BP 2010 Annual Report Download - page 135

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Additionalinformationforshareholders
Additional information for shareholders
Since1987,AtlanticRicheldCompany(AtlanticRicheld),asubsidiaryof
BP,hasbeennamedasaco-defendantinnumerouslawsuitsbroughtinthe
USalleginginjurytopersonsandpropertycausedbyleadpigmentinpaint.
Themajorityofthelawsuitshavebeenabandonedordismissedagainst
AtlanticRicheld.AtlanticRicheldisnamedintheselawsuitsasalleged
successortoInternationalSmeltingandReningandanothercompanythat
manufacturedleadpigmentduringtheperiod1920-1946.Plaintiffsinclude
individualsandgovernmentalentities.Severalofthelawsuitspurporttobe
classactions.Thelawsuitsseekvariousremediesincludingcompensation
tolead-poisonedchildren,costtondandremoveleadpaintfrombuildings,
medicalmonitoringandscreeningprogrammes,publicwarningand
educationofleadhazards,reimbursementofgovernmenthealthcarecosts
andspecialeducationforlead-poisonedcitizensandpunitivedamages.No
lawsuitagainstAtlanticRicheldhasbeensettlednorhasAtlanticRicheld
beensubjecttoanaladversejudgmentinanyproceeding.Theamounts
claimedand,ifsuchsuitsweresuccessful,thecostsofimplementingthe
remediessoughtinthevariouscasescouldbesubstantial.Whileitisnot
possibletopredicttheoutcomeoftheselegalactions,AtlanticRicheld
believesthatithasvaliddefences.Itintendstodefendsuchactions
vigorouslyandbelievesthattheincurrenceofliabilityisremote.
Consequently,BPbelievesthattheimpactoftheselawsuitsonthegroup’s
results,nancialpositionorliquiditywillnotbematerial.
On8March2010,OSHAissuedcitationstoBP’sToledorenery
allegingviolationsoftheProcessSafetyManagementStandard,with
penaltiesofapproximately$3million.Thesecitationsresultedfroman
inspectionconductedpursuanttoOSHA’sPetroleumReneryProcess
SafetyManagementNationalEmphasisProgram.BPProductshas
contestedthecitations,andthematteriscurrentlybeforetheOSHReview
CommissionwhichhasassignedanAdministrativeLawJudgeforpurposes
ofmediation.
BPistheoperatorand56%interestowneroftheAtlantisunitin
productionintheGulfofMexico.InApril2009,KennethAbbott,asrelator,
ledaUSFalseClaimsActlawsuitagainstBP,allegingthatBPviolated
federalregulations,andmadefalsestatementsinconnectionwithits
compliancewiththoseregulations,byfailingtohavenecessary
documentationfortheAtlantissubseaandothersystems.Thatcomplaint
wasunsealedinMay2010andservedonBPinJune2010.InSeptember
2010,KennethAbbottandFood&WaterWatchledanamended
complaintintheFalseClaimsActlawsuitseekinganinjunctionshutting
downtheAtlantisplatform.
BPProducts’USreneriesaresubjecttoa2001consentdecree
withtheEPAthatresolvedallegedviolationsoftheCAA,and
implementationofthedecree’srequirementscontinues.A2009
amendmenttothedecreeresolvesremainingallegedairviolationsatthe
TexasCityrenerythroughthepaymentofa$12-millioncivilne,a
$6-millionsupplementalenvironmentalprojectandenhancedCAA
compliancemeasuresestimatedtocostapproximately$150million.The
nehasbeenpaid,andBPProductsisimplementingtheotherprovisions.
On30September2010,theEPAandBPProductslodgedacivil
consentdecreewiththefederalcourtinHouston.Followingapublic
commentperiod,thefederalcourtapprovedthesettlementon
30December2010.Thedecreeresolvesallegationsofcivilviolationsofthe
riskmanagementplanningregulationspromulgatedundertheCAAthatare
allegedtohaveoccurredin2004and2005attheTexasCityrenery.The
agreementrequiresthatBPProductspaysa$15-millioncivilpenaltyand
thattheTexasCityreneryenhancereportingtotheEPAregarding
employeetraining,equipmentinspectionandincidentinvestigation.
