BP 2011 Annual Report Download - page 168

166 BP Annual Report and Form 20-F 2011
Additional information for shareholders
complaint in the False Claims Act lawsuit seeking an injunction shutting
down the Atlantis platform. The court denied BP’s motion to dismiss
the complaint in March 2011. Separately, also in March 2011, BOEMRE
issued its investigation report of the Abbott Atlantis allegations, which
concluded that Mr Abbott’s allegations that Atlantis operations personnel
lacked access to critical, engineer-approved drawings were without merit
and that his allegations about false submissions by BP to BOEMRE were
unfounded. Trial is scheduled to begin on 10 April 2012.
BP Products’ US refineries 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 refinery through the payment of a $12-million civil fine,
a $6-million supplemental environmental project and enhanced CAA
compliance measures estimated to cost approximately $150 million. The
fine 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 refinery.
BP Products has paid the $15-million civil penalty and the Texas City
refinery is implementing requirements to 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 air permits issued by the Indiana Department of
Environmental Management (IDEM) for upgrades to the Whiting refinery.
In response to these challenges, the IDEM has reviewed the permits and
responded formally to the EPA. BP is in discussions with the EPA, the
IDEM and certain environmental groups over these and other CAA issues
relating to the Whiting refinery. BP has also been in settlement discussions
with EPA to resolve alleged CAA violations at the Toledo, Carson and
Cherry Point refineries.
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 a Shareholders Agreement on the part of BP and
seeking an interim injunction restraining BP from taking steps to conclude,
implement or perform the transactions with Rosneft Oil Company,
originally announced on 14 January 2011, relating to oil and gas exploration,
production, refining and marketing in Russia (the Arctic Opportunity).
Those transactions included the issue or transfer of shares between
Rosneft Oil Company and any BP group company (pursuant to the Rosneft
Share Swap Agreement). 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 interim injunction was continued by the arbitration
panel.
On 17 May 2011, BP announced that both the Rosneft Share Swap
Agreement and the Arctic Opportunity, originally announced on 14 January
2011, had terminated. This termination was as a result of the deadline
for the satisfaction of conditions precedent having expired following
delays resulting from the interim orders referred to above. These interim
orders did not address the question of whether or not BP breached the
Shareholders Agreement. The arbitration proceedings, which are subject to
strict confidentiality obligations, are ongoing.
Five minority shareholders of OAO TNK-BP Holding (TBH) have
filed two civil actions in Tyumen, Siberia, against BP Russia Investments
Limited and BP p.l.c. and against two of the BP nominated directors
of TBH. These two actions sought to recover alleged losses to TBH
of $13 billion and $2.7 billion respectively. On 11 November 2011,
the Tyumen Court dismissed both claims fully on their merits. The
shareholders appealed both of these decisions to the Omsk Appellate
court. On 26 January 2012, the Appellate court upheld the Tyumen Court’s
dismissal of the claim in relation to the BP nominated directors of TBH. The
Omsk Appellate court subsequently confirmed the Tyumen court of first
instance’s dismissal of the minority suits against BP Russia Investments
Limited and BP p.l.c. BP believes the allegations made are wholly without
merit. No losses have been incurred and BP believes the likelihood of the
claims being ultimately successful is remote. Consequently no amounts
have been provided and the claim is not disclosed as a contingent liability.
On 9 February 2011, Apache Canada Ltd (Apache) commenced
an arbitration against BP Canada Energy. Apache alleges that various
properties/sites in respect of which it acquired interests from BP Canada
Energy pursuant to the parties’ Purchase and Sale Agreement signed in
July 2010 will require work to bring the properties/sites into compliance
with applicable environmental laws, and Apache 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 parties have appointed the arbitrator, and currently
the hearing on the merits is scheduled to commence during the second
quarter of 2012.
On 24 January 2012, the Republic of Bolivia issued a press
statement declaring its intent to nationalize Pan American Energy’s
interests in the Caipipendi Operations Contract. No formal nationalization
process has yet commenced. Pan American Energy and its shareholders
BP and Bridas intend to vigorously defend their legal interests under the
Caipipendi Operations Contract and available Bilateral Investment Treaties.