BP 2010 Annual Report Download - page 162
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Please find page 162 of the 2010 BP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Notesonnancialstatements
2.Signicantevent–GulfofMexicooilspillcontinued
Provisions and contingencies
At31December2010BPhasrecordedcertainprovisionsanddisclosedcertaincontingenciesasaconsequenceoftheGulfofMexicooilspill.
ThesearedescribedbelowunderOil Pollution Act of 1990andOther items.
OilPollutionActof1990(OPA90)
TheclaimsagainstBPundertheOPA90andforpersonalinjuryfallintothreecategories:(i)claimsbyindividualsandbusinessesforremovalcosts,damage
torealorpersonalproperty,lostprotsorimpairmentofearningcapacity,lossofsubsistenceuseofnaturalresourcesandforpersonalinjury(“Individual
andBusinessClaims”);(ii)claimsbystateandlocalgovernmententitiesforremovalcosts,physicaldamagetorealorpersonalproperty,lossof
governmentrevenueandincreasedpublicservicescosts(“StateandLocalClaims”);and(iii)claimsbytheUnitedStates,aStatetrustee,anIndiantribe
trustee,oraforeigntrusteefornaturalresourcedamages(“NaturalResourceDamagesclaims”).Inaddition,BPfacescivillitigationinwhichclaimsfor
liabilityunderOPA90alongwithothercausesofactions,includingpersonalinjuryclaims,areassertedbyindividuals,businessesandgovernmententities.
AprovisionhasbeenrecordedforIndividualandBusinessClaimsandStateandLocalClaims.Aprovisionhasalsobeenrecordedforclaims
administrationcostsandnaturalresourcedamageassessmentcosts.
BPconsidersthatitisnotpossibletomeasurereliablyanyobligationinrelationtoNaturalResourceDamagesclaimsunderOPA90orlitigationfor
violationsofOPA90.Theseitemsarethereforedisclosedascontingentliabilities.
The$20-billiontrustfunddescribedaboveisavailabletosatisfytheOPA90claimsandlitigationreferredtoabovewiththeexceptionofclaims
administrationcostswhichareborneseparatelybyBP.BP’srightsandobligationsinrelationtothetrustfundhavebeenrecognizedand$20billion,
adjustedtotakeaccountofthetimevalueofmoney,waschargedtotheincomestatement.Theestablishmentofthetrustfunddoesnotrepresentacap
orooronBP’sliabilitiesandBPdoesnotadmitliabilityforthisamount.
Otheritems
Provisionsat31December2010alsoincludeamountsinrelationtooffshoreandonshoreoilspillresponse,BP’scommitmenttoa10-yearresearch
programmeintheGulfofMexico,estimatedpenaltiesforliabilityunderCleanWaterActSection311andlegalfeeswherewehavebeenabletoestimate
reliablythosewhichwillariseinthenexttwoyears.Thesearenotcoveredbythetrustfund.
TheprovisiondoesnotreectanyamountsinrelationtonesandpenaltiesexceptforthoserelatingtotheCleanWaterAct,asitisnotpossibleto
estimatereliablyeithertheamountortimingofsuchadditionalitems.BPalsoconsidersthatitisnotpossibletomeasurereliablyanyobligationinrelation
tolitigationoranyobligationinrelationtolegalfeesbeyondtwoyears.Theseitemsarethereforedisclosedascontingentliabilities.
Noamountshavebeenrecognizedforrecoveryofcostsfromourco-ownersoftheMacondowellbecauseunderIFRSrecoverymustbevirtually
certainforreceivablestoberecognized.Alloftheseitemsarethereforedisclosedascontingentassets.
FurtherinformationonprovisionsisprovidedbelowandinNote37.Furtherinformationoncontingentliabilitiesandcontingentassetsisprovidedin
Note44.
Aprovisionhasbeenrecognizedforestimatedfutureexpenditurerelatingtotheoilspill,foritemsthatcanbereliablymeasuredatthistime,in
accordancewithBP’saccountingpolicyforprovisions,assetoutinNote1.
Thetotalamountrecognizedasaprovisionduringtheyearwas$30,261million(including$12,567millionforitemscoveredbythetrustfundand
$17,694millionforotheritems).Afterdeductingamountsutilizedduringtheyeartotalling$13,935million(includingpaymentsfromthetrustfundof
$3,023millionandpaymentsmadedirectlybyBPof$10,912million),andafteradjustmentsfordiscounting,theremainingprovisionasat31December
2010was$16,335million.
Movementsintheprovisionarepresentedinthetablebelow.
$million
Increaseinprovision–itemsnotcoveredbythetrustfund 17,694
–itemscoveredbythetrustfund 12,567
Unwindingofdiscount 4
Changeindiscountrate 5
Utilization–paidbyBP (10,912)
–paidbythetrustfund (3,023)
At31December2010 16,335
Ofwhich–current 7,938
–non-current 8,397
ThetotalamountsthatwillultimatelybepaidbyBPinrelationtoallobligationsrelatingtotheincidentaresubjecttosignicantuncertaintyandtheultimate
exposureandcosttoBPwillbedependentonmanyfactors.Furthermore,theamountofclaimsthatbecomepayablebyBP,theamountofnesultimately
leviedonBP(includinganydeterminationofBP’snegligence),theoutcomeoflitigation,andanycostsarisingfromanylonger-termenvironmental
consequencesoftheoilspill,willalsoimpactupontheultimatecostforBP.Althoughtheprovisionrecognizedisthecurrentbestreliableestimateof
expendituresrequiredtosettlecertainpresentobligationsattheendofthereportingperiod,therearefutureexpendituresforwhichitisnotpossibleto
measuretheobligationreliablyasnotedabove.
160BPAnnualReportandForm20-F2010