 eslinale, lhen lhe anounl ol oil lhal Howed lron lhe acondo well would be approxinalely 2.5 nillion
barrels, and lhe anounl discharged inlo lhe Cull would be approxinalely 1.6 nillion barrels. l lhe How rale is 20' lower lhan lhe 2 Augusl 2010 eslinale,
lhen lhe anounl ol oil lhal Howed lron lhe acondo well would be approxinalely 3.9 nillion barrels and lhe anounl discharged inlo lhe Cull would be
approxinalely 3.1 nillion barrels, which is nol nalerially dillerenl lron lhe anounl we used lor our original eslinale al lhe second quarler.
Therelore, lor lhe purposes ol calculaling a provision lor lnes and penallies under Seclion 311 ol lhe Clean valer Acl, lhe conpany has conlinued lo use
an eslinale ol 3.2 nillion barrels ol oil discharged lo lhe Cull ol exico as ils currenl besl eslinale, as delned in paragraphs 3640 ol AS 37 Provisions,
conlingenl liabililies and conlingenl assels, ol lhe anounl which nay be used in calculaling lhe penally under Seclion 311 ol lhe Clean valer Acl. This
reHecls an eslinale ol lolal How lron lhe well ol approxinalely 4 nillion barrels, and an eslinale ol approxinalely 350,000 barrels caplured by vessels on
lhe surlace. n ulilizing lhis eslinale, lhe conpany has laken inlo consideralion nol only ils own analysis ol lhe How and discharge issue, bul also lhe
analyses and conclusions ol olher parlies, including lhe US governnenl. The eslinale ol BP and ol olher parlies as lo how nuch oil was discharged lo lhe
Cull ol exico nay change, perhaps nalerially, over line. One laclor lhal would inpacl lhe How rale eslinale is lhe conplelion ol lhe analysis on lhe
blowoul prevenler which is now in lhe cuslody ol lhe lederal governnenl. Sinilar silualions exisl wilh regard lo olher pieces ol physical evidence crilical lo
lhe How rale analysis. Changes in eslinales as lo How and discharge could allecl lhe anounl aclually assessed lor Clean valer Acl lnes and penallies.
The yearend provision conlinued lo be based on a perbarrel penally ol $1,100 lor lhe reasons discussed above, including lhe conpanys
conlinued conclusion lhal il did nol acl wilh gross negligence or engage in willul nisconducl.
The anounl and lining ol lhese cosls will depend upon whal is ullinalely delernined lo be lhe volune ol oil spilled and lhe perbarrel penally rale
lhal is inposed. l is nol currenlly praclicable lo eslinale lhe lining ol expending lhese cosls and lhe provision has been included wilhin noncurrenl
liabililies on lhe balance sheel. o olher anounls have been provided as al 31 Decenber 2010 in relalion lo olher polenlial lnes and penallies because il
is nol possible lo neasure lhe obligalion reliably. Fines and penallies are nol covered by lhe lrusl lund.
www.bp.con/downloads/pensions
33. Pensions and olher poslrelirenenl benells
osl group conpanies have pension plans, lhe lorns and benells ol which vary wilh condilions and praclices in lhe counlries concerned. Pension benells
nay be provided lhrough delned conlribulion plans (noney purchase schenes or delned benell plans (lnal salary and olher lypes ol schenes wilh
connilled pension paynenls. For delned conlribulion plans, relirenenl benells are delernined by lhe value ol lunds arising lron conlribulions paid in
respecl ol each enployee. For delned benell plans, relirenenl benells are based on such laclors as lhe enployees pensionable salary and lenglh ol
service. Delned benell plans nay be exlernally lunded or unlunded. The assels ol lunded plans are generally held in separalely adninislered lrusls.
n parlicular, lhe prinary pension arrangenenl in lhe UK is a lunded lnal salary pension plan under which relired enployees draw lhe najorily ol
lheir benell as an annuily. vilh ellecl lron 1 April 2010, BP closed ils UK plan lo new joiners olher lhan sone ol lhose joining lhe orlh Sea SPU. The
plan renains open lo ongoing accrual lor lhose enployees who had joined BP on or belore 31 arch 2010. The najorily ol new joiners in lhe UK have lhe
oplion lo join a delned conlribulion plan.
n lhe US, a range ol relirenenl arrangenenls are provided. These include a lunded lnal salary pension plan lor cerlain herilage enployees and a
cash balance arrangenenl lor new hires. Felired US enployees lypically lake lheir pension benell in lhe lorn ol a lunp sun paynenl. US enployees are
also eligible lo parlicipale in a delned conlribulion (401k plan in which enployee conlribulions are nalched wilh conpany conlribulions.
The level ol conlribulions lo lunded delned benell plans is lhe anounl needed lo provide adequale lunds lo neel pension obligalions as lhey lall
due. During 2010, conlribulions ol $411 nillion (2009 $9 nillion and 2003 $6 nillion and $694 nillion (2009 $795 nillion and 2003 $362 nillion were
nade lo lhe UK plans and US plans respeclively. n addilion, conlribulions ol $133 nillion (2009 $204 nillion and 2003 $130 nillion were nade lo olher
lunded delned benell plans. The aggregale level ol conlribulions in 2011 is expecled lo be approxinalely $1,250 nillion, and includes conlribulions in all
counlries lhal we expecl lo be required lo nake by law or under conlraclual agreenenls as well as an allowance lor discrelionary lunding.
Cerlain group conpanies, principally in lhe US, provide poslrelirenenl heallhcare and lile insurance benells lo lheir relired enployees and
dependanls. The enlillenenl lo lhese benells is usually based on lhe enployee renaining in service unlil relirenenl age and conplelion ol a nininun
period ol service. The plans are lunded lo a liniled exlenl.
The obligalion and cosl ol providing pensions and olher poslrelirenenl benells is assessed annually using lhe projecled unil credil nelhod. The
dale ol lhe nosl recenl acluarial review was 31 Decenber 2010. The groups principal plans are subjecl lo a lornal acluarial valualion every lhree years in
lhe UK, wilh valualions being required nore lrequenlly in nany olher counlries. The nosl recenl lornal acluarial valualion ol lhe UK pension plans was as
al 31 Decenber 2003.
The nalerial lnancial assunplions used lor eslinaling lhe benell obligalions ol lhe various plans are sel oul below. The assunplions are reviewed
by nanagenenl al lhe end ol each year, and are used lo evaluale accrued pension and olher poslrelirenenl benells al 31 Decenber. The sane
assunplions are used lo delernine pension and olher poslrelirenenl benell expense lor lhe lollowing year, lhal is, lhe assunplions al 31 Decenber
2010 are used lo delernine lhe pension liabililies al lhal dale and lhe pension expense lor 2011.
'
Financial assunplions UK US Olher
2010 2009 2003 2010 2009 2003 2010 2009 2003
Discounl rale lor pension
plan liabililies 5.5 5.3 6.3 4.7 5.4 6.3 5.3 5.3 5.7
Discounl rale lor olher posl
relirenenl benell plans n/a n/a n/a 5.3 5.3 6.2 n/a n/a n/a
Fale ol increase in salaries 5.4 5.3 4.9 4.1 4.2 2.2 3.8 3.3 3.5
Fale ol increase lor pensions
in paynenl 3.5 3.4 3.0 - - - 1.8 1.3 1.7
Fale ol increase in delerred
pensions 3.5 3.4 3.0 - - - 1.3 1.2 1.0
nHalion 3.5 3.4 3.0 2.3 2.4 0.4 2.3 2.3 2.0

Our discounl rale assunplions are based on lhirdparly AA corporale bond indices and lor our largesl plans in lhe UK, US and Cernany we use yields lhal
reHecl lhe nalurily prolle ol lhe expecled benell paynenls. The inHalion rale assunplions lor our UK and US plans are based on lhe dillerence belween
lhe yields on indexlinked and lxedinleresl longlern governnenl bonds. n olher counlries we use eilher lhis approach, or lhe cenlral bank inHalion
largel, or advice lron lhe local acluary depending on lhe inlornalion lhal is available lo us. The inHalion assunplions are used lo delernine lhe rale ol
increase lor pensions in paynenl and lhe rale ol increase in delerred pensions where lhere is such an increase.

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33. Pensions and olher poslrelirenenl benells conlinued
Our assunplions lor lhe rale ol increase in salaries are based on our inHalion assunplion plus an allowance lor expecled longlern real salary growlh.
These include allowance lor pronolionrelaled salary growlh, ol belween 0.3' and 0.4' depending on counlry. n addilion lo lhe lnancial assunplions,
we regularly review lhe denographic and norlalily assunplions.
The norlalily assunplions reHecl besl praclice in lhe counlries in which we provide pensions, and have been chosen wilh regard lo lhe lalesl
available published lables adjusled where appropriale lo reHecl lhe experience ol lhe group and an exlrapolalion ol pasl longevily inprovenenls inlo lhe
lulure. BPs nosl subslanlial pension liabililies are in lhe UK, lhe US and Cernany where our norlalily assunplions are as lollows:
Years
orlalily assunplions UK US Cernany
2010 2009 2003 2010 2009 2003 2010 2009 2003
Lile expeclancy al age 60 lor a
nale currenlly aged 60 26.1 26.0 25.9 24.7 24.6 24.4 23.3 23.2 23.0
nale currenlly aged 40 29.1 29.0 23.9 26.2 26.1 25.9 26.2 26.1 25.9
lenale currenlly aged 60 28.7 23.6 23.5 26.3 26.3 26.1 27.9 27.3 27.6
lenale currenlly aged 40 31.6 31.5 31.4 27.2 27.2 27.0 30.6 30.4 30.3

Our assunplion lor lulure US heallhcare cosl lrend rale lor lhe lrsl year aller lhe reporling dale reHecls lhe rale ol aclual cosl increases seen in recenl
years. The ullinale lrend rale reHecls our longlern expeclalions ol lhe level al which cosl inHalion will slabilize based on pasl heallhcare cosl inHalion
seen over a longer period ol line. The assuned lulure US heallhcare cosl lrend rale assunplions are as lollows:
'
2010 2009 2003
Firsl years US heallhcare cosl lrend rale 7.8 3.0 3.1
Ullinale US heallhcare cosl lrend rale 5.0 5.0 5.0
Year in which ullinale lrend rale is reached 2018 2016 2014

Pension plan assels are generally held in lrusls. The prinary objeclive ol lhe lrusls is lo accunulale pools ol assels sullcienl lo neel lhe obligalions ol
lhe various plans. The assels ol lhe lrusls are invesled in a nanner consislenl wilh lduciary obligalions and principles lhal reHecl currenl praclices in
porllolio nanagenenl.
A signilcanl proporlion ol lhe assels are held in equilies, owing lo a higher expecled level ol relurn over lhe long lern wilh an acceplable level ol
risk. n order lo provide reasonable assurance lhal no single securily or lype ol securily has an unwarranled inpacl on lhe lolal porllolio, lhe inveslnenl
porllolios are highly diversiled. The longlern assel allocalion policy lor lhe najor plans is as lollows:
Policy range
Assel calegory '
Tolal equily 4575
Bonds/cash 17.550
Properly/real eslale 010

Sone ol lhe groups pension plans use derivalive lnancial inslrunenls as parl ol lheir assel nix and lo nanage lhe level ol risk. The groups nain pension
plans do nol invesl direclly in eilher securilies or properly/real eslale ol lhe conpany or ol any subsidiary.
Felurn on assel assunplions reHecl lhe groups expeclalions buill up by assel class and by plan. The groups expeclalion is derived lron a
conbinalion ol hislorical relurns over lhe long lern and lhe lorecasls ol narkel prolessionals. Our assunplion lor relurn on equilies is based on a
longlern view, and lhe size ol lhe resulling equily risk preniun over governnenl bond yields is reviewed each year lor reasonableness. Our assunplion
lor relurn on bonds reHecls lhe porllolio nix ol governnenl lxedinleresl, indexlinked and corporale bonds.
The expecled longlern rales ol relurn and narkel values ol lhe various calegories ol assels held by lhe delned benell plans al 31 Decenber are sel oul
below. The narkel values shown include lhe ellecls ol derivalive lnancial inslrunenls. The anounls classiled as equilies include inveslnenls in conpanies
lisled on slock exchanges as well as unlisled inveslnenls. The narkel value ol unlisled inveslnenls al 31 Decenber 2010 was $3,343 nillion (2009
$2,956 nillion and 2003 $2,319 nillion. The narkel value ol pension assels al lhe end ol 2010 was higher lhan al lhe end ol 2009 due lo a rise in lhe narkel
value ol inveslnenls when expressed in lheir local currencies parlially ollsel by a decrease in value lhal arises lron changes in exchange rales (decreasing
lhe reporled value ol inveslnenls when expressed in US dollars. ovenenls in lhe value ol plan assels during lhe year are shown in delail in lhe lable on
page 206.
2010 2009 2003
Expected Expecled Expecled
Iong-term longlern longlern
rate of Market rale ol arkel rale ol arkel
return vaIue relurn value relurn value
% $ miIIion ' $ nillion ' $ nillion
UK pension plans
Equilies 8.0 18,546 3.0 16,945 3.0 13,704
Bonds 5.0 3,866 5.3 3,701 6.1 3,253
Properly 6.5 1,462 6.5 1,269 6.5 973
Cash 1.4 406 1.1 634 2.9 299
7.2 24,280 7.3 22,549 7.4 13,239
US pension plans
Equilies 8.5 5,058 3.5 4,326 3.5 3,991
Bonds 4.5 1,419 4.3 1,213 3.7 1,247
Properly 8.0 7 3.0 3 3.0 3
Cash 0.3 165 0.9 271 1.9 131
8.0 6,649 3.0 5,323 3.0 5,377
US olher poslrelirenenl benell plans
Equilies - - 3.5 3 3.5 9
Bonds - - 4.3 4 3.7 4
Cash 0.3 8 - - - -
0.3 8 7.6 12 7.3 13
Olher plans
Equilies 8.0 1,182 3.6 1,091 3.4 799
Bonds 4.2 1,874 4.4 1,651 4.2 1,431
Properly 6.3 83 6.5 32 6.3 127
Cash 2.7 155 2.0 245 3.1 113
5.4 3,294 5.9 3,069 5.3 2,525


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The assuned rale ol inveslnenl relurn, discounl rale, inHalion, US heallhcare cosl lrend rale and lhe norlalily assunplions all have a signilcanl ellecl on
lhe anounls reporled.
A onepercenlage poinl change in lhe lollowing assunplions lor lhe groups plans would have had lhe ellecls shown in lhe lable below. The ellecls
shown lor lhe expense in 2011 include currenl service cosl and inleresl on plan liabililies.
$ nillion
One-percentage point
Increase Decrease
nveslnenl relurn
Ellecl on pension and olher poslrelirenenl benell expense in 2011 (343) 343
Discounl rale
Ellecl on pension and olher poslrelirenenl benell expense in 2011 (76) 101
Ellecl on pension and olher poslrelirenenl benell obligalion al 31 Decenber 2010 (5,370) 6,864
nHalion rale
Ellecl on pension and olher poslrelirenenl benell expense in 2011 470 (364)
Ellecl on pension and olher poslrelirenenl benell obligalion al 31 Decenber 2010 5,060 (4,135)
US heallhcare cosl lrend rale
Ellecl on US olher poslrelirenenl benell expense in 2011 31 (24)
Ellecl on US olher poslrelirenenl benell obligalion al 31 Decenber 2010 401 (328)

One addilional year ol longevily in lhe norlalily assunplions would have lhe ellecls shown in lhe lable below. The ellecl shown lor lhe expense in 2011
includes currenl service cosl and inleresl on plan liabililies.
$ nillion
US other post-
UK US retirement German
pension pension beneht pension
pIans pIans pIans pIans
One addilional years longevily
Ellecl on pension and olher poslrelirenenl benell expense in 2011 41 4 4 9
Ellecl on pension and olher poslrelirenenl benell obligalion al 31 Decenber 2010 581 73 72 187

$ nillion
2010
US other post-
UK US retirement
pension pension beneht Other
pIans pIans pIans pIans TotaI
Analysis ol lhe anounl charged lo proll (loss belore inleresl and laxalion
Currenl service cosl
a
393 241 48 120 802
Pasl service cosl - - - 3 3
Selllenenl, curlailnenl and special lerninalion benells 24 - - 161 185
Paynenls lo delned conlribulion plans 1 187 - 35 223
Tolal operaling charge
b
418 428 48 319 1,213
Analysis ol lhe anounl crediled (charged lo olher lnance expense
Expecled relurn on plan assels 1,580 465 1 178 2,224
nleresl on plan liabililies (1,183) (396) (169) (429) (2,177)
Olher lnance incone (expense 397 69 (168) (251) 47
Analysis ol lhe anounl recognized in olher conprehensive incone
Aclual relurn less expecled relurn on pension plan assels 1,577 425 (1) 36 2,037
Change in assunplions underlying lhe presenl value ol lhe plan liabililies (1,144) (498) (132) (489) (2,263)
Experience gains and losses arising on lhe plan liabililies 12 (167) (8) 69 (94)
Acluarial (loss gain recognized in olher conprehensive incone 445 (240) (141) (384) (320)
ovenenls in benell obligalion during lhe year
Benell obligalion al 1 January 21,425 7,519 2,996 8,133 40,073
Exchange adjuslnenls (835) - - (269) (1,104)
a
393 241 48 120 802
Pasl service cosl - - - 3 3
nleresl cosl 1,183 396 169 429 2,177
Curlailnenl - - - 4 4
Selllenenl 11 - - 18 29
Special lerninalion benells
c
13 - - 139 152
Conlribulions by plan parlicipanls
d
39 - - 13 52
Benell paynenls (lunded plans
e
(952) (758) (4) (192) (1,906)
Benell paynenls (unlunded plans
e
(3) (75) (192) (387) (657)
Acquisilions - - - 2 2
Disposals (43) - - (29) (72)
Acluarial loss on obligalion 1,132 665 140 420 2,357
Benell obligalion al 31 Decenber
a l
22,363 7,988 3,157 8,404 41,912
ovenenls in lair value ol plan assels during lhe year
Fair value ol plan assels al 1 January 22,549 5,823 12 3,069 31,453
Exchange adjuslnenls (881) - - 29 (852)
Expecled relurn on plan assels
a g
1,580 465 1 178 2,224
Conlribulions by plan parlicipanls
d
39 - - 13 52
Conlribulions by enployers (lunded plans 411 694 - 187 1,292
e
(952) (758) (4) (192) (1,906)
Acquisilions - - - 2 2
Disposals (43) - - (28) (71)
Acluarial gain (loss on plan assels
g
1,577 425 (1) 36 2,037
Fair value ol plan assels al 31 Decenber 24,280 6,649 8 3,294 34,231
Surplus (delcil al 31 Decenber 1,917 (1,339) (3,149) (5,110) (7,681)
Fepresenled by
Assel recognized 2,120 - - 56 2,176
Liabilily recognized (203) (1,339) (3,149) (5,166) (9,857)
1,917 (1,339) (3,149) (5,110) (7,681)
The surplus (delcil nay be analysed belween lunded and unlunded plans as lollows
Funded 2,115 (838) (39) (223) 1,015
Unlunded (198) (501) (3,110) (4,887) (8,696)
1,917 (1,339) (3,149) (5,110) (7,681)
The delned benell obligalion nay be analysed belween lunded and unlunded plans
as lollows
Funded (22,165) (7,487) (47) (3,517) (33,216)
Unlunded (198) (501) (3,110) (4,887) (8,696)
(22,363) (7,988) (3,157) (8,404) (41,912)

a
The cosls ol nanaging lhe plans inveslnenls are lrealed as being parl ol lhe inveslnenl relurn, lhe cosls ol adninislering our pension plan benells are generally included in currenl service cosl and lhe
cosls ol adninislering our olher poslrelirenenl benell plans are included in lhe benell obligalion.
b
ncluded wilhin produclion and nanulacluring expenses and dislribulion and adninislralion expenses.
c
The charge lor special lerninalion benells represenls lhe increased liabilily arising as a resull ol early relirenenls occurring as parl ol reslrucluring progrannes.
d
osl ol lhe conlribulions nade by plan parlicipanls aller 1 January 2010 inlo UK pension plans were nade under salary sacrilce.
e
The benell paynenls anounl shown above conprises $2,507 nillion benells plus $56 nillion ol plan expenses incurred in lhe adninislralion ol lhe benell.
l
The benell obligalion lor olher plans includes $3,371 nillion lor lhe Cernan plan, which is largely unlunded.
g
The aclual relurn on plan assels is nade up ol lhe sun ol lhe expecled relurn on plan assels and lhe acluarial gain on plan assels as disclosed above.

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$ nillion
2009
US olher posl
UK US relirenenl
pension pension benell Olher
plans plans plans plans Tolal
Analysis ol lhe anounl charged lo proll belore inleresl and laxalion
a
311 243 43 117 719
Pasl service cosl - - (22 1 (21
Paynenls lo delned conlribulion plans - 205 - 23 233
b
343 443 26 199 1,021
nleresl on plan liabililies (1,112 (456 (133 (420 (2,171
Olher lnance incone (expense 314 (51 (132 (273 (192
Aclual relurn less expecled relurn on pension plan assels 1,761 617 2 169 2,549
Change in assunplions underlying lhe presenl value ol lhe plan liabililies (2,217 (501 (50 (42 (2,310
Experience gains and losses arising on lhe plan liabililies (141 (229 71 (122 (421
Acluarial (loss gain recognized in olher conprehensive incone (597 (113 23 5 (632
ovenenls in benell obligalion during lhe year
Benell obligalion al 1 January 16,655 7,534 3,003 7,655 34,347
Exchange adjuslnenls 1,396 - - 363 2,259
a
311 243 43 117 719
Pasl service cosl - - (22 1 (21
nleresl cosl 1,112 456 133 420 2,171
Curlailnenl - - - 11 11
Selllenenl - - - (3 (3
Special lerninalion benells
c
37 - - 45 32
Conlribulions by plan parlicipanls 37 - - 10 47
d
(977 (1,371 (4 (209 (2,561
Benell paynenls (unlunded plans
d
(4 (73 (191 (399 (667
Disposals - - - (42 (42
Acluarial (gain loss on obligalion 2,353 730 (21 164 3,231
Benell obligalion al 31 Decenber
a e
21,425 7,519 2,996 3,133 40,073
ovenenls in lair value ol plan assels during lhe year
Fair value ol plan assels al 1 January 13,239 5,377 13 2,525 26,154
Exchange adjuslnenls 2,054 - - 242 2,296
Expecled relurn on plan assels
a l
1,426 405 1 147 1,979
Conlribulions by plan parlicipanls 37 - - 10 47
Conlribulions by enployers (lunded plans 9 795 - 204 1,003
d
(977 (1,371 (4 (209 (2,561
Disposals - - - (19 (19
Acluarial gain on plan assels
l
1,761 617 2 169 2,549
Fair value ol plan assels al 31 Decenber 22,549 5,323 12 3,069 31,453
Surplus (delcil al 31 Decenber 1,124 (1,696 (2,934 (5,064 (3,620
Fepresenled by
Assel recognized 1,290 - - 100 1,390
Liabilily recognized (166 (1,696 (2,934 (5,164 (10,010
1,124 (1,696 (2,934 (5,064 (3,620
Funded 1,237 (1,230 (33 (164 (190
Unlunded (163 (416 (2,951 (4,900 (3,430
1,124 (1,696 (2,934 (5,064 (3,620
The delned benell obligalion nay be analysed belween lunded and unlunded plans
as lollows
Funded (21,262 (7,103 (45 (3,233 (31,643
Unlunded (163 (416 (2,951 (4,900 (3,430
(21,425 (7,519 (2,996 (3,133 (40,073

a
The cosls ol nanaging lhe plans inveslnenls are lrealed as being parl ol lhe inveslnenl relurn, lhe cosls ol adninislering our pension plan benells are generally included in currenl service cosl and lhe
b
c
The charge lor special lerninalion benells represenls lhe increased liabilily arising as a resull ol early relirenenls occurring as parl ol reslrucluring progrannes.
d
The benell paynenls anounl shown above conprises $3,174 nillion benells plus $54 nillion ol plan expenses incurred in lhe adninislralion ol lhe benell.
e
The benell obligalion lor olher plans includes $3,330 nillion lor lhe Cernan plan, which is largely unlunded.
l
The aclual relurn on plan assels is nade up ol lhe sun ol lhe expecled relurn on plan assels and lhe acluarial gain on plan assels as disclosed above.
$ nillion
2003
US olher posl
UK US relirenenl
pension pension benell Olher
plans plans plans plans Tolal
Analysis ol lhe anounl charged lo proll belore inleresl and laxalion
a
443 235 40 123 351
Pasl service cosl 7 74 - 1 32
Paynenls lo delned conlribulion plans - 170 - 25 195
b
435 479 40 166 1,170
nleresl on plan liabililies (1,239 (444 (193 (450 (2,331
Olher lnance incone (expense 355 133 (196 (256 591
Aclual relurn less expecled relurn on pension plan assels (6,946 (2,395 (3 (404 (10,253
Change in assunplions underlying lhe presenl value ol lhe plan liabililies 1,570 3 215 214 2,002
Experience gains and losses arising on lhe plan liabililies (73 (194 13 70 (179
Acluarial (loss gain recognized in olher conprehensive incone (5,449 (3,036 225 (120 (3,430

a
The cosls ol nanaging lhe plans inveslnenls are lrealed as being parl ol lhe inveslnenl relurn, lhe cosls ol adninislering our pensions lund benells are generally included in currenl service cosl, and lhe
b
Al 31 Decenber 2010, reinbursenenl balances due lron or lo olher conpanies in respecl ol pensions anounled lo $433 nillion reinbursenenl assels
(2009 $443 nillion and $13 nillion reinbursenenl liabililies (2009 $14 nillion. These balances are nol included as parl ol lhe pension liabilily, bul are
reHecled elsewhere in lhe group balance sheel.
$ nillion
2010 2009 2003 2007 2006
Hislory ol surplus (delcil and ol experience gains and losses
Benell obligalion al 31 Decenber 41,912 40,073 34,347 43,100 42,433
Fair value ol plan assels al 31 Decenber 34,231 31,453 26,154 42,799 39,910
Delcil (7,681) (3,620 (3,693 (301 (2,523
Experience losses on plan liabililies (94) (421 (173 (200 (124
Aclual relurn less expecled relurn on pension plan assels 2,037 2,549 (10,253 302 1,967
Aclual relurn on plan assels 4,261 4,523 (7,331 3,157 4,377
Acluarial (loss gain recognized in olher conprehensive incone (320) (632 (3,430 1,717 2,615
Cunulalive anounl recognized in olher conprehensive incone (3,942) (3,622 (2,940 5,490 3,773

Estimated future beneht payments
The expecled benell paynenls, which reHecl expecled lulure service, as appropriale, bul exclude plan expenses, up unlil 2020 are as lollows:
$ nillion
US other post-
UK US retirement
pension pension beneht Other
pIans pIans pIans pIans TotaI
2011 994 805 207 612 2,618
2012 1,035 807 209 581 2,632
2013 1,069 810 213 584 2,676
2014 1,122 808 217 588 2,735
2015 1,167 788 221 576 2,752
20162020 6,581 3,636 1,132 2,815 14,164


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39. Calledup share capilal
The allolled, called up and lully paid share capilal al 31 Decenber was as lollows:
2010 2009 2003
Shares Shares Shares
ssued (thousand) $ miIIion (lhousand $ nillion (lhousand $ nillion
3' cunulalive lrsl prelerence shares ol 1 each 7,233 12 7,233 12 7,233 12
9' cunulalive second prelerence shares ol 1 each 5,473 9 5,473 9 5,473 9
21 21 21
Ordinary shares ol 25 cenls each
Al 1 January 20,629,665 5,158 20,613,453 5,155 20,363,424 5,216
ssue ol new shares lor enployee share schenes
a
17,495 4 11,207 3 24,791 6
Fepurchase ol ordinary share capilal
b
- - - - (269,757 (67
Al 31 Decenber 20,647,160 5,162 20,629,665 5,153 20,613,453 5,155
5,183 5,179 5,176
Aulhorized
3' cunulalive lrsl prelerence shares ol 1 each 7,250 12 7,250 12 7,250 12
9' cunulalive second prelerence shares ol 1 each 5,500 9 5,500 9 5,500 9
Ordinary shares ol 25 cenls each 36,000,000 9,000 36,000,000 9,000 36,000,000 9,000

a
Consideralion received relaling lo lhe issue ol new shares lor enployee share schenes anounled lo $133 nillion (2009 $34 nillion and 2003 $130 nillion.
b
Purchased lor a lolal consideralion ol nil (2009 nil and 2003 $2,914 nillion, all ol which were lor cancellalion. Al 31 Decenber 2010, 112,303,237 (2009 112,303,237 and 2003 150,444,403 ordinary shares
boughl back were awailing cancellalion. These shares have been excluded lron ordinary shares in issue shown above. Transaclion cosls ol share repurchases anounled lo nil (2009 nil and
2003 $16 nillion.
Voling on subslanlive resolulions labled al a general neeling is on a poll. On a poll, shareholders presenl in person or by proxy have lwo voles lor every 5
in noninal anounl ol lhe lrsl and second prelerence shares held and one vole lor every ordinary share held. On a showolhands vole on olher resolulions
(procedural nallers al a general neeling, shareholders presenl in person or by proxy have one vole each.
n lhe evenl ol lhe winding up ol lhe conpany, prelerence shareholders would be enlilled lo a sun equal lo lhe capilal paid up on lhe prelerence
shares, plus an anounl in respecl ol accrued and unpaid dividends and a preniun equal lo lhe higher ol (i 10' ol lhe capilal paid up on lhe prelerence
shares and (ii lhe excess ol lhe average narkel price ol such shares on lhe London Slock Exchange during lhe previous six nonlhs over par value.
Treasury shares
2010 2009 2003
Shares NominaI vaIue Shares oninal value Shares oninal value
(thousand) $ miIIion (lhousand $ nillion (lhousand $ nillion
Al 1 January 1,869,777 467 1,333,151 472 1,940,639 435
Shares gilled lo lhe Enployee Share Ownership Plans - - (1,265 (1 (10,000 (2
Shares lranslerred al narkel price lo lhe Enployee
Share Ownership Plans (7,125) (2) - - (20,000 (5
Shares reissued lo enployee share schenes (11,953) (3) (17,109 (4 (22,433 (6
Al 31 Decenber 1,850,699 462 1,369,777 467 1,333,151 472

For each year presenled, lhe balance al 1 January represenls lhe naxinun nunber ol shares held in lreasury during lhe year, represenling 9.1'
(2009 9.2' and 2003 9.3' ol lhe calledup ordinary share capilal ol lhe conpany.
During 2010, lhe novenenl in lreasury shares represenled less lhan 0.1' (2009 less lhan 0.1' and 2003 0.25' ol lhe ordinary share capilal ol lhe
conpany.
On 14 January 2011, BP enlered inlo a share swap agreenenl wilh Fosnell Oil Conpany lhal would resull in BP issuing 933,694,633 new ordinary
shares lo Fosnell when lhe lransaclion conpleles, which is subjecl lo lhe nallers disclosed in ole 6.
40. Capital and reserves

Share Capital
Share premium redemption Merger
capital account reserve reserve
At 1 January 2010 5,179 9,847 1,072 27,206
Currency translation differences (including recycling)
Actuarial loss relating to pensions and other post-retirement benets
Available-for-sale investments (including recycling)
Cash ow hedges (including recycling)
Prot (loss) for the year
Total comprehensive income
Dividends
a
4 140
Transactions involving minority interests
At 31 December 2010 5,183 9,987 1,072 27,206

Share Capital
At 1 January 2009 5,176 9,763 1,072 27,206
Prot for the year
Dividends
a
3 84
Changes in associates equity
At 31 December 2009 5,179 9,847 1,072 27,206

Share Capital
At 1 January 2008 5,237 9,581 1,005 27,206
Prot for the year
Dividends
Repurchase of ordinary share capital (67) 67
a
6 182
At 31 December 2008 5,176 9,763 1,072 27,206

a
Includes new share issues and movements in own shares and treasury shares where these relate to share-based payment plans.

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$ nillion
Foreign Share-
currency AvaiIabIe- based Proht BP
Own Treasury transIation for-saIe Cash ow payment and Ioss sharehoIders' Minority TotaI
shares shares reserve investments hedges reserve account equity interest equity
(214) (21,303) 4,811 754 22 1,584 72,655 101,613 500 102,113
- - 126 - 2 - - 128 3 131
- - - - - - (418) (418) - (418)
- - - (291) - - - (291) - (291)
- - - - (18) - - (18) - (18)
- - - - - - (3,719) (3,719) 395 (3,324)
- - 126 (291) (16) - (4,137) (4,318) 398 (3,920)
- - - - - - (2,627) (2,627) (315) (2,942)
88 218 - - - 2 (113) 339 - 339
- - - - - - (20) (20) 321 301
(126) (21,085) 4,937 463 6 1,586 65,758 94,987 904 95,891
Foreign Share
currency Available based Proll BP
Own Treasury lranslalion lorsale Cash How paynenl and loss shareholders inorily Tolal
shares shares reserve inveslnenls hedges reserve accounl equily inleresl equily
(326 (21,513 2,353 63 (366 1,295 67,030 91,303 306 92,109
- - 2,453 (2 (37 - - 2,419 (56 2,363
- - - - - - (473 (473 - (473
- - - 693 - - - 693 - 693
- - - - 925 - - 925 - 925
- - - - - - 16,573 16,573 131 16,759
- - 2,453 691 333 - 16,100 20,137 125 20,262
- - - - - - (10,433 (10,433 (416 (10,399
112 210 - - - 239 23 721 - 721
- - - - - - (43 (43 - (43
- - - - - - (22 (22 (15 (37
(214 (21,303 4,311 754 22 1,534 72,655 101,613 500 102,113
Foreign Share
currency Available based Proll BP
Own Treasury lranslalion lorsale Cash How paynenl and loss shareholders inorily Tolal
shares shares reserve inveslnenls hedges reserve accounl equily inleresl equily
(60 (22,112 6,540 431 106 1,196 64,510 93,690 962 94,652
- - (4,137 - - - - (4,137 (75 (4,262
- - - - - - (5,323 (5,323 - (5,323
- - - (413 - - - (413 - (413
- - - - (972 - - (972 - (972
- - - - - - 21,157 21,157 509 21,666
- - (4,137 (413 (972 - 15,329 9,752 434 10,136
- - - - - - (10,342 (10,342 (425 (10,767
- - - - - - (2,414 (2,414 - (2,414
(266 599 - - - 99 (3 617 - 617
- - - - - - - - (165 (165
(326 (21,513 2,353 63 (366 1,295 67,030 91,303 306 92,109
40. Capilal and reserves conlinued
Share capitaI
The balance on lhe share capilal accounl represenls lhe aggregale noninal value ol all ordinary and prelerence shares in issue, including lreasury shares.
Share premium account
The balance on lhe share preniun accounl represenls lhe anounls received in excess ol lhe noninal value ol lhe ordinary and prelerence shares.
CapitaI redemption reserve
The balance on lhe capilal redenplion reserve represenls lhe aggregale noninal value ol all lhe ordinary shares repurchased and cancelled.
Merger reserve
The balance on lhe nerger reserve represenls lhe lair value ol lhe consideralion given in excess ol lhe noninal value ol lhe ordinary shares issued in an
acquisilion nade by lhe issue ol shares.
Own shares
Own shares represenl BP shares held in Enployee Share Ownership Plans (ESOPs lo neel lhe lulure requirenenls ol lhe enployee sharebased
paynenl plans.
Treasury shares
Treasury shares represenl BP shares repurchased and available lor reissue.
Foreign currency transIation reserve
The loreign currency lranslalion reserve is used lo record exchange dillerences arising lron lhe lranslalion ol lhe lnancial slalenenls ol loreign
operalions. Upon disposal ol loreign operalions, lhe relaled accunulaled exchange dillerences are recycled lo lhe incone slalenenl. This reserve is also
used lo record lhe ellecl ol hedging nel inveslnenls in loreign operalions.
AvaiIabIe-for-saIe investments
This reserve records lhe changes in lair value ol availablelorsale inveslnenls. On disposal or inpairnenl, lhe cunulalive changes in lair value are recycled
lo lhe incone slalenenl.
Cash ow hedges
This reserve records lhe porlion ol lhe gain or loss on a hedging inslrunenl in a cash How hedge lhal is delernined lo be an elleclive hedge. vhen lhe
hedged lransaclion allecls proll or loss, lhe gain or loss on lhe hedging inslrunenl is lranslerred oul ol equily lo eilher proll or loss or lhe carrying value
ol assels, as appropriale. l lhe lorecasl lransaclion is no longer expecled lo occur lhe gain or loss recognized in equily is lranslerred lo proll or loss.
Share-based payment reserve
This reserve represenls cunulalive anounls charged lo proll in respecl ol enployee sharebased paynenl plans where lhe schene has nol yel been
sellled by neans ol an award ol shares lo an individual.
Proht and Ioss account
The balance held on lhis reserve is lhe accunulaled relained prolls ol lhe group.

