ANNUAL REPORT 2009

BP Norge AS (BPN) is owned by BP Global Investments Ltd and Amoco Norway Oil Company. Both companies are part of the BP Group, which again is one of the worlds largest integrated oil and gas companies. BPN carries out production and exploration for oil and gas on the Norwegian Continental Shelf. The company was established in Norway in 1920 as Norsk Brndselolje A/S. The companys exploration and production division was established in 1965, through the former company Amoco Norways application for blocks in the first licensing round on the Norwegian Continental Shelf. The companys head offices are located in Stavanger. The company has 13 licenses, and is the operator of ten of these. The fields currently in production and operation by BPN are Valhall, Hod, Ula and Tambar. In addition, the company is the operator for the development of the Skarv field which was approved in 2007. The company also holds stakes in the Draugen field, operated by A/S Norske Shell. The Valhall field entered production in 1982, and it is estimated that production will continue until 2050. The field is developed using five centrally placed platforms, and two flank platforms which normally are unmanned, and which are located six kilometres north and south of the central facilities. Due to subsidence in the seabed and the need for more efficient operation of the field, it was decided to re-develop the field, and install an integrated processing and hotel platform. Starting in 2010, the entire field will be powered from shore through a cable from Lista. This is the first field on the Norwegian Continental Shelf to receive all its power from shore. The facilities on the Hod field consist of one unmanned platform 13 kilometres south of Valhall, which is remotely operated from Valhall. Production on the Ula field started in 1986, and is expected to be maintained until 2028 or longer. After reaching a production peak in the early 1990s, and a subsequent decline in production in the mid-1990s, the Ula field has received a new lease of life using new technology and by receiving production from other fields in the area. Tambar and Blane already process their hydrocarbons on Ula, while Oselvar, which is being developed and will enter production in 2012, has selected a similar development solution. The facilities on the Tambar field consist of one unmanned platform 16 kilometres south of Ula, which is remotely operated from Ula. The Draugen field operated by A/S Norske Shell out of Kristiansund, started production in 1991. The Skarv field is being developed with a Floating Production, Storage and Offloading vessel (FPSO). The FPSO will have the worlds largest gas processing plant ever placed onboard a ship. The FPSO is being constructed in South Korea, and production from the Norwegian Sea located field is expected to start in the second half of 2011.

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Profit Petroleum revenues in 2009 amounted to NOK 5 623 million. This was lower than last years NOK 8 168 million. The main reason was lower prices on petroleum products, but a ten per cent fall in production also contributed to the decline. Other operating revenues amounted to NOK 42 million. The operating profit amounted to NOK 2 777 million. This is half the profit of 2008 mainly due to lower petroleum revenues. Net financial items gave an income of NOK 250 million, compared to a loss of NOK 809 million in 2008. The improvement from 2008 was mainly due to changes in unrealised currency positions in connection with major projects. Pre-tax profit was NOK 3 027 million compared with NOK 4 754 million in 2008. The reduction was caused by lower revenues partially offset by an improved profit for financial items. The equivalent figures after tax were NOK 1 634 million and NOK 1 289 million.

The balance sheet Assets increased from NOK 15 501 million in 2008 to NOK 20 016 million in 2009. This caused by continued major investments in the developments of the Skarv field and the new Valhall field centre. The investments are financed by loans from the BP group and funds from the operations. Other balance sheet items had only minor changes as a result of normal operation conditions. Equity at the end of the year amounted to NOK 2 066 million, an increase from NOK 1 632 million at the end of 2008.

Production In 2009, BPN had production from the following fields: Valhall (ownership interest 28.1 per cent), Ula (ownership interest 80 per cent), Hod (ownership interest 25 per cent), Tambar (ownership interest 55 per cent), Tambar st (ownership interest 46.2 per cent) Draugen (ownership interest 18.4 per cent). BPNs share of the 2009 production amounted to 41 900 barrels of oil equivalents per day compared with 46 200 in 2008. With the exception of Ula, all fields experienced a decline in production. The increase on Ula was 37 per cent, corresponding to 3 100 barrels of oil equivalents per day. This was caused by two wells coming on stream in the second half of the year following an upgrade of the drilling rig in the first half of the year. Production on Valhall fell 19 per cent to 13 500 barrels of oil equivalents per day. The decline was mainly caused by a 72 days shutdown period due to a breakdown of a compressor and turbine and inspection and repair work was carried out due to corrosion in the oil system and the system for produced water in the processing plant.

