text: **32. Additional Financial Instruments Disclosure**
  
  **(a) Foreign exchange risk exposure**
  
  The Santos Group is exposed to foreign exchange risk principally through the sale of liquid petroleum products denominated in US dollars, 
  US dollar borrowings and US dollar expenditure. In order to hedge this foreign exchange risk, the Santos Group has from time to time entered 
  into forward foreign exchange, foreign currency swap and foreign currency option contracts. 
  
  At 31 December 2004 the Santos Group has one open forward foreign currency exchange contract which has expired in January 2005. If closed 
  out at balance date a loss of $0.2 million would have resulted. 
  
  US dollar denominated borrowings are either swapped into Australian dollar exposure (2004: US$321.4 million; 2003: US$115.0 million) or 
  designated as a hedge of US dollar denominated investments in self-sustaining overseas controlled entities (2004: US$313.0 million; 
  2003: US$323.6 million) or as a hedge of future US denominated sales revenues (2004: US$146.4 million; 2003: US$219.4 million). As a result, 
  there were no net foreign currency gains or losses arising from translation of US denominated dollar borrowings recognised in the statements 
  of financial performance in 2004. Accordingly, $37.4 million of unrealised foreign currency gains were deferred as at 31 December 2004 
  (2003: gains of $66.3 million). The ultimate foreign currency gains or losses will be included in the measurement of the specific hedged US dollar 
  denominated sales revenues to be realised in the years 2005 through 2006. 