Risk management and financial instruments (Tables)

12 Months Ended

Dec. 31, 2012

Variable Interest Entity [Line Items]

Interest rate swap and cross currency interest rate swap agreements

The Company's interest rate swap and cross currency interest rate swap agreements as at December 31, 2012, were as follows:

Outstanding principal		Receive rate	Pay rate			Length of contract
(In US$ millions)
	50	3 month LIBOR		4.63	%	May 2005 - May 2015
	300	3 month LIBOR		3.16	%	Dec 2008 - Dec 2018
	150	3 month LIBOR		3.34	%	June 2013 - June 2018
	150	3 month LIBOR		3.30	%	June 2013 - June 2018
	200	3 month LIBOR		2.83	%	Jan 2011 - Jan 2018
	200	3 month LIBOR		3.27	%	Mar 2013 - Mar 2018
	350	3 month LIBOR		3.80	%	Sep 2011 - Sep 2017
	300	3 month LIBOR		3.54	%	Sep 2011 - Jun 2017
	71	6 month LIBOR		3.83	%	Mar 2008 - Sep 2016
	350	3 month LIBOR		3.36	%	Sep 2011 - Jun 2016
	100	3 month LIBOR		2.22	%	Jan 2011 - Jan 2016
	100	3 month LIBOR		2.24	%	Jan 2011 - Jan 2016
	200	3 month LIBOR		2.17	%	Jan 2011 - Jan 2016
	200	3 month LIBOR		2.17	%	Jan 2011 - Jan 2016
	250	3 month LIBOR		2.71	%	May 2009 - May 2014
	250	3 month LIBOR		2.62	%	May 2009 - May 2014
	500	3 month LIBOR		2.06	%	Mar 2009 - Mar 2014
	100	3 month LIBOR		2.17	%	Aug 2012 - Aug 2017
	100	3 month LIBOR		2.17	%	Aug 2012 - Aug 2017
	200	3 month LIBOR		2.57	%	June 2012 - June 2017
	100	3 month LIBOR		2.56	%	June 2012 - June 2017
	100	3 month LIBOR		2.74	%	May 2012 - May 2017
	200	3 month LIBOR		2.14	%	May 2011 - Jan 2016
	200	3 month LIBOR		2.14	%	May 2011 - Jan 2016
	100	3 month LIBOR		1.15	%	Dec 2012 – Dec 2019
	289	3 month LIBOR		1.11	%	Oct 2012 – Dec 2019
	289	3 month LIBOR		1.38	%	Oct 2012 – Dec 2022
	100	3 month LIBOR		1.36	%	Oct 2012 – Oct 2019
	250	3 month LIBOR		0.74	%	Nov 2012 – Nov 2017
	200	3 month LIBOR		1.36	%	Oct 2012 – Oct 2019
	200	3 month LIBOR		1.18	%	Dec 2012 – Dec 2019

Carrying value and estimated fair value of financial instruments

The carrying value and estimated fair value of the Company's financial instruments at December 31, 2012 and December 31, 2011 are as follows:

	December 31, 2012				December 31, 2011
(In US$ millions)	Fair value		Carrying value		Fair value		Carrying value
Cash and cash equivalents		318		318		483		483
Restricted cash		402		402		482		482
Current portion of long-term debt		2,066		2,066		1,419		1,419
Long-term portion of floating rate debt		6,287		6,287		7,711		7,711
Long term portion of fixed rate CIRR loans		218		218		250		250
Fixed interest loans		70		69		77		74
Fixed interest convertible bonds		872		561		735		545
Fixed interest bonds		1,360		1,342		333		350
Floating interest bonds		224		224		75		75

Financial instruments measured at fair value on a recurring basis

Financial instruments that are measured at fair value on a recurring basis:

	Fair value		Fair value measurements at reporting date using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In US$ millions)	December 31, 2012		(Level 1)		(Level 2)		(Level 3)
Assets:
Marketable securities		333		329	-			4
Other derivative instruments – short term receivable		11		-		11		-
Total assets		344		329		11		4
Liabilities:
Interest rate swap contracts – short term payable		388		-		388		-
Other derivative instruments – short term payable		8		-		8		-
Total liabilities		396		-		396		-

	Fair value		Fair value measurements at reporting date using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In US$ millions)	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Marketable securities		24		4	-			20
Other derivative instruments – short term receivable		3		1		2		-
TRS equity swap contracts		11		-		11		-
Total assets		38		5		13		20
Liabilities:
Interest rate swap contracts – short term payable		372		-		372		-
Currency forward contracts – short term payable		3		-		3		-
Other derivative instruments – short term payable		39		-		39		-
Total liabilities		414		-		414		-

Roll forward of fair value measurements using unobservable inputs (Level 3)

Roll forward of fair value measurements using unobservable inputs (Level 3):

(In US$ millions)
Beginning balance January 1, 2012	20
Realization	(16	)
Purchase	-
Changes in fair value of bonds	-
Closing balance December 31, 2012	4

Consolidated Variable Interest Entities [Member]

Variable Interest Entity [Line Items]

Interest rate swap and cross currency interest rate swap agreements

Two of the Ship Finance subsidiaries consolidated by the Company as VIE's have entered into interest rate swaps in order to mitigate the Company's exposure to variability in cash flows for future interest payments on the loans taken out to finance the acquisition of West Polaris and West Taurus. These interest rate swaps qualify for hedge accounting and any changes in their fair value are included in "Other comprehensive income/loss". Below is a summary of the notional amounts, fixed interest rates payable and durations of these interest rate swaps.

Outstanding principal	Receive rate	Pay rate			Length of contract
(In US$ millions)
470 (West Polaris )	1 month LIBOR		3.89	%	July 2008 - Oct 2012
518 (West Taurus)	1 month LIBOR		2.19	%	Dec 2008 - Aug 2013