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However, during this period preparation work for the new field centre planned for later in the year was completed. This meant that the effective shutdown period was reduced. In addition, pressure build-up in the reservoir caused the production to be higher following start-up than what it would normally have been, further offsetting the impact from the shutdown period. Lower production on the other fields was caused by naturally declining production curves. Investments BP Norge invested NOK 5 743 million in 2009. This is NOK 1 550 million more than in 2008, and another record year for BPs investments in Norway. The main investments are for the development of the Skarv field, activities in connection with the new Valhall field centre, drilling on Valhall and Ula, and major modifications, including rig upgrades on Ula. The Skarv project is still progressing according to plan, and by the end of 2009, the project was 75 per cent completed. The main activities for the FPSO part under construction in South Korea included completion and launching of the hull, and installation of processing and production modules. On the Skarv field in the Norwegian Sea there was significant activity during the summer of 2009 including dumping of rocks for laying the gas export pipeline and installation of the first subsea templates and manifolds. The construction of the new Valhall field centre is progressing well, and by the end of 2009 the project was 83 per cent completed. The technical design has been completed and construction of the topside (Holland) and the living quarters (UK) are nearing completion. The major modification activity required on the existing Valhall facilities is also getting near completion, so that everything is ready for installation when the deck and living quarters are installed in July 2010. Several major milestones were reached in the summer of 2009 as well. These included the installation of the jacket of the new platform. Furthermore, the first 192 kilometres of the cable which will provide electricity to Valhall was laid. The remaining 100 kilometres of cable will be laid in the summer of 2010. In 2009, the power-from-shore facility at Lista was started up and is now delivering reactive power to the Norwegian power grid. The biggest challenge in 2009 was that the yard constructing the living quarters module, came into administration. As the project had contingency plans for this situation, it looks as if the living quarters will be completed at the yard and be ready for installation on Valhall in July 2010 as planned. The drilling operations at the water injection platform on Valhall continued in 2009, and two producers and two injectors were completed. Due to high efficiency and new technology combined with good cost control, all wells were completed according to plan. Two stimulation jobs were also carried out to put the wells into production. On Ula, an upgrade of the drilling rig was completed in the first part of 2009. This was followed by a re-completion of one well and drilling of a new producing well. This contributed significantly to the production towards the end of the year. The drilling program continued with a WAG (Water Alternating Gas) well which will be completed in 2010.

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The external environment BPNs environmental management is certified under ISO 14001. BPN continues to receive good feedback on its environmental management in connection with the annual review, and the certification was renewed in 2009. Discharges to sea Produced water is re-injected at both Ula and Valhall, but to a smaller extent on Valhall (14 per cent), as BPN has had challenges with the injection capacity on Valhall and will need extra injection wells to re-inject more of the produced water. Ula had a re-injection rate for produced water of 60 per cent in 2009, when several water producing wells became available, and provided the opportunity for more normal operational and production conditions. The annual average for oil in produced water was 8.6 mg/ltr on Ula and 4.7 mg/ltr on Valhall. With regards to the use of chemicals, BP Norge continues its systematic efforts to reduce the use of environmentally harmful chemicals to a minimum, replacing them with other (green, yellow) products. On Valhall and Ula only a handful of red chemicals remain, but none of these are discharged to sea. Tambar and Hod, which are produced from Ula and Valhall respectively, have been included in the environmental figures for these fields. Regarding accidental discharges, Ula had one discharge to sea in 2009 above the limit of one barrel (156 litres). However, there were two discharges of 20 to 70 litres, one of which involved a red chemical. Valhall had six accidental discharges, of which two above one barrel. BPN ran an awareness campaign last year called Discharges to sea, and will continue to work to prevent accidental discharges to sea in 2010. Emissions to air Emission of the greenhouse gases CO2 and methane remains fairly stable compared with 2008, and total emissions for the year were 212 000 tonnes. There has been one accidental hydrocarbon emission to air (Valhall) of more than 0.1 kgs/s in 2009. Safety In 2009, BPN had two high-potential incidents, one related to hydrocarbon leakage on Valhall due to microbial corrosion, and the second incident was a falling object on the Ula drilling deck. Both incidents have been investigated and been closely followed up in order to prevent similar incidents. BPN had no serious personal injuries in 2009, and the total number of minor injuries was six. This means our Total Recordable Injury Frequency (TRIF) was 2.9 accidents per million hours worked offshore, which is well below the industry average of 5.5 as reported by the Norwegian Oil Industry Association (OLF). The company has continued its focus on HSE training, collaboration with our main contractors and active use of safety tools, including the Safety Observation Conversation (SOC) for leaders. These activities are seen as key success factors in achieving the low injury frequency.

