BP 2013 Annual Report Download - page 144

2. Significant event – Gulf of Mexico oil spill – continued
reimbursement asset during the period to 31 December 2013. The net increase in the provision of $1,542 million for the full year relates principally to
business economic loss claims processed by the DHCSSP subsequent to finalization of the BP Annual Report and Form 20-F 2012 that have been paid
as well as increases in the provision for claims administration costs. The amount of the reimbursement asset at 31 December 2013 is equal to the
amount of provisions and payables recognized at that date that will be covered by the trust fund – see below.
$ million
2013 2012
Cumulative since the
incident
At 1 January 6,442 9,875 –
Increase in provision for items covered by the trust fund 1,921 1,985 20,511
Derecognition of provision for items that cannot be reliably estimated (379) (794) (1,173)
Amounts paid directly by the trust fund (3,085) (4,624) (14,439)
At 31 December 4,899 6,442 4,899
Of which – current 2,457 4,178 2,457
– non-current 2,442 2,264 2,442
Any increases in estimated future expenditure that will be covered by the trust fund (up to an aggregate of $20 billion) have no net income statement
effect as a reimbursement asset is also recognized, as described above. As at 31 December 2013, the cumulative charges, and the associated
reimbursement asset recognized, amounted to $19,338 million. Thus, a further $662 million could be charged in subsequent periods for items covered
by the trust fund with no net impact on the income statement. Additional liabilities in excess of this amount regarding claims under the Oil Pollution Act
of 1990 (OPA 90), claims that are currently administered by the DHCSSP, or otherwise, including the various claims described in Legal proceedings on
page 257, would be expensed to the income statement. Information on those items that currently cannot be estimated reliably is provided under
Provisions and contingent liabilities below.
Under the terms of the EPD Settlement Agreement with the PSC, several QSFs were established in 2012. These QSFs each relate to specific
elements of the agreement, have been and will continue to be funded through payments from the Trust, and are available to make payments to
claimants in accordance with those elements of the agreement.
As at 31 December 2013, the aggregate cash balances in the Trust and the QSFs amounted to $6.7 billion, including $1.2 billion remaining in the
seafood compensation fund which has yet to be distributed and $0.9 billion held for natural resource damage early restoration. Should the cash
balances in the trust fund not be sufficient, payments in respect of legitimate claims and other costs will be made directly by BP.
The EPD Settlement Agreement with the PSC provides for a court-supervised settlement programme which commenced operation on 4 June 2012.
See Provisions below for further information on the current status of the EPD Settlement Agreement. In addition, a separate BP claims programme
began processing claims from claimants not in the Economic and Property Damages class as determined by the EPD Settlement Agreement or who
have requested to opt out of that settlement. Payments made to claimants through the BP claims programme are paid directly from the Trust. A
separate claims administrator has been appointed to pay medical claims and to implement other aspects of the Medical Benefits Class Action
Settlement. For further information on the PSC settlements, see Legal proceedings on page 257.
Other payables
BP reached an agreement with the US government in 2012, which was approved by the court in 2013, to resolve all federal criminal claims arising from
the incident. Under the agreement, BP will pay $4 billion over a period of five years. At 31 December 2013, the remaining payable was $3,525 million,
of which $565 million falls due in 2014.
BP also reached a settlement with the US Securities and Exchange Commission (SEC) in 2012, resolving the SEC’s Gulf of Mexico oil spill-related civil
claims. As part of the settlement, BP agreed to a civil penalty of $525 million. At 31 December 2013 the remaining payable, due in 2014, was
$175 million plus accrued interest.
The amounts described above were reclassified from provisions to other payables upon court approval of the agreement with the US government and
settlement with the SEC.
Provisions and contingent liabilities
Provisions
BP has recorded provisions relating to the Gulf of Mexico oil spill in relation to environmental expenditure, spill response costs, litigation and claims,
and Clean Water Act penalties that can be measured reliably at this time.
Movements in each class of provision during the year and cumulatively since the incident are presented in the tables below.
$ million
2013
Environmental
Spill
response
Litigation
and claims
Clean Water
Act Total
At 1 January 1,862 345 9,483 3,510 15,200
Increase (decrease) in provision – items not covered by the trust fund (24) (66) 408 – 318
– items covered by the trust fund 24 – 1,897 – 1,921
Derecognition of provision for items that cannot be reliably estimateda– – (379) – (379)
Reclassification of amounts between categories of provision 47 (47) – – –
Unwinding of discount 1– – –1
Change in discount rate (5) – – – (5)
Reclassified to other payables – items covered by the trust fund – – (84) – (84)
– items not covered by the trust fund – – (3,849) – (3,849)
Utilization – paid by BP (60) (143) (523) – (726)
– paid by the trust fund (255) – (2,796) – (3,051)
At 31 December 1,590 89 4,157 3,510 9,346
Of which – current 389 84 2,478 – 2,951
– non-current 1,201 5 1,679 3,510 6,395
Of which – payable from the trust fund 1,253 –3,595 – 4,848
aRelates to items covered by the trust fund.
140 BP Annual Report and Form 20-F 2013