1 Why is there a provision when the decommissioning will take place so far into the future?

The group makes full provision for the future cost of decommissioning oil and natural gas production facilities and related pipelines on a discounted basis on the installation of those facilities. The provision for the costs of decommissioning these production facilities and pipelines at the end of their economic lives has been estimated using existing technology, at current prices or long-term assumptions, depending on the expected timing of the activity, and discounted using a real discount rate of 2.0% (2007: 2.0%). These costs are generally expected to be incurred over the next 30 years.
While the provision is based on the best estimate of future costs and the economic lives of the facilities and pipelines, there is uncertainty regarding both the amount and timing of incurring these costs. Where BP has entered into a contract for the execution of decommissioning activity, these amounts are generally reported within accruals or other payables.

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At 1 January 2008 Exchange adjustments New or increased provisions Write-back of unused provisions Unwinding of discount Utilization Deletions At 31 December 2008 Of which - expected to be incurred within 1 year - expected to be incurred in more than 1 year $ million Decommissioning Environmental Litigation Total and other 9,501 2,107 3,487 15,095 (1,208) 327 (45) (107) (1,360) 270 2,059 2,656 - (107) (513) (620) 202 43 42 287 (402) (512) (1,424) (2,338) (2) (65) (67) 8,418 1,691 3,544 13,653 322 418 805 1,545 8,096 1,273 2,739 12,108