Note 19 - Decommissioning and other provisions
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$ million |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Decommissioning and restoration |
Onerous contracts |
Legal |
Environmental |
Redundancy |
Other |
Total |
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At January 1, 2021 |
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|
|
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Current [A] |
900 |
532 |
521 |
273 |
673 |
723 |
3,622 |
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Non-current [A] |
22,081 |
1,207 |
1,229 |
952 |
265 |
1,382 |
27,116 |
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|
22,981 |
1,739 |
1,750 |
1,225 |
938 |
2,105 |
30,738 |
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Additions |
1,040 [B] |
229 |
197 |
153 |
991 |
752 |
3,362 |
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Amounts charged against provisions |
(662) |
(264) |
(340) |
(154) |
(733) |
(292) |
(2,445) |
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Accretion expense |
405 |
14 |
11 |
9 |
1 |
10 |
450 |
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Disposals and liabilities classified as held for sale [A] |
(819) |
— |
(5) |
(17) |
(1) |
(27) |
(869) |
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Remeasurements and other movements [C] |
(609) |
(36) |
(196) |
(11) |
(512) |
(339) |
(1,703) |
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Currency translation differences |
(252) |
— |
(6) |
(26) |
(39) |
(68) |
(391) |
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|
(897) |
(57) |
(339) |
(46) |
(293) |
36 |
(1,596) |
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At December 31, 2021 |
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Current |
871 |
653 |
270 |
332 |
410 |
802 |
3,338 |
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Non-current |
21,213 |
1,029 |
1,141 |
847 |
235 |
1,339 |
25,804 |
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|
22,084 |
1,682 |
1,411 |
1,179 |
645 |
2,141 |
29,142 |
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At January 1, 2020 |
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Current |
755 |
79 |
626 |
263 |
295 |
793 |
2,811 |
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Non-current |
18,264 |
17 |
1,185 |
934 |
220 |
1,179 |
21,799 |
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|
19,019 |
96 |
1,811 |
1,197 |
515 |
1,972 |
24,610 |
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Additions |
1,697 [B] |
1,722 |
502 |
199 |
986 |
664 |
5,770 |
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Amounts charged against provisions |
(433) |
(71) |
(522) |
(138) |
(375) |
(317) |
(1,856) |
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Accretion expense |
448 |
3 |
17 |
21 |
1 |
7 |
497 |
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Disposals and liabilities classified as held for sale [A] |
(348) |
(11) |
— |
(7) |
— |
(9) |
(375) |
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Remeasurements and other movements [C] |
2,090 |
— |
(59) |
(73) |
(241) |
(265) |
1,452 |
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Currency translation differences |
508 |
— |
1 |
26 |
52 |
53 |
640 |
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|
3,962 |
1,643 |
(61) |
28 |
423 |
133 |
6,128 |
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At December 31, 2020 |
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Current [A] |
900 |
532 |
521 |
273 |
673 |
723 |
3,622 |
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Non-current [A] |
22,081 |
1,207 |
1,229 |
952 |
265 |
1,382 |
27,116 |
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|
22,981 |
1,739 |
1,750 |
1,225 |
938 |
2,105 |
30,738 |
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The amount and timing of settlement in respect of these provisions are uncertain and dependent on various factors that are not always within management’s control. Reviews of estimated future decommissioning and restoration costs and the discount rate applied are carried out regularly. The discount rate applied at December 31, 2021, was 2% (2020: 1.75%). An increase of 0.5% or a decrease of 0.5% in the discount rate could result in a decrease of $1.5 billion (2020: $1.7 billion) or an increase of $1.7 billion (2020: $2.2 billion) of decommissioning and restoration provisions, respectively. Such increase or decrease will be reflected in the carrying amount of the related asset. Where applicable that carrying amount is tested for impairment.
In 2021, there was a decrease of around $700 million (2020: increase of $3,999 million) in the decommissioning and restoration provision as a result of the change in the discount rate, partly offset by an increase in the provision resulting from changes in cost estimates of around $140 million (2020: decrease of $1,909 million), reported within remeasurements and other movements.
Of the decommissioning and restoration provision at December 31, 2021, an estimated $3,863 million is expected to be utilised within one to five years, $3,584 million within six to 10 years, and the remainder in later periods.
Legal provisions at December 31, 2021, include legal proceedings in Integrated Gas at $669 million, Upstream $94 million, Oil Products $255 million and Chemicals $393 million.
Other provisions at December 31, 2021, include amounts recognised in respect of employee benefits.