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Health Absence due to illness remained low for BPN in 2009, with just above two per cent, which is well below the national average. Good follow-up from our health service is a key factor in achieving this. BP in the local community BP continues to focus on education, competence enhancement and business development in our community work. Our collaboration with the University of Oslo to stimulate interest for the natural sciences continues, and the web site www.matematikk.org is visited by more and more users. Collaboration with the University of Stavanger (UiS), a contribution to a new concert hall, support for employees social involvement and contributions to charitable organisations make up BPNs major involvements in the Stavanger region. In Nordland county we are establishing new activities in Sandnessjen to support the operation of the Skarv field, and we have many and diverse activities: We have visited a number of schools in Helgeland (tenth grade, upper secondary schools) in cooperation with local industries. In addition, BP has been present at a number of job fairs and continued its involvement as the main sponsor of the First Lego League in Sandnessjen. The first report mapping the ripple effects of the Skarv development has been submitted by the Northern Areas Centre for Businesses and Governance and the Bod Graduate Business School. The report covers the period from 2006 to September 2009. Up to June 2009, contracts worth NOK 343 million had been awarded. The impact assessment study stipulated NOK 190 million in local contracts for the same period. Yearly reports will be prepared up to and including 2011. The collaboration agreement between BP and the Nordland County Council has provided a valuable contribution to BPs involvement in local communities in Nordland. BPN has entered a collaboration agreement with Norut Narvik regarding the project Gas availability and development of industrial activity. We have ensured that local industries can compete for contracts in connection with development and operation of the Skarv field, and several contracts were awarded to local industries in 2009.

Personnel and organisation The headcount increased in 2009 from 903 to 1023 (including international BP employees with positions in Norway) primarily due to the further build up of the project organisations for Skarv and Valhall. This also includes contracted consultants. The job market has been tight for some positions. Twelve employees left the company in the course of the year. Six employees retired. In 2009, BPN recruited 66 new employees, of whom six were apprentices. Seven of the new employees are women. In addition, nine employees were recruited from other BP locations. Five new apprentices were recruited. BPN had a total of 73 employees

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stationed abroad. Most of these are on rotational contracts for the Skarv and Valhall projects. A further nine employees worked for other BP companies. About half of the 711 permanent employees have higher education. Considerable amounts are spent each year to maintain and further develop the competence in the organisation. During the course of the year, a competence management system for vital offshore activities was established. The system is now in full operation. Diversity The company has an active personnel policy with regards to diversity and inclusive working environment (IA). BPN is an IA company, and has benefited greatly from the collaboration with NAV (the Norwegian Labour and Welfare Organisation) in recent years. The company has flexible working hour schemes which many employees make use of. The percentage of women employees is 16. The company wants to increase this percentage, and seeks to achieve this by recruiting Challengers and apprentices, but also through the regular recruitment activity. The proportion of women in the Challengers programme is 50 per cent, and we have an increasing number of women in executive positions. Men and women are treated identical with regards to wage levels. Thirteen employees work part-time, of whom four are male. The company follows BP group guidelines (Code of Conduct) which provides standards for equal treatment of employees regardless of sex, race, religion and ethnicity. The future development of the company Over the coming years, BPN will complete its two major development projects on Skarv and Valhall, which will ensure long-term and stable activity for the company and a significant increase in production over the next decade. The good results in HSE and operational regularity ensure that the developments are based on a sound operating environment. Furthermore, there is extensive drilling on Valhall and Ula, reflecting BPNs strategy to increase the recovery rate on existing fields. In addition, the companys strategy to use Ula as a processing hub for adjacent smaller discoveries has strengthened the fields long-term position. As a result of the large investments taking place, there is currently an accumulation of capital in the company. BPN is following the BP group guidelines and processes for managing various financial risks, such as oil price and currency risk, to ensure that the capital is managed in a controlled and effective manner. Accounts BPN is not aware of any material and significant matters which would affect the assessments of the 2009 profits or the companys general position as of 31 December 2009, other than those described above or in the accounts. The annual accounts have been prepared on the basis of the going concern assumption, in line with the accounting act 3-3.

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Allocation of the years profit Profit for BP Norge AS is allocated as follows: Profit Dividends Transferred to other equity NOK 1 634 376 000 1 200 000 000 434 376 000

On the board of BP Norge AS Stavanger 18 March 2010

G.G. Kielland (Chairman)

R. L. Wiles

C. I. Minos

H. Kerlefsen

O. Fjells

I. Haugeberg

A. Kloster

O. Henriksen

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