BP Annual Report and Form 20-F 2011 - Company Reporting

Additional information for shareholderscomplaint in the False Claims Act lawsuit seeking an injunction shuttingdown the Atlantis platform. The court denied BP’s motion to dismissthe complaint in March 2011. Separately, also in March 2011, BOEMREissued its investigation report of the Abbott Atlantis allegations, whichconcluded that Mr Abbott’s allegations that Atlantis operations personnellacked access to critical, engineer-approved drawings were without meritand that his allegations about false submissions by BP to BOEMRE wereunfounded. Trial is scheduled to begin on 10 April 2012.BP Products’ US refineries are subject to a 2001 consentdecree with the EPA that resolved alleged violations of the CAA,and implementation of the decree’s requirements continues. A 2009amendment to the decree resolves remaining alleged air violations atthe Texas City refinery through the payment of a $12-million civil fine,a $6-million supplemental environmental project and enhanced CAAcompliance measures estimated to cost approximately $150 million. Thefine has been paid, and BP Products is implementing the other provisions.On 30 September 2010, the EPA and BP Products lodged acivil consent decree with the federal court in Houston. Following apublic comment period, the federal court approved the settlement on30 December 2010. The decree resolves allegations of civil violations ofthe risk management planning regulations promulgated under the CAA thatare 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 Cityrefinery is implementing requirements to enhance reporting tothe EPA regarding employee training, equipment inspection andincident investigation.Various environmental groups and the EPA have challengedcertain aspects of the air permits issued by the Indiana Department ofEnvironmental Management (IDEM) for upgrades to the Whiting refinery.In response to these challenges, the IDEM has reviewed the permits andresponded formally to the EPA. BP is in discussions with the EPA, theIDEM and certain environmental groups over these and other CAA issuesrelating to the Whiting refinery. BP has also been in settlement discussionswith EPA to resolve alleged CAA violations at the Toledo, Carson andCherry Point refineries.An application was brought in the English High Court on 1 February2011 by Alfa Petroleum Holdings Limited and OGIP Ventures Limitedagainst BP International Limited and BP Russian Investments Limitedalleging breach of a Shareholders Agreement on the part of BP andseeking 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 betweenRosneft Oil Company and any BP group company (pursuant to the RosneftShare Swap Agreement). The court granted an interim order restrainingBP from taking any further steps in relation to the Rosneft transactionspending an expedited UNCITRAL arbitration procedure in accordance withthe Shareholders Agreement between the parties. The arbitration hascommenced and the interim injunction was continued by the arbitrationpanel.On 17 May 2011, BP announced that both the Rosneft Share SwapAgreement and the Arctic Opportunity, originally announced on 14 January2011, had terminated. This termination was as a result of the deadlinefor the satisfaction of conditions precedent having expired followingdelays resulting from the interim orders referred to above. These interimorders did not address the question of whether or not BP breached theShareholders Agreement. The arbitration proceedings, which are subject tostrict confidentiality obligations, are ongoing.Five minority shareholders of OAO TNK-BP Holding (TBH) havefiled two civil actions in Tyumen, Siberia, against BP Russia InvestmentsLimited and BP p.l.c. and against two of the BP nominated directorsof TBH. These two actions sought to recover alleged losses to TBHof $13 billion and $2.7 billion respectively. On 11 November 2011,the Tyumen Court dismissed both claims fully on their merits. Theshareholders appealed both of these decisions to the Omsk Appellatecourt. On 26 January 2012, the Appellate court upheld the Tyumen Court’sdismissal of the claim in relation to the BP nominated directors of TBH. TheOmsk Appellate court subsequently confirmed the Tyumen court of firstinstance’s dismissal of the minority suits against BP Russia InvestmentsLimited and BP p.l.c. BP believes the allegations made are wholly withoutmerit. No losses have been incurred and BP believes the likelihood of theclaims being ultimately successful is remote. Consequently no amountshave been provided and the claim is not disclosed as a contingent liability.On 9 February 2011, Apache Canada Ltd (Apache) commencedan arbitration against BP Canada Energy. Apache alleges that variousproperties/sites in respect of which it acquired interests from BP CanadaEnergy pursuant to the parties’ Purchase and Sale Agreement signed inJuly 2010 will require work to bring the properties/sites into compliancewith applicable environmental laws, and Apache claims that the purchaseprice should be adjusted for its estimated possible costs. BP CanadaEnergy denies such costs will arise or require any adjustment to thepurchase price. The parties have appointed the arbitrator, and currentlythe hearing on the merits is scheduled to commence during the secondquarter of 2012.On 24 January 2012, the Republic of Bolivia issued a pressstatement declaring its intent to nationalize Pan American Energy’sinterests in the Caipipendi Operations Contract. No formal nationalizationprocess has yet commenced. Pan American Energy and its shareholdersBP and Bridas intend to vigorously defend their legal interests under theCaipipendi Operations Contract and available Bilateral Investment Treaties.166 BP Annual Report and Form 20-F 2011