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40. Capital and reserves continued
The pre-tax amounts of each component of other comprehensive income, and the related amounts of tax, are shown in the table below.
$ million
2010
Pre-tax Tax Net of tax
Currency translation differences (including recycling) 239 (108) 131
Actuarial loss relating to pensions and other post-retirement benets (320) (98) (418)
Available-for-sale investments (including recycling) (341) 50 (291)
Cash ow hedges (including recycling) (37) 19 (18)
Other comprehensive income (459) (137) (596)
$ million
2009
Currency translation differences (including recycling) 1,799 564 2,363
Actuarial loss relating to pensions and other post-retirement benets (682) 204 (478)
Available-for-sale investments (including recycling) 707 (14) 693
Cash ow hedges (including recycling) 1,154 (229) 925
Other comprehensive income 2,978 525 3,503
$ million
2008
Currency translation differences (including recycling) (4,362) 100 (4,262)
Actuarial loss relating to pensions and other post-retirement benets (8,430) 2,602 (5,828)
Available-for-sale investments (including recycling) (468) 50 (418)
Cash ow hedges (including recycling) (1,166) 194 (972)
Other comprehensive income (14,426) 2,946 (11,480)

41. Sharebased paynenls
Effect of share-based payment transactions on the group's resuIt and hnanciaI position
$ nillion
2010 2009 2003
Tolal expense recognized lor equilysellled sharebased paynenl lransaclions 577 506 524
Tolal (credil expense recognized lor cashsellled sharebased paynenl lransaclions (1) 15 (16
Tolal expense recognized lor sharebased paynenl lransaclions 576 521 503
Closing balance ol liabilily lor cashsellled sharebased paynenl lransaclions 16 32 21
Tolal inlrinsic value lor vesled cashsellled sharebased paynenls 1 7 2

For ease ol presenlalion, oplion and share holdings delailed in lhe lables wilhin lhis nole are slaled as UK ordinary share equivalenls in US dollars.
US enployees are granled Anerican Deposilary Shares (ADSs or oplions over lhe conpanys ADSs (one ADS is equivalenl lo six ordinary shares. The
sharebased paynenl plans lhal exisled during lhe year are delailed below. All plans are ongoing unless olherwise slaled.
PIans for executive directors
Execulive Direclors ncenlive Plan (EDP - share elenenl
An equilysellled incenlive plan lor execulive direclors wilh a lhreeyear perlornance period. For share plan perlornance periods 20032010 lhe
award ol shares is delernined by conparing BPs lolal shareholder relurn (TSF againsl lhe olher oil najors (Exxonobil, Shell, Tolal and Chevron.
For lhe perlornance period 20092011 lhe award ol shares is delernined 50' on TSF versus a conpelilor group ol oil najors (which in lhis period
also included ConocoPhillips and 50' on a balanced scorecard (BSC ol lhree underlying perlornance neasures versus lhe sane conpelilor
group. For lhe period 20102012 lhe award ol shares is delernined one lhird on TSF versus a conpelilor group ol oil najors (idenlical lo lhe
20092011 plan group and lwo lhirds on a BSC ol lhree underlying perlornance laclors. Aller lhe perlornance period, lhe shares lhal vesl (nel ol
lax are lhen subjecl lo a lhreeyear relenlion period. The direclors renuneralion reporl on pages 112 lo 121 includes lull delails ol lhe plan.
Execulive Direclors ncenlive Plan (EDP - delerred nalching share elenenl
Following lhe renewal ol lhe EDP al lhe 2010 Annual Ceneral eeling, a delerred nalching share elenenl is in place requiring a nandalory one lhird ol
direclors annual bonus lo be delerred inlo shares lor lhree years. The shares are nalched by lhe conpany on a onelorone basis. Vesling ol bolh delerred
and nalching shares is conlingenl on an assessnenl ol salely and environnenlal suslainabilily over lhe lhreeyear delerral period and a direclor nay
volunlarily deler an addilional one lhird ol bonus inlo shares on lhe sane lerns.
Execulive Direclors ncenlive Plan (EDP - share oplion elenenl
An equilysellled share oplion plan lor execulive direclors lhal pernils oplions lo be granled al an exercise price no lower lhan lhe narkel price ol a share
on lhe dale lhal lhe oplion is granled. The oplions are exercisable up lo lhe sevenlh anniversary ol lhe granl dale and lhe lasl granls were nade in 2004.
Fron 2005 onwards lhe renuneralion connillees policy is nol lo nake lurlher granls ol share oplions lo execulive direclors.
PIans for senior empIoyees
The group operales a nunber ol equilysellled share plans under which share unils are granled lo ils senior leaders and cerlain enployees. These
plans lypically have a lhreeyear perlornance or reslricled period during which lhe unils accrue nel nolional dividends which are lrealed as having
been reinvesled. Leaving enploynenl during lhe lhreeyear period will nornally preclude lhe conversion ol unils inlo shares, bul special
arrangenenls apply where lhe parlicipanl leaves lor a qualilying reason.
Cranls are sellled in cash where parlicipanls are localed in a counlry whose regulalory environnenl prohibils lhe holding ol BP shares.
Perlornance unil plans
The nunber ol unils granled is nade by relerence lo level ol seniorily ol lhe enployees. The nunber ol unils converled lo shares is delernined by
relerence lo perlornance neasures over lhe lhreeyear perlornance period. The nain perlornance neasure used is BPs TSF conpared againsl lhe olher
oil najors. n addilion, lree cash How (FCF is used as a perlornance neasure lor one ol lhe perlornance plans. Plans included in lhis calegory are lhe
Conpelilive Perlornance Plan (CPP, lhe ediun Tern Perlornance Plan (TPP and, in parl, lhe Perlornance Share Plan (PSP.
Feslricled share unil plans
Share unil granls under BPs reslricled plans lypically lake inlo accounl lhe enployees perlornance in eilher lhe currenl or lhe prior year, lrack record ol
delivery, business and leadership skills and longlern polenlial. One reslricled share unil plan used in special circunslances lor senior enployees, such as
recruilnenl and relenlion, nornally has no perlornance condilions. Plans included in lhis calegory are lhe Execulive Perlornance Plan (EPP, lhe Feslricled
Share Plan (FSP, lhe Delerred Annual Bonus Plan (DAB and, in parl, lhe Perlornance Share Plan (PSP.
BP Share Oplion Plan (BPSOP
Share oplions wilh an exercise price equivalenl lo lhe narkel price ol a share innedialely preceding lhe dale ol granl were granled lo parlicipanls
annually unlil 2006. There were no perlornance condilions and lhe oplions are exercisable belween lhe lhird and lenlh anniversaries ol lhe granl dale.
BP ShareSave Plan
This is a savingsrelaled share oplion plan under which enployees save on a nonlhly basis, over a lhree or lveyear period, lowards lhe purchase
ol shares al a lxed price delernined when lhe oplion is granled. This price is usually sel al a 20' discounl lo lhe narkel price al lhe line ol
granl. The oplion nusl be exercised wilhin six nonlhs ol nalurily ol lhe savings conlracl, olherwise il lapses. The plan is run in lhe UK and
oplions are granled annually, usually in June. Parlicipanls leaving lor a qualilying reason will have six nonlhs in which lo use lheir savings lo
exercise lheir oplions on a proraled basis.

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41. Sharebased paynenls conlinued
BP Sharealch Plans
These are nalching share plans under which BP nalches enployees own conlribulions ol shares up lo a predelernined linil. The plans are run in lhe UK
and in nore lhan 60 olher counlries. The UK plan is run on a nonlhly basis wilh shares being held in lrusl lor lve years belore lhey can be released lree ol
any incone lax and nalional insurance liabilily. n olher counlries lhe plan is run on an annual basis wilh shares being held in lrusl lor lhree years. The plan
is operaled on a cash basis in lhose counlries where lhere are regulalory reslriclions prevenling lhe holding ol BP shares. vhen lhe enployee leaves BP
all shares nusl be renoved lron lrusl and unils under lhe plan operaled on a cash basis nusl be encashed.
Local plans
n sone counlries BP provides local schene benells, lhe rules and qualilcalions lor which vary according lo local circunslances.
EmpIoyee Share Ownership PIans (ESOPs)
ESOPs have been eslablished lo acquire BP shares lo salisly any awards nade lo parlicipanls under lhe BP share plans as required. The ESOPs
have waived lheir righls lo dividends on shares held lor lulure awards and are lunded by lhe group. Unlil such line as lhe conpanys own shares
held by lhe ESOP lrusls vesl uncondilionally lo enployees, lhe anounl paid lor lhose shares is deducled in arriving al shareholders equily
(see ole 40. Assels and liabililies ol lhe ESOPs are recognized as assels and liabililies ol lhe group.
Al 31 Decenber 2010 lhe ESOPs held 11,477,253 shares (2009 13,062,246 shares and 2003 29,051,032 shares lor polenlial lulure awards, which
had a narkel value ol $32 nillion (2009 $174 nillion and 2003 $220 nillion.
Share option transactions
Delails ol share oplion lransaclions lor lhe year under lhe share oplion plans are as lollows:
2010 2009 2003
Weighted veighled veighled
Number average unber average unber average
of exercise price ol exercise price ol exercise price
options $ oplions $ oplions $
Oulslanding al 1 January 295,895,357 8.73 326,254,599 3.70 353,094,243 3.51
Cranled 10,420,287 6.08 9,679,336 6.55 3,062,399 3.96
Forleiled (9,499,661) 7.88 (5,954,325 3.31 (2,502,734 3.50
Exercised (31,839,034) 7.97 (21,293,371 7.53 (37,277,395 6.97
Expired (1,670,227) 8.71 (12,790,332 3.01 (121,364 7.00
Oulslanding al 31 Decenber 263,306,722 8.75 295,395,357 3.73 326,254,599 3.70
Exercisable al 31 Decenber 242,530,635 8.90 274,635,063 3.30 260,173,933 3.22

The weighled average share price al lhe dale ol exercise was $9.54 (2009 $9.10 and 2003 $10.37. For lhe oplions oulslanding al 31 Decenber 2010, lhe
exercise price ranges and weighled average renaining conlraclual lives are shown below.
Options outstanding Options exercisabIe
Weighted Weighted Weighted
Number average average Number average
of remaining Iife exercise price of exercise price
Fange ol exercise prices shares Years $ shares $
$6.09 - $7.53 54,821,144 2.68 6.36 39,231,453 6.40
$7.54 - $3.99 115,187,261 1.71 8.19 112,551,834 8.17
$9.00 - $10.45 21,827,393 3.54 9.88 19,276,424 9.98
$10.46 - $11.92 71,470,924 4.81 11.14 71,470,924 11.14
263,306,722 2.90 8.75 242,530,635 8.90

Fair vaIues and associated detaiIs for options and shares granted
2010 2009 2003
ShareSave ShareSave ShareSave ShareSave ShareSave ShareSave
3 year 5 year 3 year 5 year 3 year 5 year
Oplion pricing nodel used BinomiaI BinomiaI Binonial Binonial Binonial Binonial
veighled average lair value $0.06 $0.08 $1.07 $1.07 $1.32 $1.74
veighled average share price $4.58 $4.58 $7.37 $7.37 $11.26 $11.26
veighled average exercise price $5.90 $5.90 $6.92 $6.92 $9.70 $9.70
Expecled volalilily 22% 23% 32' 32' 23' 23'
Oplion lile 3.5 years 5.5 years 3.5 years 5.5 years 3.5 years 5.5 years
Expecled dividends 8.40% 8.40% 7.40' 7.40' 4.60' 4.60'
Fisk lree inleresl rale 1.25% 2.00% 3.00' 3.75' 5.00' 5.00'
Expecled exercise behaviour 100% year 4 100% year 6 100' year 4 100' year 6 100' year 4 100' year 6

The group uses a valualion nodel lo delernine lhe lair value ol oplions granled. The nodel uses lhe inplied volalilily ol ordinary share price lor lhe quarler
wilhin which lhe granl dale ol lhe relevanl plan lalls. The lair value is adjusled lor lhe expecled rales ol early cancellalion. anagenenl is responsible lor
all inpuls and assunplions in relalion lo lhe nodel, including lhe delerninalion ol expecled volalilily.
EDIP- EDIP-
Shares granled in 2010 CPP EPP TSR BSC RSP DAB PSP
unber ol equily inslrunenls
granled (nillion 1.3 7.6 1.2 2.5 21.4 24.5 16.0
veighled average lair value $19.81 $9.43 $4.42 $8.94 $6.78 $9.43 $9.43
Fair value neasurenenl basis Monte CarIo Market vaIue Monte CarIo Market vaIue Market vaIue Market vaIue Market vaIue

EDP EDP
Shares granled in 2009 CPP EPP TSF BSC FSP DAB PSP
granled (nillion 1.4 7.6 2.1 2.1 2.4 33.9 16.5
Fair value neasurenenl basis onle Carlo arkel value onle Carlo arkel value arkel value arkel value onle Carlo

TPP TPP EDP EDP
Shares granled in 2003 TSF FCF TSF FET
a
FSP DAB PSP
granled (nillion 9.1 9.1 2.6 0.5 7.7 5.3 16.7
Fair value neasurenenl basis onle Carlo arkel value onle Carlo arkel value arkel value arkel value onle Carlo

a
EDP - relenlion elenenl.
The group used a onle Carlo sinulalion lo delernine lhe lair value ol lhe TSF elenenl ol lhe 2010, 2009 and 2003 CPP, TPP, and EDP plans, and in
2009 and 2003 lor lhe PSP plan. n accordance wilh lhe rules ol lhe plans lhe nodel sinulales BPs TSF and conpares il againsl our principal slralegic
conpelilors over lhe lhreeyear period ol lhe plans. The nodel lakes inlo accounl lhe hisloric dividends, share price volalililies and covariances ol BP and
each conparalor conpany lo produce a predicled dislribulion ol relalive share perlornance. This is applied lo lhe reward crileria lo give an expecled value
ol lhe TSF elenenl.
Accounling expense does nol necessarily represenl lhe aclual value ol sharebased paynenls nade lo recipienls, which are delernined by lhe
renuneralion connillee according lo eslablished crileria.
www.bp.con/downloads/enployee
42. Enployee cosls and nunbers
$ nillion
Enployee cosls 2010 2009 2003
vages and salaries
a
9,242 9,702 10,333
Social securily cosls 789 730 305
Pension and olher poslrelirenenl benell cosls 1,166 1,213 579
11,773 12,216 12,230

unber ol enployees al 31 Decenber 2010 2009 2003
b
52,300 51,600 61,500
Cull Coasl Fesloralion Organizalion 100 - -
79,700 30,300 92,000
US 22,100 22,300 29,300
onUS
b
57,600 57,500 62,700
79,700 30,300 92,000

2010 2009 2003
Average nunber ol enployees US Non-US TotaI US onUS Tolal US onUS Tolal
Exploralion and Produclion 8,100 13,500 21,600 7,900 13,300 21,700 7,300 13,300 21,600
Felning and arkeling 12,600 38,300 50,900 14,700 40,700 55,400 21,600 43,400 65,000
Olher businesses and corporale 1,900 5,000 6,900 2,300 5,300 3,100 2,600 6,500 9,100
22,600 56,800 79,400 24,900 60,300 35,200 32,000 63,700 95,700

a
ncludes lerninalion paynenls ol $166 nillion (2009 $945 nillion and 2003 $669 nillion.
b
ncludes 15,200 (2009 13,900 and 2003 21,200 service slalion slall.

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43. Fenuneralion ol direclors and senior nanagenenl
Remuneration of directors
$ nillion
2010 2009 2003
Tolal lor all direclors
Enolunenls 15 19 19
Cains nade on lhe exercise ol share oplions 2 2 1
Anounls awarded under incenlive schenes 4 2 -

Enolunenls
These anounls conprise lees paid lo lhe nonexeculive chairnan and lhe nonexeculive direclors and, lor execulive direclors, salary and benells
earned during lhe relevanl lnancial year, plus bonuses awarded lor lhe year. Also included was conpensalion lor loss ol ollce ol $3 nillion in 2010
(2009 nil and 2003 $1 nillion.
Pension conlribulions
During 2010 lhree execulive direclors parlicipaled in a nonconlribulory pension schene eslablished lor UK enployees by a separale lrusl lund lo which
conlribulions are nade by BP based on acluarial advice. Two US execulive direclors parlicipaled in lhe US BP Felirenenl Accunulalion Plan during 2010.
Ollce lacililies lor lorner chairnen and depuly chairnen
l is cuslonary lor lhe conpany lo nake available lo lorner chairnen and depuly chairnen, who were previously enployed execulives, lhe use ol ollce
and basic secrelarial lacililies lollowing lheir relirenenl. The cosl involved in doing so is nol signilcanl.
Furlher inlornalion
Full delails ol individual direclors renuneralion are given in lhe direclors renuneralion reporl on pages 112 lo 121.
Remuneration of directors and senior management
$ nillion
2010 2009 2003
Tolal lor all senior nanagenenl
Shorllern enployee benells 25 36 34
Poslrelirenenl benells 3 3 4

Senior nanagenenl, in addilion lo execulive and nonexeculive direclors, includes olher senior nanagers who are nenbers ol lhe execulive
nanagenenl lean.
Shorllern enployee benells
n addilion lo lees paid lo lhe nonexeculive chairnan and nonexeculive direclors, lhese anounls conprise, lor execulive direclors and senior nanagers,
salary and benells earned during lhe year, plus cash bonuses awarded lor lhe year. Delerred annual bonus awards, lo be sellled in shares, are included
in sharebased paynenls. Shorllern enployee benells includes conpensalion lor loss ol ollce ol $3 nillion (2009 $6 nillion and 2003 $3 nillion.
Poslrelirenenl benells
The anounls represenl lhe eslinaled cosl lo lhe group ol providing delned benell pensions and olher poslrelirenenl benells lo senior nanagenenl
in respecl ol lhe currenl year ol service neasured in accordance wilh AS 19 Enployee Benells.
Sharebased paynenls
This is lhe cosl lo lhe group ol senior nanagenenls parlicipalion in sharebased paynenl plans, as neasured by lhe lair value ol oplions and shares
granled accounled lor in accordance wilh FFS 2 Sharebased Paynenls. The nain plans in which senior nanagenenl have parlicipaled are lhe EDP,
DAB and FSP. For delails ol lhese plans reler lo ole 41.
44. Conlingenl liabililies and conlingenl assels
Contingent IiabiIities reIating to the GuIf of Mexico oiI spiII
As a consequence ol lhe Cull ol exico oil spill, as described on pages 34 lo 39, BP has incurred cosls during lhe year and recognized provisions lor
cerlain lulure cosls. Furlher inlornalion is provided in ole 2 and ole 37.
BP has provided lor ils besl eslinale ol cerlain clains under lhe Oil Pollulion Acl ol 1990 (OPA 90 lhal will be paid lhrough lhe $20billion lrusl
lund. l is nol possible, al lhis line, lo neasure reliably any olher ilens lhal will be paid lron lhe lrusl lund, nanely any obligalion in relalion lo alural
Fesource Danages clains, and clains asserled in civil liligalion, nor is il praclicable lo eslinale lheir nagnilude or possible lining ol paynenl.
alural resource danages resulling lron lhe oil spill are currenlly being assessed (see ole 37 lor lurlher inlornalion. BP and lhe lederal and slale
lruslees are collecling exlensive dala in order lo assess lhe exlenl ol danage lo wildlile, shoreline, near shore and deepwaler habilals, and recrealional
uses, anong olher lhings. Because lhe allecled areas and lheir uses vary by seasons, we anlicipale lhal we will need al leasl a lull year, and perhaps
nalerially longer, aller lhe inilial oil inpacls lo gain an underslanding ol lhe nalural resource danages. n addilion, il early resloralion projecls are
underlaken, lhese projecls could niligale lhe lolal danages resulling lron lhe incidenl. Accordingly, unlil lhe size, localion and duralion ol lhe inpacl have
been delernined and lhe ellecls ol early resloralion projecls are assessed, or olher aclions such as polenlial lulure selllenenl discussions occur, il is nol
possible lo oblain a range ol oulcones or lo eslinale reliably eilher lhe anounls or lining ol lhe renaining alural Fesource Danages clains.
BP is naned as a delendanl in nore lhan 400 civil lawsuils broughl by individuals, corporalions and governnenlal enlilies in US lederal and slale
courls resulling lron lhe Cull ol exico oil spill. Addilional lawsuils are likely lo be broughl. The lawsuils asserl, anong olhers, clains lor personal injury in
conneclion wilh lhe incidenl ilsell and lhe response lo il, and wronglul dealh, connercial or econonic injury, breach ol conlracl and violalions ol slalules.
The lawsuils, nany ol which purporl lo be class aclions, seek various renedies including conpensalion lo injured workers and lanilies ol deceased
workers, recovery lor connercial losses and properly danage, clains lor environnenlal danage, renedialion cosls, injunclive reliel, lreble danages and
punilive danages. These pending lawsuils are al lhe very early slages ol proceedings and nosl ol lhe clains have been consolidaled inlo one ol lwo
nullidislricl liligalion proceedings. A lrial ol liabilily issues in lhe pending nullidislricl liligalion is currenlly scheduled lor February 2012. Danage issues
will be scheduled lor lrial lherealler. Unlil lurlher lacl and experl disclosures occur, courl rulings clarily lhe issues in dispule, liabilily and danage lrial
aclivily nears, or olher aclions such as possible selllenenls occur, il is nol possible given lhese uncerlainlies lo arrive al a range ol oulcones or a reliable
eslinale ol lhe liabilily. See Lega| proceedings on page 130 lor lurlher inlornalion.
Therelore no anounls have been provided lor lhese ilens as ol 31 Decenber 2010. Allhough lhese ilens, which will be paid lhrough lhe lrusl
lund, have nol been provided lor al lhis line, BPs lull obligalion under lhe $20billion lrusl lund has been expensed in lhe incone slalenenl, laking
accounl ol lhe line value ol noney. The aggregale ol anounls paid and provided lor ilens lo be sellled lron lhe lrusl lund currenlly lalls wilhin lhe
anounl connilled by BP lo lhe lrusl lund.
For lhose ilens nol covered by lhe lrusl lund il is nol possible lo neasure reliably any obligalion in relalion lo olher liligalion or polenlial lnes and
penallies excepl, subjecl lo cerlain assunplions delailed in ole 37, lor lhose relaling lo lhe Clean valer Acl. l is also nol possible lo reliably eslinale
legal lees beyond lwo years. There are a nunber ol lederal and slale environnenlal and olher provisions ol law, olher lhan lhe Clean valer Acl, under
which one or nore governnenlal agencies could seek civil lnes and penallies lron BP. For exanple, a conplainl lled by lhe Uniled Slales soughl lo
reserve lhe abilily lo seek penallies and olher reliel under a nunber ol olher laws. Civen lhe large nunber ol clains lhal nay be asserled, il is nol possible
al lhis line lo delernine whelher and lo whal exlenl any such clains would be successlul or whal penallies or lnes would be assessed.
Therelore no anounls have been provided lor lhese ilens.
The nagnilude and lining ol possible obligalions in relalion lo lhe Cull ol exico oil spill are subjecl lo a very high degree ol uncerlainly as
described lurlher in Fisk !ac!ors on pages 27 lo 32. Any such possible obligalions are lherelore conlingenl liabililies and, al presenl, il is nol praclicable lo
eslinale lheir nagnilude or possible lining ol paynenl. Furlhernore, olher nalerial unanlicipaled obligalions nay arise in lulure in relalion lo lhe incidenl.
Contingent assets reIating to the GuIf of Mexico oiI spiII
BP is lhe operalor ol lhe acondo well and holds a 65' working inleresl, wilh lhe renaining 35' inleresl held by lwo coowners, Anadarko Pelroleun
Corporalion (APC and OEX Ollshore 2007 LLC (OEX. Under lhe Operaling Agreenenl, OEX and APC are responsible lor reinbursing BP lor lheir
proporlionale shares ol lhe cosls ol all operalions and aclivilies conducled under lhe Operaling Agreenenl. n addilion, lhe parlies are responsible lor lheir
proporlionale shares ol all liabililies resulling lron operalions or aclivilies conducled under lhe Operaling Agreenenl, excepl where liabilily resulls lron a
parlys gross negligence or willul nisconducl, in which case lhal parly is solely responsible. BP does nol believe lhal il has been grossly negligenl nor has
il engaged in willul nisconducl under lhe lerns ol lhe Operaling Agreenenl or al law.
As ol 31 Decenber 2010, $6 billion had been billed lo lhe coowners, which BP believes lo be conlraclually recoverable. Billings lo coowners are
based upon cosls incurred lo dale ralher lhan anounls provided in lhe period. As lurlher cosls are incurred, BP believes lhal cerlain ol lhe cosls will be
billable lo our coowners under lhe Operaling Agreenenl.
Our coowners have each wrillen lo BP indicaling lhal lhey are wilhholding paynenl in lighl ol lhe invesligalions surrounding, and pending
delerninalion ol lhe rool causes ol, lhe incidenl. n addilion, APC has publicly accused BP ol having been grossly negligenl and slaled il has no liabilily lor
lhe incidenl, bolh ol which clains BP relules and inlends lo challenge in any legal proceedings. There are also audil righls concerning billings under lhe
Operaling Agreenenl which nay be exercised by APC and OEX, and which nay or nay nol lead lo an adjuslnenl ol lhe anounl billed. BP nay
ullinalely need lo enlorce ils righls lo collecl paynenl lron lhe coowners lhrough an arbilralion proceeding as provided lor in lhe Operaling Agreenenl.
There is a risk lhal anounls billed lo coowners nay nol ullinalely be recovered should our coowners be lound nol liable lor lhese cosls or be unable lo
pay lhen.
BP believes lhal il has a conlraclual righl lo recover lhe coowners shares ol lhe cosls incurred, however, no recovery anounls have been
recognized in lhe lnancial slalenenls as al 31 Decenber 2010.

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44. Conlingenl liabililies and conlingenl assels conlinued
Other contingent IiabiIities
There were conlingenl liabililies al 31 Decenber 2010 in respecl ol guaranlees and indennilies enlered inlo as parl ol lhe ordinary course ol lhe groups
business. o nalerial losses are likely lo arise lron such conlingenl liabililies. Furlher inlornalion is included in ole 27.
Lawsuils arising oul ol lhe Exxon Valdez oil spill in Prince villian Sound, Alaska, in arch 1939 were lled againsl Exxon (now Exxonobil, Alyeska
Pipeline Service Conpany (Alyeska, which operales lhe oil lerninal al Valdez, and lhe olher oil conpanies lhal own Alyeska. Alyeska inilially responded lo
lhe spill unlil lhe response was laken over by Exxon. BP owns a 46.9' inleresl (reduced during 2001 lron 50' by a sale ol 3.1' lo Phillips in Alyeska
lhrough a subsidiary ol BP Anerica nc. and brieHy indireclly owned a lurlher 20' inleresl in Alyeska lollowing BPs conbinalion wilh Allanlic Fichleld
Conpany (Allanlic Fichleld. Alyeska and ils owners have sellled all lhe clains againsl lhen under lhese lawsuils. Exxon has indicaled lhal il nay lle a
clain lor conlribulion againsl Alyeska lor a porlion ol lhe cosls and danages lhal Exxon has incurred. BP will delend any such clains vigorously. l is nol
possible lo eslinale any lnancial ellecl.
n lhe nornal course ol lhe groups business, legal proceedings are pending or nay be broughl againsl BP group enlilies arising oul ol currenl and
pasl operalions, including nallers relaled lo connercial dispules, producl liabilily, anlilrusl, prenisesliabilily clains, general environnenlal clains and
allegalions ol exposures ol lhird parlies lo loxic subslances, such as lead pignenl in painl, asbeslos and olher chenicals. BP believes lhal lhe inpacl ol
lhese legal proceedings on lhe groups resulls ol operalions, liquidily or lnancial posilion will nol be nalerial.
vilh respecl lo lead pignenl in painl in parlicular, Allanlic Fichleld, a subsidiary ol BP, has been naned as a codelendanl in nunerous lawsuils
broughl in lhe US alleging injury lo persons and properly. Allhough il is nol possible lo predicl lhe oulcone ol lhe legal proceedings, Allanlic Fichleld
believes il has valid delences lhal render lhe incurrence ol a liabilily renole, however, lhe anounls clained and lhe cosls ol inplenenling lhe renedies
soughl in lhe various cases could be subslanlial. The najorily ol lhe lawsuils have been abandoned or disnissed againsl Allanlic Fichleld. o lawsuil
againsl Allanlic Fichleld has been sellled nor has Allanlic Fichleld been subjecl lo a lnal adverse judgnenl in any proceeding. Allanlic Fichleld inlends lo
delend such aclions vigorously.
The group lles incone lax relurns in nany jurisdiclions lhroughoul lhe world. Various lax aulhorilies are currenlly exanining lhe groups incone lax
relurns. Tax relurns conlain nallers lhal could be subjecl lo dillering inlerprelalions ol applicable lax laws and regulalions and lhe resolulion ol lax
posilions lhrough negolialions wilh relevanl lax aulhorilies, or lhrough liligalion, can lake several years lo conplele. vhile il is dillcull lo predicl lhe
ullinale oulcone in sone cases, lhe group does nol anlicipale lhal lhere will be any nalerial inpacl upon lhe groups resulls ol operalions, lnancial
posilion or liquidily.
The group is subjecl lo nunerous nalional and local environnenlal laws and regulalions concerning ils producls, operalions and olher aclivilies.
These laws and regulalions nay require lhe group lo lake lulure aclion lo renediale lhe ellecls on lhe environnenl ol prior disposal or release ol
chenicals or pelroleun subslances by lhe group or olher parlies. Such conlingencies nay exisl lor various siles including relneries, chenical planls, oil
lelds, service slalions, lerninals and wasle disposal siles. n addilion, lhe group nay have obligalions relaling lo prior assel sales or closed lacililies. The
ullinale requirenenl lor renedialion and ils cosl are inherenlly dillcull lo eslinale. However, lhe eslinaled cosl ol known environnenlal obligalions has
been provided in lhese accounls in accordance wilh lhe groups accounling policies. vhile lhe anounls ol lulure cosls could be signilcanl and could be
nalerial lo lhe groups resulls ol operalions in lhe period in which lhey are recognized, il is nol praclical lo eslinale lhe anounls involved. BP does nol
expecl lhese cosls lo have a nalerial ellecl on lhe groups lnancial posilion or liquidily.
The group also has obligalions lo deconnission oil and nalural gas produclion lacililies and relaled pipelines. Provision is nade lor lhe eslinaled
cosls ol lhese aclivilies, however lhere is uncerlainly regarding bolh lhe anounl and lining ol lhese cosls, given lhe longlern nalure ol lhese
obligalions. BP believes lhal lhe inpacl ol any reasonably loreseeable changes lo lhese provisions on lhe groups resulls ol operalions, lnancial posilion or
liquidily will nol be nalerial.
The group generally reslricls ils purchase ol insurance lo silualions where lhis is required lor legal or conlraclual reasons. This is because exlernal
insurance is nol considered an econonic neans ol lnancing losses lor lhe group. Losses will lherelore be borne as lhey arise ralher lhan being spread
over line lhrough insurance preniuns wilh allendanl lransaclion cosls. The posilion is reviewed periodically.
45. Capilal connilnenls
Aulhorized lulure capilal expendilure lor properly, planl and equipnenl by group conpanies lor which conlracls had been placed al 31 Decenber 2010
anounled lo $11,279 nillion (2009 $9,312 nillion. n addilion, al 31 Decenber 2010, lhe group had conlracls in place lor lulure capilal expendilure
relaling lo inveslnenls in joinlly conlrolled enlilies ol $437 nillion (2009 $622 nillion and inveslnenls in associales ol $30 nillion (2009 $170 nillion.
BPs share ol capilal connilnenls ol joinlly conlrolled enlilies anounled lo $1,117 nillion (2009 $926 nillion.
46. Subsidiaries, joinlly conlrolled enlilies and associales
The nore inporlanl subsidiaries, joinlly conlrolled enlilies and associales ol lhe group al 31 Decenber 2010 and lhe group percenlage ol ordinary share
capilal or joinl venlure inleresl (lo nearesl whole nunber are sel oul below. Those held direclly by lhe parenl conpany are narked wilh an aslerisk (', lhe
percenlage owned being lhal ol lhe group unless olherwise indicaled. A conplele lisl ol inveslnenls in subsidiaries, joinlly conlrolled enlilies and
associales will be allached lo lhe parenl conpanys annual relurn nade lo lhe Fegislrar ol Conpanies.
Counlry ol
Subsidiaries ' incorporalion Principal aclivilies
nlernalional
'BP Corporale Holdings 100 England & vales nveslnenl holding
'BP Europa SE 100 Cernany Felning and narkeling and pelrochenicals
BP Exploralion Op. Co. 100 England & vales Exploralion and produclion
'BP Clobal nveslnenls 100 England & vales nveslnenl holding
'BP nlernalional 100 England & vales nlegraled oil operalions, inveslnenl holding, lnance
BP Oil nlernalional 100 England & vales nlegraled oil operalions
'BP Shipping 100 England & vales Shipping
'Burnah Caslrol 100 Scolland Lubricanls
Jupiler nsurance 100 Cuernsey nsurance
Algeria
BP Anoco Exploralion (n Anenas 100 Scolland Exploralion and produclion
BP Exploralion (El Djazair 100 Bahanas Exploralion and produclion
Angola
BP Exploralion (Angola 100 England & vales Exploralion and produclion
Auslralia
BP Oil Auslralia 100 Auslralia nlegraled oil operalions
BP Auslralia Capilal arkels 100 Auslralia Finance
BP Developnenls Auslralia 100 Auslralia Exploralion and produclion
BP Finance Auslralia 100 Auslralia Finance
Azerbaijan
Anoco Caspian Sea Pelroleun 100 Brilish Virgin slands Exploralion and produclion
BP Exploralion (Caspian Sea 100 England & vales Exploralion and produclion
Canada
BP Canada Energy 100 Canada Exploralion and produclion
BP Canada Finance 100 Canada Finance
Egypl
BP Egypl Co. 100 US Exploralion and produclion
ndonesia
BP Berau 100 US Exploralion and produclion
ew Zealand
BP Oil ew Zealand 100 ew Zealand arkeling
orway
BP orge 100 orway Exploralion and produclion
Spain
BP Espaa 100 Spain Felning and narkeling
Soulh Alrica
'BP Soulhern Alrica 75 Soulh Alrica Felning and narkeling
Trinidad & Tobago
BP Trinidad and Tobago 70 US Exploralion and produclion
UK
BP Capilal arkels 100 England & vales Finance
BP Oil UK 100 England & vales arkeling
Briloil 100 Scolland Exploralion and produclion
US
'BP Holdings orlh Anerica 100 England & vales nveslnenl holding
Allanlic Fichleld Co. 100 US
BP Anerica 100 US
BP Anerica Produclion Conpany 100 US
BP Anoco Chenical Conpany 100 US
BP Conpany orlh Anerica 100 US
BP Corporalion orlh Anerica 100 US Exploralion and produclion, relning and
BP Exploralion and Produclion 100 US narkeling, pipelines and pelrochenicals
BP Exploralion (Alaska 100 US
BP Producls orlh Anerica 100 US
BP vesl Coasl Producls 100 US
Slandard Oil Co. 100 US
Verano Collaleral Holdings 100 US
BP Capilal arkels Anerica 100 US Finance

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46. Subsidiaries, joinlly conlrolled enlilies and associales conlinued
Counlry ol incorporalion
Joinlly conlrolled enlilies ' or regislralion Principal aclivilies
Angola
Angola LC Supply Services 14 US LC processing and lransporlalion
Argenlina
Pan Anerican Energy
a b
60 US Exploralion and produclion
Canada
Sunrise Oil Sands 50 Canada Exploralion and produclion
China
Shanghai SECCO Pelrochenical Co. 50 China Pelrochenicals
Cernany
Fuhr Oel 50 Cernany Felning and narkeling and pelrochenicals
Fussia
Elvary ellegaz Holdings BV 49 elherlands Exploralion and appraisal
Trinidad & Tobago
Allanlic 4 Holdings 33 US LC nanulaclure
Allanlic LC 2/3 Conpany ol Trinidad and Tobago 43 Trinidad & Tobago LC nanulaclure
US
BPHusky Felning 50 US Felning
valson Cogeneralion
a
51 US Power generalion
Venezuela
Pelrononagas
b
17 Venezuela Exploralion and produclion
a
The enlily is nol conlrolled by BP as cerlain key business decisions require joinl approval ol bolh BP and lhe ninorily parlner. l is lherelore classiled as a joinlly conlrolled enlily ralher lhan a subsidiary.
b
As al 31 Decenber 2010 lhe groups inleresls in Pan Anerican Energy and Pelrononagas have been reclassiled as assels held lor sale. See ole 4 lor lurlher inlornalion.
Associales ' Counlry ol incorporalion Principal aclivilies
Abu Dhabi
Abu Dhabi arine Areas 37 England & vales Crude oil produclion
Abu Dhabi Pelroleun Co. 24 England & vales Crude oil produclion
Azerbaijan
The BakuTbilisiCeyhan Pipeline Co. 30 Caynan slands Pipelines
Soulh Caucasus Pipeline Co. 26 Caynan slands Pipelines
Fussia
TKBP 50 Brilish Virgin slands nlegraled oil operalions
47. Condensed consolidaling inlornalion on cerlain US subsidiaries
BP p.l.c. lully and uncondilionally guaranlees lhe paynenl obligalions ol ils 100'owned subsidiary BP Exploralion (Alaska nc. under lhe BP Prudhoe Bay
Foyally Trusl. The lollowing lnancial inlornalion lor BP p.l.c., BP Exploralion (Alaska nc. and all olher subsidiaries on a condensed consolidaling basis is
inlended lo provide inveslors wilh neaninglul and conparable lnancial inlornalion aboul BP p.l.c. and ils subsidiary issuers ol regislered securilies and is
provided pursuanl lo Fule 310 ol Fegulalion SX in lieu ol lhe separale lnancial slalenenls ol each subsidiary issuer ol public debl securilies. nveslnenls
include lhe inveslnenls in subsidiaries recorded under lhe equily nelhod lor lhe purposes ol lhe condensed consolidaling lnancial inlornalion. Equily
incone ol subsidiaries is lhe groups share ol proll relaled lo such inveslnenls. The elininalions and reclassilcalions colunn includes lhe necessary
anounls lo elininale lhe inlerconpany balances and lransaclions belween BP p.l.c., BP Exploralion (Alaska nc. and olher subsidiaries. The lnancial
inlornalion presenled in lhe lollowing lables lor BP Exploralion (Alaska nc. lor all years includes equily incone arising lron subsidiaries ol BP Exploralion
(Alaska nc. sone ol which operale oulside ol Alaska and excludes lhe BP groups nidslrean operalions in Alaska lhal are reporled lhrough dillerenl legal
enlilies and lhal are included wilhin lhe olher subsidiaries colunn in lhese lables. BP p.l.c. also lully and uncondilionally guaranlees securilies issued by
BP Capilal arkels p.l.c. and BP Capilal arkels Anerica nc. These conpanies are 100'owned lnance subsidiaries ol BP p.l.c.
Income statement
$ nillion
For the year ended 31 December 2010
Issuer Guarantor
BP EIiminations
ExpIoration Other and
(AIaska) Inc. BP p.I.c. subsidiaries recIassihcations BP group
Sales and olher operaling revenues 4,793 - 297,107 (4,793) 297,107
Earnings lron joinlly conlrolled enlilies - aller inleresl and lax - - 1,175 - 1,175
Earnings lron associales - aller inleresl and lax - - 3,582 - 3,582
Equilyaccounled incone ol subsidiaries - aller inleresl and lax 620 (3,567) - 2,947 -
nleresl and olher revenues - 188 714 (221) 681
Cains on sale ol businesses and lxed assels - 260 6,376 (253) 6,383
Tolal revenues and olher incone 5,413 (3,119) 308,954 (2,320) 308,928
Purchases 637 - 220,367 (4,793) 216,211
Produclion and nanulacluring expenses 966 - 63,649 - 64,615
Produclion and sinilar laxes 998 - 4,246 - 5,244
Deprecialion, deplelion and anorlizalion 351 - 10,813 - 11,164
npairnenl and losses on sale ol businesses and lxed assels 1,524 - 1,689 (1,524) 1,689
Exploralion expense - - 843 - 843
Dislribulion and adninislralion expenses 16 673 11,975 (109) 12,555
Fair value loss on enbedded derivalives - - 309 - 309
Proll (loss belore inleresl and laxalion 921 (3,792) (4,937) 4,106 (3,702)
Finance cosls 2 31 1,249 (112) 1,170
el lnance (incone expense relaling lo pensions and
olher poslrelirenenl benells 4 (388) 337 - (47)
Proll (loss belore laxalion 915 (3,435) (6,523) 4,218 (4,825)
Taxalion 143 31 (1,675) - (1,501)
Proll (loss lor lhe year 772 (3,466) (4,848) 4,218 (3,324)
Allribulable lo
BP shareholders 772 (3,466) (5,243) 4,218 (3,719)
772 (3,466) (4,848) 4,218 (3,324)


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47. Condensed consolidaling inlornalion on cerlain US subsidiaries conlinued
Income statement DPOUJOVFE
$ nillion
For lhe year ended 31 Decenber 2009
ssuer Cuaranlor
BP Elininalions
Exploralion Olher and
(Alaska nc. BP p.l.c. subsidiaries reclassilcalions BP group
Sales and olher operaling revenues 4,139 - 239,272 (4,139 239,272
Earnings lron associales - aller inleresl and lax - - 2,615 - 2,615
Equilyaccounled incone ol subsidiaries - aller inleresl and lax 333 17,315 - (13,153 -
nleresl and olher revenues 17 144 332 (201 792
Cains on sale ol businesses and lxed assels - 9 2,173 (9 2,173
Tolal revenues and olher incone 5,044 17,463 246,173 (22,552 246,133
Purchases 510 - 167,451 (4,139 163,772
Produclion and nanulacluring expenses 970 - 22,232 - 23,202
Produclion and sinilar laxes 602 - 3,150 - 3,752
npairnenl and losses on sale ol businesses and lxed assels - - 2,333 - 2,333
Exploralion expense - - 1,116 - 1,116
Dislribulion and adninislralion expenses 27 1,145 12,974 (103 14,033
Fair value gain on enbedded derivalives - - (607 - (607
Proll belore inleresl and laxalion 2,511 16,323 25,347 (13,255 26,426
Finance cosls 22 26 1,155 (93 1,110
olher poslrelirenenl benells 10 (310 492 - 192
Proll belore laxalion 2,479 16,607 24,200 (13,162 25,124
Taxalion 533 20 7,762 - 3,365
Proll lor lhe year 1,396 16,537 16,433 (13,162 16,759
Allribulable lo
BP shareholders 1,396 16,537 16,257 (13,162 16,573
1,396 16,537 16,433 (13,162 16,759

