BP 2013 Annual Report Download - page 271

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 Richfield. Atlantic Richfield is named in these lawsuits as
alleged successor to International Smelting and Refining and another
company that manufactured lead pigment during the period 1920-1946.
The 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 find 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
Richfield has been settled nor has Atlantic Richfield been subject to a
final 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 Richfield 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, financial
position or liquidity will not be material.
Abbott Atlantis related matters
In April 2009, Kenneth Abbott, as relator, filed 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. BP is the operator and 56% interest owner of
the Atlantis unit in production in the Gulf of Mexico. That complaint was
unsealed in May 2010 and served on BP in June 2010. Abbott seeks
damages measured by the value, net of royalties, of all past and future
production from the Atlantis platform, trebled, plus penalties. In
September 2010, Kenneth Abbott and Food & Water Watch filed an
amended 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 Kenneth 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 was scheduled to
begin on 10 April 2012, but the trial date was vacated and not
rescheduled pending consideration of the parties’ summary judgment
motions.
Clean Air Act matters
On 1 February 2013, Marathon Petroleum Company LP (Marathon)
purchased the Texas City refinery from BP Products and directed BP
Products to transfer the refinery to Blanchard Refining Company LLC
(Blanchard). On 4 November 2013, BP Products, Blanchard and the EPA
reached an agreement to settle certain alleged Clean Air Act violations at
the Texas City refinery. Pursuant to the settlement BP Products paid a
civil penalty of $950,000 and Blanchard agreed to undertake certain
injunctive relief.
BP Products has also been in discussions with the EPA regarding alleged
CAA violations at the Toledo refinery and the EPA has alleged certain
CAA violations at the Cherry Point refinery and the Carson refinery (which
BP Products sold to Tesoro Corporation on 1 June 2013).
Bolivia
On 24 January 2012, the Republic of Bolivia issued a press statement
declaring its intent to nationalize Pan American Energy’s (PAE) interests
in the Caipipendi Operations Contract. No formal decision has been
issued or announced by the government, and no nationalization process
has commenced. In October 2013, in a public speech the President of
Bolivia made remarks in connection with PAE’s arbitration case for
compensation for expropriation of its shares in Empresa Petrolera Chaco
S.A. (Chaco). PAE and its shareholders BP and Bridas intend to vigorously
defend their legal interests under the Caipipendi Operations Contract and
in relation to the arbitration case relating to the expropriation of the PAE
shares in Chaco. That arbitration was filed in March 2012 and jurisdiction
has been confirmed by the tribunal. The case is due to proceed. PAE has
reiterated its willingness to negotiate on the Chaco compensation claim
and in December 2013 there was an agreement in principle to explore
settlement options with the Bolivian government. Such proposals are
being evaluated.
EC investigation and related matters
On 14 May 2013, European Commission officials made a series of
unannounced inspections at the offices of BP and other companies
involved in the oil industry acting on concerns that anticompetitive
practices may have occurred in connection with oil price reporting
practices and the reference price assessment process. Such inspections
are a preliminary step in investigations. There is no deadline for the
completion of the inquiries. Related inquiries and requests for information
have also been received from US and other regulators following the
European Commission’s actions. On 25 June 2013, the Federal Trade
Commission (FTC) served BP with a Request for Voluntary Submission of
Documents and Information regarding its non-public investigation into
whether or not Shell, BP or Statoil have engaged in unfair methods of
competition or manipulative or deceptive conduct. BP is producing
documents to the FTC. In June 2013, BP received an initial request for
information from the Japanese Fair Trade Commission. In
December 2013, the Korea Fair Trade Commission initiated an
investigation and a first information request is expected to be issued. On
16 January 2014, the U.S. Commodity Futures Trading Commission
requested price reporting documents from BP.
In addition, fifteen purported class actions related to these matters have
been filed in US District Courts alleging manipulation and antitrust
violations under the Commodity Exchange Act and US antitrust laws, and
these purported class actions have been consolidated in federal court in
New York.
Further note on certain activities
During the period covered by this report, non-US subsidiaries or other
non-US entities of BP conducted limited activities in, or with persons
from, certain countries identified by the US Department of State as State
Sponsors of Terrorism or otherwise subject to US sanctions (‘Sanctioned
Countries’). These activities continue to be insignificant to the group’s
financial condition and results of operations. BP monitors its activities
with Sanctioned Countries and persons from Sanctioned Countries and
seeks to comply with applicable sanctions laws and regulations.
Both the US and the EU have enacted strong sanctions against Iran,
including: in the US, sanctions against persons involved with Iran’s
energy, shipping and petrochemicals industries, and sanctions against
financial institutions that engage in significant transactions with the Iran
Central Bank; and in the EU, a prohibition on the import, purchase and
transport of Iranian-origin crude oil, petroleum products and natural gas.
In addition, in August 2012, US President Obama signed into law the Iran
Threat Reduction and Syria Human Rights Act of 2012 (‘ITRA’), which,
among other things, added a new Section 13(r) to the Securities
Exchange Act of 1934, as amended (the ‘Exchange Act’) and requires
issuers that must file annual or quarterly reports under the Exchange Act
to disclose in such reports whether, during the period covered by the
report, the registrant or its affiliates have knowingly engaged in certain,
principally Iran-related, activities.
Both the US and the EU have enacted strong sanctions against Syria,
including a prohibition on the purchase of Syrian-origin crude and a US
prohibition on the provision of services to Syria by US persons. The EU
sanctions against Syria include a prohibition on supplying certain
equipment used in the production, refining, or liquefaction of petroleum
resources as well as restrictions on dealing with the Central Bank of Syria
and numerous other Syrian financial institutions.
With effect from 20 January 2014, the US and the EU implemented
temporary, limited and reversible relief of certain sanctions related to Iran
pursuant to a Joint Plan of Action entered by Iran, China, France,
Germany, Russia, the UK and the US. BP has not changed its policy in
relation to Iran as a result of the Joint Plan of Action and has no plans to
engage in any new business with Iran which would now be permitted as
a result of the Joint Plan of Action.
BP has interests in and operates two fields – the North Sea Rhum field
(‘Rhum’) and the Azerbaijan Shah Deniz field – and has interests in a gas
marketing entity and a gas pipeline entity which, respectively, market and
Additional disclosures
BP Annual Report and Form 20-F 2013 267