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Notesonnancialstatements
Financial statements
44.Contingentliabilitiesandcontingentassetscontinued
Other contingent liabilities
Therewerecontingentliabilitiesat31December2010inrespectofguaranteesandindemnitiesenteredintoaspartoftheordinarycourseofthegroup‘s
business.Nomateriallossesarelikelytoarisefromsuchcontingentliabilities.FurtherinformationisincludedinNote27.
LawsuitsarisingoutoftheExxonValdezoilspillinPrinceWilliamSound,Alaska,inMarch1989wereledagainstExxon(nowExxonMobil),Alyeska
PipelineServiceCompany(Alyeska),whichoperatestheoilterminalatValdez,andtheotheroilcompaniesthatownAlyeska.Alyeskainitiallyrespondedto
thespilluntiltheresponsewastakenoverbyExxon.BPownsa46.9%interest(reducedduring2001from50%byasaleof3.1%toPhillips)inAlyeska
throughasubsidiaryofBPAmericaInc.andbrieyindirectlyownedafurther20%interestinAlyeskafollowingBP‘scombinationwithAtlanticRicheld
Company(AtlanticRicheld).Alyeskaanditsownershavesettledalltheclaimsagainstthemundertheselawsuits.Exxonhasindicatedthatitmaylea
claimforcontributionagainstAlyeskaforaportionofthecostsanddamagesthatExxonhasincurred.BPwilldefendanysuchclaimsvigorously.Itisnot
possibletoestimateanynancialeffect.
Inthenormalcourseofthegroup‘sbusiness,legalproceedingsarependingormaybebroughtagainstBPgroupentitiesarisingoutofcurrentand
pastoperations,includingmattersrelatedtocommercialdisputes,productliability,antitrust,premises-liabilityclaims,generalenvironmentalclaimsand
allegationsofexposuresofthirdpartiestotoxicsubstances,suchasleadpigmentinpaint,asbestosandotherchemicals.BPbelievesthattheimpactof
theselegalproceedingsonthegroup‘sresultsofoperations,liquidityornancialpositionwillnotbematerial.
Withrespecttoleadpigmentinpaintinparticular,AtlanticRicheld,asubsidiaryofBP,hasbeennamedasaco-defendantinnumerouslawsuits
broughtintheUSalleginginjurytopersonsandproperty.Althoughitisnotpossibletopredicttheoutcomeofthelegalproceedings,AtlanticRicheld
believesithasvaliddefencesthatrendertheincurrenceofaliabilityremote;however,theamountsclaimedandthecostsofimplementingtheremedies
soughtinthevariouscasescouldbesubstantial.ThemajorityofthelawsuitshavebeenabandonedordismissedagainstAtlanticRicheld.Nolawsuit
againstAtlanticRicheldhasbeensettlednorhasAtlanticRicheldbeensubjecttoanaladversejudgmentinanyproceeding.AtlanticRicheldintendsto
defendsuchactionsvigorously.
Thegrouplesincometaxreturnsinmanyjurisdictionsthroughouttheworld.Varioustaxauthoritiesarecurrentlyexaminingthegroup‘sincometax
returns.Taxreturnscontainmattersthatcouldbesubjecttodifferinginterpretationsofapplicabletaxlawsandregulationsandtheresolutionoftax
positionsthroughnegotiationswithrelevanttaxauthorities,orthroughlitigation,cantakeseveralyearstocomplete.Whileitisdifculttopredictthe
ultimateoutcomeinsomecases,thegroupdoesnotanticipatethattherewillbeanymaterialimpactuponthegroup‘sresultsofoperations,nancial
positionorliquidity.
Thegroupissubjecttonumerousnationalandlocalenvironmentallawsandregulationsconcerningitsproducts,operationsandotheractivities.
Theselawsandregulationsmayrequirethegrouptotakefutureactiontoremediatetheeffectsontheenvironmentofpriordisposalorreleaseof
chemicalsorpetroleumsubstancesbythegrouporotherparties.Suchcontingenciesmayexistforvarioussitesincludingreneries,chemicalplants,oil
elds,servicestations,terminalsandwastedisposalsites.Inaddition,thegroupmayhaveobligationsrelatingtopriorassetsalesorclosedfacilities.The
ultimaterequirementforremediationanditscostareinherentlydifculttoestimate.However,theestimatedcostofknownenvironmentalobligationshas
beenprovidedintheseaccountsinaccordancewiththegroup‘saccountingpolicies.Whiletheamountsoffuturecostscouldbesignicantandcouldbe
materialtothegroup‘sresultsofoperationsintheperiodinwhichtheyarerecognized,itisnotpracticaltoestimatetheamountsinvolved.BPdoesnot
expectthesecoststohaveamaterialeffectonthegroup‘snancialpositionorliquidity.
Thegroupalsohasobligationstodecommissionoilandnaturalgasproductionfacilitiesandrelatedpipelines.Provisionismadefortheestimated
costsoftheseactivities,howeverthereisuncertaintyregardingboththeamountandtimingofthesecosts,giventhelong-termnatureofthese
obligations.BPbelievesthattheimpactofanyreasonablyforeseeablechangestotheseprovisionsonthegroup‘sresultsofoperations,nancialpositionor
liquiditywillnotbematerial.
Thegroupgenerallyrestrictsitspurchaseofinsurancetosituationswherethisisrequiredforlegalorcontractualreasons.Thisisbecauseexternal
insuranceisnotconsideredaneconomicmeansofnancinglossesforthegroup.Losseswillthereforebeborneastheyariseratherthanbeingspread
overtimethroughinsurancepremiumswithattendanttransactioncosts.Thepositionisreviewedperiodically.
45.Capitalcommitments
Authorizedfuturecapitalexpenditureforproperty,plantandequipmentbygroupcompaniesforwhichcontractshadbeenplacedat31December2010
amountedto$11,279million(2009$9,812million).Inaddition,at31December2010,thegrouphadcontractsinplaceforfuturecapitalexpenditure
relatingtoinvestmentsinjointlycontrolledentitiesof$437million(2009$622million)andinvestmentsinassociatesof$80million(2009$170million).
BP’sshareofcapitalcommitmentsofjointlycontrolledentitiesamountedto$1,117million(2009$926million).
BPAnnualReportandForm20-F2010 219