Income statement DPOUJOVFE
$ nillion
ssuer Cuaranlor
BP Elininalions
Sales and olher operaling revenues 6,732 - 361,143 (6,732 361,143
Earnings lron associales - aller inleresl and lax - - 793 - 793
Equilyaccounled incone ol subsidiaries - aller inleresl and lax 469 20,295 - (20,764 -
nleresl and olher revenues 514 173 1,025 (976 736
Cains on sale ol businesses and lxed assels - - 1,353 - 1,353
Tolal revenues and olher incone 7,765 20,463 367,342 (23,522 367,053
Purchases 395 - 272,369 (6,732 266,932
Produclion and nanulacluring expenses 1,033 - 25,673 - 26,756
Produclion and sinilar laxes 2,343 - 6,610 - 3,953
npairnenl and losses on sale ol businesses and lxed assels - - 1,733 - 1,733
Exploralion expense - - 332 - 332
Dislribulion and adninislralion expenses 22 23 15,469 (107 15,412
Fair value loss on enbedded derivalives - - 111 - 111
Proll belore inleresl and laxalion 3,057 20,440 33,375 (21,633 35,239
Finance cosls 153 169 2,039 (369 1,547
olher poslrelirenenl benells - (322 231 - (591
Proll belore laxalion 2,399 21,093 31,055 (20,764 34,233
Taxalion 944 (64 11,737 - 12,617
Proll lor lhe year 1,955 21,157 19,313 (20,764 21,666
Allribulable lo
BP shareholders 1,955 21,157 13,309 (20,764 21,157
1,955 21,157 19,313 (20,764 21,666


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BaIance sheet
$ nillion
At 31 December 2010
Issuer Guarantor
BP EIiminations
oncurrenl assels
Properly, planl and equipnenl 7,679 - 102,484 - 110,163
Coodwill - - 8,598 - 8,598
nlangible assels 425 - 13,873 - 14,298
nveslnenls in joinlly conlrolled enlilies - - 12,286 - 12,286
nveslnenls in associales - 2 13,333 - 13,335
Olher inveslnenls - - 1,191 - 1,191
Subsidiaries - equilyaccounled basis 4,489 112,227 - (116,716) -
Fixed assels 12,593 112,229 151,765 (116,716) 159,871
Loans - 38 5,161 (4,305) 894
Olher receivables - - 6,298 - 6,298
Derivalive lnancial inslrunenls - - 4,210 - 4,210
Prepaynenls - - 1,432 - 1,432
Delerred lax assels - - 528 - 528
Delned benell pension plan surpluses - 1,870 306 - 2,176
12,593 114,137 169,700 (121,021) 175,409
Currenl assels
Loans - - 247 - 247
nvenlories 244 - 25,974 - 26,218
Trade and olher receivables 3,173 14,444 42,783 (23,851) 36,549
Prepaynenls 6 - 1,568 - 1,574
Currenl lax receivable - - 693 - 693
Cash and cash equivalenls (1) 4 18,553 - 18,556
3,422 14,448 95,706 (23,851) 89,725
Assels classiled as held lor sale - - 7,128 - 7,128
Tolal assels 16,015 128,585 272,534 (144,872) 272,262
Currenl liabililies
Trade and olher payables 4,931 2,362 62,887 (23,851) 46,329
Accruals - 23 5,589 - 5,612
Finance debl - - 14,626 - 14,626
Currenl lax payable 182 - 2,738 - 2,920
Provisions - - 9,489 - 9,489
5,113 2,385 99,185 (23,851) 82,832
Liabililies direclly associaled wilh assels classiled as held lor sale - - 1,047 - 1,047
5,113 2,385 100,232 (23,851) 83,879
Olher payables 9 4,258 14,323 (4,305) 14,285
Accruals - 35 602 - 637
Finance debl - - 30,710 - 30,710
Delerred lax liabililies 2,026 410 8,472 - 10,908
Provisions 958 - 21,460 - 22,418
Delned benell pension plan and olher poslrelirenenl benell
plan delcils - - 9,857 - 9,857
2,993 4,703 89,101 (4,305) 92,492
Tolal liabililies 8,106 7,088 189,333 (28,156) 176,371
el assels 7,909 121,497 83,201 (116,716) 95,891
Equily
BP shareholders equily 7,909 121,497 82,297 (116,716) 94,987
Tolal equily 7,909 121,497 83,201 (116,716) 95,891

BaIance sheet DPOUJOVFE
$ nillion
Al 31 Decenber 2009
ssuer Cuaranlor
BP Elininalions
oncurrenl assels
Properly, planl and equipnenl 7,366 - 100,909 - 103,275
Coodwill - - 3,620 - 3,620
nlangible assels 321 - 11,227 - 11,543
nveslnenls in joinlly conlrolled enlilies - - 15,296 - 15,296
nveslnenls in associales - 2 12,961 - 12,963
Subsidiaries equilyaccounled basis 4,424 101,760 - (106,134 -
Fixed assels 12,111 101,762 150,530 (106,134 153,269
Loans 233 1,173 5,490 (5,912 1,039
Olher receivables - - 1,729 - 1,729
Prepaynenls - - 1,407 - 1,407
Delerred lax assels - - 516 - 516
Delned benell pension plan surpluses - 1,071 319 - 1,390
12,394 104,011 164,006 (112,096 163,315
Currenl assels
Loans - - 249 - 249
nvenlories 221 - 22,334 - 22,605
Trade and olher receivables 13,529 30,707 35,352 (55,557 29,531
Prepaynenls 3 2 1,743 - 1,753
Currenl lax receivable - - 209 - 209
Cash and cash equivalenls (22 23 3,333 - 3,339
13,736 30,737 73,737 (55,557 67,653
Tolal assels 31,130 134,743 237,743 (167,653 235,963
Currenl liabililies
Trade and olher payables 4,662 2,374 33,725 (55,557 35,204
Accruals - 27 6,175 - 6,202
Finance debl 55 - 9,054 - 9,109
Currenl lax payable 172 - 2,292 - 2,464
Provisions - - 1,660 - 1,660
4,339 2,401 107,537 (55,557 59,320
Olher payables 229 4,254 4,627 (5,912 3,193
Accruals - 74 629 - 703
Finance debl - - 25,513 - 25,513
Delerred lax liabililies 1,372 149 16,641 - 13,662
Provisions 1,043 - 11,922 - 12,970
Delned benell pension plan and olher poslrelirenenl benell
plan delcils - - 10,010 - 10,010
3,149 4,477 72,321 (5,912 74,535
Tolal liabililies 3,033 6,373 130,403 (61,469 133,355
el assels 23,092 127,370 57,335 (106,134 102,113
Equily
BP shareholders equily 23,092 127,370 56,335 (106,134 101,613
Tolal equily 23,092 127,370 57,335 (106,134 102,113


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Cash ow statement
$ nillion
Issuer Guarantor
BP EIiminations
el cash provided by operaling aclivilies 829 32,111 (4,584) (14,740) 13,616
el cash used in invesling aclivilies (752) (29,325) 26,117 - (3,960)
el cash (used in provided by lnancing aclivilies (56) (2,810) (11,034) 14,740 840
Currency lranslalion dillerences relaling lo cash and cash equivalenls - - (279) - (279)
(Decrease increase in cash and cash equivalenls 21 (24) 10,220 - 10,217
Cash and cash equivalenls al beginning ol year (22) 28 8,333 - 8,339
Cash and cash equivalenls al end ol year (1) 4 18,553 - 18,556
$ nillion
ssuer Cuaranlor
BP Elininalions
el cash provided by operaling aclivilies 1,022 14,514 47,466 (35,236 27,716
el cash used in invesling aclivilies (935 (4,227 (12,971 - (13,133
el cash used in lnancing aclivilies (99 (10,270 (34,463 35,236 (9,551
Currency lranslalion dillerences relaling lo cash and cash equivalenls - - 110 - 110
(Decrease increase in cash and cash equivalenls (12 17 137 - 142
Cash and cash equivalenls al beginning ol year (10 11 3,196 - 3,197
Cash and cash equivalenls al end ol year (22 23 3,333 - 3,339
$ nillion
ssuer Cuaranlor
BP Elininalions
el cash provided by operaling aclivilies 1,105 12,665 41,600 (17,275 33,095
el cash used in invesling aclivilies (396 - (21,371 - (22,767
el cash used in lnancing aclivilies (209 (12,393 (14,677 17,275 (10,509
Currency lranslalion dillerences relaling lo cash and cash equivalenls - - (134 - (134
(Decrease increase in cash and cash equivalenls - (233 4,363 - 4,635
Cash and cash equivalenls al beginning ol year (10 244 3,323 - 3,562
Cash and cash equivalenls al end ol year (10 11 3,196 - 3,197

Supplementary information on oil and natural gas (unaudited)
The regional analysis presented below is on a continent basis, with separate disclosure for countries that contain 15% or more of the total proved
reserves (for subsidiaries plus equity-accounted entities), in accordance with SEC and FASB requirements. For 2009 and 2010, where relevant,
information for equity-accounted entities is provided in the same level of detail as for subsidiaries. Also for 2009 and 2010, proved reserves are based
on revised SEC denitions.
Oil and gas reserves certain denitions
Unless the context indicates otherwise, the following terms have the meanings shown below:
Proved oil and gas reserves
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions,
operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates
that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the
hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
(i) The area of the reservoir considered as proved includes:
(A) The area identied by drilling and limited by uid contacts, if any; and
(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically
producible oil or gas on the basis of available geoscience and engineering data.
(ii) In the absence of data on uid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well
penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.
(iii) Where direct observation from well penetrations has dened a highest known oil (HKO) elevation and the potential exists for an associated gas
cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data
and reliable technology establish the higher contact with reasonable certainty.
(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, uid injection)
are included in the proved classication when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favourable than in the reservoir as a whole, the
operation of an installed programme in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the
reasonable certainty of the engineering analysis on which the project or programme was based; and
(B) The project has been approved for development by all necessary parties and entities, including governmental entities.
(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be
the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted
arithmetic average of the rst-day-of-the-month price for each month within such period, unless prices are dened by contractual arrangements,
excluding escalations based upon future conditions.
Undeveloped oil and gas reserves
Undeveloped oil and gas reserves are reserves of any category 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.
(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production
when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater
distances.
(ii) Undrilled locations can be classied as having undeveloped reserves only if a development plan has been adopted indicating that they are
scheduled to be drilled within ve years, unless the specic circumstances, justify a longer time.
(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of uid injection or
other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir
or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.
Developed oil and gas reserves
Developed oil and gas reserves are reserves of any category that can be expected to be recovered:
(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor
compared to the cost of a new well; and
(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not
involving a well.
For details on BPs proved reserves and production compliance and governance processes, see pages 51 to 52.

Supplenenlary inlornalion on oil and nalural gas (unaudiled
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Supplenenlary inlornalion on oil and nalural gas (unaudiled conlinued
OiI and naturaI gas expIoration and production activities
$ nillion
2010
Europe North South Africa Asia AustraIasia TotaI
America America
Rest of
Rest of North Rest of
UK Europe US America Russia Asia
Subsidiaries
a
Capilalized cosls al 31 Decenber
b j
Cross capilalized cosls
Proved properlies 36,161 7,846 67,724 278 6,047 27,014 - 11,497 3,088 159,655
Unproved properlies 787 179 5,968 1,363 220 2,694 - 1,113 1,149 13,473
36,948 8,025 73,692 1,641 6,267 29,708 - 12,610 4,237 173,128
Accunulaled deprecialion 27,688 3,515 33,972 216 3,282 13,893 - 4,569 1,205 88,340
el capilalized cosls 9,260 4,510 39,720 1,425 2,985 15,815 - 8,041 3,032 84,788

Cosls incurred lor lhe year ended 31 Decenber
b j
Acquisilion ol properlies
c
Proved - - 655 1 - - - 1,121 - 1,777
Unproved - 519 1,599 1,200 - - - 151 - 3,469
- 519 2,254 1,201 - - - 1,272 - 5,246
Exploralion and appraisal cosls
d
401 13 1,096 78 68 607 7 316 120 2,706
Developnenl 726 816 3,034 251 414 3,003 - 1,244 187 9,675
Tolal cosls 1,127 1,348 6,384 1,530 482 3,610 7 2,832 307 17,627

Fesulls ol operalions lor lhe year ended 31 Decenber
e
Third parlies 1,472 58 1,148 90 1,896 3,158 - 1,272 1,398 10,492
Sales belween businesses 3,405 1,134 18,819 453 1,574 4,353 - 6,697 929 37,364
4,877 1,192 19,967 543 3,470 7,511 - 7,969 2,327 47,856
Exploralion expendilure 82 (2) 465 25 9 189 7 51 17 843
Produclion cosls 1,018 152 2,867 240 445 938 9 365 124 6,158
Produclion laxes 52 - 1,093 2 249 - - 3,764 109 5,269
Olher cosls (incone
l
(316) 76 3,502 129 209 130 76 90 195 4,091
Deprecialion, deplelion and anorlizalion 897 209 3,477 95 575 1,771 - 829 168 8,021
npairnenls and (gains losses on sale ol
businesses and lxed assels (1) - (1,441) (2,190) (3) (427) 341
k
- - (3,721)
1,732 435 9,963 (1,699) 1,484 2,601 433 5,099 613 20,661
Proll (loss belore laxalion
g
3,145 757 10,004 2,242 1,986 4,910 (433) 2,870 1,714 27,195
Allocable laxes 1,333 530 3,504 610 1,084 1,771 (23) 813 410 10,032
Fesulls ol operalions 1,812 227 6,500 1,632 902 3,139 (410) 2,057 1,304 17,163

Exploralion and Produclion segnenl replacenenl cosl proll belore inleresl and lax
Exploralion and produclion aclivilies -
subsidiaries (as above 3,145 757 10,004 2,242 1,986 4,910 (433) 2,870 1,714 27,195
idslrean aclivilies - subsidiaries
h
23 42 (347) 3 49 (26) 4 (23) (13) (288)
i
- 4 27 171 614 63 2,613 487 - 3,979
Tolal replacenenl cosl proll
belore inleresl and lax 3,168 803 9,684 2,416 2,649 4,947 2,184 3,334 1,701 30,886
a
T hese lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies ol subsidiaries. They do nol include any cosls relaling lo lhe Cull ol exico oil spill. idslrean
aclivilies relaling lo lhe nanagenenl and ownership ol crude oil and nalural gas pipelines, processing and exporl lerninals and LC processing lacililies and lransporlalion are excluded. n addilion,
our nidslrean aclivilies ol narkeling and lrading ol nalural gas, power and CLs in lhe US, Canada, UK and Europe are excluded. The nosl signilcanl nidslrean pipeline inleresls include lhe Trans
Alaska Pipeline Syslen, lhe Forlies Pipeline Syslen, lhe Cenlral Area Transnission Syslen pipeline, lhe Soulh Caucasus Pipeline and lhe BakuTbilisiCeyhan pipeline. ajor LC aclivilies are localed
in Trinidad, ndonesia and Auslralia and BP is also invesling in lhe LC business in Angola.
b
Deconnissioning assels are included in capilalized cosls al 31 Decenber bul are excluded lron cosls incurred lor lhe year.
c
ncludes cosls capilalized as a resull ol assel exchanges.
d
ncludes exploralion and appraisal drilling expendilures, which are capilalized wilhin inlangible assels, and geological and geophysical exploralion cosls, which are charged lo incone as incurred.
e
Presenled nel ol lransporlalion cosls, purchases and sales laxes.
l
ncludes properly laxes, olher governnenl lake and lhe lair value loss on enbedded derivalives ol $309 nillion. The UK region includes a $322 nillion gain ollsel by corresponding charges prinarily in lhe
US, relaling lo lhe group sellinsurance progranne.
g
Excludes lhe unwinding ol lhe discounl on provisions and payables anounling lo $313 nillion which is included in lnance cosls in lhe group incone slalenenl.
h
idslrean aclivilies exclude invenlory holding gains and losses.
i
The prolls ol equilyaccounled enlilies are included aller inleresl and lax.
j
Excludes balances associaled wilh assels held lor sale.
k
This anounl represenls lhe wriledown ol our inveslnenl in Sakhalin. A porlion ol lhese cosls was previously reporled wilhin capilalized cosls ol equily accounled enlilies wilh lhe renainder previously
reporled as a loan, which was nol included in lhe disclosures ol oil and nalural gas exploralion and produclion aclivilies.
OiI and naturaI gas expIoration and production activities DPOUJOVFE
$ nillion
2010
America America
Rest of
Equilyaccounled enlilies (BP share
a
b
Proved properlies - - - 142 103 - 14,486 3,192 - 17,923
Unproved properlies - - - 1,284 - - 652 - - 1,936
- - - 1,426 103 - 15,138 3,192 - 19,859
Accunulaled deprecialion - - - - - - 6,300 2,674 - 8,974
el capilalized cosls - - - 1,426 103 - 8,838 518 - 10,885

b
c
Proved - - - - - - - - - -
Unproved - - - - 9 - 66 - - 75
- - - - 9 - 66 - - 75
d
- - - - 2 - 94 - - 96
Developnenl - - - 49 549 - 1,416 355 - 2,369
Tolal cosls - - - 49 560 - 1,576 355 - 2,540

e
Third parlies - - - - 2,268 - 5,610 87 - 7,965
Sales belween businesses - - - - - - 3,432 460 - 3,892
- - - - 2,268 - 9,042 547 - 11,857
Exploralion expendilure - - - - 22 - 40 - - 62
Produclion cosls - - - - 316 - 1,602 184 - 2,102
Produclion laxes - - - - 911 - 3,567 - - 4,478
Olher cosls (incone - - - 67 75 - 3 (2) - 143
Deprecialion, deplelion and anorlizalion - - - - 269 - 954 363 - 1,586
npairnenls and losses on sale ol
businesses and lxed assels - - - - - - 43 - - 43
- - - 67 1,593 - 6,209 545 - 8,414
Proll (loss belore laxalion - - - (67) 675 - 2,833 2 - 3,443
Allocable laxes - - - - 260 - 475 33 - 768
Fesulls ol operalions - - - (67) 415 - 2,358 (31) - 2,675

equilyaccounled enlilies aller
lax (as above - - - (67) 415 - 2,358 (31) - 2,675
idslrean and olher aclivilies aller lax
l
- 4 27 238 199 63 255 518 - 1,304
aller inleresl and lax - 4 27 171 614 63 2,613 487 - 3,979

a
These lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies ol equilyaccounled enlilies. They do nol include anounls relaling lo assels held lor sale. idslrean
aclivilies relaling lo lhe nanagenenl and ownership ol crude oil and nalural gas pipelines, processing and exporl lerninals and LC processing lacililies and lransporlalion as well as downslrean aclivilies
ol TKBP are excluded. The anounls reporled lor equilyaccounled enlilies exclude lhe corresponding anounls lor lheir equilyaccounled enlilies.
b
c
d
e
Presenled nel ol lransporlalion cosls and sales laxes.
l
ncludes inleresl, ninorily inleresl and lhe nel resulls ol equilyaccounled enlilies ol equilyaccounled enlilies.

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2009
Europe orlh Soulh Alrica Asia Auslralasia Tolal
Anerica Anerica
Fesl ol
Subsidiaries
a
b
Proved properlies 35,096 6,644 64,366 3,967 3,346 24,476 _ 10,900 2,394 156,639
Unproved properlies 752 - 5,464 147 193 2,377 - 733 1,039 10,710
35,343 6,644 69,330 4,114 3,544 26,353 - 11,633 3,933 167,399
Accunulaled deprecialion 26,794 3,306 31,723 2,309 4,337 12,492 - 4,793 1,033 37,302

b
c
Proved 179 - (17 - - - - 306 - 463
Unproved (1 - 370 1 - 13 - - 10 393
173 - 353 1 - 13 - 306 10 366
d
133 - 1,377 79 73 712 3 315 53 2,305
Developnenl 751 1,054 4,203 336 453 2,707 - 560 277 10,396
Tolal cosls 1,112 1,054 5,933 466 531 3,437 3 1,131 340 14,067

e

Third parlies 2,239 63 972 99 1,525 1,346 - 636 735 3,170
Sales belween businesses 2,432 309 15,100 434 1,409 5,313 - 6,257 726 32,530
4,721 377 16,072 533 2,934 7,159 - 6,393 1,511 40,750
Exploralion expendilure 59 - 663 30 16 219 3 49 22 1,116
Produclion laxes (3 - 649 1 220 - - 2,354 72 3,793
Olher cosls (incone
l
(1,259 51 2,353 145 134 144 76 967 173 2,339
Deprecialion, deplelion and anorlizalion 1,143 135 3,357 170 697 2,041 - 757 96 3,951
npairnenls and (gains losses on
sale ol businesses and lxed assels (122 (7 (203 - (11 (1 - (702
j
- (1,051
1,066 393 10,135 630 1,501 3,311 99 4,236 433 21,909
g
3,655 434 5,937 (97 1,433 3,343 (99 2,607 1,073 13,341
Allocable laxes 1,563 76 1,902 (53 916 1,517 (25 632 2 6,530
Fesulls ol operalions 2,037 403 4,035 (39 517 2,331 (74 1,925 1,071 12,261

subsidiaries (as above 3,655 434 5,937 (97 1,433 3,343 (99 2,607 1,073 13,341
idslrean aclivilies - subsidiaries
h j
925 17 719 333 17 (27 (37 513 (315 2,650
i
- 5 29 134 630 56 1,924 531 - 3,309
belore inleresl and lax 4,530 506 6,635 370 2,030 3,377 1,733 3,656 753 24,300

a
T hese lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies ol subsidiaries. idslrean aclivilies relaling lo lhe nanagenenl and ownership ol crude oil and nalural
gas pipelines, processing and exporl lerninals and LC processing lacililies and lransporlalion are excluded. n addilion, our nidslrean aclivilies ol narkeling and lrading ol nalural gas, power and CLs in
lhe US, Canada, UK and Europe are excluded. The nosl signilcanl nidslrean pipeline inleresls include lhe TransAlaska Pipeline Syslen, lhe Forlies Pipeline Syslen, lhe Cenlral Area Transnission Syslen
pipeline, lhe Soulh Caucasus Pipeline and lhe BakuTbilisiCeyhan pipeline. ajor LC aclivilies are localed in Trinidad, ndonesia and Auslralia and BP is also invesling in lhe LC business in Angola.
b
c
d
e
Presenled nel ol lransporlalion cosls, purchases and sales laxes. Sales belween businesses and lhird parly sales have been anended in lhe US wilhoul nel ellecl lo lolal sales.
l
ncludes properly laxes, olher governnenl lake and lhe lair value gain on enbedded derivalives ol $663 nillion. The UK region includes a $733 nillion gain ollsel by corresponding charges prinarily in lhe
g
h
i
The prolls ol equilyaccounled enlilies are included aller inleresl and lax.
j
ncludes lhe gain on disposal ol upslrean assels associaled wilh our sale ol our 46' slake in LukArco (see ole 5.
$ nillion
2009
Anerica Anerica
Fesl ol
a
b
Proved properlies - - - - 5,739 - 13,266 2,259 - 21,314
Unproved properlies - - - 1,373 197 - 737 - - 2,312
- - - 1,373 5,936 - 14,003 2,259 - 23,626
Accunulaled deprecialion - - - - 2,034 - 5,550 1,739 - 9,373
el capilalized cosls - - - 1,373 3,902 - 3,453 520 - 14,253

b
c
Proved - - - - - - - - - -
Unproved - - - - 31 - 10 - - 41
- - - - 31 - 10 - - 41
d
- - - - 21 - 77 3 - 101
Developnenl - - - 30 533 - 1,132 246 - 1,996
Tolal cosls - - - 30 590 - 1,269 249 - 2,133

e
Third parlies - - - - 1,977 - 4,919 351 - 7,247
Sales belween businesses - - - - - - 2,333 - - 2,333
- - - - 1,977 - 7,757 351 - 10,035
Exploralion expendilure - - - - 23 - 37 - - 60
Produclion cosls - - - - 354 - 1,423 159 - 1,941
Produclion laxes - - - - 702 - 2,597 - - 3,299
Olher cosls (incone - - - - (69 - 12 (2 - (59
Deprecialion, deplelion and anorlizalion - - - - 231 - 1,073 274 - 1,623
npairnenls and losses on
sale ol businesses and lxed assels - - - - - - 72 - - 72
- - - - 1,291 - 5,219 431 - 6,941
Proll (loss belore laxalion - - - - 636 - 2,533 (30 - 3,144
Allocable laxes - - - - 270 - 501 - - 771
Fesulls ol operalions - - - - 416 - 2,037 (30 - 2,373

equilyaccounled enlilies aller
lax (as above - - - - 416 - 2,037 (30 - 2,373
idslrean and olher aclivilies aller lax
l
- 5 29 134 214 56 (113 611 - 936
aller inleresl and lax - 5 29 134 630 56 1,924 531 - 3,309

a
T hese lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies ol equilyaccounled enlilies. idslrean aclivilies relaling lo lhe nanagenenl and ownership ol crude
oil and nalural gas pipelines, processing and exporl lerninals and LC processing lacililies and lransporlalion as well as downslrean aclivilies ol TKBP are excluded. The anounls reporled lor equily
accounled enlilies exclude lhe corresponding anounls lor lheir equilyaccounled enlilies.
b
c
d
e
Presenled nel ol lransporlalion cosls, purchases and sales laxes.
l
ncludes inleresl, ninorily inleresl and lhe nel resulls ol equilyaccounled enlilies ol equilyaccounled enlilies.

F
i
n
a
n
c
i
a
I

s
t
a
t
e
m
e
n
t
s
$ nillion
2003
Anerica Anerica
Fesl ol
Subsidiaries
a
b
Proved properlies 34,614 5,507 59,913 3,517 7,934 21,563 - 10,639 2,531 146,323
Unproved properlies 626 - 5,006 165 134 2,011 - 465 1,013 9,425
35,240 5,507 64,924 3,632 3,063 23,574 - 11,154 3,599 155,743
Accunulaled deprecialion 26,564 3,125 23,511 2,141 4,217 10,451 - 4,395 945 30,349

The groups share ol equilyaccounled enlilies nel capilalized cosls al 31 Decenber 2003 was $13,393 nillion.

b
c
Proved - - 1,374 2 - - - 136 - 1,512
Unproved 4 - 2,942 - - - - 41 - 2,937
4 - 4,316 2 - - - 177 - 4,499
d
137 - 362 33 90 333 12 269 49 2,290
Developnenl 907 695 4,914 309 763 2,966 - 359 349 11,767
Tolal cosls 1,043 695 10,092 344 353 3,304 12 1,305 393 13,556

The groups share ol equilyaccounled enlilies cosls incurred in 2003 was $3,259 nillion: in Fussia $1,921 nillion, Soulh Anerica $1,039 nillion, and
Fesl ol Asia $299 nillion.

e
Third parlies 3,365 105 1,526 147 3,339 3,745 - 1,136 360 14,773
Sales belween businesses 4,374 1,416 22,094 1,237 2,605 6,022 - 11,249 1,171 50,163
3,239 1,521 23,620 1,334 5,944 9,767 - 12,435 2,031 64,941
Exploralion expendilure 121 1 305 32 30 213 14 140 26 332
Produclion laxes 503 - 2,603 2 353 - - 5,510 110 9,036
Olher cosls (incone
l
(23 (43 3,440 343 193 (122 196 2,064 226 6,274
Deprecialion, deplelion and anorlizalion 1,049 199 2,729 131 730 2,120 - 733 37 7,333
npairnenls and losses on
sale ol businesses and lxed assels - - 303 2 4 3 - 219 - 541
3,002 307 12,337 349 1,749 3,094 223 9,206 511 31,333
g
5,237 1,214 11,233 535 4,195 6,673 (223 3,229 1,520 33,603
Allocable laxes 2,230 333 3,357 205 2,213 2,672 (36 934 513 13,576
Fesulls ol operalions 2,957 331 7,376 330 1,977 4,001 (192 2,245 1,007 20,032

The groups share ol equilyaccounled enlilies resulls ol operalions (including lhe groups share ol lolal TKBP resulls in 2003 was a proll ol
$2,793 nillion aller deducling inleresl ol $355 nillion, laxalion ol $1,217 nillion and ninorily inleresl ol $169 nillion.

Exploralion and produclion aclivilies
Subsidiaries (as above 5,237 1,214 11,233 535 4,195 6,673 (223 3,229 1,520 33,603
Equilyaccounled enlilies (1 - 1 40 304 (1 2,259 191 - 2,793
idslrean aclivilies
h i
743 16 490 673 274 112 - (272 (129 1,907
belore inleresl and lax 5,979 1,230 11,724 1,243 4,773 6,734 2,031 3,143 1,391 33,303

a
T hese lables conlain inlornalion relaling lo oil and nalural gas exploralion and produclion aclivilies. idslrean aclivilies relaling lo lhe nanagenenl and ownership ol crude oil and nalural gas pipelines,
processing and exporl lerninals and LC processing lacililies and lransporlalion are excluded. n addilion, our nidslrean aclivilies ol narkeling and lrading ol nalural gas, power and CLs in lhe US, Canada,
UK and Europe are excluded. The nosl signilcanl nidslrean pipeline inleresls include lhe TransAlaska Pipeline Syslen, lhe Forlies Pipeline Syslen, lhe Cenlral Area Transnission Syslen pipeline, lhe Soulh
Caucasus Pipeline and lhe BakuTbilisiCeyhan pipeline. ajor LC aclivilies are localed in Trinidad, ndonesia and Auslralia and BP is also invesling in lhe LC business in Angola. The groups share ol equily
accounled enlilies aclivilies are excluded lron lhe lables and included in lhe loolnoles, wilh lhe exceplion ol Abu Dhabi produclion laxes, which are included in lhe resulls ol operalions above.
b
c
d
e
Presenled nel ol lransporlalion cosls, purchases and sales laxes. Sales belween businesses and lhird parly sales have been anended in lhe US wilhoul nel ellecl lo lolal sales.
l
ncludes properly laxes, olher governnenl lake and lhe lair value loss on enbedded derivalives ol $102 nillion. The UK region includes a $499 nillion gain ollsel by corresponding charges prinarily in lhe
g
h
ncludes a $517 nillion wriledown ol our inveslnenl in Fosnell based on ils quoled narkel price al lhe end ol lhe year.
i
Movements in estimated net proved reserves
nillion barrels
Crude oiI
a
2010
America America
Rest of
UK Europe US
e
America Russia Asia

Subsidiaries
Al 1 January 2010
Developed 403 83 1,862 11 49 422 - 182 58 3,070
Undeveloped 291 184 1,211 1 56 454 - 334 57 2,588
694 267 3,073 12 105 876 - 516 115 5,658
Changes allribulable lo
Fevisions ol previous eslinales 20 3 (45) 1 (1) (62) - (62) - (146)
nproved recovery 100 9 133 - 17 14 - 145 3 421
Purchases ol reservesinplace - 33 6 - - - - 38 - 77
Discoveries and exlensions 31 1 80 - - 19 - - - 131
Produclion
b j
(50) (15) (211) (2) (19) (87) - (43) (12) (439)
Sales ol reservesinplace - - (117) (11) - (15) - - - (143)
101 31 (154) (12) (3) (131) - 78 (9) (99)
Al 31 Decenber 2010
c g
Developed 364 77 1,729 - 44 371 - 269 48 2,902
Undeveloped 431 221 1,190 - 58 374 - 325 58 2,657
795 298 2,919 - 102 745 - 594 106 5,559

l
Al 1 January 2010
Developed - - - - 407 - 2,351 363 - 3,121
Undeveloped - - - - 405 9 1,198 120 - 1,732
- - - - 812 9 3,549 483 - 4,853
Fevisions ol previous eslinales - - - - 4 3 248 (20) - 235
nproved recovery - - - - 33 - 269 - - 302
Purchases ol reservesinplace - - - - - - - - - -
Discoveries and exlensions - - - - 1 - - - - 1
Produclion - - - - (35)
i k
- (313) (69) - (417)
Sales ol reservesinplace - - - - - - (3) - - (3)
- - - - 3 3 201 (89) - 118
Al 31 Decenber 2010
d
Developed - - - - 408 - 2,388 370 - 3,166
Undeveloped - - - - 407 12 1,362 24 - 1,805
- - - - 815
h
12 3,750 394 - 4,971

Tolal subsidiaries and equilyaccounled enlilies (BP share
Al 1 January 2010
Developed 403 83 1,862 11 456 422 2,351 545 58 6,191
Undeveloped 291 184 1,211 1 461 463 1,198 454 57 4,320
694 267 3,073 12 917 885 3,549 999 115 10,511
Al 31 Decenber 2010
Developed 364 77 1,729 - 452 371 2,388 639 48 6,068
Undeveloped 431 221 1,190 - 465 386 1,362 349 58 4,462
795 298 2,919 - 917 757 3,750 988 106 10,530

a
Crude oil includes CLs and condensale. Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and
lhe oplion and abilily lo nake lilling and sales arrangenenls independenlly.
b
Excludes CLs lron processing planls in which an inleresl is held ol 29 lhousand barrels a day.
c
ncludes 643 nillion barrels ol CLs. Also includes 22 nillion barrels ol crude oil in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 13 nillion barrels ol CLs. Also includes 254 nillion barrels ol crude oil in respecl ol lhe 7.03' ninorily inleresl in TKBP.
e
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 73 nillion barrels upon which a nel prolls royally will be payable over lhe lile ol lhe leld under lhe lerns ol lhe BP Prudhoe Bay
Foyally Trusl.
l
Volunes ol equilyaccounled enlilies include volunes ol equilyaccounled inveslnenls ol lhose enlilies.
g
ncludes 70 nillion barrels relaling lo assels held lor sale al 31 Decenber 2010. Anounls by region are: 6 nillion barrels in US, 30 nillion barrels in Soulh Anerica, and 34 nillion barrels in Fesl ol Asia.
h
ncludes 301 nillion barrels relaling lo assels held lor sale al 31 Decenber 2010.
i
ncludes 4 nillion barrels ol crude oil sold relaling lo produclion since classilcalion ol equilyaccounled enlilies as held lor sale.
j
ncludes 15 nillion barrels ol crude oil sold relaling lo produclion lron assels held lor sale al 31 Decenber 2010. Anounls by region are: 2 nillion barrels in US, 6 nillion barrels in Soulh Anerica,
and 7 nillion barrels in Fesl ol Asia.
k
ncludes 35 nillion barrels ol crude oil sold relaling lo produclion lron assels held lor sale al 31 Decenber 2010.

F
i
n
a
n
c
i
a
I

s
t
a
t
e
m
e
n
t
s
Movements in estimated net proved reserves DPOUJOVFE
billion cubic leel
NaturaI gas
a
2010
America America
Rest of
Subsidiaries
Al 1 January 2010
Developed 1,602 49 9,583 716 3,177 1,107 - 1,579 3,219 21,032
Undeveloped 670 397 5,633 453 7,393 1,454 - 249 3,107 19,356
2,272 446 15,216 1,169 10,570 2,561 - 1,828 6,326 40,388
Fevisions ol previous eslinales (8) (5) (1,854) (11) 2 3 - (142) (191) (2,206)
nproved recovery 152 6 830 - 512 18 - 83 58 1,659
Purchases ol reservesinplace - 31 97 1 - - - 17 - 146
Discoveries and exlensions 26 - 739 9 19 1,378 - - - 2,171
Produclion
b i
(191) (8) (861) (77) (953) (229) - (228) (288) (2,835)
Sales ol reservesinplace (6) - (424) (1,033) - (51) - - - (1,514)
(27) 24 (1,473) (1,111) (420) 1,119 - (270) (421) (2,579)
Al 31 Decenber 2010
c l
Developed 1,416 40 9,495 58 3,575 1,329 - 1,290 3,563 20,766
Undeveloped 829 430 4,248 - 6,575 2,351 - 268 2,342 17,043
2,245 470 13,743 58 10,150 3,680 - 1,558 5,905 37,809

e
Al 1 January 2010
Developed - - - - 1,252 - 1,703 80 - 3,035
Undeveloped - - - - 1,010 165 519 13 - 1,707
- - - - 2,262 165 2,222 93 - 4,742
Fevisions ol previous eslinales - - - - (141) 10 382 2 - 253
nproved recovery - - - - 291 - - 12 - 303
Produclion
b
- - - - (168)
h j
- (244) (17) - (429)
- - - - 5 10 137 (3) - 149
Al 31 Decenber 2010
d
Developed - - - - 1,075 - 1,900 71 - 3,046
Undeveloped - - - - 1,192 175 459 19 - 1,845
- - - - 2,267
g
175 2,359 90 - 4,891

Al 1 January 2010
Developed 1,602 49 9,583 716 4,429 1,107 1,703 1,659 3,219 24,067
Undeveloped 670 397 5,633 453 8,403 1,619 519 262 3,107 21,063
2,272 446 15,216 1,169 12,832 2,726 2,222 1,921 6,326 45,130
Al 31 Decenber 2010
Developed 1,416 40 9,495 58 4,650 1,329 1,900 1,361 3,563 23,812
Undeveloped 829 430 4,248 - 7,767 2,526 459 287 2,342 18,888
2,245 470 13,743 58 12,417 3,855 2,359 1,648 5,905 42,700

a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and sales
b
ncludes 204 billion cubic leel ol nalural gas consuned in operalions, 166 billion cubic leel in subsidiaries, 33 billion cubic leel in equilyaccounled enlilies and excludes 14 billion cubic leel ol produced
nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
c
ncludes 2,921 billion cubic leel ol nalural gas in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
e
l
ncludes 740 billion cubic leel relaling lo assels held lor sale al 31 Decenber 2010. Anounls by region are: 153 billion cubic leel in US, 205 billion cubic leel in Soulh Anerica, and 377 billion cubic leel in
Fesl ol Asia.
g
ncludes 1,319 billion cubic leel relaling lo assels held lor sale al 31 Decenber 2010.
h
ncludes 12 billion cubic leel ol gas sales relaling lo produclion since classilcalion ol equilyaccounled enlilies as held lor sale.
i
ncludes 133 billion cubic leel ol gas (excluding gas consuned in operalions relaling lo produclion lron assels held lor sale al 31 Decenber 2010. Anounls by region are: 23 billion cubic leel in US,
27 billion cubic leel in Soulh Anerica, and 33 billion cubic leel in Fesl ol Asia.
j
ncludes 141 billion cubic leel ol gas (excluding gas consuned in operalions relaling lo produclion lron assels held lor sale al 31 Decenber 2010.
nillion barrels
Bitumen
a
2010
Rest of
North
America TotaI
Al 1 January 2010
Developed - -
Undeveloped - -
- -
Fevisions ol previous eslinales - -
nproved recovery - -
Purchases ol reservesinplace - -
Discoveries and exlensions 179 179
Produclion - -
Sales ol reservesinplace - -
179 179
Al 31 Decenber 2010
Developed - -
Undeveloped 179 179
179 179

a
Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and
sales arrangenenls independenlly.

