BP 2015 Annual Report Download - page 45

Shipping
The primary purpose of BP’s shipping and chartering activities is the safe
transportation of the group’s hydrocarbon products using a combination of
BP-operated, time-chartered and spot-chartered vessels. Surplus capacity may
also be used to transport third-party products. All vessels conducting BP
shipping activities are subject to our health, safety, security and environmental
requirements. At 31 December 2015, our fleet included four vessels
supporting operations in Alaska, 44 BP-operated and 40 time-chartered
vessels for our deep-sea, international oil and gas shipping operations. In
addition 28 deep-sea oil tankers and six LNG tankers are on order and planned
for delivery into the BP-operated fleet between 2016 and 2019. The first of
these new vessels, the British Respect oil tanker, was formally named at a
ceremony in November.
Trea sur y
Treasury manages the financing of the group centrally, with responsibility
for managing the group’s debt profile, share buyback programmes and
dividend payments, while ensuring liquidity is sufficient to meet group
requirements. It also manages key financial risks including interest rate,
foreign exchange, pension and financial institution credit risk. From
locations in the UK, US and Singapore, treasury provides the interface
between BP and the international financial markets and supports the
financing of BP’s projects around the world. Treasury trades foreign
exchange and interest-rate products in the financial markets, hedging
group exposures and generating incremental value through optimizing and
managing cash flows and the short-term investment of operational cash
balances. Trading activities are underpinned by the compliance, control
and risk management infrastructure common to all BP trading activities.
For further information, see Financial statements – Note 28.
Insurance
The group generally restricts its purchase of insurance to situations where
this is required for legal or contractual reasons. Some risks are insured with
third parties and reinsured by group insurance companies. This approach is
reviewed on a regular basis and if specific circumstances require such a
review.
Outlook
Other businesses and corporate annual charges, excluding non-operating
items, are expected to be around $1.2 billion in 2016.
Gulf of Mexico oil spill
BP reached agreements resolving the largest
remaining liabilities.
Federal and state settlements
On 2 July 2015 BP announced that BP Exploration & Production Inc. (BPXP)
had reached agreements in principle to settle all federal and state claims
arising from the incident. The United States is expected to file a motion
with the court to enter the Consent Decree as a final settlement around the
end of March, which the court will then consider. Subject to final court
approval, payments under the terms of the agreements will be made
at a rate of around $1.1 billion a year for the majority of the 18-year
payment period.
See Legal proceedings on page 237 for further details including a summary
of what is not covered by the proposed Consent Decree and the
Settlement Agreement. For additional details on the financial impacts
see Financial statements – Note 2.
Key events
• BP reached agreements in principle with the United States federal
government and five Gulf states in July to settle all federal and state
claims arising from the Deepwater Horizon accident and oil spill (the
incident). In addition, BP also settled the vast majority of claims made
by local government entities.
– The United States lodged a proposed Consent Decree with the
district court in October to resolve all United States and Gulf states
natural resource damage claims and all Clean Water Act penalty
claims. At the same time, BP entered a Settlement Agreement
with the Gulf states for economic, property and other losses.
– The proposed Consent Decree and the Settlement Agreement are
conditional on each other and neither will become effective unless
the court provides final approval of the Consent Decree.
• The final submission deadline for claims under the 2012 Plaintiffs’
Steering Committee settlements was 8 June 2015.
• By the end of 2015, the cumulative pre-tax income statement charge
as a result of the incident amounted to $55.5 billion. This excludes
amounts that BP does not consider possible to measure reliably at
this time.
Shrimpers off the coast of Grand Isle in Louisiana.
★ Defined on page 256.
BP also runs two wind farms in our refinery sites in the Netherlands,
operating on a much smaller scale and managed by our Downstream
segment, with 32MW of generating capacity.
Our net share of wind generation for 2015 was 4,424GWh, compared
with 4,617GWh a year ago. Lower power generation was primarily a
result of less windy weather across the US in 2015.
See our Sustainability Report or bp.com/renewables for additional
information on our renewable energy activities.
BP shipping reached a centenary of maritime achievement in April 2015.
BP Annual Report and Form 20-F 2015 41
Strategic report