With independent auditor’s report

Property, plant and equipment
The initial cost of an asset purchased comprises its purchase price or construction cost, any costs directly
attributable to bringing the asset into operation, the initial estimate of decommissioning obligation, if any, and,
for qualifying assets, borrowing costs. Non-recoverable value-added tax related to the acquisition of property,
plant and equipment is capitalized by the Group. Non-recoverable value-added tax related with operational
activities is charged to profit or loss.
At each reporting date management assesses whether there is any indication of impairment of property, plant
and equipment. If any such indication exists, management estimates the recoverable amount, which is
determined as the higher of an asset’s or cash generating unit’s fair value less costs to sell and its value in
use. The carrying amount is reduced to the recoverable amount and the impairment loss, if any, is recognized
in the consolidated statement of profit or loss. An impairment loss recognized for an asset or cash generating
unit in prior years is reversed if there are indicators that impairment loss may no longer exist or may have
decreased.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. Gains and
losses are recognized in profit or loss.
The cost of maintenance, repairs, and the replacement of minor items of property is charged to operating
expenses. Renewals and betterments of assets are capitalized. Cost of replacing major parts or components
of property, plant and equipment items are capitalized and the replaced part is written-off.
Oil and gas properties
Expenditure on the construction, installation or completion of infrastructure facilities such as separators,
compressors, the pipelines and the drilling of commercially proven development wells is capitalized within
tangible and intangible assets according to nature. When development is completed on a specific field, it is
transferred to production assets (oil and gas properties).
The present value of the estimated costs of decommissioning oil and gas production wells and facilities,
including abandonment and site restoration costs, are recognized when the obligation is incurred and are
included within the carrying value of property, plant and equipment, subject to depletion using unit-of-
production method.