F
i
n
a
n
c
i
a
I

s
t
a
t
e
m
e
n
t
s

n
TotaI hydrocarbons
a
2010
America America
Rest of
UK Europe US
e
America Russia Asia
Subsidiaries
Al 1 January 2010
Developed 680 91 3,514 135 596 613 - 455 612 6,696
Undeveloped 406 253 2,183 79 1,331 704 - 376 593 5,925
1,086 344 5,697 214 1,927 1,317 - 831 1,205 12,621
Fevisions ol previous eslinales 18 2 (364) (2) (1) (61) - (87) (33) (528)
Purchases ol reservesinplace - 38 22 - - - - 41 - 101
Discoveries and exlensions 36 1 207 2 4 257 - - - 507
Produclion
b l l
(83) (16) (359) (15) (183) (127) - (83) (61) (927)
Sales ol reservesinplace (1) - (190) (189) - (24) - - - (404)
96 35 (408) (204) (75) 62 - 31 (81) (544)
Al 31 Decenber 2010
c i
Developed 608 84 3,366 10 660 600 - 491 662 6,481
Undeveloped 574 295 1,923 - 1,192 779 - 371 462 5,596
1,182 379 5,289 10 1,852 1,379 - 862 1,124 12,077

g
Al 1 January 2010
Developed - - - - 623 - 2,645 377 - 3,645
Undeveloped - - - - 580 37 1,287 122 - 2,026
- - - - 1,203 37 3,932 499 - 5,671
Fevisions ol previous eslinales - - - - (20) 6 314 (19) - 281
nproved recovery - - - - 83 - 269 2 - 354
Discoveries and exlensions - - - 179 4 - - - - 183
Produclion
b l
- - - - (64)
k m
- (354) (73) - (491)
- - - 179 3 6 225 (90) - 323
Al 31 Decenber 2010
d
Developed - - - - 593 - 2,716 382 - 3,691
Undeveloped - - - 179 613 43 1,441 27 - 2,303
- - - 179 1,206
j
43 4,157 409 - 5,994

h
Al 1 January 2010
Developed 680 91 3,514 135 1,219 613 2,645 832 612 10,341
Undeveloped 406 253 2,183 79 1,911 741 1,287 498 593 7,951
1,086 344 5,697 214 3,130 1,354 3,932 1,330 1,205 18,292
Al 31 Decenber 2010
Developed 608 84 3,366 10 1,253 600 2,716 873 662 10,172
Undeveloped 574 295 1,923 179 1,805 822 1,441 398 462 7,899
1,182 379 5,289 189 3,058 1,422 4,157 1,271 1,124 18,071

a
b
Excludes CLs lron processing planls in which an inleresl is held ol 29 lhousand barrels ol oil equivalenl a day.
c
ncludes 643 nillion barrels ol CLs. Also includes 526 nillion barrels ol oil equivalenl in respecl ol lhe 30' ninorily inleresl in BP Trinidad and Tobago LLC.
d
ncludes 13 nillion barrels ol CLs. Also includes 273 nillion barrels ol oil equivalenl in respecl ol lhe ninorily inleresl in TKBP.
e
Proved reserves in lhe Prudhoe Bay leld in Alaska include an eslinaled 73 nillion barrels ol oil equivalenl upon which a nel prolls royally will be payable.
l
ncludes 35 nillion barrels ol oil equivalenl ol nalural gas consuned in operalions, 23 nillion barrels ol oil equivalenl in subsidiaries, 7 nillion barrels ol oil equivalenl in equilyaccounled enlilies and
excludes 2 nillion barrels ol oil equivalenl ol produced nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
g
h
ncludes 1,311 nillion barrels ol oil equivalenl (197 nillion barrels ol oil equivalenl lor subsidiaries and 1,114 nillion barrels ol oil equivalenl lor equilyaccounled enlilies associaled wilh properlies currenlly
held lor sale where lhe disposal has nol yel been conpleled.
i
ncludes 197 nillion barrels ol oil equivalenl relaling lo assels held lor sale al 31 Decenber 2010. Anounls by region are: 34 nillion barrels ol oil equivalenl in US, 64 nillion barrels ol oil equivalenl in
Soulh Anerica, and 99 nillion barrels ol oil equivalenl in Fesl ol Asia.
j
ncludes 1,114 nillion barrels ol oil equivalenl relaling lo assels held lor sale al 31 Decenber 2010.
k
ncludes 6 nillion barrels ol oil equivalenl sold relaling lo produclion since classilcalion ol equilyaccounled enlilies as held lor sale.
l
ncludes 33 nillion barrels ol oil equivalenl (excluding gas consuned in operalions relaling lo produclion lron assels held lor sale al 31 Decenber 2010. Anounls by region are: 6 nillion barrels ol oil
equivalenl in US, 11 nillion barrels ol oil equivalenl in Soulh Anerica, and 21 nillion barrels ol oil equivalenl in Fesl ol Asia.
ncludes 59 nillion barrels ol oil equivalenl (excluding gas consuned in operalions relaling lo produclion lron assels held lor sale al 31 Decenber 2010.
nillion barrels
Crude oiI
a
2009
Anerica Anerica
Fesl ol
UK Europe US
e
Anerica Fussia Asia
Subsidiaries
Al 1 January 2009
Developed 410 31 1,717 11 47 464 - 195 56 2,931
Undeveloped 119 194 1,273 1 55 496 - 433 53 2,634
529 275 2,990 12 102 960 - 633 114 5,665
Fevisions ol previous eslinales 7 (1 165 2 13 (121 - (123 3 (55
Purchases ol reservesinplace 1 - - - - - - 1 - 2
Discoveries and exlensions 134 - 73 - - 114 - - 7 373
Produclion
b
(61 (14 (237 (2 (22 (109 - (45 (11 (501
Sales ol reservesinplace (3 - - - - - - (26 - (34
165 (3 33 - 3 (34 - (167 1 (7
Al 31 Decenber 2009
c
Developed 403 33 1,362 11 49 422 - 132 53 3,070
Undeveloped 291 134 1,211 1 56 454 - 334 57 2,533
694 267 3,073 12 105 376 - 516 115 5,653

l
Al 1 January 2009
Developed - - - - 399 - 2,227 499 - 3,125
Undeveloped - - - - 409 11 944 199 - 1,563
- - - - 303 11 3,171 693 - 4,633
Fevisions ol previous eslinales - - - - 2 (2 590 (23 - 562
nproved recovery - - - - 50 - 3 - - 53
Discoveries and exlensions - - - - 3 - 37 - - 90
Produclion - - - - (37 - (307 (71 - (415
Sales ol reservesinplace - - - - (14 - - (116 - (130
- - - - 4 (2 373 (215 - 165
Al 31 Decenber 2009
d
Developed - - - - 407 - 2,351 363 - 3,121
Undeveloped - - - - 405 9 1,193 120 - 1,732
- - - - 312 9 3,549 433 - 4,353

Al 1 January 2009
Developed 410 31 1,717 11 446 464 2,227 694 56 6,106
Undeveloped 119 194 1,273 1 464 507 944 637 53 4,247
529 275 2,990 12 910 971 3,171 1,331 114 10,353
Al 31 Decenber 2009
Developed 403 33 1,362 11 456 422 2,351 545 53 6,191
Undeveloped 291 134 1,211 1 461 463 1,193 454 57 4,320
694 267 3,073 12 917 335 3,549 999 115 10,511

a
Crude oil includes CLs and condensale. Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe
oplion and abilily lo nake lilling and sales arrangenenls independenlly.
b
c
d
e
Foyally Trusl.
l

F
i
n
a
n
c
i
a
I

s
t
a
t
e
m
e
n
t
s
billion cubic leel
NaturaI gas
a
2009
Anerica Anerica
Fesl ol
Subsidiaries
Al 1 January 2009
Developed 1,322 61 9,059 659 3,316 1,050 - 1,102 1,337 13,956
Undeveloped 532 402 5,473 463 7,434 1,332 - 1,303 4,000 21,049
2,404 463 14,532 1,127 10,750 2,432 - 2,410 5,337 40,005
Fevisions ol previous eslinales (114 (3 549 43 322 270 - (231 22 353
nproved recovery 34 - 550 5 322 49 - 32 75 1,117
Discoveries and exlensions 150 - 496 94 105 59 - - 531 1,435
Produclion
b
(243 (9 (907 (100 (929 (249 - (241 (139 (2,367
Sales ol reservesinplace (113 - (4 - - - - (223 - (345
(132 (17 634 42 (130 129 - (532 439 333
Al 31 Decenber 2009
c
Developed 1,602 49 9,533 716 3,177 1,107 - 1,579 3,219 21,032
Undeveloped 670 397 5,633 453 7,393 1,454 - 249 3,107 19,356
2,272 446 15,216 1,169 10,570 2,561 - 1,323 6,326 40,333

e
Al 1 January 2009
Developed - - - - 1,493 - 1,560 176 - 3,234
Undeveloped - - - - 1,023 132 653 111 - 1,969
- - - - 2,521 132 2,213 237 - 5,203
Fevisions ol previous eslinales - - - - (26 (17 204 (19 - 142
Produclion
b
- - - - (165 - (219 (25 - (409
- - - - (259 (17 9 (194 - (461
Al 31 Decenber 2009
d
Developed - - - - 1,252 - 1,703 30 - 3,035
Undeveloped - - - - 1,010 165 519 13 - 1,707
- - - - 2,262 165 2,222 93 - 4,742

Al 1 January 2009
Developed 1,322 61 9,059 659 4,314 1,050 1,560 1,273 1,337 22,190
Undeveloped 532 402 5,473 463 3,457 1,564 653 1,419 4,000 23,013
2,404 463 14,532 1,127 13,271 2,614 2,213 2,697 5,337 45,203
Al 31 Decenber 2009
Developed 1,602 49 9,533 716 4,429 1,107 1,703 1,659 3,219 24,067
Undeveloped 670 397 5,633 453 3,403 1,619 519 262 3,107 21,063
2,272 446 15,216 1,169 12,332 2,726 2,222 1,921 6,326 45,130

a
b
c
d
e
TotaI hydrocarbons
a
2009
Anerica Anerica
Fesl ol
UK Europe US
e
Anerica Fussia Asia
Subsidiaries
Al 1 January 2009
Developed 724 91 3,279 126 617 645 - 335 332 6,249
Undeveloped 219 264 2,217 31 1,337 734 - 714 747 6,313
943 355 5,496 207 1,954 1,379 - 1,099 1,129 12,562
Fevisions ol previous eslinales (13 (2 260 9 74 (74 - (163 7 93
nproved recovery 43 7 177 1 63 40 - 45 15 396
Discoveries and exlensions 210 - 153 17 13 124 - - 93 625
Produclion
b l
(102 (16 (393 (20 (132 (152 - (36 (44 (995
Sales ol reservesinplace (23 - (1 - - - - (65 - (94
143 (11 201 7 (27 (62 - (263 76 59
Al 31 Decenber 2009
c
Developed 630 91 3,514 135 596 613 - 455 612 6,696
Undeveloped 406 253 2,133 79 1,331 704 - 376 593 5,925
1,036 344 5,697 214 1,927 1,317 - 331 1,205 12,621

g
Al 1 January 2009
Developed - - - - 653 - 2,495 529 - 3,632
Undeveloped - - - - 536 42 1,057 213 - 1,903
- - - - 1,244 42 3,552 747 - 5,535
Fevisions ol previous eslinales - - - - (2 (5 625 (32 - 536
Produclion
b l
- - - - (66 - (345 (75 - (436
- - - - (41 (5 330 (243 - 36
Al 31 Decenber 2009
d
Developed - - - - 623 - 2,645 377 - 3,645
Undeveloped - - - - 530 37 1,237 122 - 2,026
- - - - 1,203 37 3,932 499 - 5,671

Al 1 January 2009
Developed 724 91 3,279 126 1,275 645 2,495 914 332 9,931
Undeveloped 219 264 2,217 31 1,923 776 1,057 932 747 3,216
943 355 5,496 207 3,193 1,421 3,552 1,346 1,129 13,147
Al 31 Decenber 2009
Developed 630 91 3,514 135 1,219 613 2,645 332 612 10,341
Undeveloped 406 253 2,133 79 1,911 741 1,237 493 593 7,951
1,036 344 5,697 214 3,130 1,354 3,932 1,330 1,205 13,292

a
b
c
d
e
l
ncludes 34 nillion barrels ol oil equivalenl ol nalural gas consuned in operalions, 29 nillion barrels ol oil equivalenl in subsidiaries, 5 nillion barrels ol oil equivalenl in equilyaccounled enlilies and excludes
3 nillion barrels ol oil equivalenl ol produced nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
g

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nillion barrels
Crude oiI
a
2003
Anerica Anerica
Fesl ol
UK Europe US
e
Anerica Fussia Asia
Subsidiaries
Al 1 January 2003
Developed 414 105 1,332 13 102 256 - 121 44 2,937
Undeveloped 123 169 1,265 1 202 350 - 372 73 2,555
537 274 3,147 14 304 606 - 493 117 5,492
Fevisions ol previous eslinales 16 (11 (212 1 7 264 - 194 5 264
Discoveries and exlensions - - 64 - 5 173 - - - 242
Produclion
b
(63 (16 (191 (3 (23 (101 - (47 (11 (455
Sales ol reservesinplace - - - - (199 - - - - (199
(3 1 (157 (2 (202 354 - 190 (3 173
Al 31 Decenber 2003
c
Developed 410 31 1,717 11 47 464 - 195 56 2,931
Undeveloped 119 194 1,273 1 55 496 - 433 53 2,634
529 275 2,990 12 102 960 - 633 114 5,665

l
Al 1 January 2003
Developed - - - - 323 - 2,094 574 - 2,996
Undeveloped - - - - 243 - 1,137 205 - 1,535
- - - - 571 - 3,231 779 - 4,531
Fevisions ol previous eslinales - - - - (3 11 217 (1 - 224
nproved recovery - - - - 62 - - - - 62
Purchases ol reservesinplace - - - - 199 - - - - 199
Produclion - - - - (34 - (302 (30 - (416
Sales ol reservesinplace - - - - - - (1 - - (1
- - - - 237 11 (60 (31 - 107
Al 31 Decenber 2003
d
Developed - - - - 399 - 2,227 499 - 3,125
Undeveloped - - - - 409 11 944 199 - 1,563
- - - - 303 11 3,171 693 - 4,633

Al 1 January 2003
Developed 414 105 1,332 13 430 256 2,094 695 44 5,933
Undeveloped 123 169 1,265 1 445 350 1,137 577 73 4,140
537 274 3,147 14 375 606 3,231 1,272 117 10,073
Al 31 Decenber 2003
Developed 410 31 1,717 11 446 464 2,227 694 56 6,106
Undeveloped 119 194 1,273 1 464 507 944 637 53 4,247
529 275 2,990 12 910 971 3,171 1,331 114 10,353

a
Crude oil includes CLs and condensale. Proved reserves exclude royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe
oplion and abilily lo nake lilling and sales arrangenenls independenlly.
b
c
d
e
Foyally Trusl.
l
billion cubic leel
NaturaI gas
a
2003
Anerica Anerica
Fesl ol
Subsidiaries
Al 1 January 2003
Developed 2,049 63 10,670 603 3,075 990 - 1,270 1,135 19,360
Undeveloped 553 410 4,705 421 7,973 1,410 - 1,269 4,529 21,270
2,602 473 15,375 1,029 11,043 2,400 - 2,539 5,664 41,130
Fevisions ol previous eslinales 23 (3 (2,063 51 (456 142 - - 361 (1,950
nproved recovery 77 9 1,322 16 159 6 - 103 2 1,699
Purchases ol reservesinplace - - 133 - - - - - - 133
Discoveries and exlensions - - 549 125 943 32 - 37 - 1,741
Produclion
b
(293 (11 (334 (94 (946 (193 - (274 (140 (2,795
(193 (10 (343 93 (293 32 - (129 223 (1,125
Al 31 Decenber 2003
c
Developed 1,322 61 9,059 659 3,316 1,050 - 1,102 1,337 13,956
Undeveloped 532 402 5,473 463 7,434 1,332 - 1,303 4,000 21,049
2,404 463 14,532 1,127 10,750 2,432 - 2,410 5,337 40,005

e
Al 1 January 2003
Developed - - - - 1,473 - 303 137 - 2,473
Undeveloped - - - - 331 - 353 113 - 1,297
- - - - 2,309 - 1,161 300 - 3,770
Fevisions ol previous eslinales - - - - (96 132 1,273 (2 - 1,357
Produclion
b
- - - - (133 - (221 (22 - (431
Sales ol reservesinplace - - - - - - - - - -
- - - - 212 132 1,052 (13 - 1,433
Al 31 Decenber 2003
d
Developed - - - - 1,493 - 1,560 176 - 3,234
Undeveloped - - - - 1,023 132 653 111 - 1,969
- - - - 2,521 132 2,213 237 - 5,203

Al 1 January 2003
Developed 2,049 63 10,670 603 4,553 990 303 1,457 1,135 22,333
Undeveloped 553 410 4,705 421 3,304 1,410 353 1,332 4,529 22,567
2,602 473 15,375 1,029 13,357 2,400 1,161 2,339 5,664 44,900
Al 31 Decenber 2003
Developed 1,322 61 9,059 659 4,314 1,050 1,560 1,273 1,337 22,190
Undeveloped 532 402 5,473 463 3,457 1,564 653 1,419 4,000 23,013
2,404 463 14,532 1,127 13,271 2,614 2,213 2,697 5,337 45,203

a
b
c
d
e

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b
d
e
TotaI hydrocarbons
a
2003
Anerica Anerica
Fesl ol
UK Europe US
e
Anerica Fussia Asia
Subsidiaries
Al 1 January 2003
Developed 767 116 3,722 113 631 427 - 340 240 6,361
Undeveloped 219 239 2,077 74 1,576 593 - 591 353 6,222
936 355 5,799 192 2,207 1,020 - 931 1,093 12,533
Fevisions ol previous eslinales 20 (12 (569 10 (71 239 - 194 67 (72
nproved recovery 52 30 410 3 36 13 - 61 4 614
Purchases ol reservesinplace - - 32 - - - - - - 32
Discoveries and exlensions - - 153 22 163 137 - 7 - 542
Produclion
b l
(115 (13 (334 (20 (136 (135 - (94 (35 (937
(43 - (303 15 (253 359 - 163 36 (21
Al 31 Decenber 2003
c
Developed 724 91 3,279 126 617 645 - 335 332 6,249
Undeveloped 219 264 2,217 31 1,337 734 - 714 747 6,313
943 355 5,496 207 1,954 1,379 - 1,099 1,129 12,562

g
Al 1 January 2003
Developed - - - - 533 - 2,233 606 - 3,422
Undeveloped - - - - 336 - 1,199 224 - 1,309
- - - - 969 - 3,432 330 - 5,231
Fevisions ol previous eslinales - - - - (20 42 436 (1 - 457
Produclion
b l
- - - - (66 - (341 (34 - (491
Sales ol reservesinplace - - - - - - (1 - - (1
- - - - 275 42 120 (33 - 354
Al 31 Decenber 2003
d
Developed - - - - 653 - 2,495 529 - 3,632
Undeveloped - - - - 536 42 1,057 213 - 1,903
- - - - 1,244 42 3,552 747 - 5,535

Al 1 January 2003
Developed 767 116 3,722 113 1,214 427 2,233 946 240 9,733
Undeveloped 219 239 2,077 74 1,962 593 1,199 315 353 3,031
936 355 5,799 192 3,176 1,020 3,432 1,761 1,093 17,314
Al 31 Decenber 2003
Developed 724 91 3,279 126 1,275 645 2,495 914 332 9,931
Undeveloped 219 264 2,217 31 1,923 776 1,057 932 747 3,216
943 355 5,496 207 3,193 1,421 3,552 1,346 1,129 13,147

a

c


l
ncludes 33 nillion barrels ol oil equivalenl ol nalural gas consuned in operalions, 25 nillion barrels ol oil equivalenl in subsidiaries, 3 nillion barrels ol oil equivalenl in equilyaccounled enlilies and
excludes 3 nillion barrels ol oil equivalenl ol produced nonhydrocarbon conponenls which neel regulalory requirenenls lor sales.
g
Standardized measure of discounted future net cash ows and changes therein reIating to proved oiI and gas reserves
The lollowing lables sel oul lhe slandardized neasure ol discounled lulure nel cash Hows, and changes lhere in, relaling lo crude oil and nalural gas
produclion lron lhe groups eslinaled proved reserves. This inlornalion is prepared in conpliance wilh FASB Oil and Cas Disclosures requirenenls.
Fulure nel cash Hows have been prepared on lhe basis ol cerlain assunplions which nay or nay nol be realized. These include lhe lining ol lulure
produclion, lhe eslinalion ol crude oil and nalural gas reserves and lhe applicalion ol average crude oil and nalural gas prices and exchange rales lron lhe
previous 12 nonlhs. Furlhernore, bolh proved reserves eslinales and produclion lorecasls are subjecl lo revision as lurlher lechnical inlornalion
becones available and econonic condilions change. BP caulions againsl relying on lhe inlornalion presenled because ol lhe highly arbilrary nalure ol lhe
assunplions on which il is based and ils lack ol conparabilily wilh lhe hislorical cosl inlornalion presenled in lhe lnancial slalenenls.
$ nillion
2010
America America
Rest of
Al 31 Decenber 2010
Subsidiaries
Fulure cash inHows
a
73,100 25,800 264,800 200 29,300 70,800 - 52,500 42,300 558,800
Fulure produclion cosl
b
25,700 9,800 111,400 200 6,800 14,000 - 13,400 12,800 194,100
Fulure developnenl cosl
b
7,400 2,500 24,300 - 6,100 14,600 - 9,900 3,100 67,900
Fulure laxalion
c
19,900 8,100 41,900 - 8,200 14,100 - 7,000 6,200 105,400
Fulure nel cash Hows 20,100 5,400 87,200 - 8,200 28,100 - 22,200 20,200 191,400
10' annual discounl
d
9,800 2,300 45,500 - 3,300 11,900 - 8,200 10,300 91,300
Slandardized neasure ol discounled
lulure nel cash Hows
e
10,300 3,100 41,700 - 4,900 16,200 - 14,000 9,900 100,100
l
Fulure cash inHows
a
- - - 9,700 45,500 - 110,500 31,000 - 196,700
b
- - - 4,500 19,200 - 80,900 26,500 - 131,100
b
- - - 2,000 4,300 - 11,000 2,800 - 20,100
Fulure laxalion
c
- - - 800 7,500 - 3,900 200 - 12,400
Fulure nel cash Hows - - - 2,400 14,500 - 14,700 1,500 - 33,100
10' annual discounl
d
- - - 2,400 8,700 - 6,100 700 - 17,900
nel cash Hows
g h
lulure - - - - 5,800 - 8,600 800 - 15,200
Tolal subsidiaries and equilyaccounled enlilies
j
10,300 3,100 41,700 - 10,700 16,200 8,600 14,800 9,900 115,300

The lollowing are lhe principal sources ol change in lhe slandardized neasure ol discounled lulure nel cash Hows:
$ nillion
Equity-accounted TotaI subsidiaries and
Subsidiaries entities (BP share) equity-accounted entities
Sales and lranslers ol oil and gas produced, nel ol produclion cosls (26,600) (4,900) (31,500)
Developnenl cosls lor lhe currenl year as eslinaled in previous year 10,400 2,000 12,400
Exlensions, discoveries and inproved recovery, less relaled cosls 9,600 1,600 11,200
el changes in prices and produclion cosl 52,800 1,900 54,700
Fevisions ol previous reserves eslinales (9,200) 200 (9,000)
el change in laxalion (13,400) (300) (13,700)
Fulure developnenl cosls (4,300) (1,400) (5,700)
el change in purchase and sales ol reservesinplace (1,500) - (1,500)
Addilion ol 10' annual discounl 7,500 1,500 9,000
Tolal change in lhe slandardized neasure during lhe year
i
25,300 600 25,900

a
The narker prices used were Brenl $79.02/bbl, Henry Hub $4.37/nnBlu.
b
Produclion cosls, which include produclion laxes, and developnenl cosls relaling lo lulure produclion ol proved reserves are based on lhe conlinualion ol exisling econonic condilions. Fulure
deconnissioning cosls are included.
c
Taxalion is conpuled using appropriale yearend slalulory corporale incone lax rales.
d
Fulure nel cash Hows lron oil and nalural gas produclion are discounled al 10' regardless ol lhe group assessnenl ol lhe risk associaled wilh ils producing aclivilies.
e
inorily inleresl in BP Trinidad and Tobago LLC anounled lo $1,200 nillion.
l
T he slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled enlilies includes slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled inveslnenls ol
lhose enlilies.
g
inorily inleresl in TKBP anounled lo $600 nillion.
h
o equilyaccounled lulure cash Hows in Alrica because proved reserves are received as a resull ol conlraclual arrangenenls, wilh no associaled cosls.
i
T olal change in lhe slandardized neasure during lhe year includes lhe ellecl ol exchange rale novenenls.
j
ncludes lulure nel cash Hows lor assels held lor sale al 31 Decenber 2010.

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Standardized measure of discounted future net cash ows and changes therein reIating to proved oiI and gas reserves DPOUJOVFE
$ nillion
2009
Anerica Anerica
Fesl ol
Al 31 Decenber 2009
Subsidiaries
Fulure cash inHows
a
50,300 17,700 204,000 4,900 26,400 53,400 - 36,100 32,500 430,300
b
20,000 3,000 91,300 2,700 6,700 12,000 - 9,200 11,000 160,900
b
5,000 2,500 24,900 1,000 5,600 12,200 - 6,400 3,100 60,700
Fulure laxalion
c
12,900 3,700 27,300 200 5,300 11,300 - 4,700 4,500 70,400
Fulure nel cash Hows 12,900 3,500 60,500 1,000 3,300 22,900 - 15,300 13,900 133,300
10' annual discounl
d
5,300 1,600 29,500 500 3,200 9,300 - 6,300 7,300 64,000
e
7,100 1,900 31,000 500 5,100 13,100 - 9,500 6,600 74,300
l
Fulure cash inHows
a
- - - - 37,700 - 96,700 30,000 - 164,400
b
- - - - 17,000 - 65,200 25,200 - 107,400
b
- - - - 4,000 - 10,200 3,100 - 17,300
Fulure laxalion
c
- - - - 5,200 - 4,300 100 - 9,600
Fulure nel cash Hows - - - - 11,500 - 17,000 1,600 - 30,100
10' annual discounl
d
- - - - 6,300 - 7,900 300 - 15,500
g h
- - - - 4,700 - 9,100 300 - 14,600
lulure nel cash Hows 7,100 1,900 31,000 500 9,300 13,100 9,100 10,300 6,600 39,400
$ nillion
Equilyaccounled Tolal subsidiaries and
Subsidiaries enlilies (BP share equilyaccounled enlilies
Sales and lranslers ol oil and gas produced, nel ol produclion cosls (13,900 (3,400 (22,300
Developnenl cosls lor lhe currenl year as eslinaled in previous year 11,700 2,100 13,300
Exlensions, discoveries and inproved recovery, less relaled cosls 3,500 1,600 10,100
el changes in prices and produclion cosl 37,200 5,900 43,100
Fevisions ol previous reserves eslinales (4,300 (200 (4,500
el change in laxalion (10,600 (1,600 (12,200
Fulure developnenl cosls (600 900 300
el change in purchase and sales ol reservesinplace (100 (900 (1,000
Addilion ol 10' annual discounl 4,700 900 5,600
Tolal change in lhe slandardized neasure during lhe year
i
27,600 5,300 32,900

a
T he narker prices used were Brenl $59.91/bbl, Henry Hub $3.32/nnBlu.
b
Produclion cosls, which include produclion laxes, and developnenl cosls relaling lo lulure produclion ol proved reserves are based on lhe conlinualion ol exisling econonic condilions. Fulure
deconnissioning cosls are included.
c
T axalion is conpuled using appropriale yearend slalulory corporale incone lax rales.
d
e
inorily inleresl in BP Trinidad and Tobago LLC anounled lo $1,300 nillion.
l
T he slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled enlilies includes slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled inveslnenls ol lhose
enlilies.
g
inorily inleresl in TKBP anounled lo $600 nillion.
h
o equilyaccounled lulure cash Hows in Alrica because proved reserves are received as a resull ol conlraclual arrangenenls, wilh no associaled cosls.
i
Standardized measure of discounted future net cash ows and changes therein reIating to proved oiI and gas reserves DPOUJOVFE
$ nillion
2003
Anerica Anerica
Fesl ol
Al 31 Decenber 2003
Subsidiaries
Fulure cash inHows
a
36,400 13,300 165,300 6,400 26,300 40,400 - 31,400 24,200 344,700
b
13,100 6,300 30,400 2,700 7,200 11,600 - 11,300 10,700 143,300
b
3,300 2,900 25,600 1,300 7,200 10,900 - 7,500 3,200 61,900
Fulure laxalion
c
7,300 2,300 17,500 500 5,500 6,600 - 2,400 2,300 44,900
Fulure nel cash Hows 7,700 2,300 42,300 1,900 6,400 11,300 - 9,700 7,500 39,100
10' annual discounl
d
2,200 1,200 21,000 1,000 2,900 5,500 - 4,200 3,900 41,900
e
5,500 1,100 21,300 900 3,500 5,300 - 5,500 3,600 47,200
g
h
- - - - 3,600 - 4,300 900 - 9,300
e
5,500 1,100 21,300 900 7,100 5,300 4,300 6,400 3,600 56,500

$ nillion
2003
Sales and lranslers ol oil and gas produced, nel ol produclion cosls (43,600
Developnenl cosls lor lhe currenl year as eslinaled in previous year 9,400
Exlensions, discoveries and inproved recovery, less relaled cosls 4,400
el changes in prices and produclion cosl (146,300
Fevisions ol previous reserves eslinales 1,200
el change in laxalion 69,400
Fulure developnenl cosls (7,400
el change in purchase and sales ol reservesinplace (200
Addilion ol 10' annual discounl 14,600
Tolal change in lhe slandardized neasure during lhe year ol subsidiaries
l
(99,000

a
T he yearend narker prices used were 2003 Brenl $36.55/bbl, Henry Hub $5.63/nnBlu.
b
Produclion cosls, which include produclion laxes, and developnenl cosls relaling lo lulure produclion ol proved reserves are based on yearend cosl levels and assune conlinualion ol exisling econonic
condilions. Fulure deconnissioning cosls are included.
c
Taxalion is conpuled using appropriale yearend slalulory corporale incone lax rales.
d
e
inorily inleresl in BP Trinidad and Tobago LLC anounled lo $900 nillion al 31 Decenber 2003.
l
g
The slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled enlilies includes slandardized neasure ol discounled lulure nel cash Hows ol equilyaccounled inveslnenls ol lhose
enlilies.
h
inorily inleresl in TKBP anounled lo $300 nillion al 31 Decenber 2003.

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OperationaI and statisticaI information
The lollowing lables presenl operalional and slalislical inlornalion relaled lo produclion, drilling, produclive wells and acreage. Figures include anounls
allribulable lo assels held lor sale.
Crude oiI and naturaI gas production
The lollowing lable shows crude oil and nalural gas produclion lor lhe years ended 31 Decenber 2010, 2009 and 2003.
Production for the year
a

Anerica Anerica
Fesl ol
Subsidiaries
Crude oil
b
2010 137 40 594 7 54 246 - 119 32 1,229
2009 163 40 665 3 61 304 - 123 31 1,400
2003 173 43 533 9 66 277 - 123 29 1,263
alural gas
c
2010 472 15 2,184 202 2,544 556 - 574 785 7,332
2009 613 16 2,316 263 2,492 621 - 610 514 7,450
2003 759 23 2,157 245 2,532 434 - 696 331 7,277
Crude oil
b
2010 - - - - 98 - 856 191 - 1,145
2009 - - - - 101 - 340 194 - 1,135
2003 - - - - 92 - 326 220 - 1,133
alural gas
c
2010 - - - - 399 - 640 30 - 1,069
2009 - - - - 392 - 601 42 - 1,035
2003 - - - - 454 - 564 39 - 1,057

a
Produclion excludes royallies due lo olhers, whelher payable in cash or in kind, where lhe royally owner has a direcl inleresl in lhe underlying produclion and lhe oplion and abilily lo nake lilling and sales
b
Crude oil includes nalural gas liquids and condensale.
c
alural gas produclion excludes gas consuned in operalions.
Productive oiI and gas weIIs and acreage
The lollowing lables show lhe nunber ol gross and nel produclive oil and nalural gas wells and lolal gross and nel developed and undeveloped oil and
nalural gas acreage in which lhe group and ils equilyaccounled enlilies had inleresls as al 31 Decenber 2010. A gross well or acre is one in which a
whole or lraclional working inleresl is owned, while lhe nunber ol nel wells or acres is lhe sun ol lhe whole or lraclional working inleresls in gross wells
or acres. Produclive wells are producing wells and wells capable ol produclion. Developed acreage is lhe acreage wilhin lhe boundary ol a leld, on which
developnenl wells have been drilled, which could produce lhe reserves, while undeveloped acres are lhose on which wells have nol been drilled or
conpleled lo a poinl lhal would pernil lhe produclion ol connercial quanlilies, whelher or nol such acres conlain proved reserves.
Anerica Anerica
Fesl ol
unber ol produclive wells al
31 Decenber 2010
Oil wells
a
- gross 251 84 2,709 7 3,705 596 20,235 1,889 13 29,489
- nel 130 32 1,121 3 2,063 454 9,081 424 2 13,310
Cas wells
b
- gross 281 - 23,041 366 498 106 63 639 68 25,062
- nel 138 - 12,581 285 167 42 31 284 13 13,541

a
ncludes approxinalely 3,939 gross (1,730 nel nulliple conplelion wells (nore lhan one lornalion producing inlo lhe sane well bore.
b
ncludes approxinalely 2,623 gross (1,673 nel nulliple conplelion wells. l one ol lhe nulliple conplelions in a well is an oil conplelion, lhe well is classiled as an oil well.