VariousenvironmentalgroupsandtheEPAhavechallengedcertain
aspectsoftheoperatingpermitissuedbytheIndianaDepartmentof
EnvironmentalManagement(IDEM)forupgradestotheWhitingrenery.
Inresponsetothesechallenges,theIDEMhasreviewedthepermitsand
respondedformallytotheEPA.TheEPA,eitherthroughtheIDEMor
directly,cancausethepermittobemodied,reissued,terminatedor
revoked.BPisindiscussionswiththeEPAandtheIDEMovertheseand
otherCAAissuesrelatingtotheWhitingrenery.
BPisalsoinsettlementnegotiationswithEPAtoresolveallegedCAA
violationsattheWhiting,Toledo,CarsonandCherryPointreneries.
AnapplicationwasbroughtintheEnglishHighCourton1February
2011byAlfaPetroleumHoldingsLimitedandOGIPVenturesLimited
againstBPInternationalLimitedandBPRussianInvestmentsLimited
allegingbreachoftheshareholdersagreementonthepartofBPand
seekinganinteriminjunctionrestrainingBPfromtakingstepstoconclude,
implementorperformthepreviouslyannouncedtransactionswithRosneft
OilCompanyrelatingtooilandgasexploration,production,reningand
marketinginRussia.Thosetransactionsincludetheissueortransferof
sharesbetweenRosneftOilCompanyandanyBPgroupcompany.The
courtgrantedaninterimorderrestrainingBPfromtakinganyfurthersteps
inrelationtotheRosnefttransactionspendinganexpeditedUNCITRAL
arbitrationprocedureinaccordancewiththeShareholdersAgreement
betweentheparties.
Thearbitrationhascommencedandtheinjunctionhasbeen
extendeduntil11March2011pendinganexpeditedhearinginrelationto
mattersindisputebetweenthepartiesonanalbasisduringtheweek
commencing7March2011.Theexpeditedhearingwilldecide,among
othermatters,whethertheinjunctionwillbeextendedbeyond
11March2011.
On9February2011,ApacheCanadaLtdcommencedanarbitration
againstBPCanadaEnergy.Apacheallegesthatinthefuturevariousofthe
sitesthatitacquiredfromBPCanadaEnergypursuanttotheparties’July
2010PurchaseandSaleAgreementwillhavetohaveworkcarriedoutto
bringthesitesintocompliancewithapplicableAlbertaenvironmentallaws,
andApacheCanadaLtdclaimsthatthepurchasepriceshouldbeadjusted
foritsestimatedpossiblecosts.BPCanadaEnergydeniessuchcostswill
ariseorrequireanyadjustmenttothepurchaseprice.Theprocessof
selectingthearbitratorhasbegun.Nohearingdateshavebeenset.
Relationshipswithsuppliers
andcontractors
Essential contracts
BPhascontractualandotherarrangementswithnumerousthirdpartiesin
supportofitsbusinessactivities.Thisreportdoesnotcontaininformation
aboutanyofthesethirdpartiesasnoneofourarrangementswiththemare
consideredtobeessentialtothebusinessofBP.
Suppliers and contractors
Ourprocessesaredesignedtoenableustochoosesupplierscarefullyon
merit,avoidingconictsofinterestandinappropriategiftsand
entertainment.Weexpectsupplierstocomplywithlegalrequirementsand
weseektodobusinesswithsupplierswhoactinlinewithBP’s
commitmentstocomplianceandethics,asoutlinedinourcodeofconduct.
Weengagewithsuppliersinavarietyofways,includingperformance
reviewmeetingstoidentifymutuallyadvantageouswaystoimprove
performance.
Creditor payment policy and practice
StatutoryregulationsissuedundertheUKCompaniesAct2006require
companiestomakeastatementoftheirpolicyandpracticeinrespectof
thepaymentoftradecreditors.Inviewoftheinternationalnatureofthe
group’soperationsthereisnospecicgroup-widepolicyinrespectof
paymentstosuppliers.Relationshipswithsuppliersare,however,governed
bythegroup’spolicycommitmenttolong-termrelationshipsfoundedon
trustandmutualadvantage.Withinthisoverallpolicy,individualoperating
companiesareresponsibleforagreeingtermsandconditionsfortheir
businesstransactionsandensuringthatsuppliersareawareofthetermsof
payment.
BPAnnualReportandForm20-F2010 133