Anerica Anerica
Fesl ol

Oil and nalural gas acreage al 31 Decenber 2010 Thousands ol acres
Developed - gross 346 65 6,920 198 1,738 497 2,282 2,434 162 14,642
- nel 189 21 4,184 157 471 195 885 935 35 7,072
Undeveloped
a
- gross 1,311 186 6,970 7,185 12,434 21,373 32,137 18,366 7,330 107,292
- nel 775 79 4,663 4,380 6,398 16,072 15,475 8,955 2,796 59,593

a
Undeveloped acreage includes leases and concessions.
Net oiI and gas weIIs compIeted or abandoned
The lollowing lable shows lhe nunber ol nel produclive and dry exploralory and developnenl oil and nalural gas wells conpleled or abandoned in lhe
years indicaled by lhe group and ils equilyaccounled enlilies. Produclive wells include wells in which hydrocarbons were encounlered and lhe drilling or
conplelion ol which, in lhe case ol exploralory wells, has been suspended pending lurlher drilling or evalualion. A dry well is one lound lo be incapable ol
producing hydrocarbons in sullcienl quanlilies lo juslily conplelion.
Anerica Anerica
Fesl ol
2010
Exploralory
Produclive - 0.2 39.3 - 1.3 1.2 10.5 2.8 0.3 55.6
Dry 0.7 - 0.3 - 0.9 1.4 4.0 - - 7.3
Developnenl
Produclive 6.4 1.2 260.0 31.7 105.7 18.9 364.3 53.3 - 841.5
Dry 1.7 - 0.5 - 1.2 2.7 - 2.4 - 8.5
2009
Exploralory
Produclive 0.1 - 47.2 - 3.0 4.5 7.0 5.3 0.6 67.7
Dry 0.2 - 4.2 - - 1.4 4.5 6.0 0.2 16.5
Developnenl
Produclive 9.3 1.5 403.3 17.9 135.4 20.3 293.0 45.3 1.6 929.1
Dry - - 3.3 - - 0.5 4.0 0.4 0.6 3.3
2003
Exploralory
Produclive 0.3 - 2.4 - 4.4 4.3 12.5 0.5 0.6 25.5
Dry - 0.5 0.9 0.1 0.4 2.6 23.0 0.5 0.4 23.4
Developnenl
Produclive 6.6 0.5 379.3 23.3 112.5 13.6 10.0 45.4 4.5 606.2
Dry 0.2 - 1.1 0.9 2.9 1.5 19.5 2.1 - 23.2

DriIIing and production activities in progress
The lollowing lable shows lhe nunber ol exploralory and developnenl oil and nalural gas wells in lhe process ol being drilled by lhe group and ils equily
accounled enlilies as ol 31 Decenber 2010. Suspended developnenl wells and longlern suspended exploralory wells are also included in lhe lable.
Anerica Anerica
Fesl ol
Al 31 Decenber 2010
Exploralory
Cross 1.0 - 211.0 3.0 1.0 3.0 11.0 3.0 -
233.0
el 0.2 - 45.2 1.5 - 1.6 5.5 1.2 - 55.2
Developnenl
Cross 11.0 - 375.0 - 23.0 34.0 88.0 20.0 - 551.0
el 5.5 - 140.6 - 9.5 10.8 39.7 6.6 - 212.7


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Signalures
The regislranl hereby cerliles lhal il neels all ol lhe requirenenls lor lling on Forn 20F and lhal il has duly caused and aulhorized lhe undersigned lo
sign lhis annual reporl on ils behall.
BP p.l.c.
(Fegislranl
/s/D.J. JACKSON
D.J. Jackson
Conpany Secrelary
Daled 2 arch 2011
250 BP Annual Feporl and Forn 20-F 2010

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Parent company nancial statements of BP p.l.c.
Statement of directors responsibilities in respect of the parent company
nancial statements
The directors are responsible for preparing the nancial statements in accordance with applicable United Kingdom law and United Kingdom generally
accepted accounting practice.
Company law requires the directors to prepare nancial statements for each nancial year that give a true and fair view of the state of affairs of the
company. In preparing these nancial statements, the directors are required:
To select suitable accounting policies and then apply them consistently.
To make judgements and estimates that are reasonable and prudent.
To state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the nancial
statements.
To prepare the nancial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The
directors are also responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the nancial position of the
company and enable them to ensure that the nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Having made the requisite enquiries, so far as the directors are aware, there is no relevant audit information (as dened by Section 418(3) of the
Companies Act 2006) of which the companys auditors are unaware, and the directors have taken all the steps they ought to have taken to make
themselves aware of any relevant audit information and to establish that the companys auditors are aware of that information.
The parent company nancial statements of BP p.l.c. on pages PC1 PC16 do not form part of BPs Annual Report on Form 20-F as led with the SEC.
BP Annual Report and Form 20-F 2010 PC1
Parenl conpany lnancial slalenenls ol BP p.l.c.
ndependenl audilors reporl lo lhe nenbers ol BP p.l.c.
ve have audiled lhe parenl conpany lnancial slalenenls ol BP p.l.c. lor lhe year ended 31 Decenber 2010 which conprise lhe conpany balance sheel,
lhe conpany cash How slalenenl, lhe conpany slalenenl ol lolal recognized gains and losses and lhe relaled noles 1 lo 14. The lnancial reporling
lranework lhal has been applied in lheir preparalion is applicable law and Uniled Kingdon accounling slandards (Uniled Kingdon generally accepled
accounling praclice.
This reporl is nade solely lo lhe conpanys nenbers, as a body, in accordance wilh Chapler 3 ol Parl 16 ol lhe Conpanies Acl 2006. Our audil
work has been underlaken so lhal we nighl slale lo lhe conpanys nenbers lhose nallers we are required lo slale lo lhen in an audilors reporl and
lor no olher purpose. To lhe lullesl exlenl pernilled by law, we do nol accepl or assune responsibilily lo anyone olher lhan lhe conpany and lhe
conpanys nenbers as a body, lor our audil work, lor lhis reporl, or lor lhe opinions we have lorned.
Respective responsibiIities of directors and auditors
As explained nore lully in lhe Slalenenl ol direclors responsibililies in respecl ol lhe parenl conpany lnancial slalenenls sel oul on page PC1, lhe
direclors are responsible lor lhe preparalion ol lhe parenl conpany lnancial slalenenls and lor being salisled lhal lhey give a lrue and lair view. Our
responsibilily is lo audil lhe parenl conpany lnancial slalenenls in accordance wilh applicable law and nlernalional Slandards on Audiling (UK and
reland. Those slandards require us lo conply wilh lhe Audiling Praclices Boards Elhical Slandards lor Audilors.
Scope of the audit of the hnanciaI statements
An audil involves oblaining evidence aboul lhe anounls and disclosures in lhe lnancial slalenenls sullcienl lo give reasonable assurance lhal lhe
lnancial slalenenls are lree lron nalerial nisslalenenl, whelher caused by lraud or error. This includes an assessnenl ol: whelher lhe accounling
policies are appropriale lo lhe parenl conpanys circunslances and have been consislenlly applied and adequalely disclosed, lhe reasonableness ol
signilcanl accounling eslinales nade by lhe direclors, and lhe overall presenlalion ol lhe lnancial slalenenls.
Opinion on hnanciaI statements
n our opinion lhe parenl conpany lnancial slalenenls:
give a lrue and lair view ol lhe slale ol lhe conpanys allairs as al 31 Decenber 2010,
have been properly prepared in accordance wilh Uniled Kingdon generally accepled accounling praclice, and
have been prepared in accordance wilh lhe requirenenls ol lhe Conpanies Acl 2006.
Opinion on other matters prescribed by the Companies Act 2006
n our opinion:
lhe parl ol lhe Direclors renuneralion reporl lo be audiled has been properly prepared in accordance wilh lhe Conpanies Acl 2006, and
lhe inlornalion given in lhe Direclors Feporl lor lhe lnancial year lor which lhe parenl conpany lnancial slalenenls are prepared is consislenl wilh
lhe parenl conpany lnancial slalenenls.
Matters on which we are required to report by exception
ve have nolhing lo reporl in respecl ol lhe lollowing nallers where lhe Conpanies Acl 2006 requires us lo reporl lo you il, in our opinion:
adequale accounling records have nol been kepl by lhe parenl conpany, or relurns adequale lor our audil have nol been received lron branches nol
visiled by us, or
lhe parenl conpany lnancial slalenenls and lhe parl ol lhe Direclors renuneralion reporl lo be audiled are nol in agreenenl wilh lhe accounling
records and relurns, or
cerlain disclosures ol direclors renuneralion speciled by law are nol nade, or
we have nol received all lhe inlornalion and explanalions we require lor our audil.
Other matter
ve have reporled separalely on lhe consolidaled lnancial slalenenls ol BP p.l.c. lor lhe year ended 31 Decenber 2010. Thal reporl includes an
enphasis ol naller on lhe signilcanl uncerlainly over provisions and conlingencies relaled lo lhe Cull ol exico oil spill.
Ernst & Young LLP
Allisler vilson (Senior slalulory audilor
lor and on behall ol Ernsl & Young LLP, Slalulory Audilor
London
2 arch 2011
The parenl conpany lnancial slalenenls ol BP p.l.c. on pages PC1 - PC16 do nol lorn parl ol BPs Annual Feporl on Forn 20F as lled wilh lhe SEC.
PC2 BP Annual Feporl and Forn 20F 2010

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Conpany balance sheel
Al 31 Decenber $ nillion
ole 2010 2009
Fixed assels
nveslnenls
Subsidiary underlakings 3 122,649 93,063
Associaled underlakings 3 2
Tolal lxed assels 122,651 93,065
Currenl assels
Deblors - anounls lalling due:
vilhin one year 4 14,444 30,709
Aller nore lhan one year 4 38 1,173
Delerred laxalion 2 70 130
Cash al bank and in hand 4 23
14,556 32,045
Credilors - anounls lalling due wilhin one year 5 2,385 2,401
el currenl assels 12,171 29,644
Tolal assels less currenl liabililies 134,822 122,709
Credilors - anounls lalling due aller nore lhan one year 5 4,293 4,323
el assels excluding pension plan surplus 130,529 113,331
Delned benell pension plan surplus 6 1,537 912
Delned benell pension plan delcil 6 (147) (120
el assels 131,919 119,173
Fepresenled by
Capilal and reserves
Calledup share capilal 7 5,183 5,179
Share preniun accounl 3 9,987 9,347
Capilal redenplion reserve 3 1,072 1,072
erger reserve 3 26,509 26,509
Own shares 3 (126) (214
Treasury shares 3 (21,085) (21,303
Sharebased paynenl reserve 3 1,585 1,519
Proll and loss accounl 3 108,794 96,564
131,919 119,173

The lnancial slalenenls on pages PC3PC16 were approved and signed by lhe chairnan and group chiel execulive on 2 arch 2011 having been duly
aulhorized lo do so by lhe board ol direclors:
C-H Svanberg Chairnan
R W DudIey Croup Chiel Execulive
2
BP Annual Feporl and Forn 20F 2010 PC3
Company cash ow statement
For the year ended 31 December $ million
Note 2010 2009 2008
Net cash (outow) inow from operating activities 9 17,231 (20,773) (4,399)
Servicing of nance and returns on investments
Interest received 175 137 167
Interest paid (31) (26) (167)
Dividends received 14,739 35,187 17,066
Net cash inow from servicing of nance and returns on investments 14,883 35,298 17,066
Tax paid (3) (11) (2)
Capital expenditure and nancial investment
Payments for xed assets investments (29,636) (4,236)
Proceeds from sale of xed assets investments 311 9
Net cash outow for capital expenditure and nancial investment (29,325) (4,227)
Equity dividends paid (2,627) (10,483) (10,342)
Net cash (outow) inow before nancing 159 (196) 2,323
Financing
Other share-based payment movements (183) 213 358
Repurchase of ordinary share capital (2,914)
Net cash inow (outow) from nancing (183) 213 (2,556)
Increase (decrease) in cash 9 (24) 17 (233)

Company statement of total recognized gains and losses
For the year ended 31 December $ million
Note 2010 2009 2008
Prot for the year 14,776 34,524 17,715
Currency translation differences (45) 104 (710)
Actuarial gain (loss) relating to pensions 6 457 (585) (5,122)
Tax on actuarial (gain) loss relating to pensions 2 (123) 164 1,434
Total recognized gains and losses relating to the year 15,065 34,207 13,317

PC4 BP Annual Report and Form 20-F 2010

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1. Accounling policies
Accounting standards
These lnancial slalenenls are prepared in accordance wilh applicable UK accounling slandards.
Accounting convention
The lnancial slalenenls are prepared under lhe hislorical cosl convenlion.
Foreign currency transactions
Funclional currency is lhe currency ol lhe prinary econonic environnenl in which an enlily operales and is nornally lhe currency in which lhe enlily
prinarily generales and expends cash. Transaclions in loreign currencies are inilially recorded in lhe lunclional currency by applying lhe rale ol exchange
ruling al lhe dale ol lhe lransaclion. onelary assels and liabililies denoninaled in loreign currencies are relranslaled inlo lhe lunclional currency al lhe
rale ol exchange ruling al lhe balance sheel dale. Any resulling exchange dillerences are included in proll lor lhe year. Exchange adjuslnenls arising
when lhe opening nel assels and lhe prolls lor lhe year relained by nonUS dollar lunclional currency branches are lranslaled inlo US dollars are laken lo
a separale conponenl ol equily and reporled in lhe slalenenl ol lolal recognized gains and losses.
Investments
nveslnenls in subsidiaries and associaled underlakings are recorded al cosl. The conpany assesses inveslnenls lor inpairnenl whenever evenls or
changes in circunslances indicale lhal lhe carrying value ol an inveslnenl nay nol be recoverable. l any such indicalion ol inpairnenl exisls, lhe
conpany nakes an eslinale ol ils recoverable anounl. vhere lhe carrying anounl ol an inveslnenl exceeds ils recoverable anounl, lhe inveslnenl is
considered inpaired and is wrillen down lo ils recoverable anounl.
Equilysellled lransaclions
The cosl ol equilysellled lransaclions wilh enployees is neasured by relerence lo lhe lair value al lhe dale al which equily inslrunenls are granled and
is recognized as an expense over lhe vesling period, which ends on lhe dale on which lhe relevanl enployees becone lully enlilled lo lhe award. Fair
value is delernined by using an appropriale valualion nodel. n valuing equilysellled lransaclions, no accounl is laken ol any vesling condilions, olher
lhan condilions linked lo lhe price ol lhe shares ol lhe conpany (narkel condilions. onvesling condilions, such as lhe condilion lhal enployees
conlribule lo a savingsrelaled plan, are laken inlo accounl in lhe granldale lair value, and lailure lo neel a nonvesling condilion is lrealed as a
cancellalion, where lhis is wilhin lhe conlrol ol lhe enployee.
o expense is recognized lor awards lhal do nol ullinalely vesl, excepl lor awards where vesling is condilional upon a narkel condilion, which are
lrealed as vesling irrespeclive ol whelher or nol lhe narkel condilion is salisled, provided lhal all olher perlornance condilions are salisled.
Al each balance sheel dale belore vesling, lhe cunulalive expense is calculaled, represenling lhe exlenl lo which lhe vesling period has expired
and nanagenenls besl eslinale ol lhe achievenenl or olherwise ol nonnarkel condilions and lhe nunber ol equily inslrunenls lhal will ullinalely
vesl or, in lhe case ol an inslrunenl subjecl lo a narkel condilion, be lrealed as vesling as described above. The novenenl in cunulalive expense since
lhe previous balance sheel dale is recognized in lhe incone slalenenl, wilh a corresponding enlry in equily.
vhen lhe lerns ol an equilysellled award are nodiled or a new award is designaled as replacing a cancelled or sellled award, lhe cosl based on
lhe original award lerns conlinues lo be recognized over lhe original vesling period. n addilion, an expense is recognized over lhe renainder ol lhe new
vesling period lor lhe increnenlal lair value ol any nodilcalion, based on lhe dillerence belween lhe lair value ol lhe original award and lhe lair value ol
lhe nodiled award, bolh as neasured on lhe dale ol lhe nodilcalion. o reduclion is recognized il lhis dillerence is negalive.
vhen an equilysellled award is cancelled, il is lrealed as il il had vesled on lhe dale ol cancellalion and any cosl nol yel recognized in lhe incone
slalenenl lor lhe award is expensed innedialely.
Cashsellled lransaclions
The cosl ol cashsellled lransaclions is neasured al lair value and recognized as an expense over lhe vesling period, wilh a corresponding liabilily
recognized on lhe balance sheel.
Pensions
The cosl ol providing benells under lhe delned benell plans is delernined separalely lor each plan using lhe projecled unil credil nelhod, which
allribules enlillenenl lo benells lo lhe currenl period (lo delernine currenl service cosl and lo lhe currenl and prior periods (lo delernine lhe presenl
value ol lhe delned benell obligalion. Pasl service cosls are recognized innedialely when lhe conpany becones connilled lo a change in pension plan
design. vhen a selllenenl (elininaling all obligalions lor benells already accrued or a curlailnenl (reducing lulure obligalions as a resull ol a nalerial
reduclion in lhe schene nenbership or a reduclion in lulure enlillenenl occurs, lhe obligalion and relaled plan assels are reneasured using currenl
acluarial assunplions and lhe resullanl gain or loss is recognized in lhe incone slalenenl during lhe period in which lhe selllenenl or curlailnenl occurs.
The inleresl elenenl ol lhe delned benell cosl represenls lhe change in presenl value ol schene obligalions resulling lron lhe passage ol line,
and is delernined by applying lhe discounl rale lo lhe opening presenl value ol lhe benell obligalion, laking inlo accounl nalerial changes in lhe
obligalion during lhe year. The expecled relurn on plan assels is based on an assessnenl nade al lhe beginning ol lhe year ol longlern narkel relurns
on plan assels, adjusled lor lhe ellecl on lhe lair value ol plan assels ol conlribulions received and benells paid during lhe year. The dillerence belween
lhe expecled relurn on plan assels and lhe inleresl cosl is recognized in lhe incone slalenenl as olher lnance incone or expense.
Acluarial gains and losses are recognized in lull wilhin lhe slalenenl ol lolal recognized gains and losses in lhe year in which lhey occur.
The delned benell pension plan surplus or delcil in lhe balance sheel conprises lhe lolal lor each plan ol lhe presenl value ol lhe delned
benell obligalion (using a discounl rale based on high qualily corporale bonds, less lhe lair value ol plan assels oul ol which lhe obligalions are lo be
sellled direclly. Fair value is based on narkel price inlornalion and, in lhe case ol quoled securilies, is lhe published bid price. The surplus or delcil, nel ol
laxalion lhereon, is presenled separalely above lhe lolal lor nel assels on lhe lace ol lhe balance sheel.
1. Accounling policies conlinued
Deferred taxation
Delerred lax is recognized in respecl ol all lining dillerences lhal have originaled bul nol reversed al lhe balance sheel dale where lransaclions or evenls
have occurred al lhal dale lhal will resull in an obligalion lo pay nore, or a righl lo pay less, lax in lhe lulure.
Delerred lax assels are recognized only lo lhe exlenl lhal il is considered nore likely lhan nol lhal lhere will be suilable laxable prolls lron which
lhe underlying lining dillerences can be deducled.
Delerred lax is neasured on an undiscounled basis al lhe lax rales lhal are expecled lo apply in lhe periods in which lining dillerences reverse,
based on lax rales and laws enacled or subslanlively enacled al lhe balance sheel dale.
Use of estimates
The preparalion ol accounls in conlornily wilh generally accepled accounling praclice requires nanagenenl lo nake eslinales and assunplions lhal
allecl lhe reporled anounls ol assels and liabililies al lhe dale ol lhe accounls and lhe reporled anounls ol revenues and expenses during lhe reporling
period. Aclual oulcones could diller lron lhese eslinales.
2. Taxalion
$ nillion
Tax incIuded in the statement of totaI recognized gains and Iosses 2010 2009 2003
Delerred lax
Originalion and reversal ol lining dillerences in lhe currenl year 123 (164 (1,434
This conprises:
Acluarial (loss gain relaling lo pensions and olher poslrelirenenl benells 123 (164 (1,434
Deferred tax
Delerred lax liabilily
Pensions 480 279 399
Delerred lax assel
Olher laxable lining dillerences 70 130 77
el delerred lax liabilily 410 149 322
Analysis ol novenenls during lhe year
Al 1 January 149 322 1,335
Exchange adjuslnenls 45 47 (276
Charge (credil lor lhe year on ordinary aclivilies 93 (56 147
Charge (credil lor lhe year in lhe slalenenl ol lolal recognized gains and losses 123 (164 (1,434
Al 31 Decenber 410 149 322

3. Fixed assels - inveslnenls
$ nillion
Subsidiary Associated
undertakings undertakings
Shares Shares Loans TotaI
Cosl
Al 1 January 2010 93,137 2 2 93,141
Addilions
a
29,637 - - 29,637
Disposals (51) - - (51)
Al 31 Decenber 2010 122,723 2 2 122,727
Anounls provided
Al 1 January 2010 74 - 2 76
Al 31 Decenber 2010 74 - 2 76
Cosl
Al 1 January 2009 39,045 2 2 39,049
Adjuslnenls (116 - - (116
Addilions 4,203 - - 4,203
Al 31 Decenber 2009 93,137 2 2 93,141
Anounls provided
Al 1 January 2009 74 - 2 76
Al 31 Decenber 2009 74 - 2 76
el book anounl
Al 31 Decenber 2010 122,649 2 - 122,651
Al 31 Decenber 2009 93,063 2 - 93,065

a
ncludes $29,375 nillion relaled lo an equily injeclion in BP nlernalional Lld.

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3. Fixed assels - inveslnenls conlinued
The nore inporlanl subsidiary underlakings ol lhe conpany al 31 Decenber 2010 and lhe percenlage holding ol ordinary share capilal (lo lhe nearesl
whole nunber are sel oul below. The principal counlry ol operalion is generally indicaled by lhe conpanys counlry ol incorporalion or by ils nane.
A conplele lisl ol inveslnenls in subsidiary underlakings, joinl venlures and associaled underlakings will be allached lo lhe conpanys annual relurn
nade lo lhe Fegislrar ol Conpanies.
Counlry ol
Subsidiary underlakings ' incorporalion Principal aclivilies
nlernalional
BP Clobal nveslnenls 100 England & vales nveslnenl holding
BP nlernalional 100 England & vales nlegraled oil operalions
BP Holdings orlh Anerica 100 England & vales nveslnenl holding
BP Corporale Holdings 100 England & vales nveslnenl holding
Burnah Caslrol 100 Scolland Lubricanls

The carrying value ol BP nlernalional Lld in lhe accounls ol lhe conpany al 31 Decenber 2010 was $59.63 billion (2009 $30.25 billion and 2003
$30.25 billion.
4. Deblors
$ nillion
2010 2009
Within After vilhin Aller
1 year 1 year 1 year 1 year
Croup underlakings 14,440 38 30,704 1,150
Olher 4 - 5 23
14,444 38 30,709 1,173

The carrying anounls ol deblors approxinale lheir lair value.
5. Credilors
$ nillion
2010 2009
Within After vilhin Aller
1 year 1 year 1 year 1 year
Croup underlakings 2,343 4,258 2,343 4,236
Accruals and delerred incone 23 35 27 74
Dividends 1 - 1 -
Olher 18 - 30 13
2,385 4,293 2,401 4,323

The carrying anounls ol credilors approxinale lheir lair value.
The nalurily prolle ol lhe lnancial liabililies included in lhe balance sheel al 31 Decenber is shown in lhe lable below. These anounls are included
wilhin Credilors - anounls lalling due aller nore lhan one year, and are denoninaled in US dollars.
Anounls lalling due aller one year include $4,236 nillion payable lo a group underlaking. This anounl is subjecl lo inleresl payable quarlerly al
LBOF plus 55 basis poinls.
$ nillion
2010 2009
Due wilhin
1 lo 2 years 41 33
2 lo 5 years 16 51
ore lhan 5 years 4,236 4,244
4,293 4,323

6. Pensions
The primary pension arrangement in the UK is a funded nal salary pension plan under which retired employees draw the majority of their benet as an
annuity. With effect from 1 April 2010, BP closed its UK plan to new joiners other than some of those joining the North Sea SPU. The plan remains open
to ongoing accrual for those employees who had joined BP on or before 31 March 2010. The majority of new joiners have the option to join a dened
contribution plan.
The obligation and cost of providing the pension benets is assessed annually using the projected unit credit method. The date of the most recent
actuarial review was 31 December 2010. The principal plans are subject to a formal actuarial valuation every three years in the UK. The most recent formal
actuarial valuation of the main UK pension plan was as at 31 December 2008.
The material nancial assumptions used for estimating the benet obligations of the plans are set out below. The assumptions used to evaluate
accrued pension at 31 December in any year are used to determine pension expense for the following year, that is, the assumptions at 31 December
2010 are used to determine the pension liabilities at that date and the pension cost for 2011.

Financial assumptions 2010 2009 2008
Expected long-term rate of return 7.3 7.4 7.5
Discount rate for plan liabilities 5.5 5.8 6.3
Rate of increase in salaries 5.4 5.3 4.9
Rate of increase for pensions in payment 3.5 3.4 3.0
Rate of increase in deferred pensions 3.5 3.4 3.0
Ination 3.5 3.4 3.0

%
Our discount rate assumption is based on third-party AA corporate bond indices and we use yields that reect the maturity prole of the expected benet
payments. The ination rate assumption is based on the difference between the yields on index-linked and xed-interest long-term government bonds. The
ination assumptions are used to determine the rate of increase for pensions in payment and the rate of increase in deferred pensions.
Our assumption for the rate of increase in salaries is based on our ination assumption plus an allowance for expected long-term real salary
growth. This includes allowance for promotion-related salary growth of 0.4%. In addition to the nancial assumptions, we regularly review the
demographic and mortality assumptions. The mortality assumptions reect best practice in the UK, and have been chosen with regard to the latest
available published tables adjusted where appropriate to reect the experience of the group and an extrapolation of past longevity improvements into
the future.
Years
Mortality assumptions 2010 2009 2008
Life expectancy at age 60 for a male currently aged 60 26.1 26.0 25.9
Life expectancy at age 60 for a male currently aged 40 29.1 29.0 28.9
Life expectancy at age 60 for a female currently aged 60 28.7 28.6 28.5
Life expectancy at age 60 for a female currently aged 40 31.6 31.5 31.4

The market values of the various categories of asset held by the pension plan at 31 December are set out below.
The market value of pension assets at the end of 2010 is higher when compared with 2009 due to an increase in the market value of investments
when expressed in their local currencies and partially offset by a decrease in value that arises from changes in exchange rates (decreasing the reported
value of investments when expressed in US dollars). Movements in the value of plan assets during the year are shown in detail below.
$ million
2010 2009 2008
Expected Expected Expected
long-term long-term long-term
rate of Market rate of Market rate of Market
return value return value return value
% $ million % $ million % $ million
Equities 8.0 17,703 8.0 16,148 8.0 13,106
Bonds 5.1 3,128 5.4 2,989 6.3 2,610
Property 6.5 1,412 6.5 1,221 6.5 932
Cash 1.4 369 1.1 595 2.9 282
7.3 22,612 7.4 20,953 7.5 16,930
Present value of plan liabilities 20,742 19,882 15,414
Surplus in the plan 1,870 1,071 1,516

PC8 BP Annual Report and Form 20-F 2010

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6. Pensions continued
$ million
2010 2009 2008
Analysis of the amount charged to operating prot
Current service cost
a
381 300 434
Past service cost 7
Settlement, curtailment and special termination benets 21 34 29
Total operating charge 402 334 470
Analysis of the amount credited (charged) to other nance income
Expected return on pension plan assets 1,486 1,339 1,969
Interest on pension plan liabilities (1,098) (1,029) (1,146)
Other nance income 388 310 823
Analysis of the amount recognized in the statement of total recognized gains and losses
Actual return less expected return on pension plan assets 1,479 1,634 (6,533)
Change in assumptions underlying the present value of the plan liabilities (1,034) (2,073) 1,476
Experience gains (losses) arising on the plan liabilities 12 (146) (65)

Actuarial (loss) gain recognized in statement of total recognized gains

and losses 457 (585) (5,122)
2010 2009
Movements in benet obligation during the year
Benet obligation at 1 January 19,882 15,414
Exchange adjustment (775) 1,756
Current service cost
a
381 300
Interest cost 1,098 1,029
Special termination benets
b
21 34
Contributions by plan participants
c
38 36
Benet payments (funded plans)
d
(879) (902)
Benet payments (unfunded plans)
d
(3) (4)
Disposals (43)
Actuarial loss on obligation 1,022 2,219
Benet obligation at 31 December 20,742 19,882
Movements in fair value of plan assets during the year
Fair value of plan assets at 1 January 20,953 16,930
Exchange adjustment (819) 1,907
Expected return on plan assets
a e
1,486 1,339
Contributions by plan participants
c
38 36
Contributions by employers (funded plans) 397
Benet payments (funded plans) (879) (902)
Disposals (43)
Actuarial gain on plan assets
e
1,479 1,634
Fair value of plan assets at 31 December
f
22,612 20,953

Surplus at 31 December

1,870 1,071
a
The costs of managing the funds investments are treated as being part of the investment return, the costs of administering our pensions plan benets are included in current service cost.
b
The charge for special termination benets represents the increased liability arising as a result of early retirements occurring as part of restructuring programmes.
c
The contributions by plan participants are mostly comprised of contributions made under salary sacrice with effect from January 2010.
d
The benet payments amount shown above comprises $867 million benets plus $15 million of plan expenses incurred in the administration of the benet.
e
The actual return on plan assets is made up of the sum of the expected return on plan assets and the actuarial gain on plan assets as disclosed above.
f
Reects $22,516 million of assets held in the BP Pension Fund (2009 $20,895 million) and $68 million held in the BP Global Pension Trust (2009 $58 million), with $28 million representing the companys
share of the Merchant Navy Ofcers Pension Fund (2009 nil).
BP Annual Report and Form 20-F 2010 PC9
6. Pensions conlinued
$ nillion
2010 2009
Fepresenled by
Assel recognized 2,069 1,234
Liabilily recognized (199) (163
1,870 1,071
Funded 2,064 1,231
Unlunded (194) (160
1,870 1,071
The delned benell obligalion nay be analysed belween lunded and unlunded plans as lollows
Funded
a
(20,548) (19,722
Unlunded (194) (160

(20,742) (19,332
a
FeHecls $20,443 nillion ol liabililies ol lhe BP Pension Fund (2009 $19,661 nillion, $67 nillion ol liabililies ol lhe BP Clobal Pension Trusl (2009 $61 nillion and $33 nillion ol liabililies represenling lhe
conpanys share ol lhe erchanl avy Ollcers Pension Fund (2009 nil.
$ nillion
2010 2009
Feconcilialion ol plan surplus lo balance sheel
Surplus al 31 Decenber 1,870 1,071
Delerred lax (480) (279
1,390 792
Fepresenled by
Assel recognized on balance sheel 1,537 912
Liabilily recognized on balance sheel (147) (120

1,390 792
The aggregale level ol enployer conlribulions inlo lhe BP Pension Fund in 2011 is expecled lo be $404 nillion.
$ nillion
2010 2009 2003 2007 2006
Hislory ol surplus and ol experience gains and losses
Benell obligalion al 31 Decenber 20,742 19,332 15,414 22,146 21,507
Fair value ol plan assels al 31 Decenber 22,612 20,953 16,930 29,411 27,169
Surplus 1,870 1,071 1,516 7,265 5,662
Experience gains (losses on plan liabililies
Anounl ($ nillion 12 (146 (65 (155 (211
Percenlage ol benell obligalion 0% (1' 0' (1' (1'
Aclual relurn less expecled relurn on pension plan assels
Anounl ($ nillion 1,479 1,634 (6,533 404 1,252
Percenlage ol plan assels 7% 3' (39' 1' 5'
Acluarial (loss gain recognized in slalenenl ol lolal recognized gains and losses
Anounl ($ nillion 457 (535 (5,122 693 1,120
Percenlage ol benell obligalion 2% (3' (33' 3' 6'
Cunulalive anounl recognized in slalenenl ol lolal recognized gains and losses (1,235) (1,692 (1,107 4,015 3,317


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7. Calledup share capilal
The allolled, calledup and lully paid share capilal al 31 Decenber was as lollows:
2010 2009
Shares Shares
ssued (thousand) $ miIIion (lhousand $ nillion
3' cunulalive lrsl prelerence shares ol 1 each 7,233 12 7,233 12
9' cunulalive second prelerence shares ol 1 each 5,473 9 5,473 9
21 21
Ordinary shares ol 25 cenls each
Al 1 January 20,629,665 5,158 20,613,453 5,155
ssue ol new shares lor enployee share schenes 17,495 4 11,207 3
31 Decenber 20,647,160 5,162 20,629,665 5,153
5,183 5,179
Aulhorized
3' cunulalive lrsl prelerence shares ol 1 each 7,250 12 7,250 12
9' cunulalive second prelerence shares ol 1 each 5,500 9 5,500 9
Ordinary shares ol 25 cenls each 36,000,000 9,000 36,000,000 9,000

Voling on subslanlive resolulions labled al a general neeling is on a poll. On a poll, shareholders presenl in person or by proxy have lwo voles lor every 5
in noninal anounl ol lhe lrsl and second prelerence shares held and one vole lor every ordinary share held. On a showolhands vole on olher resolulions
(procedural nallers al a general neeling, shareholders presenl in person or by proxy have one vole each.
n lhe evenl ol lhe winding up ol lhe conpany, prelerence shareholders would be enlilled lo a sun equal lo lhe capilal paid up on lhe prelerence
shares plus an anounl in respecl ol accrued and unpaid dividends and a preniun equal lo lhe higher ol (i 10' ol lhe capilal paid up on lhe prelerence
shares and (ii lhe excess ol lhe average narkel price ol such shares on lhe London Slock Exchange during lhe previous six nonlhs over par value.
Repurchase of ordinary share capitaI
The conpany did nol purchase any ordinary shares in 2010 (2009 no ordinary shares were purchased and 2003 269,757,133 ordinary shares were
purchased lor lolal consideralion ol $2,914 nillion ol which all were lor cancellalion. Al 31 Decenber 2010, 1,350,693,774 shares ol noninal value
$462 nillion were held in lreasury (2009 1,369,777,323 shares ol noninal value $467 nillion and 2003 1,333,151,157 shares ol noninal value
$472 nillion. There were no lransaclion cosls lor share purchases in 2010 (2009 nil and 2003 $16 nillion.
3. Capilal and reserves
$ nillion
Share CapitaI Share-based Proht
Share premium redemption Merger Own Treasury payment and Ioss
capitaI account reserve reserve shares shares reserve account TotaI
Al 1 January 2010 5,179 9,847 1,072 26,509 (214) (21,303) 1,519 96,564 119,173
Currency lranslalion dillerences - - - - - - - (45) (45)
Acluarial gain on pensions
(nel ol lax - - - - - - - 276 276
Sharebased paynenls 4 140 - - 88 218 66 (150) 366
Proll lor lhe year - - - - - - - 14,776 14,776
Dividends - - - - - - - (2,627) (2,627)
Al 31 Decenber 2010 5,183 9,987 1,072 26,509 (126) (21,085) 1,585 108,794 131,919
$ nillion
Share Capilal Sharebased Proll
Share preniun redenplion erger Own Treasury paynenl and loss
capilal accounl reserve reserve shares shares reserve accounl Tolal
Al 1 January 2009 5,176 9,763 1,072 26,509 (326 (21,513 1,271 72,340 94,792
Currency lranslalion dillerences - - - - - - - 104 104
Acluarial loss on pensions
(nel ol lax - - - - - - - (421 (421
Sharebased paynenls 3 34 - - 112 210 243 - 657
Proll lor lhe year - - - - - - - 34,524 34,524
Dividends - - - - - - - (10,433 (10,433
Al 31 Decenber 2009 5,179 9,347 1,072 26,509 (214 (21,303 1,519 96,564 119,173

3. Capilal and reserves conlinued
As a consolidaled incone slalenenl is presenled lor lhe group, a separale incone slalenenl lor lhe parenl conpany is nol required lo be published.
The proll and loss accounl reserve includes $24,107 nillion (2009 $24,107 nillion and 2003 $24,107 nillion, lhe dislribulion ol which is liniled by
slalulory or olher reslriclions.
The conpany does nol accounl lor dividends unlil lhey are paid. The lnancial slalenenls lor lhe year ended 31 Decenber 2010 do nol
reHecl lhe dividend announced on 1 February 2011 and payable in arch 2011, lhis will be lrealed as an approprialion ol proll in lhe year ended
31 Decenber 2011.
Managing capitaI
The conpany delnes capilal as lhe lolal equily ol lhe conpany. The conpanys approach lo nanaging capilal is sel oul in ils lnancial lranework
which was revised during 2010, wilh lhe objeclive ol nainlaining a capilal slruclure lhal allows lhe conpany lo execule ils slralegy and is resilienl lo
inherenl volalilily. During 2010, lhe conpany did nol repurchase any ol ils own shares.
9. Cash How
$ nillion
2010 2009 2003
Feconcilialion ol nel cash How lo novenenl ol lunds
ncrease (decrease in cash (24) 17 (233
ovenenl ol lunds (24) 17 (233
el cash al 1 January 28 11 244
el cash al 31 Decenber 4 23 11
oles on cash How slalenenl
(a Feconcilialion ol operaling proll lo nel cash (oulHow inHow lron operaling aclivilies 2010 2009 2003
Operaling proll 14,514 34,195 17,211
el operaling charge lor pensions and olher poslrelirenenl benells, less conlribulions 2 321 461
Dividends, inleresl and olher incone (15,188) (35,139 (17,239
(ncrease decrease in deblors 17,405 (24,534 (5,271
ncrease (decrease in credilors (51) 4,040 (7
el cash inHow (oulHow lron operaling aclivilies 17,231 (20,773 (4,399
$ nillion
At
1 January Cash 31 December
(b Analysis ol novenenls ol lunds 2010 ow 2010
Cash al bank 28 (24) 4

10. Conlingenl liabililies
The parenl conpany has issued guaranlees under which anounls oulslanding al 31 Decenber 2010 were $36,777 nillion (2009 $30,153 nillion and 2003
$30,063 nillion, ol which $36,747 nillion (2009 $30,126 nillion and 2003 $30,003 nillion relaled lo guaranlees in respecl ol subsidiary underlakings,
including $36,006 nillion (2009 $29,335 nillion and 2003 $29,267 nillion in respecl ol borrowings by subsidiary underlakings and $30 nillion
(2009 $32 nillion and 2003 $55 nillion in respecl ol liabililies ol olher lhird parlies.
At

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11. Sharebased paynenls
Effect of share-based payment transactions on the company's resuIt and hnanciaI position
$ nillion
2010 2009 2003
Tolal expense recognized lor equilysellled sharebased paynenl lransaclions 577 506 524
Tolal expense (credil recognized lor cashsellled sharebased paynenl lransaclions (1) 15 (16
Tolal expense recognized lor sharebased paynenl lransaclions 576 521 503
Closing balance ol liabilily lor cashsellled sharebased paynenl lransaclions 16 32 21
Tolal inlrinsic value lor vesled cashsellled sharebased paynenls 1 7 2

For ease ol presenlalion, oplion and share holdings delailed in lhe lables wilhin lhis nole are slaled as UK ordinary share equivalenls in US dollars. US
enployees are granled Anerican Deposilary Shares (ADSs or oplions over lhe conpanys ADSs (one ADS is equivalenl lo six ordinary shares. The
sharebased paynenl plans lhal exisled during lhe year are delailed below. All plans are ongoing unless olherwise slaled.
PIans for executive directors
Execulive Direclors ncenlive Plan (EDP - share elenenl
An equilysellled incenlive plan lor execulive direclors wilh a lhreeyear perlornance period. For share plan perlornance periods 20032010 lhe award ol
shares is delernined by conparing BPs lolal shareholder relurn (TSF againsl lhe olher oil najors (Exxonobil, Shell, Tolal and Chevron. For lhe
perlornance period 20092011 lhe award ol shares is delernined 50' on TSF versus a conpelilor group ol oil najors (which in lhis period also included
ConocoPhillips and 50' on a balanced scorecard (BSC ol lhree underlying perlornance neasures versus lhe sane conpelilor group. For lhe period
20102012 lhe award ol shares is delernined one lhird on TSF versus a conpelilor group ol oil najors (idenlical lo lhe 20092011 plan group and lwo
lhirds on a BSC ol lhree underlying perlornance indicalors. Aller lhe perlornance period, lhe shares lhal vesl (nel ol lax are lhen subjecl lo a lhreeyear
relenlion period. The direclors renuneralion reporl on pages 112 lo 121 includes lull delails ol lhe plan.
Execulive Direclors ncenlive Plan (EDP - delerred nalching share elenenl
Following lhe renewal ol lhe EDP al lhe 2010 Annual Ceneral eeling, a delerred nalching share elenenl is in place requiring a nandalory one lhird ol
direclors annual bonus lo be delerred inlo shares lor lhree years. The shares are nalched by lhe conpany on a onelorone basis. Vesling ol bolh delerred
and nalching shares is conlingenl on an assessnenl ol salely and environnenlal suslainabilily over lhe lhreeyear delerral period and a direclor nay
volunlarily deler an addilional one lhird ol bonus inlo shares on lhe sane lerns.
Execulive Direclors ncenlive Plan (EDP - share oplion elenenl
An equilysellled share oplion plan lor execulive direclors lhal pernils oplions lo be granled al an exercise price no lower lhan lhe narkel price ol a share
on lhe dale lhal lhe oplion is granled. The oplions are exercisable up lo lhe sevenlh anniversary ol lhe granl dale and lhe lasl granls were nade in 2004.
Fron 2005 onwards lhe renuneralion connillees policy is nol lo nake lurlher granls ol share oplions lo execulive direclors.
PIans for senior empIoyees
The group operales a nunber ol equilysellled share plans under which share unils are granled lo ils senior leaders and cerlain enployees. These plans
lypically have a lhreeyear perlornance or reslricled period during which lhe unils accrue nel nolional dividends which are lrealed as having been
reinvesled. Leaving enploynenl during lhe lhreeyear period will nornally preclude lhe conversion ol unils inlo shares, bul special arrangenenls apply
where lhe parlicipanl leaves lor a qualilying reason.
Cranls are sellled in cash where parlicipanls are localed in a counlry whose regulalory environnenl prohibils lhe holding ol BP shares.
Performance unit pIans
The nunber ol unils granled is nade by relerence lo level ol seniorily ol lhe enployees. The nunber ol unils converled lo shares is delernined by relerence
lo perlornance neasures over lhe lhreeyear perlornance period. The nain perlornance neasure used is BPs TSF conpared againsl lhe olher oil najors. n
addilion, lree cash How (FCF is used as a perlornance neasure lor one ol lhe perlornance plans. Plans included in lhis calegory are lhe Conpelilive
Perlornance Plan (CPP, lhe ediun Tern Perlornance Plan (TPP and, in parl, lhe Perlornance Share Plan (PSP.
Feslricled share unil plans
Share unil granls under BPs reslricled plans lypically lake inlo accounl lhe enployees perlornance in eilher lhe currenl or lhe prior year, lrack record ol
delivery, business and leadership skills and longlern polenlial. One reslricled share unil plan used in special circunslances lor senior enployees, such as
recruilnenl and relenlion, nornally has no perlornance condilions. Plans included in lhis calegory are lhe Execulive Perlornance Plan (EPP, lhe
Feslricled Share Plan (FSP, lhe Delerred Annual Bonus Plan (DAB and, in parl, lhe Perlornance Share Plan (PSP.
BP Share Oplion Plan (BPSOP
Share oplions wilh an exercise price equivalenl lo lhe narkel price ol a share innedialely preceding lhe dale ol granl were granled lo parlicipanls
annually unlil 2006. There were no perlornance condilions and lhe oplions are exercisable belween lhe lhird and lenlh anniversaries ol lhe granl dale.
BP ShareSave Plan
This is a savingsrelaled share oplion plan under which enployees save on a nonlhly basis, over a lhree or lveyear period, lowards lhe purchase ol shares
al a lxed price delernined when lhe oplion is granled. This price is usually sel al a 20' discounl lo lhe narkel price al lhe line ol granl. The oplion nusl be
exercised wilhin six nonlhs ol nalurily ol lhe savings conlracl, olherwise il lapses. The plan is run in lhe UK and oplions are granled annually, usually in
June. Parlicipanls leaving lor a qualilying reason have six nonlhs in which lo use lheir savings lo exercise lheir oplions on a proraled basis.

BP Sharealch Plans
These are nalching share plans under which BP nalches enployees own conlribulions ol shares up lo a predelernined linil. The plans are run in lhe UK
and in nore lhan 60 olher counlries. The UK plan is run on a nonlhly basis wilh shares being held in lrusl lor lve years belore lhey can be released lree ol
any incone lax and nalional insurance liabilily. n olher counlries lhe plan is run on an annual basis wilh shares being held in lrusl lor lhree years. The plan
is operaled on a cash basis in lhose counlries where lhere are regulalory reslriclions prevenling lhe holding ol BP shares. vhen lhe enployee leaves BP
all shares nusl be renoved lron lrusl and unils under lhe plan operaled on a cash basis nusl be encashed.
Local plans
n sone counlries BP provides local schene benells, lhe rules and qualilcalions lor which vary according lo local circunslances.
EmpIoyee Share Ownership PIans (ESOPs)
ESOPs have been eslablished lo acquire BP shares lo salisly any awards nade lo parlicipanls under lhe BP share plans as required. The ESOPs have waived
lheir righls lo dividends on shares held lor lulure awards and are lunded by lhe group. Unlil such line as lhe conpanys own shares held by lhe ESOP lrusls
vesl uncondilionally lo enployees, lhe anounl paid lor lhose shares is deducled in arriving al shareholders equily (see ole 3. Assels and liabililies ol lhe
ESOPs are recognized as assels and liabililies ol lhe group.
Al 31 Decenber 2010 lhe ESOPs held 11,477,253 shares (2009 13,062,246 shares and 2003 29,051,032 shares lor polenlial lulure awards, which
had a narkel value ol $32 nillion (2009 $174 nillion and 2003 $220 nillion.
Share option transactions
Delails ol share oplion lransaclions lor lhe year under lhe share oplion plans are as lollows:
2010 2009 2003
Weighted veighled veighled
Number average unber average unber average
of exercise price ol exercise price ol exercise price
options $ oplions $ oplions $
Oulslanding al 1 January 295,895,357 8.73 326,254,599 3.70 353,094,243 3.51
Cranled 10,420,287 6.08 9,679,336 6.55 3,062,399 3.96
Forleiled (9,499,661) 7.88 (5,954,325 3.31 (2,502,734 3.50
Exercised (31,839,034) 7.97 (21,293,371 7.53 (37,277,395 6.97
Expired (1,670,227) 8.71 (12,790,332 3.01 (121,364 7.00
Oulslanding al 31 Decenber 263,306,722 8.75 295,395,357 3.73 326,254,599 3.70
Exercisable al 31 Decenber 242,530,635 8.90 274,635,063 3.30 260,173,933 3.22

The weighled average share price al lhe dale ol exercise was $9.54 (2009 $9.10 and 2003 $10.37. For lhe oplions oulslanding al 31 Decenber 2010, lhe
exercise price ranges and weighled average renaining conlraclual lives are shown below.
Options outstanding Options exercisabIe
Weighted Weighted Weighted
Number average average Number average
of remaining Iife exercise price of exercise price
Fange ol exercise prices shares years $ shares $
$6.09 - $7.53 54,821,144 2.68 6.36 39,231,453 6.40
$7.54 - $3.99 115,187,261 1.71 8.19 112,551,834 8.17
$9.00 - $10.45 21,827,393 3.54 9.88 19,276,424 9.98
$10.46 - $11.92 71,470,924 4.81 11.14 71,470,924 11.14
263,306,722 2.90 8.75 242,530,635 8.90

Fair vaIues and associated detaiIs for options and shares granted
2010 2009 2003
ShareSave ShareSave ShareSave ShareSave ShareSave ShareSave
3 year 5 year 3 year 5 year 3 year 5 year
Oplion pricing nodel used BinomiaI BinomiaI Binonial Binonial Binonial Binonial
veighled average lair value $0.06 $0.08 $1.07 $1.07 $1.32 $1.74
veighled average share price $4.58 $4.58 $7.37 $7.37 $11.26 $11.26
veighled average exercise price $5.90 $5.90 $6.92 $6.92 $9.70 $9.70
Expecled volalilily 22% 23% 32' 32' 23' 23'
Oplion lile 3.5 years 5.5 years 3.5 years 5.5 years 3.5 years 5.5 years
Expecled dividends 8.40% 8.40% 7.40' 7.40' 4.60' 4.60'
Fisk lree inleresl rale 1.25% 2.00% 3.00' 3.75' 5.00' 5.00'
Expecled exercise behaviour 100% year 4 100% year 6 100' year 4 100' year 6 100' year 4 100' year 6

F
i
n
a
n
c
i
a
I

s
t
a
t
e
m
e
n
t
s
The group uses a valualion nodel lo delernine lhe lair value ol oplions granled. The nodel uses lhe inplied volalilily ol ordinary share price lor lhe quarler
wilhin which lhe granl dale ol lhe relevanl plan lalls. The lair value is adjusled lor lhe expecled rales ol early cancellalion. anagenenl is responsible lor
all inpuls and assunplions in relalion lo lhe nodel, including lhe delerninalion ol expecled volalilily.
EDIP- EDIP-
Shares granled in 2010 CPP EPP TSR BSC RSP DAB PSP
unber ol equily inslrunenls granled (nillion 1.3 7.6 1.2 2.5 21.4 24.5 16.0
Fair value neasurenenl basis Monte Market Monte Market Market Market Market
CarIo vaIue CarIo vaIue vaIue vaIue vaIue
EDP EDP
Shares granled in 2009 CPP EPP TSF BSC FSP DAB PSP
Fair value neasurenenl basis onle arkel onle arkel arkel arkel onle
Carlo value Carlo value value value Carlo
TPP TPP EDP EDP
Shares granled in 2003 TSF FCF TSF FET
a
FSP DAB PSP
Fair value neasurenenl basis onle arkel onle arkel arkel arkel onle
Carlo value Carlo value value value Carlo

a
EDP - relenlion elenenl.
The group used a onle Carlo sinulalion lo delernine lhe lair value ol lhe TSF elenenl ol lhe 2010, 2009 and 2003 CPP, TPP and EDP plans, and in
2009 and 2003 lor lhe PSP plan. n accordance wilh lhe rules ol lhe plans lhe nodel sinulales BPs TSF and conpares il againsl our principal slralegic
conpelilors over lhe lhreeyear period ol lhe plans. The nodel lakes inlo accounl lhe hisloric dividends, share price volalililies and covariances ol BP and
each conparalor conpany lo produce a predicled dislribulion ol relalive share perlornance. This is applied lo lhe reward crileria lo give an expecled value
ol lhe TSF elenenl.
Accounling expense does nol necessarily represenl lhe aclual value ol sharebased paynenls nade lo recipienls, which are delernined by lhe
renuneralion connillee according lo eslablished crileria.
12. Audilors renuneralion
Fees payable lo lhe conpanys audilor lor lhe audil ol lhe conpanys accounls were $17 nillion (2009 $13 nillion and 2003 $16 nillion.
Fenuneralion receivable by lhe conpanys audilor lor lhe supply ol olher services lo lhe conpany is nol presenled in lhe parenl conpany lnancial
slalenenls as lhis inlornalion is provided in lhe consolidaled lnancial slalenenls.
13. Direclors renuneralion
$ nillion
Fenuneralion ol direclors 2010 2009 2003
Tolal lor all direclors
Enolunenls 15 19 19
Cains nade on lhe exercise ol share oplions 2 2 1
Anounls awarded under incenlive schenes 4 2 -

EmoIuments
These anounls conprise lees paid lo lhe nonexeculive chairnan and lhe nonexeculive direclors and, lor execulive direclors, salary and benells earned
during lhe relevanl lnancial year, plus bonuses awarded lor lhe year. Also included was conpensalion lor loss ol ollce, ol $3 nillion in 2010, (2009 nil and
2003 $1 nillion.
Pension contributions
During 2010 lhree execulive direclors parlicipaled in a nonconlribulory pension schene eslablished lor UK slall by a separale lrusl lund lo which
conlribulions are nade by BP based on acluarial advice. Two US execulive direclors parlicipaled in lhe US BP Felirenenl Accunulalion Plan during 2010.
Ofhce faciIities for former chairmen and deputy chairmen
l is cuslonary lor lhe conpany lo nake available lo lorner chairnen and depuly chairnen, who were previously enployed execulives, lhe use ol ollce
and basic secrelarial lacililies lollowing lheir relirenenl. The cosl involved in doing so is nol signilcanl.
Further information
Full delails ol individual direclors renuneralion are given in lhe direclors renuneralion reporl on pages 112 lo 121.
14. Posl balance sheel evenls
On 14 January 2011, BP enlered inlo a share swap agreenenl wilh Fosnell Oil Conpany whereby BP will receive approxinalely 9.5' ol Fosnells
shares in exchange lor BP issuing new ordinary shares lo Fosnell, resulling in Fosnell holding 5' ol BPs ordinary voling shares. The aggregale value ol
lhe shares in BP lo be issued lo Fosnell is approxinalely $7.3 billion (as al close ol lrading in London on 14 January 2011. BP has agreed lo issue
933,694,633 ordinary shares lo Fosnell, Fosnell has agreed lo lransler 1,010,153,003 ordinary shares lo BP. Conplelion ol lhe lransaclion is subjecl lo
lhe oulcone ol lhe courl applicalion relerred lo in lhe paragraph below, and relaled pending arbilral proceedings. Aller conplelion, BPs increased
inveslnenl in Fosnell will conlinue lo be recognized as an availablelorsale lnancial assel. During lhe period lron enlering inlo lhe agreenenl unlil
conplelion, lhe agreenenl represenls a derivalive lnancial inslrunenl and changes in ils lair value will be recognized in BPs incone slalenenl in 2011.
An applicalion was broughl in lhe English High Courl on 1 February 2011 by Alla Pelroleun Holdings Liniled (APH and OCP Venlures Liniled
(OCP againsl BP nlernalional Liniled and BP Fussian nveslnenls Liniled. APH is a conpany owned by Alpha Croup. APH and OCP each own 25' ol
TKBP, in which BP also has a 50' shareholding. This applicalion alleges breach ol lhe shareholders agreenenl on lhe parl ol BP and seeks an inlerin
injunclion reslraining BP lron laking sleps lo conclude, inplenenl or perlorn lhe previously announced lransaclions wilh Fosnell Oil Conpany relaling
lo oil and gas exploralion, produclion, relning and narkeling in Fussia. Those lransaclions include lhe issue or lransler ol shares belween Fosnell Oil
Conpany and any BP group conpany. The courl granled an inlerin order reslraining BP lron laking any lurlher sleps in relalion lo lhe Fosnell
lransaclions pending an expediled UCTFAL arbilralion procedure in accordance wilh lhe shareholders agreenenl belween lhe parlies. The arbilralion
has connenced and lhe injunclion has been exlended unlil 11 arch 2011 pending an expediled hearing in relalion lo nallers in dispule belween lhe
parlies on a lnal basis during lhe week connencing 7 arch 2011. The expediled hearing will decide, anong olher nallers, whelher lhe injunclion will
be exlended beyond 11 arch 2011.


Information for shareholders
Reports and publications
BPs reports and publications are available to view online
or download from www.bp.com/annualreport.
Summary Review 2010
Read a summary of our nancial
and operating performance in
BP Summary Review 2010 in
print or online.
www.bp.com/summaryreview
Sustainability Review
Read the summary
BP Sustainability Review
2010 in print or read more
online from late March 2011.
www.bp.com/sustainability
You can order BPs printed publications, free of charge, from:
US and Canada
Precision IR
Toll-free +1 888 301 2505
Fax +1 804 327 7549
bpreports@precisionir.com
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Tel +44 (0)870 241 3269
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Acknowledgements
Design sasdesign.co.uk
Typesetting RR Donnelley
Printing Pureprint Group Limited,
UK, ISO 14001, FSC
certied
and CarbonNeutral
Photography Bob Wheeler

Paper This Annual Report and
Form 20-F is printed on FSC-certied
Mohawk Options 100% (cover) and
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This paper has been independently
certied according to the rules of the
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was manufactured at a mill that holds
ISO 14001 accreditation. The inks
used are all vegetable oil based.
BP p.l.c. 2011

1

BP p.l.c.
Group results
First quarter 2011

London 27 April 2011
FOR IMMEDIATE RELEASE

First Fourth First
quarter quarter quarter
2011 2010 2010
$ million
Profit for the period(a) 7,124 5,567 6,079
Inventory holding (gains) losses, net of tax (1,643) (953) (481)
Replacement cost profit 5,481 4,614 5,598

per ordinary share (cents) 29.13 24.55 29.82
per ADS (dollars) 1.75 1.47 1.79

x BPs first-quarter replacement cost profit was $5,481 million, compared with $5,598 million a year ago.

x The group income statement for the first quarter reflects a pre-tax charge of $0.4 billion related to the Gulf of Mexico oil
spill. All charges relating to the incident have been treated as non-operating items. For further information on the Gulf of
Mexico oil spill and its consequences see pages 2 3, Note 2 on pages 21 26 and Legal proceedings on pages 31 37.

x Non-operating items (including amounts relating to the Gulf of Mexico oil spill) and fair value accounting effects for the first
quarter, on a post-tax basis, had a net favourable impact of $107 million compared with a net unfavourable impact of
$49 million in the first quarter of 2010. See pages 4, 18 and 19 for further details.

x Finance costs and net finance income or expense relating to pensions and other post-retirement benefits were $239 million
for the first quarter, compared with $228 million for the same period last year.

x The effective tax rate on replacement cost profit for the first quarter was 37% compared with 34% a year ago. For the full
year, our expectation is that the effective tax rate will be around 32-34%, in line with previous guidance. Excluding the
impact of a $683-million one-off deferred tax adjustment in respect of the recently enacted increase in the supplementary
charge on UK oil and gas production, the effective tax rate for the first quarter was 30%. The UK government has also
announced its intention to restrict the tax relief available on decommissioning expenditure to 50% in 2012. This change is
not yet substantively enacted but would be likely to give rise to an additional tax charge in 2012 in the order of $0.4 billion.

x Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the first quarter was
$2.4 billion, compared with $7.7 billion in the same period of last year. The amounts for the first quarter of 2011 included a
net cash outflow of $2.8 billion relating to the Gulf of Mexico oil spill and also included the impact of increases in working
capital as a consequence of higher oil prices.

x Net debt at the end of the quarter was $27.5 billion, compared with $25.2 billion a year ago. The ratio of net debt to net
debt plus equity was 21% compared with 19% a year ago.

x Total capital expenditure for the first quarter was $4.0 billion, all of which was organic(b). Disposal proceeds were $1.0
billion for the quarter.

x The quarterly dividend expected to be paid on 28 June 2011 is 7 cents per share ($0.42 per ADS). The corresponding
amount in sterling will be announced on 14 June 2011. A scrip dividend alternative is available, allowing shareholders to
elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the
scrip dividend programme are available at www.bp.com/scrip.

x On 14 April, BP announced that, as a result of the continuing interim injunction prohibiting completion, it had agreed with
Rosneft to extend the deadline for completing their previously announced share swap agreement until 16 May 2011. This is
to allow more time for the arbitration process that was convened to resolve issues raised by Alfa Petroleum Holdings
Limited and OGIP Ventures Limited and to determine whether or not the interim injunction prohibiting completion should
remain in effect. See Legal proceedings on page 37 for further information.

(a)
Profit attributable to BP shareholders.
(b)
Organic capital expenditure excludes acquisitions and asset exchanges (see page 16).

The commentaries above and following are based on replacement cost profit and should be read in conjunction with the cautionary
statement on page 11.

2

Gulf of Mexico oil spill

Operational update

During the first quarter of 2011, the majority of the subsea work related to the Gulf of Mexico oil spill was completed. This
included the plugging and abandonment (P&A) of the second relief well on 8 March 2011. The last source control vessel, the
Discoverer Enterprise, is in the final stages of being cleaned and decontaminated and this is expected to be completed by the
end of the second quarter of 2011. Seabed survey work commenced on 21 March 2011 and is expected to take 40 to 60
days, after which a seismic survey is expected to commence with planned completion in the third quarter of 2011.

The majority of the shoreline clean-up phase of the incident was completed in the first quarter of 2011. Limited work
continues to complete cleaning of the impacted marshes and barrier islands. Monitoring and maintenance continues on
shorelines where clean-up has been completed. Efforts continue to identify and, where practicable to do so safely and
effectively, to remove submerged oil mats offshore. Finally, a pilot project to determine the feasibility of recovering the
remaining anchors that were used to secure protective boom in the shallow coastal waters of Louisiana is nearing
completion.

The phased transition from the Gulf Coast incident management team (GC-IMT) to BPs Gulf Coast Restoration Organization
(GCRO) continues, and the response organization continues to maintain resources in line with operational requirements.
GCRO state offices have been established in the four impacted Gulf States (Alabama, Florida, Louisiana and Mississippi) and
these manage the ongoing activities including any shoreline monitoring and maintenance work and projects. Surveys are
scheduled for the fourth quarter of 2011, after the hurricane season, to identify any remaining clean-up needs.

Trust and claims update

On 15 February 2011, BP made a scheduled $1.25 billion contribution to the Deepwater Horizon Oil Spill Trust fund,
established in 2010 to satisfy legitimate individual and business claims administered by the Gulf Coast Claims Facility (GCCF),
state and local government claims resolved by BP, final judgments and settlements, state and local response costs, and
natural resource damages (NRD) and related costs. Payments from the Trust during the quarter totalled $1.1 billion, of which
$934 million was paid through the GCCF to individual and business claimants, $12 million in relation to state and local
government claims, and $116 million for NRD costs and other resolved items.

On 23 November 2010, the GCCF ended its Emergency Advance Payment process. During the emergency advance phase,
the GCCF received claims from 448,970 claimants and paid 169,005 claimants amounts totalling $2.6 billion. Following a
transition period, the GCCF began the second and final phase of the claims process(a). In connection with this second phase,
claimants submitting legitimate claims to the GCCF may elect to (i) receive interim payments for substantiated past losses, or
(ii) receive an offer for full and final settlement payment and release, with certain exceptions, their right to sue all potentially
liable entities including BP. As at 31 March 2011, 267,960 claimants had submitted a claim as part of the second phase, of
which 107,955 had been paid and finalized for $1 billion and 4,343 had been denied. The remaining 155,662 claimants are at
various stages of the GCCFs claims review process.

BP received 100 new government claims during the first quarter and has now processed 84% of all government claims filed
since the incident occurred, for which BP has made payments totalling $559 million. The remaining government claims are
going through the claims process. These amounts do not include payments to the US Coast Guard for federal government
expenses (which include the expenses of a number of federal entities) and agencies from four states.

Restoration, research and other donations

As part of the Natural Resource Damage Assessment and Restoration (NRDA) process, trustees held a series of public
meetings along the Gulf Coast. The first NRDA emergency restoration project was initiated in January 2011 to reduce further
injury to migratory birds by creating an additional wintering habitat in the region. Additional emergency restoration projects to
address shoreline and aquatic vegetation impacts are in the planning phase, with a project to protect sea turtle eggs and
hatchlings expected to begin in the second quarter of 2011.

In January the National Fish and Wildlife Foundation (NFWF) reported that several emergency projects implemented by NFWF
using BP funds achieved substantial benefits for wildlife during a six-month period. BP donated $22 million to the NFWF from
the net revenue it received from the sale of oil recovered from the spill.

On 11 February, the Unified Command issued the results of the second part of its Operational Science Advisory Team (OSAT
II) study. The report found that environmental impacts of remnant oil found on or near beaches after clean-up operations were
relatively minor, and that further cleaning would likely do more harm than good to the ecosystem. The final determination that
no further treatment activity is required at a given site will be made in agreement with federal, state and local authorities.

In March, BP completed an agreement with the state of Alabama to provide $16 million for tourism promotion. In April, BP
completed a similar agreement with the state of Florida for $30 million and an agreement has been reached with the state of
Mississippi for $16 million. Discussions are currently under way with the states of both Mississippi and Alabama regarding
contributions for seafood testing and marketing.

(a)
As reported at 31 December 2010, the total number of claimants who had filed a claim with the GCCF stood at 468,869, which
included claimants under both the emergency advance phase and the second phase.

3

Gulf of Mexico oil spill (continued)

The Master Research Agreement between BP and the Gulf of Mexico Alliance for the Gulf of Mexico Research Initiative (GRI)
was signed on 14 March 2011. On 25 April 2011, the independent GRI Research Board issued a request for proposals (RFP)
for studies into the effects of the Deepwater Horizon incident and the potential associated impact on the environment and
public health. The Research Board anticipates awarding the first funds under the RFPs in the summer of 2011.

As of 19 April 2011, all of the US federal commercial waters in the Gulf of Mexico are now open for fishing, including those
immediately surrounding the Deepwater Horizon wellhead.

On 21 April 2011, BP entered into a framework agreement with the natural resource trustees for the United States and five
Gulf coast states, providing for up to $1 billion to be spent on early restoration projects to address natural resource injuries
resulting from the Gulf of Mexico oil spill. Funding for these projects will come from the $20-billion Deepwater Horizon Oil Spill
Trust. BP will work with the trustees of the Deepwater Horizon Oil Spill Trust to segregate funds to be made available to pay
for early restoration projects and other NRD claims. This agreement has no impact on BP's first-quarter profit as the full
amount of the trust fund has been previously expensed. Each project that is selected for early restoration pursuant to the
framework agreement must be agreed to by BP and all natural resource trustees. Each project agreement will identify the
natural resource improvements that the parties expect to achieve with the project, and those improvements will offset BPs
alleged liability for natural resource damages in settlement agreements or final court judgements. The parties seek to begin
early restoration under this agreement in 2011 and 2012.

Financial update

The income statement for the first quarter included a pre-tax charge of $0.4 billion in relation to the incident, reflecting an
increase in the oil spill response provision and functional expenses of the GCRO. This is in addition to the pre-tax charge of
$40.9 billion recognized in 2010 which included the $20-billion trust commitment.

The total amounts that will be paid by BP in relation to all obligations relating to the incident are subject to significant
uncertainty as described further in Note 2 on pages 21 26 and in BPs Annual Report and Form 20-F 2010. Also see Note 2,
on page 25 under Contingent assets, for information on partner recovery.

Legal proceedings and investigations

See Gulf of Mexico oil spill on pages 34 39 of BPs Annual Report and Form 20F 2010 and Legal proceedings on pages
31 37 herein for details of legal proceedings, including external investigations relating to the incident.

4

Analysis of replacement cost profit before interest and tax and
reconciliation to profit for the period

First Fourth First
2011 2010 2010
$ million
Exploration and Production 8,420 8,000 8,292
Refining and Marketing 2,079 964 729
Other businesses and corporate (478) (550) (328)
Gulf of Mexico oil spill response(a) (384) (1,010)
Consolidation adjustment (542) 56 208
RC profit before interest and tax(b) 9,095 7,460 8,901

Finance costs and net finance income or expense relating to
pensions and other post-retirement benefits (239) (346) (228)
Taxation on a replacement cost basis (3,314) (2,404) (2,966)
Minority interest (61) (96) (109)
Replacement cost profit attributable to BP shareholders 5,481 4,614 5,598

Inventory holding gains (losses) 2,412 1,445 705
Taxation (charge) credit on inventory holding gains and losses (769) (492) (224)
Profit for the period attributable to BP shareholders 7,124 5,567 6,079

(a)
See Note 2 on pages 21 26 for further information on the accounting for the Gulf of Mexico oil spill response.
(b)
Replacement cost profit reflects the replacement cost of supplies. For further information see page 17.

Total of non-operating items and fair value accounting effects(a)(b)

First Fourth First
2011 2010 2010
$ million
Exploration and Production 739 1,344 104
Refining and Marketing (117) 220 (60)
Other businesses and corporate (181) (67) (118)
Gulf of Mexico oil spill response (384) (1,010)
Total before interest and taxation 57 487 (74)
Finance costs(c) (16) (30)
Total before taxation 41 457 (74)
Taxation credit (charge)(d) 66 (207) 25
Total after taxation for the period 107 250 (49)

(a)
An analysis of non-operating items by type is provided on page 18 and an analysis by region is shown on pages 7, 9 and 10.
(b)
Information on fair value accounting effects is non-GAAP. For further details, see page 19.
(c)
Finance costs relate to the Gulf of Mexico oil spill. See Note 2 on pages 21 26 for further details.
(d)
Tax is calculated using the quarters effective tax rate (excluding the impact of the Gulf of Mexico oil spill and, for the first quarter
2011, the impact of a $683-million one-off deferred tax adjustment in respect of the recently enacted increase in the supplementary
charge on UK oil and gas production) on replacement cost profit or loss. However, the US statutory tax rate has been used for
expenditures relating to the Gulf of Mexico oil spill that qualify for tax relief.

5

Per share amounts

First Fourth First
2011 2010 2010
Per ordinary share (cents)(a)
Profit for the period 37.86 29.62 32.39
RC profit for the period 29.13 24.55 29.82

Per ADS (dollars)(a)
Profit for the period 2.27 1.78 1.94
RC profit for the period 1.75 1.47 1.79

(a)
See Note 6 on page 28 for details of the calculation of earnings per share.

Net debt ratio net debt: net debt + equity

First Fourth First
2011 2010 2010
$ million
Gross debt 47,102 45,336 32,153
Less: fair value asset of hedges related to finance debt 870 916 152
46,232 44,420 32,001
Cash and cash equivalents 18,726 18,556 6,841
Net debt 27,506 25,864 25,160
Equity 103,183 95,891 104,978
Net debt ratio 21% 21% 19%

See Note 7 on page 29 for further details on finance debt.

Net debt and net debt ratio are non-GAAP measures. Net debt includes the fair value of associated derivative financial
instruments that are used to hedge foreign exchange and interest rate risks relating to finance debt, for which hedge
accounting is claimed. The derivatives are reported on the balance sheet within the headings Derivative financial
instruments. We believe that net debt and net debt ratio provide useful information to investors. Net debt enables investors
to see the economic effect of gross debt, related hedges and cash and cash equivalents in total. The net debt ratio enables
investors to see how significant net debt is relative to equity from shareholders.

Dividends

Dividends payable

BP today announced a dividend of 7 cents per ordinary share expected to be paid in June. The corresponding amount in
sterling will be announced on 14 June 2011, calculated based on the average of the market exchange rates for the four
dealing days commencing on 8 June 2011. Holders of American Depositary Shares (ADSs) will receive $0.42 per ADS. The
dividend is payable on 28 June 2011 to shareholders and ADS holders on the register on 13 May 2011. A scrip dividend
alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS
holders in the form of new ADSs. Details of the scrip dividend programme including the first-quarter dividend and timetable
are available at www.bp.com/scrip.

Dividends paid First Fourth First
2011 2010 2010
Dividends paid per ordinary share
cents 7.000 14.000
pence 4.3372 8.679
Dividends paid per ADS (cents) 42.00 84.00

In the first quarter 2011, the total dividend paid in cash amounted to $808 million. In addition, 66.6 million new shares were
issued to shareholders who had elected to receive their dividends in the form of new shares, rather than cash, through the
scrip dividend programme, for a value of $510 million.

6

Exploration and Production

First Fourth First
2011 2010 2010
$ million
Profit before interest and tax 8,535 8,114 8,316
Inventory holding (gains) losses (115) (114) (24)
Replacement cost profit before interest and tax 8,420 8,000 8,292
By region
US 1,875 1,522 2,762
Non-US 6,545 6,478 5,530
8,420 8,000 8,292

The replacement cost profit before interest and tax for the first quarter was $8,420 million, compared with $8,292 million for
the same period in 2010. The first quarter of 2011 benefited from net non-operating gains of $710 million, primarily gains on
disposals arising from the ongoing asset disposal programme, partly offset by losses on embedded derivatives. A year ago,
there were net non-operating gains of $41 million. Fair value accounting effects in the first quarter had a favourable impact of
$29 million, compared with a favourable impact of $63 million in the same period a year ago.

The primary additional factors impacting the first-quarter result, compared with the same period last year, were lower
production volumes (including from the impact of divestments), higher costs (including rig standby costs in the Gulf of
Mexico), higher exploration write-offs and a lower contribution from gas marketing and trading. These factors were partly
offset by higher realizations and lower depreciation.

Production for the quarter was 3,578mboe/d, 11% lower than the first quarter 2010. After adjusting for the effect of
acquisitions and divestments, and entitlement impacts in our production-sharing agreements (PSAs), the decrease was 7%.
The reduction was weighted toward our highest margin areas and primarily reflects the impacts to the Gulf of Mexico
production as a result of the drilling moratorium, higher turnaround and maintenance activity in the North Sea and in Angola,
and the Trans-Alaska Pipeline System interruption, partly offset by first production from Iraq.

Looking ahead, we expect second-quarter production to reflect the continued impact on operations in the Gulf of Mexico
following the drilling moratorium, the impact of acquisitions and divestments, and the seasonal ramp-up in turnaround activity,
which is expected to be higher than in 2010.

BP has neither production nor reserves in Libya. We have suspended our exploration operations (seismic and preparation for
drilling) that were under way. We will fully comply with sanctions (US, UK, EU, UN), and will continue to examine them in
detail to ensure our compliance. See Further note on certain activities on page 11 for further information on Libya sanctions.

We continued to make strategic progress in the quarter. In Australia, we were awarded four deepwater offshore blocks in the
Ceduna Sub Basin, off the coast of South Australia. The proposed exploration activity is expected to be phased over six years
and, as part of the regulatory approval process, will be subject to detailed environmental assessment.

In Iraq, the Rumaila Operating Organization met a major milestone in December 2010 in the redevelopment of the Rumaila
field in Southern Iraq by increasing production by more than 10% above the initial production rate agreed in December 2009.
Meeting this production target is a significant milestone and triggers the recognition of production and earnings. We expect to
commence liftings in the second quarter.

In February 2011, Reliance Industries Limited (Reliance) and BP announced an alliance across the full value chain with BP
taking a 30% stake in 23 oil and gas PSAs operated by Reliance in India, including the producing KG D6 block, and the
formation of a 50:50 joint venture between the two companies for the sourcing and marketing of gas in India. The joint
venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas
in India. BP will pay Reliance an aggregate consideration of $7.2 billion, subject to completion adjustments. Future
performance payments of up to $1.8 billion could be payable based on exploration success that results in the development of
commercial discoveries. The completion of this transaction remains subject to Indian regulatory approvals. Completion is
expected to take place in the second quarter of 2011.

BP announced in February the intention of selling its interests in a number of operated oil and gas fields in the UK. The assets
involved are the Wytch Farm onshore oilfield in Dorset and all of BPs operated gas fields in the southern North Sea, including
associated pipeline infrastructure and the Dimlington terminal. For an update on previously announced disposals, see Note 3
on page 26.

BP confirmed in early April that it has been awarded interests in four new coalbed methane PSAs in the Barito basin of South
Kalimantan, Indonesia.

For information on the status of our proposed share swap with Rosneft, see Legal proceedings on page 37.

7


First Fourth First
2011 2010 2010
$ million
Non-operating items
US 4 (273) (62)
Non-US 706 1,629 103
710 1,356 41
Fair value accounting effects(a)

US 25 9 81
Non-US 4 (21) (18)
29 (12) 63
Exploration expense
US(b) 308 254 69
Non-US(c) 91 177 51
399 431 120
Production (net of royalties)(d)
Liquids (mb/d)(e)
US 523 567 665
Europe 166 155 215
Russia 856 858 849
Rest of World 725 686 798
2,270 2,266 2,527
Natural gas (mmcf/d)
US 1,905 2,085 2,221
Europe 373 390 599
Russia 719 698 673
Rest of World 4,589 4,987 5,107
7,586 8,160 8,600
Total hydrocarbons (mboe/d)(f)
US 851 927 1,048
Europe 230 222 318
Russia 980 978 965
Rest of World 1,517 1,546 1,679
3,578 3,673 4,010
Average realizations(g)
Total liquids ($/bbl) 93.93 78.80 71.86
Natural gas ($/mcf) 4.21 3.98 4.26
Total hydrocarbons ($/boe) 59.02 50.41 49.16

(a)
These effects represent the favourable (unfavourable) impact relative to managements measure of performance. Further
information on fair value accounting effects is provided on page 19.
(b)
First quarter 2011 includes $93 million and fourth quarter 2010 includes $157 million related to decommissioning of idle
infrastructure, as required by BOEMREs Notice to Lessees No. 2010-GO5 issued in October 2010.
(c)
First quarter 2011 includes $44 million classified within the other category of non-operating items.
(d)
Includes BPs share of production of equity-accounted entities.
(e)
Crude oil and natural gas liquids.
(f)
Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels.
(g)
Based on sales of consolidated subsidiaries only this excludes equity-accounted entities.

Because of rounding, some totals may not agree exactly with the sum of their component parts.

8

Refining and Marketing

First Fourth First
2011 2010 2010
$ million
Inventory holding (gains) losses (2,288) (1,318) (679)
Replacement cost profit before interest and tax 2,079 964 729

By region
US 640 21 (63)
Non-US 1,439 943 792
2,079 964 729

The replacement cost profit before interest and tax for the first quarter was $2,079 million, compared with $729 million for
the same period last year.

The first quarters result included a net non-operating charge of $17 million compared with a net charge of $70 million a year
ago. Fair value accounting effects had an unfavourable impact of $100 million for the first quarter compared with a favourable
impact of $10 million a year ago.

The result for the first quarter reflected continued strong operations in all businesses. Compared with the same period last
year, the result reflected a very strong supply and trading contribution and an improved overall refining environment. In
addition there was strong refining feedstock optimization in the US, due to BPs location advantage in accessing WTI-priced
crude grades, and strength in petrochemicals aromatics margins and volumes. These factors were partially offset by the
impacts of higher turnaround activities compared with the same period last year.

In the fuels value chains, Solomon refining availability (as defined in footnote (b) on page 9) was 93.9% for the quarter but
refining throughputs in the first quarter were slightly lower compared with the same period last year, primarily due to higher
turnaround activities at the Texas City refinery.

In the international businesses, strong operational performance in our petrochemicals business has enabled us to benefit
from the favourable margin environment and lubricants continued to deliver earnings growth.

Looking ahead, we expect the supply and trading contribution in the second quarter to be lower than the very strong first-
quarter performance. In the fuels value chains, WTI differentials may narrow somewhat compared with recent levels,
reducing the benefit to our US Midwest refineries. We expect the usual seasonal improvement in refining margins in the
second quarter but anticipate some softening in petrochemicals margins. Turnaround activities in the second quarter are
expected to be in line with the first quarter.

In March, BP announced that it had agreed to sell a package of 33 refined products terminals and 992 miles of pipelines
across 13 states in the US. The transaction is expected to complete during the second quarter of 2011.

9


First Fourth First
2011 2010 2010
$ million
Non-operating items
US (16) (12) (3)
Non-US (1) 98 (67)
(17) 86 (70)

Fair value accounting effects(a)
US (48) 27 16
Non-US (52) 107 (6)
(100) 134 10

Refinery throughputs (mb/d)
US 1,194 1,343 1,366
Europe 768 777 780
Total throughput 2,269 2,420 2,428
Refining availability (%)(b) 93.9 94.9 95.3

Sales volumes (mb/d)(c)
Marketing sales by region
US 1,375 1,415 1,418
Europe 1,267 1,379 1,428
Total marketing sales 3,252 3,391 3,475
Trading/supply sales 2,256 2,485 2,622
Total refined product sales 5,508 5,876 6,097

Refining Marker Margin (RMM) ($/bbl)(d)
US West Coast 16.18 12.52 9.82
US Gulf Coast 10.81 9.21 10.31
US Midwest 3.55 5.00 4.99
North West Europe 11.07 11.29 9.79
Mediterranean 9.09 9.80 8.27
Singapore 14.69 11.56 10.60
BP Average RMM 11.02 9.98 9.06

Chemicals production (kte)
US 1,135 1,046 940
Europe(e) 985 894 1,063
Rest of World 1,918 1,780 1,888
Total production(e) 4,038 3,720 3,891

(a)
These effects represent the favourable (unfavourable) impact relative to managements measure of performance. Further information
on fair value accounting effects is provided on page 19.
(b)
Refining availability represents Solomon Associates operational availability, which is defined as the percentage of the year that a unit
is available for processing after subtracting the annualized time lost due to turnaround activity and all planned mechanical, process
and regulatory maintenance downtime.
(c)
Does not include volumes relating to crude oil.
(d)
The Refining Marker Margin (RMM) replaces the Global Indicator Refining Margin (GIM), which we reported prior to 2011. The RMM
is the average of regional indicator margins weighted for BP's crude refining capacity in each region. Each regional marker margin is
based upon product yields and a marker crude oil deemed appropriate for the region. The regional marker margins may not be
representative of the margins achieved by BP in any period because of BPs particular refinery configurations and crude and product
slate.
(e)
A minor amendment has been made in the first quarter 2010.

10

Other businesses and corporate

First Fourth First
2011 2010 2010
$ million
Profit (loss) before interest and tax (469) (537) (326)
Inventory holding (gains) losses (9) (13) (2)
Replacement cost profit (loss) before interest and tax (478) (550) (328)

By region
US (188) (225) (231)
Non-US (290) (325) (97)
(478) (550) (328)
Results include
Non-operating items
US 1 (54) (106)
Non-US (182) (13) (12)
(181) (67) (118)

Other businesses and corporate comprises the Alternative Energy business, Shipping, the group's aluminium business,
Treasury (which includes interest income on the group's cash and cash equivalents), and corporate activities worldwide.

The replacement cost loss before interest and tax for the first quarter was $478 million, compared with a loss of $328 million
a year ago. The net non-operating charge for the first quarter was $181 million, compared with a net charge of $118 million a
year ago.

In our US wind business, construction commenced at the 150MW Sherbino 2 wind farm in Pecos County, Texas, wholly
owned by BP. BPs net wind generation capacity(a) at the end of the first quarter was 774MW (1,362MW gross), compared
with 711MW (1,237MW gross) at the end of the same period a year ago.

In our biofuels business, on 11 March BP agreed to pay a total of approximately $680 million to acquire 83% of the shares of
Companhia Nacional de Acar e lcool (CNAA), a Brazilian ethanol and sugar producer, and to refinance all of CNAA's
existing long-term debt. Regulatory approval for the transaction has been received and completion is expected to take place in
the second quarter of 2011.

On 4 April, BP announced that it had agreed the sale of its wholly-owned subsidiary, ARCO Aluminum Inc., to a consortium of
Japanese companies for cash consideration of $680 million (subject to closing adjustments). Subject to obtaining required
regulatory approvals, the parties expect to complete the transaction in the third quarter of 2011.

(a)
Net wind capacity is the sum of the rated capacities of the assets/turbines that have entered into commercial operation, including
BPs share of equity-accounted entities. The gross data is the equivalent capacity on a gross-JV basis, which includes 100% of the
capacity of equity-accounted entities where BP has partial ownership. Capacity figures include 32MW in the Netherlands managed
by our Refining and Marketing segment.

11

Cautionary statement
Cautionary statement regarding forward-looking statements: The discussion in this results announcement contains forward-looking
statements particularly those regarding the expected effective tax rate for 2011 and the impact in 2012 of an announced change in UK tax
relief available on decommissioning expenditure; the quarterly dividend payment; the completion of the decontamination of the vessels
involved in the response to the Gulf of Mexico oil spill; the timing of seabed and seismic surveys of the area affected by the Gulf of Mexico
oil spill; the magnitude and timing of remaining remediation costs related to the Gulf of Mexico oil spill; the factors that could affect the
magnitude of BPs ultimate exposure and the cost to BP in relation to the spill and any potential mitigation resulting from BPs partners or
others involved in the spill; the potential liabilities resulting from pending and future legal proceedings and potential investigations and
civil or criminal actions that US state and/or local governments could seek to take against BP as a result of the spill; the timing of claims
and litigation outcomes and of payment of legal costs; the anticipated timing for completion of the disposition of certain BP assets; the
anticipated timing of the acquisition of shares of CNAA; contributions to and payments from the trust fund and the setting aside of assets
while the fund is building; the expected impact on second-quarter production from lower production in the Gulf of Mexico following the
drilling moratorium, acquisitions and divestments, and seasonal ramp up in turnaround activity; expectations for second-quarter refining
margins and for the petrochemicals environment; expectations for refinery turnaround activities; the supply and trading contribution and
WTI differentials in the second quarter; compliance with sanctions in relation to Libya; exploration activity in four deepwater offshore
blocks off of Australia; expectations regarding the re-development of the Rumaila field in Southern Iraq; continuing requests for cost
reimbursement from the US Coast Guard and other governmental authorities; the timing for publication of investigation reports; the
impact of BPs potential liabilities relating to the Gulf of Mexico oil spill on the group, including its business, results and financial
condition; and BPs anticipated response to potential future claims against Alyeska and Atlantic Richfield; completion of the transactions
related to a partnership with Reliance; and completion of a share swap agreement entered into with Rosneft. By their nature, forward-
looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the
future. Actual results may differ from those expressed in such statements, depending on a variety of factors including the timing of bringing
new fields onstream; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational
problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and
governmental regulations; regulatory or legal actions including the types of enforcement action pursued and the nature of remedies
sought; the impact on our reputation following the Gulf of Mexico oil spill; exchange rate fluctuations; development and use of new
technology; the success or otherwise of partnering; the actions of competitors, trading partners, creditors, rating agencies and others;
natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts
of terrorism or sabotage; and other factors discussed under Risk factors in our Annual Report and Form 20-F 2010 as filed with the US
Securities and Exchange Commission (SEC).

Further note on certain activities

Prior to the conflict in Libya, BP was involved in exploration activities (seismic and preparation for drilling) in the onshore Ghadames and
offshore Sirt basins pursuant to a participation agreement and an exploration and production-sharing agreement with the Libyan
government and affiliated entities. These entities are subject to international sanctions. BP has suspended all operations in Libya and
declared force majeure under these agreements. BP also had supply, purchase and trading activities with Libyan entities and affiliated
parties. BP has issued force majeure notices on outstanding contractual obligations. BP has no production or reserves in Libya.

12

Group income statement

First Fourth First
2011 2010 2010
$ million
Sales and other operating revenues (Note 4) 85,329 79,703 73,071
Earnings from jointly controlled entities after interest and tax 262 233 403
Earnings from associates after interest and tax 1,409 1,125 763
Interest and other income 124 174 142
Gains on sale of businesses and fixed assets 1,188 2,753 38
Total revenues and other income 88,312 83,988 74,417

Purchases 61,721 58,339 51,641
Production and manufacturing expenses(a)(b) 6,508 7,522 5,740
Production and similar taxes (Note 5) 1,831 1,524 1,276
Depreciation, depletion and amortization 2,835 2,634 2,996
Impairment and losses on sale of businesses and fixed assets 59 1,201 164
Exploration expense 399 431 120
Distribution and administration expenses(b) 2,907 3,409 3,020
Fair value (gain) loss on embedded derivatives 545 23 (146)
Profit before interest and taxation 11,507 8,905 9,606
Finance costs 308 359 238
Net finance income relating to pensions and
other post-retirement benefits (69) (13) (10)
Profit before taxation 11,268 8,559 9,378
Taxation(a) 4,083 2,896 3,190
Profit for the period 7,185 5,663 6,188
Attributable to

BP shareholders 7,124 5,567 6,079
Minority interest 61 96 109
7,185 5,663 6,188
Earnings per share cents (Note 6)
Profit for the period attributable to BP shareholders
Basic 37.86 29.62 32.39
Diluted 37.42 29.28 31.99

(a)
See Note 2 on pages 21 26 for further details of the impact of the Gulf of Mexico oil spill on the income statement line items.
(b)
Cash costs for the first quarter of 2011 increased compared to the same period a year ago, consistent with the increase in
production and manufacturing expenses plus distribution and administration expenses. Cash costs are a subset of these two line
items in the income statement. They represent the substantial majority of the expenses in these line items but exclude associated
non-operating items (including amounts relating to the Gulf of Mexico oil spill), and certain costs that are variable, primarily with
volumes (such as freight costs). They are the principal operating and overhead costs that management considers to be most directly
under their control although they include certain foreign exchange and commodity price effects.

13

Group statement of comprehensive income

First Fourth First
2011 2010 2010
$ million
Profit for the period 7,185 5,663 6,188
Currency translation differences 657 26 (526)
Exchange (gains) losses on translation of foreign operations transferred to gain
or loss on sale of businesses and fixed assets 11 (48)
Actuarial gain (loss) relating to pensions and other post-retirement benefits (320)
Available-for-sale investments marked to market 266 65 (93)
Available-for-sale investments recycled to the income statement (2) (8)
Cash flow hedges marked to market 118 20 (162)
Cash flow hedges recycled to the income statement (16) 16 (94)
Cash flow hedges recycled to the balance sheet 2 8 13
Taxation (5) 121 (119)
Other comprehensive income (expense) 1,031 (120) (981)
Total comprehensive income 8,216 5,543 5,207
Attributable to
BP shareholders 8,139 5,449 5,105
Minority interest 77 94 102
8,216 5,543 5,207

Group statement of changes in equity

BP
shareholders Minority Total
equity interest equity
$ million
At 1 January 2011 94,987 904 95,891

Total comprehensive income 8,139 77 8,216
Dividends (808) (6) (814)
Share-based payments (net of tax) (110) (110)
At 31 March 2011 102,208 975 103,183

BP
shareholders Minority Total
equity interest equity
$ million
At 1 January 2010 101,613 500 102,113

Total comprehensive income 5,105 102 5,207
Dividends (2,626) (3) (2,629)
Share-based payments (net of tax) (13) (13)
Transactions involving minority interests 300 300
At 31 March 2010 104,079 899 104,978

14

Group balance sheet

31 March 31 December
2011 2010
$ million
Non-current assets
Property, plant and equipment 111,476 110,163
Goodwill 8,764 8,598
Intangible assets 14,439 14,298
Investments in jointly controlled entities 12,604 12,286
Investments in associates 14,727 13,335
Other investments 1,462 1,191
Fixed assets 163,472 159,871
Loans 882 894
Other receivables 6,055 6,298
Derivative financial instruments 4,309 4,210
Prepayments 1,544 1,432
Deferred tax assets 566 528
Defined benefit pension plan surpluses 2,430 2,176
179,258 175,409
Current assets
Loans 254 247
Inventories 28,657 26,218
Trade and other receivables 42,751 36,549
Prepayments 4,291 1,574
Current tax receivable 234 693
Other investments 1,439 1,532
Cash and cash equivalents 18,726 18,556
101,093 89,725
Assets classified as held for sale (Note 3) 6,241 7,128
107,334 96,853
Total assets 286,592 272,262
Current liabilities
Trade and other payables 51,345 46,329
Accruals 5,273 5,612
Finance debt 14,255 14,626
Current tax payable 3,490 2,920
Provisions 9,258 9,489
87,930 82,832
Liabilities directly associated with assets classified as held for sale (Note 3) 1,013 1,047
88,943 83,879
Non-current liabilities
Other payables 12,672 14,285
Accruals 426 637
Finance debt 32,847 30,710
Deferred tax liabilities 12,419 10,908
Provisions 22,254 22,418
Defined benefit pension plan and other post-retirement benefit plan deficits 9,794 9,857
94,466 92,492
Total liabilities 183,409 176,371
Net assets 103,183 95,891
Equity
BP shareholders equity 102,208 94,987
Minority interest 975 904
103,183 95,891

15

Condensed group cash flow statement

First Fourth First
2011 2010 2010
$ million
Operating activities
Adjustments to reconcile profit before taxation to net cash
provided by operating activities
Depreciation, depletion and amortization and exploration
expenditure written off 3,127 2,877 3,017
Impairment and (gain) loss on sale of businesses and fixed assets (1,129) (1,552) 126
Earnings from equity-accounted entities, less dividends received (1,446) (76) (669)
Net charge for interest and other finance expense, less net
interest paid 51 5 46
Share-based payments (124) 72 (146)
Net operating charge for pensions and other post-retirement benefits,
less contributions and benefit payments for unfunded plans (439) (298) (490)
Net charge for provisions, less payments 273 2,005 (48)
Movements in inventories and other current and non-current
assets and liabilities(a) (7,823) (10,215) (1,940)
Income taxes paid (1,354) (1,555) (1,581)
Net cash provided by (used in) operating activities 2,404 (178) 7,693
Investing activities
Capital expenditure(b) (5,774) (5,118) (4,289)
Acquisitions, net of cash acquired (2) (8)
Investment in jointly controlled entities (89) (174) (82)
Investment in associates (11) (27) (6)
Proceeds from disposal of fixed assets(c) 384 2,555 108
Proceeds from disposal of businesses, net of cash disposed(c) 586 4,818
Proceeds from loan repayments 35 109 56
Net cash provided by (used in) investing activities (4,871) 2,155 (4,213)
Financing activities
Net issue (repurchase) of shares 12 31 128
Proceeds from long-term financing 4,917 6,529 342
Repayments of long-term financing (2,622) (1,963) (2,495)
Net increase (decrease) in short-term debt 949 (533) (247)
Dividends paid BP shareholders (808) (2,626)
Net cash provided by (used in) financing activities 2,442 3,947 (4,901)
Currency translation differences relating to cash and
cash equivalents 195 (171) (77)
Increase (decrease) in cash and cash equivalents 170 5,753 (1,498)
Cash and cash equivalents at beginning of period 18,556 12,803 8,339
Cash and cash equivalents at end of period 18,726 18,556 6,841

(a)
Includes:
Inventory holding (gains) losses (2,412) (1,445) (705)
Fair value (gain) loss on embedded derivatives 545 23 (146)
Movements related to Gulf of Mexico oil spill response (2,864) (6,542)

Inventory holding gains and losses and fair value gains and losses on embedded derivatives are also included within profit before
taxation. See Note 2 for further information on the cash flow impacts of the Gulf of Mexico oil spill.
(b)
First quarter 2011 included $2,000 million paid as a deposit relating to the transaction with Reliance Industries Limited.
See page 6 for further information.
(c)
Included in disposal proceeds are deposits received in respect of disposal transactions expected to complete in subsequent periods
as follows: first quarter 2011 $57.5 million; fourth quarter 2010 $4,947 million; first quarter 2010 nil. For further information see
Note 7.

16

Capital expenditure and acquisitions

First Fourth First
2011 2010 2010
$ million
By business
US 1,023 1,043 1,133
Non-US(a) 2,111 2,319 2,815
3,134 3,362 3,948
US 522 755 528
Non-US 215 610 144
737 1,365 672
US(b) 130 630 28
Non-US 20 104 39
150 734 67
4,021 5,461 4,687
US(b) 1,675 2,428 1,689
Non-US(a) 2,346 3,033 2,998
4,021 5,461 4,687
Included above:
Acquisitions and asset exchanges(a)(b) 9 212

(a)
First quarter 2010 included capital expenditure of $900 million relating to the formation of a partnership with Value Creation Inc. to
develop the Terre de Grace oil sands acreage in the Athabasca region of Alberta, Canada.
(b)
Fourth quarter 2010 included capital expenditure of $390 million for wind turbines, incurred at the time for future wind projects.

Exchange rates

First Fourth First
2011 2010 2010
US dollar/sterling average rate for the period 1.60 1.58 1.56
US dollar/sterling period-end rate 1.61 1.54 1.51
US dollar/euro average rate for the period 1.37 1.36 1.38
US dollar/euro period-end rate 1.41 1.33 1.34

17

Analysis of replacement cost profit before interest and tax and
reconciliation to profit before taxation(a)

First Fourth First
2011 2010 2010
$ million
By business
US 1,875 1,522 2,762
Non-US 6,545 6,478 5,530
8,420 8,000 8,292
US 640 21 (63)
Non-US 1,439 943 792
2,079 964 729
US (188) (225) (231)
Non-US (290) (325) (97)
(478) (550) (328)
10,021 8,414 8,693
Consolidation adjustment (542) 56 208
Replacement cost profit before interest and tax(b) 9,095 7,460 8,901
Inventory holding gains (losses)(c)
Exploration and Production 115 114 24
Refining and Marketing 2,288 1,318 679
Other businesses and corporate 9 13 2
Finance costs 308 359 238
Net finance income relating to pensions
and other post-retirement benefits (69) (13) (10)

Replacement cost profit before interest and tax
US 1,813 385 2,590
Non-US 7,282 7,075 6,311
9,095 7,460 8,901

(a)
IFRS requires that the measure of profit or loss disclosed for each operating segment is the measure that is provided regularly to the
chief operating decision maker for the purposes of performance assessment and resource allocation. For BP, this measure of profit
or loss is replacement cost profit or loss before interest and tax. In addition, a reconciliation is required between the total of the
operating segments' measures of profit or loss and the group profit or loss before taxation.
(b)
Replacement cost profit or loss reflects the replacement cost of supplies. The replacement cost profit or loss for the period is arrived
at by excluding from profit or loss inventory holding gains and losses and their associated tax effect. Replacement cost profit or loss
for the group is not a recognized GAAP measure.
(c)
Inventory holding gains and losses represent the difference between the cost of sales calculated using the average cost to BP of
supplies acquired during the period and the cost of sales calculated on the first-in first-out (FIFO) method after adjusting for any
changes in provisions where the net realizable value of the inventory is lower than its cost. Under the FIFO method, which we use
for IFRS reporting, the cost of inventory charged to the income statement is based on its historic cost of purchase, or manufacture,
rather than its replacement cost. In volatile energy markets, this can have a significant distorting effect on reported income. The
amounts disclosed represent the difference between the charge (to the income statement) for inventory on a FIFO basis (after
adjusting for any related movements in net realizable value provisions) and the charge that would have arisen if an average cost of
supplies was used for the period. For this purpose, the average cost of supplies during the period is principally calculated on a
monthly basis by dividing the total cost of inventory acquired in the period by the number of barrels acquired. The amounts disclosed
are not separately reflected in the financial statements as a gain or loss. No adjustment is made in respect of the cost of inventories
held as part of a trading position and certain other temporary inventory positions.

Management believes this information is useful to illustrate to investors the fact that crude oil and product prices can vary
significantly from period to period and that the impact on our reported result under IFRS can be significant. Inventory holding gains
and losses vary from period to period due principally to changes in oil prices as well as changes to underlying inventory levels. In
order for investors to understand the operating performance of the group excluding the impact of oil price changes on the
replacement of inventories, and to make comparisons of operating performance between reporting periods, BPs management
believes it is helpful to disclose this information.

18

Non-operating items(a)

First Fourth First
2011 2010 2010
$ million
Impairment and gain (loss) on sale of businesses and fixed assets 1,089 1,430 (13)
Environmental and other provisions
Restructuring, integration and rationalization costs (14) (104)
Fair value gain (loss) on embedded derivatives (328) (23) 146
Other (51) (37) 12
710 1,356 41
Impairment and gain (loss) on sale of businesses and fixed assets 5 145 (45)
Environmental and other provisions (15)
Restructuring, integration and rationalization costs (1) (47) 12
Fair value gain (loss) on embedded derivatives
Other (21) 3 (37)
(17) 86 (70)
Impairment and gain (loss) on sale of businesses and fixed assets 35 (23) (68)
Environmental and other provisions (22)
Restructuring, integration and rationalization costs 1 (13) (38)
Fair value gain (loss) on embedded derivatives(b) (217)
Other (9) (12)
(181) (67) (118)
Total before interest and taxation 128 365 (147)
Finance costs(c) (16) (30)
Total before taxation 112 335 (147)
Taxation credit (charge)(d) 44 (167) 50
Total after taxation for period 156 168 (97)

(a)
An analysis of non-operating items by region is shown on pages 7, 9 and 10.
(b)
First quarter 2011 includes a loss on an embedded derivative arising from a financing arrangement.
(c)
Finance costs relate to the Gulf of Mexico oil spill. See Note 2 on pages 21 26 for further details.
(d)
charge on UK oil and gas production) on replacement cost profit or loss. However, the US statutory tax rate has been used for
expenditures relating to the Gulf of Mexico oil spill that qualify for tax relief.

Non-operating items are charges and credits arising in consolidated entities that BP discloses separately because it considers
such disclosures to be meaningful and relevant to investors. These disclosures are provided in order to enable investors
better to understand and evaluate the groups financial performance.

19

Non-GAAP information on fair value accounting effects

First Fourth First
$ million 2011 2010 2010
Favourable (unfavourable) impact relative to
managements measure of performance
Exploration and Production 29 (12) 63
Refining and Marketing (100) 134 10
(71) 122 73
Taxation credit (charge)(a) 22 (40) (25)
(49) 82 48

(a)
charge on UK oil and gas production) on replacement cost profit or loss.

BP uses derivative instruments to manage the economic exposure relating to inventories above normal operating
requirements of crude oil, natural gas and petroleum products. Under IFRS, these inventories are recorded at historic cost.
The related derivative instruments, however, are required to be recorded at fair value with gains and losses recognized in
income because hedge accounting is either not permitted or not followed, principally due to the impracticality of effectiveness
testing requirements. Therefore, measurement differences in relation to recognition of gains and losses occur. Gains and
losses on these inventories are not recognized until the commodity is sold in a subsequent accounting period. Gains and
losses on the related derivative commodity contracts are recognized in the income statement from the time the derivative
commodity contract is entered into on a fair value basis using forward prices consistent with the contract maturity.

BP enters into commodity contracts to meet certain business requirements, such as the purchase of crude for a refinery or
the sale of BPs gas production. Under IFRS these contracts are treated as derivatives and are required to be fair valued when
they are managed as part of a larger portfolio of similar transactions. Gains and losses arising are recognized in the income
statement from the time the derivative commodity contract is entered into.

IFRS requires that inventory held for trading be recorded at its fair value using period end spot prices whereas any related
derivative commodity instruments are required to be recorded at values based on forward prices consistent with the contract
maturity. Depending on market conditions, these forward prices can be either higher or lower than spot prices resulting in
measurement differences.

BP enters into contracts for pipelines and storage capacity, oil and gas processing and liquefied natural gas (LNG) that, under
IFRS, are recorded on an accruals basis. These contracts are risk-managed using a variety of derivative instruments, which are
fair valued under IFRS. This results in measurement differences in relation to recognition of gains and losses.

The way that BP manages the economic exposures described above, and measures performance internally, differs from the
way these activities are measured under IFRS. BP calculates this difference for consolidated entities by comparing the IFRS
result with managements internal measure of performance. Under managements internal measure of performance the
inventory, capacity, oil and gas processing and LNG contracts in question are valued based on fair value using relevant
forward prices prevailing at the end of the period and the commodity contracts for business requirements are accounted for
on an accruals basis. We believe that disclosing managements estimate of this difference provides useful information for
investors because it enables investors to see the economic effect of these activities as a whole. The impacts of fair value
accounting effects, relative to managements internal measure of performance, are shown in the table above. A reconciliation
to GAAP information is set out below.

Reconciliation of non-GAAP information

First Fourth First
$ million 2011 2010 2010
Replacement cost profit before interest and tax adjusted for
fair value accounting effects 8,391 8,012 8,229
Impact of fair value accounting effects 29 (12) 63
Replacement cost profit before interest and tax 8,420 8,000 8,292

Replacement cost profit before interest and tax adjusted for
fair value accounting effects 2,179 830 719
Impact of fair value accounting effects (100) 134 10
Replacement cost profit before interest and tax 2,079 964 729

20

Realizations and marker prices

First Fourth First
2011 2010 2010

Average realizations(a)
Liquids ($/bbl)(b)
US 86.53 74.60 69.77
Europe 102.37 85.30 75.71
Rest of World 99.68 82.30 72.94
BP Average 93.93 78.80 71.86
Natural gas ($/mcf)
US 3.20 3.31 4.84
Europe 7.04 6.76 4.91
Rest of World 4.41 4.05 3.90
BP Average 4.21 3.98 4.26
Total hydrocarbons ($/boe)
US 60.30 53.60 54.54
Europe 85.08 71.48 60.39
Rest of World 52.79 43.70 42.20
BP Average 59.02 50.41 49.16
Average oil marker prices ($/bbl)
Brent 105.43 86.46 76.36
West Texas Intermediate 94.49 85.13 78.84
Alaska North Slope 103.22 85.92 79.14
Mars 101.95 84.19 75.85
Urals (NWE cif) 102.55 85.16 75.31
Russian domestic oil 49.18 40.62 35.52
Average natural gas marker prices
Henry Hub gas price

($/mmBtu)(c) 4.11 3.80 5.30
UK Gas National Balancing Point (p/therm) 56.94 52.43 35.65

(a)
Based on sales of consolidated subsidiaries only this excludes equity-accounted entities.
(b)
Crude oil and natural gas liquids.
(c)
Henry Hub First of Month Index.

21

Notes

1. Basis of preparation

The interim financial information included in this report has been prepared in accordance with IAS 34 Interim
Financial Reporting.

The results for the interim periods are unaudited and in the opinion of management include all adjustments
necessary for a fair presentation of the results for the periods presented. All such adjustments are of a normal
recurring nature. This report should be read in conjunction with the consolidated financial statements and related
notes for the year ended 31 December 2010 included in the BP Annual Report and Form 20-F 2010.

BP prepares its consolidated financial statements included within its Annual Report and Accounts on the basis of
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB),
IFRS as adopted by the European Union (EU) and in accordance with the provisions of the UK Companies Act 2006.
IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences
have no impact on the groups consolidated financial statements for the periods presented. The financial information
presented herein has been prepared in accordance with the accounting policies expected to be used in preparing BP
Annual Report and Form 20-F 2011, which do not differ significantly from those used in the BP Annual Report and
Form 20-F 2010.

New or amended International Financial Reporting Standards adopted

There are no new or amended standards or interpretations adopted with effect from 1 January 2011 that have a
significant impact on the financial statements.

2. Gulf of Mexico oil spill

(a) Overview

As a consequence of the Gulf of Mexico oil spill, BP continues to incur costs and has also recognized liabilities for
future costs. The information presented in this note should be read in conjunction with BP Annual Report and
Form 20-F 2010 Financial Statements Note 2, Note 37 and Note 44.

The group income statement for 2010 included a pre-tax charge of $40,935 million in relation to the Gulf of Mexico
oil spill. The amounts set out below reflect the impacts on the financial statements of the Gulf of Mexico oil spill for
the periods presented, as described on pages 2 3. The income statement, balance sheet and cash flow statement
impacts are included within the relevant line items in those statements as set out below.

First Fourth First
$ million 2011 2010 2010

Income statement
Production and manufacturing expenses 384 1,010
Profit (loss) before interest and taxation (384) (1,010)
Finance costs 16 30
Profit (loss) before taxation (400) (1,040)
Less: Taxation 201 287
Profit (loss) for the period (199) (753)

22

Notes

2. Gulf of Mexico oil spill (continued)

31 March 2011 31 December 2010
Of which: Of which:
amount related amount related
Total to the trust fund Total to the trust fund
$ million

Balance sheet
Current assets
Trade and other receivables 5,981 5,981 5,943 5,943
Current liabilities
Trade and other payables (6,031) (5,001) (6,587) (5,002)
Provisions (7,379) (7,938)
Net current assets (liabilities) (7,429) 980 (8,582) 941
Non-current assets
Other receivables 3,563 3,563 3,601 3,601
Non-current liabilities
Other payables (8,667) (8,667) (9,899) (9,899)
Provisions (8,098) (8,397)
Deferred tax 11,218 11,255
Net non-current liabilities (1,984) (5,104) (3,440) (6,298)

Net assets (9,413) (4,124) (12,022) (5,357)

First Fourth First
$ million 2011 2010 2010

Cash flow statement Operating activities
Profit (loss) before taxation (400) (1,040)
Adjustments to reconcile profit (loss) before taxation
to net cash provided by operating activities
Net charge for interest and other finance
expense, less net interest paid 16 30
Net charge for provisions, less payments 202 2,117
Movements in inventories and other current
and non-current assets and liabilities (2,864) (6,542)
Pre-tax cash flows (3,046) (5,435)

Net cash used in operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to
$2,808 million in the first quarter 2011 and $5,415 million in the fourth quarter 2010.

Trust fund

In 2010, BP established the Deepwater Horizon Oil Spill Trust (the Trust) to be funded in the amount of $20 billion
over the period to the fourth quarter of 2013, which is available to satisfy legitimate individual and business claims
administered by the Gulf Coast Claims Facility (GCCF), state and local government claims resolved by BP, final
judgments and settlements, state and local response costs, and natural resource damages and related costs. In 2010
BP contributed $5 billion to the fund, and a further contribution of $1.25 billion was made in the first quarter of 2011.
The income statement charge for 2010 included $20 billion in relation to the trust fund, adjusted to take account of
the time value of money. Fines, penalties and claims administration costs are not covered by the trust fund.

23

Notes


The table below shows movements in the funding obligation during the period to 31 March 2011. This liability is
recognized within other payables on the balance sheet apportioned between current and non-current elements
according to the agreed schedule of contributions.

$ million

At 1 January 2011 14,901
Unwinding of discount 14
Contribution (1,250)
Other 3
At 31 March 2011 13,668
Of which current 5,001
non-current 8,667

An asset has been recognized representing BPs right to receive reimbursement from the trust fund. This is the
portion of the estimated future expenditure provided for that will be settled by payments from the trust fund. We
use the term reimbursement asset to describe this asset. BP will not actually receive any reimbursements from
the trust fund, instead payments will be made directly to claimants from the trust fund, and BP will be released from
its corresponding obligation. The reimbursement asset is recorded within other receivables on the balance sheet
apportioned between current and non-current elements. The table below shows movements in the reimbursement
asset during the period to 31 March 2011. The amount of the reimbursement asset at 31 March 2011 is equal to the
amount of provisions recognized at that date that will be covered by the trust fund see below.

$ million

At 1 January 2011 9,544
Increase in provision for items covered by the trust fund 1,062
Amounts paid directly by the trust fund (1,062)
At 31 March 2011 9,544
Of which current 5,981
non-current 3,563

As noted above, the obligation to fund the $20-billion trust fund has been recognized in full. Any increases in the
provision that will be covered by the trust fund (up to the amount of $20 billion) have no net income statement effect
as a reimbursement asset is also recognized, as described above. As at 31 March 2011, the cumulative charges for
provisions, and the associated reimbursement asset recognized, amounted to $13,629 million. Thus, a further
$6,371 million could be provided in subsequent periods for items covered by the trust fund with no net impact on
the income statement. Such future increases in amounts provided could arise from adjustments to existing
provisions, or from the initial recognition of provisions for items that currently cannot be estimated reliably, namely
final judgments and settlements and natural resource damages and related costs. Further information on those items
that currently cannot be reliably estimated is provided under Provisions and contingencies below.

It is not possible at this time to conclude whether the $20-billion trust fund will be sufficient to satisfy all claims
under the Oil Pollution Act 1990 (OPA 90) that will ultimately be paid.

The Trust agreement does not require BP to make further contributions to the trust fund in excess of the agreed $20
billion should this be insufficient to cover all claims administered by the GCCF, or to settle other items that are
covered by the trust fund, as described above. Should the $20-billion trust fund not be sufficient, BP would
commence settling legitimate claims and other costs by making payments directly to claimants. In this case,
increases in estimated future expenditure above $20 billion would be recognized as provisions with a corresponding
charge in the income statement. The provisions would be utilized and derecognized at the point that BP made the
payments.

24

Notes


(b) Provisions and contingencies

BP has recorded certain provisions and disclosed certain contingencies as a consequence of the Gulf of Mexico oil
spill. These are described below and in more detail in BP Annual Report and Form 20-F 2010 Financial statements
Notes 2, 37 and 44.

Provisions

BP has recorded provisions relating to the Gulf of Mexico oil spill in relation to environmental expenditure, spill
response costs, litigation and claims, and Clean Water Act penalties.

On 21 April 2011, BP entered a framework agreement with natural resource trustees for the United States and five
Gulf coast states, providing for up to $1 billion to be spent on early restoration projects to address natural resource
injuries resulting from the Gulf of Mexico oil spill. Funding for these projects will come from the $20-billion
Deepwater Horizon Oil Spill Trust. BP will work with the trustees of the Deepwater Horizon Oil Spill Trust to
segregate funds to be made available to pay for early restoration projects and other NRD claims. This agreement has
no impact on BP's first-quarter profit as the full amount of the trust fund has been previously expensed. A provision
of $1 billion has been recorded and a corresponding reimbursement asset has been recognized.

BP considers that it is not possible to measure reliably any obligation in relation to Natural Resources Damages
claims under OPA 90 (other than the costs of the early restoration projects referred to above) or litigation for
violations of OPA 90, any amounts in relation to fines and penalties except for those relating to the Clean Water Act
and any obligation in relation to litigation or in relation to legal fees beyond 2012. These items are therefore disclosed
as contingent liabilities see below.

Movements in the provision are presented in the table below.

$ million
Spill Litigation Clean Water
Environmental response and claims Act penalties Total

At 1 January 2011 809 1,043 10,973 3,510 16,335
Increase in provision items not
covered by the trust fund 302 302
Increase in provision items covered
by the trust fund 1,000 62 1,062
Unwinding of discount 2 2
Utilization paid by BP (3) (875) (284) (1,162)
paid by the trust fund (68) (994) (1,062)
At 31 March 2011 1,740 470 9,757 3,510 15,477
Of which current 799 470 6,110 7,379
non-current 941 3,647 3,510 8,098
Of which payable from the trust fund 1,313 8,231 9,544

The total charge in the income statement for the first quarter of 2011 is analysed in the table below.

$ million

Increase in provision 1,364
Recognition of reimbursement asset (1,062)
Other costs charged directly to the income statement 82
(Profit) loss before interest and taxation 384
Finance costs 16
(Profit) loss before taxation 400

25

Notes


The total amounts that will ultimately be paid by BP in relation to all obligations relating to the incident are subject to
significant uncertainty and the ultimate exposure and cost to BP will be dependent on many factors. Furthermore,
the amount of claims that become payable by BP, the amount of fines ultimately levied on BP (including any
determination of BPs negligence), the outcome of litigation and arbitration proceedings, and any costs arising from
any longer-term environmental consequences of the oil spill, will also impact upon the ultimate cost for BP.

In estimating the amount of the provision at 31 March 2011 for Individual and Business Claims and State and Local
Claims, BP has concluded that a reasonable range of possible outcomes is $5 billion to $12 billion. BP believes that
the provision recorded at 31 March 2011 of $8.1 billion represents a reliable best estimate from within this range of
possible outcomes. This amount is included within amounts payable from the trust fund under Litigation and claims
in the table above.

Although the provision recognized is the current best reliable estimate of expenditures required to settle certain
present obligations at the end of the reporting period, there are future expenditures for which it is not possible to
measure the obligation reliably as noted below under Contingent liabilities.

No amounts have been recognized for recovery of costs from our co-owners of the Macondo well because under
IFRS recovery must be virtually certain for these receivables to be recognized. All of these items are therefore
disclosed as contingent assets.

Further information on provisions is provided in BP Annual Report and Form 20-F 2010 Financial statements Note
37.

Contingent liabilities

BP has provided for its best estimate of certain claims under OPA 90 that will be paid through the $20-billion trust
fund. It is not possible, at this time, to measure reliably any other items that will be paid from the trust fund, namely
any obligation in relation to Natural Resource Damages claims (except for costs relating to early restoration projects
as described above under Provisions) and claims asserted in civil litigation, nor is it practicable to estimate their
magnitude or possible timing of payment. Therefore no amounts have been provided for these items as of 31 March
2011.

For those items not covered by the trust fund it is not possible to measure reliably any obligation in relation to other
litigation or potential fines and penalties except, subject to certain assumptions, for those relating to the Clean Water
Act. It is also not possible to reliably estimate legal fees beyond 2012. Therefore no amounts have been provided for
these items as of 31 March 2011.

See Legal proceedings on pages 31 37 and BP Annual Report and Form 20-F 2010 Financial statements Note
44 for further information on contingent liabilities.

Contingent assets

See Legal proceedings on pages 31 37 and BP Annual Report and Form 20-F 2010 Financial statements
Note 44 for information on contingent assets.

As of 31 March 2011, $7 billion had been billed to the co-owners, Anadarko Petroleum Corporation (Anadarko) and
MOEX Offshore 2007 LLC (MOEX), which BP believes to be contractually recoverable pursuant to the terms of the
Macondo Prospect Offshore Deepwater Operating Agreement. Billings to co-owners under this Operating
Agreement are based upon costs incurred to date rather than amounts provided in the period. As further costs are
incurred, BP believes that certain of the costs will be billable to our co-owners under the Operating Agreement. No
recovery amounts have been recognized in the financial statements as at 31 March 2011.

On 4 April 2011, BP initiated contractual out-of-court dispute resolution proceedings against Anadarko and MOEX,
claiming that they have breached the parties contract by failing to reimburse BP for their working-interest share of
incident-related costs. These procedures will culminate in arbitration if the parties cannot resolve their disputes
through negotiation. On 19 April 2011, MOEX filed a cross-claim against BP in the federal Limitation of Liability
action, alleging negligence, breach of contract, and seeking a declaration that MOEX is excused from paying charges
related to the incident. MOEX also alleges economic losses, including damage to the reservoir, defence costs, and
contribution or indemnity for claims against it by other parties. Also on 19 April 2011, Anadarko filed a cross-claim
against BP, alleging gross negligence and 15 other counts under state and federal laws. Like MOEX, Anadarko seeks
a declaration that it is excused from its contractual obligation to pay incident-related costs. Anadarko also seeks
damages from alleged economic losses and contribution or indemnity for claims filed against it by other parties. BP
disputes Anadarkos and MOEXs cross-claims and intends to defend against them vigorously.

26

Notes


There are also audit rights concerning billings under the Operating Agreement which may be exercised by Anadarko
and MOEX, and which may or may not lead to an adjustment of the amount billed. BP may ultimately need to
enforce its rights to collect payment from the co-owners following any successful arbitration proceedings as
provided for in the Operating Agreement. There is a risk that amounts billed to co-owners may not ultimately be
recovered should our co-owners be found not liable for these costs or be unable to pay them. Moreover,
negotiations amongst co-owners could result in settlement(s) of these claims, which if reached, may result in
amounts to be received by BP differing from the amounts billed.

3. Non-current assets held for sale

As a result of the groups disposal programme following the Gulf of Mexico oil spill, various assets, and associated
liabilities, have been presented as held for sale in the group balance sheet at 31 March 2011. The carrying amount of
the assets held for sale is $6,241 million, with associated liabilities of $1,013 million. Included within these amounts
are the following items, all of which relate to the Exploration and Production segment unless otherwise stated.

On 14 December 2010, BP announced that it had reached agreement to sell its exploration and production assets in
Pakistan to United Energy Group Limited for $775 million in cash. These assets, and associated liabilities, have been
classified as held for sale in the group balance sheet at 31 March 2011. The sale is expected to be completed in the
second quarter of 2011, subject to certain conditions precedent, including the satisfaction of closing conditions, the
receipt of government and regulatory approvals, and the lifting of an interim injunction entered by the Islamabad High
Court on 9 March 2011 in a preferential rights dispute affecting the Mirpur Khas and Khipro concessions.

On 18 October 2010, BP announced that it had reached agreement to sell its upstream and midstream assets in
Vietnam, together with its upstream businesses and associated interests in Venezuela, to TNK-BP for $1.8 billion in
cash, subject to post-closing adjustments. The Venezuelan assets include BPs interests in the Petroperij, Boquern
and PetroMonagas joint ventures. These assets, and associated liabilities, have been classified as held for sale in the
group balance sheet at 31 March 2011. The sales of the Vietnam and Venezuela businesses are expected to be
completed in the second quarter of 2011, subject to regulatory and other approvals and conditions.

On 28 November 2010, BP announced that it had reached agreement to sell its interests in Pan American Energy
(PAE) to Bridas Corporation for $7.06 billion in cash. PAE is an Argentina-based oil and gas company owned by BP
(60%) and Bridas Corporation (40%). The transaction excludes the shares of PAE E&P Bolivia Ltd. BPs investment in
PAE has been classified as held for sale in the group balance sheet at 31 March 2011. The sale is expected to be
completed in 2011, subject to closing conditions and government and regulatory approvals.

On 4 April 2011, BP announced that it had agreed the sale of its wholly-owned subsidiary, ARCO Aluminium Inc.
(reported within Other businesses and corporate), to a consortium of Japanese companies for cash consideration of
$680 million, subject to closing adjustments. The assets, and associated liabilities, of this subsidiary have been
classified as held for sale in the group balance sheet at 31 March 2011. Subject to obtaining required regulatory
approvals, the parties expect to complete the transaction in the third quarter of 2011.

In Canada, BP intends to dispose of its NGL business. The assets, and associated liabilities, of this business have
been classified as held for sale in the group balance sheet at 31 March 2011. The sale is expected to be completed
in 2011.

Disposal proceeds of $4,630 million ($6,197 million at 31 December 2010) received in advance of completion of
certain of these transactions have been classified as finance debt on the group balance sheet. See Note 7 for further
information.

The majority of the transactions noted above are subject to post-closing adjustments, which may include
adjustments for working capital and adjustments for profits attributable to the purchaser between the agreed
effective date and the closing date of the transaction. Such post-closing adjustments may result in the final amounts
received by BP from the purchasers differing from the disposal proceeds noted above.

27

Notes

4. Sales and other operating revenues

First Fourth First
2011 2010 2010
$ million
By business
Refining and Marketing 77,433 71,161 64,286
96,694 89,905 83,156

Less: sales between businesses
Refining and Marketing 626 467 135
11,365 10,202 10,085

Third party sales and other operating revenues
Refining and Marketing 76,807 70,694 64,151
Total third party sales and other operating revenues 85,329 79,703 73,071

US 30,847 27,635 26,108
Non-US 63,855 60,121 54,009
94,702 87,756 80,117
Less: sales between areas 9,373 8,053 7,046
85,329 79,703 73,071

5. Production and similar taxes

First Fourth First
2011 2010 2010
$ million
US 374 351 313
Non-US 1,457 1,173 963
1,831 1,524 1,276

28

Notes

6. Earnings per share and shares in issue

Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit or loss for the period
attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the
period. The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date
period. As a result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be
equal to the EpS amount for the year-to-date period.

For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for
the number of shares that are potentially issuable in connection with employee share-based payment plans using the
treasury stock method. If the inclusion of potentially issuable shares would decrease the loss per share, the
potentially issuable shares are excluded from the diluted EpS calculation.

First Fourth First
2011 2010 2010
$ million
Results for the period
Profit for the period attributable to BP shareholders 7,124 5,567 6,079
Less: preference dividend 1
Profit attributable to BP ordinary shareholders 7,124 5,566 6,079
Inventory holding gains net of tax (1,643) (953) (481)
RC profit attributable to BP ordinary shareholders 5,481 4,613 5,598

Basic weighted average number of shares outstanding (thousand)(a) 18,816,868 18,793,234 18,769,888
ADS equivalent (thousand)(a) 3,136,145 3,132,206 3,128,315

Weighted average number of shares outstanding used to
calculate diluted earnings per share (thousand)(a) 19,038,387 19,008,309 19,004,740

Shares in issue at period-end (thousand)(a) 18,866,532 18,796,498 18,784,361

(a)
Excludes treasury shares and the shares held by the Employee Share Ownership Plans and includes certain shares that
will be issued in the future under employee share plans.

On 14 January 2011, BP entered into a share swap agreement with Rosneft Oil Company that has since been
subject to an interim injunction granted by the English High Court and continued by an UNCITRAL arbitral tribunal
which is referred to in Legal proceedings. Completion of the share swap agreement is prohibited at this time by the
interim injunction, but if the interim injunction were to be lifted and the share swap agreement were to be
completed then it would result in BP issuing 988,694,683 new ordinary shares to Rosneft.

29

Notes

7. Analysis of changes in net debt

First Fourth First
2011 2010 2010
$ million
Opening balance
Finance debt 45,336 39,979 34,627
Less: Cash and cash equivalents 18,556 12,803 8,339
Less: FV asset of hedges related to finance debt 916 797 127
Opening net debt 25,864 26,379 26,161

Closing balance
Finance debt 47,102 45,336 32,153
Less: Cash and cash equivalents 18,726 18,556 6,841
Less: FV asset of hedges related to finance debt 870 916 152
Closing net debt 27,506 25,864 25,160
Decrease (increase) in net debt (1,642) 515 1,001

Movement in cash and cash equivalents
(excluding exchange adjustments) (25) 5,924 (1,421)
Net cash outflow (inflow) from financing
(excluding share capital) (3,244) (4,033) 2,400
Movement in finance debt relating to investing activities(a) 1,595 (1,152)
Other movements (21) (185) 7
Movement in net debt before exchange effects (1,695) 554 986
Exchange adjustments 53 (39) 15
Decrease (increase) in net debt (1,642) 515 1,001

(a)
During the first quarter 2011 disposal transactions were completed in respect of which deposits of $1,595 million had been
received in 2010.

At 31 March 2011 $796 million of finance debt ($790 million at 31 December 2010, nil at 31 March 2010) was
secured by the pledging of assets, and $3,530 million was secured in connection with deposits received relating to
certain disposal transactions expected to complete in subsequent periods ($4,780 million at 31 December 2010). In
addition, in connection with $3,799 million of finance debt ($4,588 million at 31 December 2010), BP has entered
into crude oil sales contracts in respect of oil produced from certain fields in offshore Angola and Azerbaijan to
provide security to the lending banks. The remainder of finance debt was unsecured.

During the first quarter 2011 the company signed new three-year committed standby facilities totalling $6.8 billion,
available to draw and repay until mid-March 2014, largely replacing existing arrangements. At 31 March 2011 the
total available undrawn committed borrowing facilities stood at $7.5 billion ($12.5 billion at 31 December 2010).

30

Notes

8. TNK-BP operational and financial information

First Fourth First
2011 2010 2010
Production (Net of royalties) (BP share)
Crude oil (mb/d) 856 858 849
Natural gas (mmcf/d) 719 698 673
Total hydrocarbons (mboe/d)(a) 980 978 965
$ million
Income statement (BP share)
Profit before interest and tax 1,526 1,263 788
Finance costs (35) (30) (38)
Taxation (246) (311) (168)
Net income 1,186 854 543
Cash flow
Dividends received 790 256

Balance sheet 31 March 31 December
2011 2010
Investments in associates 11,193 9,995

(a)
Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels.

9. Subsequent events

On 22 February 2011, BP announced its intention to sell its interests in a number of operated oil and gas fields in the
UK. The assets involved are the Wytch Farm onshore oilfield in Dorset and all of BPs operated gas fields in the
southern North Sea, including associated pipeline infrastructure and the Dimlington terminal. BP aims to complete
the divestments around the end of 2011, subject to receipt of suitable offers and regulatory and third-party
approvals. The assets did not meet the criteria to be classified as assets held for sale in the group balance sheet at
31 March 2011. However, subsequent to the quarter end, the proposed sale of the Wytch Farm onshore oilfield has
progressed sufficiently that it has now met the criteria to be classified as held for sale.

On 14 April 2011, BP announced that it had agreed with Rosneft to extend the deadline for satisfaction of conditions
precedent for completion of their previously announced share swap agreement to 16 May 2011. The agreement
between the two companies follows the 8 April decision of the arbitral tribunal to continue the interim injunction
prohibiting completion of the share swap agreement but to allow them to discuss extension of the deadline. This
means that the share swap agreement is now subject to a long-stop date for satisfaction of conditions precedent of
16 May 2011, failing which the agreement will terminate. No amounts have been recorded in the first quarter in
relation to the share swap agreement as it is subject to ongoing arbitration proceedings. See Legal Proceedings for
more information.

10. Statutory accounts

The financial information shown in this publication, which was approved by the Board of Directors on 26 April 2011,
is unaudited and does not constitute statutory financial statements. BP Annual Report and Form 20-F 2010 has been
filed with the Registrar of Companies in England and Wales; the report of the auditors on those accounts was
unqualified and did not contain a statement under section 498(2) or section 498(3) of the UK Companies Act 2006.

31

Legal proceedings

Proceedings and investigations relating to the Gulf of Mexico oil spill
BP p.l.c., BP Exploration & Production Inc. (BP E&P) and various other BP entities (collectively referred to as BP) are among
the companies named as defendants in more than 450 private civil lawsuits resulting from the 20 April 2010 explosions and
fire on the semi-submersible rig Deepwater Horizon and resulting oil spill (the Incident) and further actions are likely to be
brought. BP E&P is lease operator of Mississippi Canyon, Block 252 in the Gulf of Mexico, where the Deepwater Horizon was
deployed at the time of the Incident, and holds a 65% working interest. The other working interest owners are Anadarko
Petroleum Company (Anadarko) and MOEX Offshore 2007 LLC (MOEX). The Deepwater Horizon, which was owned and
operated by certain affiliates of Transocean, Ltd. (Transocean), sank on 22 April 2010. The pending lawsuits and/or claims
arising from the Incident have been brought in US federal and state courts. Plaintiffs include individuals, corporations and
governmental entities and many of the lawsuits purport to be class actions. The lawsuits assert, among others, claims for
personal injury in connection with the Incident itself and the response to it, and wrongful death, commercial or economic
injury, breach of contract and violations of statutes. The lawsuits seek various remedies including compensation to injured
workers and families of deceased workers, recovery for commercial losses and property damage, claims for environmental
damage, remediation costs, injunctive relief, treble damages and punitive damages. Purported classes of claimants include
residents of the states of Louisiana, Mississippi, Alabama, Florida, Texas, Tennessee, Kentucky, Georgia and South Carolina,
property owners and rental agents, fishermen and persons dependent on the fishing industry, charter boat owners and deck
hands, marina owners, gasoline distributors, shipping interests, restaurant and hotel owners and others who are property
and/or business owners alleged to have suffered economic loss. Shareholder derivative lawsuits have also been filed in US
federal and state courts against various current and former officers and directors of BP alleging, among other things, breach
of fiduciary duty, gross mismanagement, abuse of control and waste of corporate assets. Purported class action lawsuits
have also been filed in US federal courts against BP entities and various current and former officers and directors alleging,
among other things, securities fraud claims, violations of the Employee Retirement Income Security Act (ERISA) and
contractual and quasi-contractual claims related to the cancellation of the dividend on 16 June 2010. In addition, BP has been
named in several lawsuits alleging claims under the Racketeer-Influenced and Corrupt Organizations Act (RICO). In August
2010, many of the lawsuits pending in federal court were consolidated by the Federal Judicial Panel on Multidistrict Litigation
into two multi-district litigation proceedings, one in federal court in Houston for the securities, derivative and ERISA cases and
another in federal court in New Orleans for the remaining cases. Since late September, most of the Deepwater Horizon
related cases have been pending before these courts.

On 18 February 2011, certain Transocean affiliates filed a third party complaint against BP, the US government, and other
corporations involved in the Incident, thereby naming those entities as formal parties in Transoceans Limitation of Liability
action pending in federal court in New Orleans.

On 4 April 2011, BP initiated contractual out-of-court dispute resolution proceedings against Anadarko and MOEX, claiming
that they have breached the parties contract by failing to reimburse BP for their working-interest share of Incident-related
costs. These procedures will culminate in arbitration if the parties cannot resolve their disputes through negotiation. On 19
April 2011, MOEX filed a cross-claim against BP in the federal Limitation of Liability action, alleging negligence, breach of
contract, and seeking a declaration that MOEX is excused from paying charges related to the Incident. MOEX also alleges
economic losses, including damage to the reservoir, defense costs, and contribution or indemnity for claims against it by
other parties. Also on 19 April 2011, Anadarko filed a cross-claim against BP, alleging gross negligence and 15 other counts
under state and federal laws. Like MOEX, Anadarko seeks a declaration that it is excused from its contractual obligation to
pay Incident-related costs. Anadarko also seeks damages from alleged economic losses and contribution or indemnity for
claims filed against it by other parties.

On 20 April 2011, Transocean filed claims in Transoceans Limitation of Liability action alleging that BP had breached BP
America Production Companys contract with Transocean Holdings LLC by BP not agreeing to indemnify Transocean against
liability related to the Deepwater Horizon incident and by not paying certain invoices. Transocean also asserted claims against
BP under state law, maritime law, and the Oil Pollution Act of 1990 (OPA 90) for contribution. Also on 20 April 2011,
Halliburton Energy Services, Inc. (Halliburton), filed claims in Transoceans Limitation of Liability action in which it sought
indemnification from BP for claims brought against Halliburton in that action, and Cameron International Corporation
(Cameron) asserted claims against BP for contribution under state law, maritime law, and OPA 90, as well as for contribution
on the basis of comparative fault. Halliburton also asserted a claim for negligence, gross negligence and wilful misconduct
against BP and others. On 19 April 2011, Halliburton filed a separate lawsuit in Texas state court seeking indemnification from
BP E&P for certain tort and pollution-related liabilities resulting from the Incident and resulting oil spill.

On 20 April 2011, BP asserted claims against Cameron, Halliburton, and Transocean in the Limitation of Liability action. BPs
claims against Transocean include breach of contract, unseaworthiness of the Deepwater Horizon vessel, negligence (or
gross negligence and/or gross fault as may be established at trial based upon the evidence), contribution and subrogation for
costs (including those arising from litigation claims) resulting from the Incident and oil spill, as well as a declaratory claim that
Transocean is wholly or partly at fault for the Incident and responsible for its proportionate share of the costs and damages.
BPs claims against Cameron assert that Cameron is liable under maritime law for providing a Blowout Preventer (BOP) that
was unreasonably dangerous in design based on certain design defects, that Cameron was negligent with respect to certain
maintenance and repair that it conducted on the Deepwater Horizon BOP, and that Cameron is liable to BP for contribution
and subrogation of the damages, costs and expenses that BP has paid and will continue to pay relating to BPs response
efforts and the various claims brought against BP. BP asserted claims against Halliburton for fraud and fraudulent
concealment based on Halliburton's misrepresentations to BP concerning, among other things, the stability testing on the
foamed cement used at the Mississippi Canyon Block 252, well; for negligence (or, if established by the evidence at trial,

32

Legal proceedings (continued)
gross negligence) based on Halliburton's performance of its professional services, including cementing and mud logging
services; and for contribution and subrogation for amounts that BP has paid in responding to the Incident and oil spill, as well
as in OPA assessments and in payments to plaintiffs. Also on 20 April 2011, BP filed a complaint in federal court in the
Southern District of Texas, Houston Division, against Halliburton. That complaint alleges the same counts as BPs claim
against Halliburton in Transoceans Limitation of Liability action.

Under the Oil Pollution Act 1990 (OPA 90), BP E&P has been designated as one of the responsible parties for the oil spill
resulting from the Incident. Accordingly, BP E&P is one of the parties that the US government alleges is financially
responsible for the clean-up of the spill and for economic damages as provided by OPA 90. In addition, pursuant to OPA 90,
the US Coast Guard has requested reimbursement from BP and the other responsible parties for its costs of responding to
the Incident, and BP has paid all amounts due as of the date hereof. Continuing requests for cost reimbursement are
expected from the US Coast Guard and other governmental authorities. In addition, BP is participating with federal and state
trustees in a co-operative assessment of potential natural resource damages associated with the spill. Under OPA 90, the US
government alleges that BP E&P is one of the parties financially responsible for paying the reasonable assessment costs
incurred by these trustees as well as natural resource damages that result from the Incident.

BP E&P has established and committed to fund the Deepwater Horizon Oil Spill Trust, a $20-billion trust fund to pay costs and
satisfy legitimate claims. BP E&P has contributed $6.25 billion to the trust fund at the end of the first quarter of 2011. This will
be supplemented by additional payments of $1.25 billion per quarter until a total of $20 billion has been paid into the trust
fund. While the trust fund is building, BP E&P has pledged collateral consisting of an overriding royalty interest in oil and gas
production from certain assets in the Gulf of Mexico sufficient at any time to secure the difference between the amount
deposited as of that date and $20 billion. The establishment of this trust does not represent a cap on BPs liabilities, and BP
does not admit to a liability of this amount. The trust fund will pay claims administered by the GCCF, state and local
government claims resolved by BP, final judgments, settlements, state and local response costs, and natural resource
damages and related costs. Payments from the trust fund will be made upon adjudication or resolution of claims or the final
determination of other costs covered by the account. Upon the termination of the trust fund, the funds, if any remaining once
the claims process has been completed, will revert to BP E&P.

BP is subject to a number of investigations related to the Incident by numerous agencies of the US government. On 27 April
2010, the US Coast Guard and the Minerals Management Service (renamed the Bureau of Ocean Energy Management,
Regulation and Enforcement (BOEMRE) in June 2010) convened a joint investigation of the Incident by establishing a Marine
Board of Investigation (Marine Board of Investigation) aimed at determining the causes of the Incident and recommending
safety improvements. BP was designated as one of several Parties in Interest in the investigation. In a report dated 20 March
2011, the Joint Investigation Team (JIT) for the Marine Board of Investigation issued the Final Report of the Forensic
Examination of the Deepwater Horizon Blowout Preventer (BOP) prepared by Det Norske Veritas (BOP Report). BP has fully
supported the JIT investigation. The BOP Report concludes that the position of the drill pipe against the blind shear rams
prevented the BOP from functioning as intended. BP continues to review the BOP Report and agrees with the Report's
recommendation that additional testing should be completed to provide a more comprehensive view of why the BOP failed.
On 22 April 2011, the US Coast Guard issued its report (Maritime Report) focused upon the maritime aspects of the Incident.
The Maritime Report criticizes Transocean's maintenance operations and safety culture, while also criticizing the Republic of
the Marshall Islands the flag state responsible for certifying Transoceans Deepwater Horizon vessel. The BOEMRE is
expected to issue a subsequent report that will likely focus more heavily on the drilling aspects of the Incident and hence the
roles of BP, Halliburton and Cameron.

On 21 May 2010, President Obama signed an executive order establishing the National Commission on the BP Deepwater
Horizon Oil Spill and Offshore Drilling (National Commission) to examine and report on, within six months of the date of the
Commissions first meeting, the relevant facts and circumstances concerning the causes of the Gulf of Mexico oil spill
incident and develop options for guarding against, and mitigating the impact of, oil spills associated with offshore drilling,
taking into consideration the environmental, public health, and economic effects of such options. On 11 January 2011, the
National Commission published its final report on the causes of the Incident and its recommendations for policy and
regulatory changes for offshore drilling. On 17 February 2011, the National Commissions Chief Counsel published a separate
report on his investigation that provides additional information about the causes of the Incident. The National Commission
ceased operations on 11 March 2011.

33

On 7 July 2010, the US Chemical Safety and Hazard Investigation Board (CSB) informed BP of its intent to conduct an
investigation of the Incident. The investigation is focused on the 20 April 2010 explosions and fire, and not the resulting oil
spill or response efforts. The CSB is expected to issue within two years several investigation reports that will seek to identify
the alleged root cause(s) of the Incident, and recommend improvements to BP and industry practices and to regulatory
programmes to prevent recurrence and mitigate potential consequences. Also, at the request of the Department of the
Interior, the National Academy of Engineering/National Research Council established a Committee (Committee) to examine
the performance of the technologies and practices involved in the probable causes of the explosion, including the
performance of the blowout preventer and related technology features, and to identify and recommend available technology,
industry best practices, best available standards, and other measures in the US and around the world related to oil and gas
deepwater exploratory drilling and well completion to avoid future occurrence of such events. On 17 November 2010 the
Committee publicly released its interim report setting forth the Committees preliminary findings and observations on various
actions and decisions including well design, cementing operations, well monitoring, and well control actions. The interim
report also considers management, oversight, and regulation of offshore operations. We expect that the Committee will issue
its final report that presents the Committee's final analysis, including findings and/or recommendations, by 1 June 2011 (a
pre-publication version of report), with further review and a final published version to follow by 30 December 2011.

A second, unrelated National Academies Committee will be looking at the methodologies available for assessing spill impacts
on ecosystems in the Gulf of Mexico, and a summary of the known effects of the spill, the impacts in the context of stresses
from other human activities in the Gulf, and identification of research and monitoring needs to more fully understand the
effects of the spill and gauge progress towards recovery and restoration.

A third National Academies' Committee will be studying methods for assessing the effectiveness of safety and environmental
management systems (SEMS) established by offshore oil and gas operators. The Committee will be preparing an interim
report that will identify a range of assessment means and the pros and cons of each; we understand that the Committee
plans to issue the interim report in April 2011. We also understand that the Committee will issue a final report of
recommendations that will focus on assessing human and organizational factors, and that the Committee expects to
complete the final report of recommendations by 30 December 2011.

On 14 June 2010, the US Coast Guard initiated an Incident Specific Preparedness Review (ISPR) to examine the
implementation and effectiveness of the response and recovery operations relating to the spill. On 18 March 2011, the Coast
Guard ISPR team released its final report capturing lessons learned from the incident as well as making recommendations on
how to improve future oil spill response and recovery efforts.

On 10 March 2011, the Flow Rate Technical Group (FRTG), Department of the Interior, issued its final report titled
Assessment of Flow Rate Estimates for the Deepwater Horizon/Macondo Well Oil Spill. The report provides a summary of
the strengths and limitations of the different methods used by the US government to estimate the flow rate and a range of
estimates from 13,000 bpd to over 100,000 bpd. The report concludes that the most accurate estimate was 53,000 bpd just
prior to shut in, with an uncertainty on that value of 10% based on FRTG collective experience and judgment, and, based on
modeling, the flow on day one of the Incident was 62,000 bpd. BP is currently reviewing the report.

Additionally, BP representatives have appeared before multiple committees of the US Congress that have been conducting
inquiries into the Incident. BP has provided documents and written information in response to requests by these committees
and will continue to do so.

On 1 June 2010, the US Department of Justice (DoJ) announced that it is conducting an investigation into the Incident
encompassing possible violations of US civil or criminal laws. The United States filed a civil complaint against BP E&P and
others on 15 December 2010. The complaint seeks a declaration of liability under OPA 90 and civil penalties under the Clean
Water Act. Paragraph 92 of the complaint sets forth a purported reservation of rights on behalf of the United States to
amend the complaint or file additional complaints seeking various remedies under various laws and regulations, including but
not limited to eight specifically mentioned federal statutes. Paragraph 92 of the complaint likewise contains a similar
reservation of rights regarding the conduct of administrative proceedings under the Outer Continental Shelf Lands Act, 43
U.S.C. 1301 et seq., and the Federal Oil and Gas Royalty Management Act, 30 U.S.C. 1701 et seq. On 20 April 2011,
BP filed claims against Cameron, Halliburton, and Transocean in the DoJ action, seeking contribution for any assessments
against BP under OPA 90 based on those entities fault.

Citizens groups have also filed either lawsuits or notices of intent to file lawsuits seeking civil penalties and injunctive relief
under the Clean Water Act and other environmental statutes. The DoJ announced on 7 March 2011 that it created a unified
task force of federal agencies, led by the DoJ Criminal Division, to investigate the Gulf of Mexico incident. Other US federal
agencies may commence investigations relating to the Incident. The SEC and DoJ are investigating securities matters arising
in relation to the Incident.

34

The State of Alabama has filed a lawsuit seeking damages for alleged economic and environmental harms, including natural
resource damages, civil penalties under state law, declaratory and injunctive relief, and punitive damages as a result of the
Incident. The State of Louisiana has filed a lawsuit to declare various BP entities (as well as other entities) liable for removal
costs and damages, including natural resource damages under federal and state law, to recover civil penalties, attorneys
fees, and response costs under state law, and to recover for alleged negligence, nuisance, trespass, fraudulent concealment
and negligent misrepresentation of material facts regarding safety procedures and BPs (and other defendants) ability to
manage the oil spill, unjust enrichment from economic and other damages to the State of Louisiana and its citizens, and
punitive damages. It is possible that the States of Mississippi, Florida, Texas or other states and/or local governments, such
as coastal municipalities also may initiate investigations and bring civil or criminal actions seeking damages, penalties and
fines for violating state or local statutes. The Louisiana Department of Environmental Quality has issued an administrative
order seeking injunctive relief and environmental civil penalties under state law, and several local governments in the State of
Louisiana have filed suits under state wildlife statutes seeking penalties for damage to wildlife as a result of the spill. On 10
December 2010, the Mississippi Department of Environmental Quality issued a Complaint and Notice of Violation alleging
violations of several State environmental statutes.

On 21 April 2011, BP entered a framework agreement with natural resource trustees for the United States and five Gulf coast
states, providing for up to $1 billion to be spent on early restoration projects to address natural resource injuries resulting from
the Gulf of Mexico oil spill. Funding for these projects will come from the $20-billion Deepwater Horizon Oil Spill Trust. BP will
work with the trustees of the Deepwater Horizon Oil Spill Trust to create a separate sub account to ensure that funds are
made available to pay for early restoration projects and other NRD claims. Each project that is selected for early restoration
pursuant to the framework agreement must be agreed to by BP and all natural resource trustees. Each project agreement will
identify the natural resource improvements that the parties expect to achieve with the project, and those improvements will
offset BPs alleged liability for natural resource damages in settlement agreements or final court judgments. The parties seek
to begin early restoration under this agreement in 2011 and 2012

On 15 September 2010, three Mexican states bordering the Gulf of Mexico (Veracruz, Quintana Roo, and Tamaulipas) filed
lawsuits in federal court in Texas against several BP entities. These lawsuits allege that the Incident harmed their tourism,
fishing, and commercial shipping industries (resulting in, among other things, diminished tax revenue), damaged natural
resources and the environment, and caused the states to incur expenses in preparing a response to the Incident. On 5 April
2011, the State of Yucatan submitted a claim to the GCCF alleging potential damage to its natural resources and environment,
and seeking to recover the cost of assessing the alleged damage.

BPs potential liabilities resulting from threatened, pending and potential future claims, lawsuits and enforcement actions
relating to the Incident, together with the potential cost of implementing remedies sought in the various proceedings, cannot
be fully estimated at this time but they have had and are expected to have a material adverse impact on the groups business,
competitive position, cash flows, prospects, liquidity, shareholder returns and/or implementation of its strategic agenda,
particularly in the US. These potential liabilities may continue to have a material adverse effect on the groups results and
financial condition. See Note 2 on pages 21 26 for information regarding the financial impact in 2011 of the Incident and see
the financial statements contained in BPs Annual Report and Form 20-F 2010 for information regarding 2010.

Other legal proceedings
From 25 October 2007 to 23 October 2010, BP America Inc. (BP America) was subject to oversight by an independent
monitor, who had authority to investigate and report alleged violations of the US Commodity Exchange Act or US Commodity
Futures Trading Commission (CFTC) regulations and to recommend corrective action. The appointment of the independent
monitor was a condition of the deferred prosecution agreement (DPA) entered into with the DoJ on 25 October 2007 relating
to allegations that BP America manipulated the price of February 2004 TET physical propane and attempted to manipulate the
price of TET propane in April 2003 and the companion consent order with the CFTC, entered the same day, resolving all
criminal and civil enforcement matters pending at that time concerning propane trading by BP Products North America Inc.
(BP Products). The DPA required BP Americas and certain of its affiliates continued co-operation with the US governments
investigation and prosecution of the trades in question, as well as other trading matters that may arise. The DPA had a term
of three years but could be extended by two additional one-year periods, and contemplated dismissal of all charges at the end
of the term following the DoJs determination that BP America has complied with the terms of the DPA. The initial three year
term has expired and the DoJs motion to dismiss the action underlying the DPA was granted on 31 January 2011.
Investigations into BPs trading activities continue to be conducted from time to time. The US Federal Energy Regulatory
Commission (FERC) and the US Commodity Futures Trading Commission (CFTC) are currently investigating several BP
entities regarding trading in the next-day natural gas market at Houston Ship Channel during October and November 2008.
The FERC Office of Enforcement staff notified BP on 12 November 2010 of their preliminary conclusions relating to alleged
market manipulation in violation of 18 C.F.R. Sec. 1c.1. The FERC staff will determine whether to pursue the investigation, to
close the investigation, or to seek authority to pursue resolution by settlement. On 30 November 2010, CFTC Enforcement
staff also provided BP with a notice of intent to recommend charges based on the same conduct alleging that BP engaged in
attempted market manipulation in violation of Section 6(c), 6(d), and 9(a)(2) of the Commodity Exchange Act. BP submitted
responses to both notices on 23 December 2010 providing a detailed response that it did not engage in any inappropriate or
unlawful activity.

35

Private complaints, including class actions, were also filed against BP Products and affiliates alleging propane price
manipulation. The complaints contained allegations similar to those in the CFTC action as well as of violations of federal and
state antitrust and unfair competition laws and state consumer protection statutes and unjust enrichment. The complaints
sought actual and punitive damages and injunctive relief. Settlement in both groups of the class actions (the direct and
indirect purchasers) has received final court approval. Two independent lawsuits from class members who opted out of the
direct purchaser settlement have now been settled in principle.

On 23 March 2005, an explosion and fire occurred in the isomerization unit of BP Products Texas City refinery as the unit was
coming out of planned maintenance. Fifteen workers died in the incident and many others were injured. BP Products has
resolved all civil injury claims arising from the March 2005 incident.

In March 2007, the US Chemical Safety and Hazard Investigation Board (CSB) issued a report on the incident. The report
contained recommendations to the Texas City refinery and to the board of directors of BP. In May 2007, BP responded to the
CSBs recommendations. BP and the CSB will continue to discuss BPs responses with the objective of the CSBs agreeing
to close out its recommendations.

On 25 October 2007, the DoJ announced that it had entered into a criminal plea agreement with BP Products related to the
March 2005 explosion and fire. On 4 February 2008, BP Products pleaded guilty, pursuant to the plea agreement, to one
felony violation of the risk management planning regulations promulgated under the US Clean Air Act (CAA) and on 12 March
2009, the court accepted the plea agreement. In connection with the plea agreement, BP Products paid a $50-million criminal
fine and was sentenced to three years probation which is set to expire on 12 March 2012. Compliance with a 2005 US
Occupational Safety and Health Administration (OSHA) settlement agreement (2005 Agreement) and a 2006 agreed order
entered into by BP Products with the Texas Commission on Environmental Quality (TCEQ) are conditions of probation.

The Texas Office of Attorney General, on behalf of TCEQ, has filed a petition against BP Products asserting certain air
emissions and reporting violations at the Texas City refinery from 2005 to 2010, including in relation to the March 2005
explosion and fire. BP is contesting the petition in a pending civil proceeding. In March 2010, TCEQ notified the DoJ of its
belief that certain of the alleged violations may violate the 25 October 2007 plea agreement.

On 9 August 2010, the Texas Attorney General filed a separate petition against BP Products asserting emissions violations
relating to a 6 April 2010 compressor fire and subsequent flaring event at the Texas City refinerys ultracracker unit. This
emissions event is also the subject of a number of civil suits by many area workers and residents alleging personal injury and
property damages and seeking substantial damages.

In September 2009, BP Products filed a petition to clarify specific required actions and deadlines under the 2005 Agreement
with OSHA. That agreement resolved citations issued in connection with the March 2005 Texas City refinery explosion.
OSHA denied BP Products petition.

In October 2009 OSHA issued citations to the Texas City refinery seeking a total of $87.4 million in civil penalties for alleged
violations of the 2005 Agreement and alleged process safety management violations. BP Products contested these citations.
These matters were subsequently transferred for review to the Occupational Safety and Health (OSH) Review Commission.

A settlement agreement between BP Products and OSHA in August 2010 (2010 Agreement) resolved the petition filed by BP
Products in September 2009 and the alleged violations of the 2005 Agreement. BP Products has paid a penalty of $50.6
million in that matter and agreed to perform certain abatement actions. Compliance with the 2010 Agreement (which is set to
expire on 12 March 2012) is also a condition of probation due to the linkage between this 2010 Agreement and the 2005
Agreement.

On 6 May, 2010, certain persons qualifying under the US Crime Victims Rights Act as victims in relation to the Texas City plea
agreement requested that the federal court revoke BP Products probation based on alleged violations of the Courts
conditions of probation. The alleged violations of probation relate to the alleged failure to comply with the 2005 Agreement.

The OSHA process safety management citations issued in October 2009 were not resolved by the August 2010 settlement
agreement. The proposed penalties in that matter are $30.7 million. The matter is currently before the OSH Review
Commission which has assigned an Administrative Law Judge for purposes of mediation. These citations do not allege
violations of the 2005 Agreement.

A shareholder derivative action was filed against several current and former BP officers and directors based on alleged
violations of the CAA and OSHA regulations at the Texas City refinery subsequent to the March 2005 explosion and fire. An
investigation by a special committee of BPs board into the shareholder allegations has been completed and the committee
has recommended that the allegations do not warrant action by BP against the officers and directors. BP has filed a motion to
dismiss the shareholder derivative action.

36

On 29 November 2007, BP Exploration (Alaska) Inc. (BPXA) entered into a criminal plea agreement with the DoJ relating to
leaks of crude oil in March and August 2006. BPXAs guilty plea, to a misdemeanour violation of the US Water Pollution
Control Act, included a term of three years probation. On 29 November, 2009 a spill of approximately 360 barrels of crude oil
and produced water was discovered beneath a line running from a well pad to the Lisburne Processing Center in Prudhoe
Bay, Alaska. On 17 November, 2010, the US Probation Officer filed a petition in federal district court to revoke BPXAs
probation based on an allegation that the Lisburne event was a criminal violation of state or federal law. A hearing is
scheduled for the week of 5 September 2011. On 12 May 2008, a BP p.l.c. shareholder filed a consolidated complaint alleging
violations of federal securities law on behalf of a putative class of BP p.l.c. shareholders against BP p.l.c., BPXA, BP America,
and four officers of the companies, based on alleged misrepresentations concerning the integrity of the Prudhoe Bay pipeline
before its shutdown on 6 August 2006. On 8 February 2010, the Ninth Circuit Court of Appeals accepted BPs appeal from a
decision of the lower court granting in part and denying in part BPs motion to dismiss the lawsuit. Briefing is complete and
oral argument was held on 7 March 2011. We await the court's decision.

On 31 March 2009, the DoJ filed a complaint against BPXA seeking civil penalties and injunctive relief relating to the 2006 oil
releases. The complaint alleges that BPXA violated various federal environmental and pipeline safety statutes and associated
regulations in connection with the two releases and its maintenance and operation of North Slope pipelines. The State of
Alaska also filed a complaint on 31 March 2009 against BPXA seeking civil penalties and damages relating to these events.
The complaint alleges that the two releases and BPXAs corrosion management practices violated various statutory,
contractual and common law duties to the State, resulting in penalty liability, damages for lost royalties and taxes, and liability
for punitive damages.

Approximately 200 lawsuits were filed in state and federal courts in Alaska seeking compensatory and punitive damages
arising out of the Exxon Valdez oil spill in Prince William Sound in March 1989. Most of those suits named Exxon (now
ExxonMobil), Alyeska Pipeline Service Company (Alyeska), which operates the oil terminal at Valdez, and the other oil
companies that own Alyeska. Alyeska initially responded to the spill until the response was taken over by Exxon. BP owns a
46.9% interest (reduced during 2001 from 50% by a sale of 3.1% to Phillips) in Alyeska through a subsidiary of BP America
Inc. and briefly indirectly owned a further 20% interest in Alyeska following BPs combination with Atlantic Richfield Company
(Atlantic Richfield). Alyeska and its owners have settled all the claims against them under these lawsuits. Exxon has indicated
that it may file a claim for contribution against Alyeska for a portion of the costs and damages that it has incurred. If any
claims are asserted by Exxon that affect Alyeska and its owners, BP will defend the claims vigorously.

Since 1987, Atlantic Richfield, a subsidiary of BP, has been named as a co-defendant in numerous lawsuits brought in the US
alleging injury to persons and property caused by lead pigment in paint. The majority of the lawsuits have been abandoned or
dismissed against Atlantic Richfield. Atlantic Richfield is named in these lawsuits as alleged successor to International
Smelting and Refining and another company that manufactured lead pigment during the period 1920-1946. Plaintiffs include
individuals and governmental entities. Several of the lawsuits purport to be class actions. The lawsuits seek various remedies
including compensation to lead-poisoned children, cost to find and remove lead paint from buildings, medical monitoring and
screening programmes, public warning and education of lead hazards, reimbursement of government healthcare costs and
special education for lead-poisoned citizens and punitive damages. No lawsuit against Atlantic Richfield has been settled nor
has Atlantic Richfield been subject to a final adverse judgment in any proceeding. The amounts claimed and, if such suits
were successful, the costs of implementing the remedies sought in the various cases could be substantial. While it is not
possible to predict the outcome of these legal actions, Atlantic Richfield believes that it has valid defences. It intends to
defend such actions vigorously and believes that the incurrence of liability is remote. Consequently, BP believes that the
impact of these lawsuits on the groups results, financial position or liquidity will not be material.

On 8 March 2010, OSHA issued citations to BP's Toledo refinery alleging violations of the Process Safety Management
Standard, with penalties of approximately $3 million. These citations resulted from an inspection conducted pursuant to
OSHA's Petroleum Refinery Process Safety Management National Emphasis Program. BP Products has contested the
citations, and the matter is currently before the OSH Review Commission which has assigned an Administrative Law Judge
to decide this proceeding.

BP is the operator and 56% interest owner of the Atlantis unit in production in the Gulf of Mexico. In April 2009, Kenneth
Abbott, as relator, filed a US False Claims Act lawsuit against BP, alleging that BP violated federal regulations, and made false
statements in connection with its compliance with those regulations, by failing to have necessary documentation for the
Atlantis subsea and other systems. That complaint was unsealed in May 2010 and served on BP in June 2010. In September
2010, Kenneth Abbott and Food & Water Watch filed an amended complaint in the False Claims Act lawsuit seeking an
injunction shutting down the Atlantis platform. The court denied BP's motion to dismiss the complaint in March 2011.
Separately, also in March 2011, BOEMRE issued its investigation report of the Abbott Atlantis allegations, which concluded
that Mr. Abbotts allegations that Atlantis operations personnel lacked access to critical, engineer-approved drawings were
without merit and that his allegations about false submissions by BP to BOEMRE were unfounded.

37

BP Products US refineries are subject to a 2001 consent decree with the EPA that resolved alleged violations of the CAA,
and implementation of the decrees requirements continues. A 2009 amendment to the decree resolves remaining alleged air
violations at the Texas City refinery through the payment of a $12-million civil fine, a $6-million supplemental environmental
project and enhanced CAA compliance measures estimated to cost approximately $150 million. The fine has been paid, and
BP Products is implementing the other provisions.

On 30 September 2010, the EPA and BP Products lodged a civil consent decree with the federal court in Houston. Following
a public comment period, the federal court approved the settlement on 30 December 2010. The decree resolves allegations
of civil violations of the risk management planning regulations promulgated under the CAA that are alleged to have occurred in
2004 and 2005 at the Texas City refinery. The agreement requires that BP Products pays a $15-million civil penalty and that
the Texas City refinery enhance reporting to the EPA regarding employee training, equipment inspection and incident
investigation.

Various environmental groups and the EPA have challenged certain aspects of the operating permit issued by the Indiana
Department of Environmental Management (IDEM) for upgrades to the Whiting refinery. In response to these challenges, the
IDEM has reviewed the permits and responded formally to the EPA. The EPA, either through the IDEM or directly, can cause
the permit to be modified, reissued, terminated or revoked. BP is in discussions with the EPA and the IDEM over these and
other CAA issues relating to the Whiting refinery.

BP is also in settlement negotiations with EPA to resolve alleged CAA violations at the Whiting, Toledo, Carson and Cherry
Point refineries.

On 14 January 2011 BP and Rosneft Oil Company (Rosneft) announced the intent to form a strategic global alliance. The
alliance contemplates the granting to BP of the exclusive opportunity until up to 31 December 2012 to negotiate final terms
with Rosneft for joint exploration of the three licence blocks, EPNZ-1, 2, 3, on the Russian Arctic continental shelf (the Arctic
Opportunity). A share swap agreement was entered into as part of the alliance, whereby BP has agreed to issue 988,694,683
ordinary shares to Rosneft and Rosneft has agreed to transfer 1,010,158,003 ordinary shares to BP (the Share Swap
Agreement). An application was brought in the English High Court on 1 February 2011 by Alfa Petroleum Holdings Limited
(Alfa) and OGIP Ventures Limited (OGIP) against BP International Limited (BPIL) and BP Russian Investments Limited (BPRIL)
alleging breach of the TNK-BP shareholders agreement (the Shareholders Agreement) on the part of BP and seeking an
interim injunction restraining BP from taking steps to conclude, implement or perform transactions with Rosneft relating to oil
and gas exploration, production, refining and marketing in Russia. Those transactions include the Arctic Opportunity and the
Share Swap Agreement. The court granted an interim order restraining BP from taking any further steps in relation to the
Rosneft transactions pending an expedited UNCITRAL arbitration procedure in accordance with the Shareholders Agreement
between Alfa, OGIP, BPIL and BPRIL.

The arbitration has commenced and the arbitral proceedings are continuing. Both the Share Swap Agreement and the Arctic
Opportunity remain subject to an interim injunction. On 24 March 2011, the arbitration panel issued its second partial award
and the interim injunction has been continued until further order. On 8 April 2011 the arbitral tribunal allowed BP and Rosneft
to discuss the extension of a 14 April 2011 deadline for satisfaction of the conditions precedent for completion of the Share
Swap Agreement. On 14 April 2011 BP announced that it had agreed with Rosneft to extend this deadline to 16 May 2011.
This means that the Share Swap Agreement is subject to a long-stop date for the satisfaction of conditions precedent of 16
May 2011, failing which the agreement will terminate. Further arbitration hearings to consider an application by BP to vary the
interim injunction to allow the Share Swap Agreement to complete are now scheduled for 5 and 6 May. BP continues to
explore a range of possible settlement alternatives with all relevant parties which may or may not lead to settlement and
which may or may not result in a transaction.

On 9 February 2011 Apache Canada Ltd (Apache) commenced an arbitration against BP Canada Energy. Apache alleges that
in the future various of the sites that it acquired from BP Canada Energy pursuant to the parties' July 2010 Purchase and Sale
Agreement will have to have work carried out to bring the sites into compliance with applicable Alberta environmental laws,
and Apache claims that the purchase price should be adjusted for its estimated possible costs. BP Canada Energy denies
such costs will arise or require any adjustment to the purchase price. The parties have appointed the arbitrator, and currently
the hearing on the merits is scheduled to commence during the second quarter of 2012.

Contacts

London United States

Press Office David Nicholas Scott Dean
+44 (0)20 7496 4708 +1 630 821 3212

Investor Relations Fergus MacLeod Nick Wayth
http://www.bp.com/investors +44 (0)20 7496 4632 +1 281 366 3123

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

OECD/EA 2011, page 4, lrsl paragraph.

OECD/EA 2011, Table 1, page 59.

OECD/EA 2010, page 306.

Photography Bob Wheeler

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