BP 2011 Annual Report Download - page 66

64 BP Annual Report and Form 20-F 2011
Business review
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. In 2011, the US
enacted additional sanctions against Iran which included lower monetary
thresholds for certain investments in Iran for the development or refining
of petroleum resources, new restrictions on the petrochemicals industry
and restrictions on transactions with the Iran Central Bank, including
financial transactions for the purchase of Iranian-origin crude oil. Further
legislation is pending in the US Congress which may enact additional
sanctions against Iran. The UK adopted sanctions prohibiting UK persons
from engaging in any financial transactions with the Iran Central Bank
or other financial institutions incorporated in Iran. Both the US and the
EU enacted strong sanctions against Syria including a prohibition on the
purchase of Syrian-origin crude and a US prohibition on the provision of
services by US persons. (Libya sanctions were enacted in early 2011 and
largely lifted by the end of the year.) In January 2012, the EU imposed an
embargo on Iranian crude, among other measures, to be phased in over a
period of months. The EU also adopted more stringent sanctions against
Syria including 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. BP monitors its activities with Sanctioned
Countries and keeps them under review to ensure compliance with
applicable laws and regulations of the US, the EU and other countries
where BP operates.
BP has interests in, and is the operator of, two fields (the North
Sea Rhum field and the Azerbaijan Shah Deniz field) and, serving the Shah
Deniz field, a gas marketing entity and an entity that owns a gas pipeline
(both entities and related assets located outside Iran), in which Naftiran
Intertrade Co. Ltd (NICO) and NICO SPV Limited (collectively NICO) or
Iranian Oil Company (UK) Limited (IOC UK) have interests. Production
was suspended at the North Sea Rhum field (in which IOC UK has a 50%
interest) in November 2010 and Rhum remains shut-in. It is presently
unclear when it may be possible to resume production. The Shah Deniz
field, its gas marketing entity and the entity that owns a pipeline (in which
NICO has a 10% or less non-operating interest) continues in operation in
full compliance with current US and EU sanctions. BP has no operations
in Iran and does not purchase or ship crude oil or other products of Iranian
origin. Joint venture participants in non-BP controlled or operated joint
ventures may purchase Iranian-origin crude oil or other components
as feedstock for facilities located outside the EU and US. BP does not
sell crude oil or other products into Iran, except that small quantities of
lubricants are sold to non-Iranian third parties for resale or use in Iran. Until
January 2010, BP held an equity interest in an Iranian joint venture that
blended and marketed lubricants for sale to domestic consumers in Iran.
BP sold its equity interest but continues to sell small quantities of lubricant
components to the current owner. Transactions with Iranian shipping
companies have been terminated.
Following the imposition in 2011 of further US and EU sanctions
against Syria, BP terminated all sales of crude oil and petroleum products
into Syria, though continues to supply aviation fuel to non-governmental
Syrian resellers outside of Syria. Prior to the imposition of Syrian sanctions
in 2011, BP sold lubricants through third parties and obtained crude oil and
refinery feedstocks for sale to third parties in Europe and for use in certain
of its non-US refineries. BP also bought and sold crude oil and refined
products into and from Syria and incurred port costs for vessels utilizing
Syrian ports. Sales and purchases to and from Syrian shipping companies
have been terminated.
BP sells lubricants in Cuba through a 50:50 joint venture and trades in
small quantities of lubricants. BP sold small quantities of lubricants to third
parties that were resold in Sudan; BP has terminated these sales.
BP has equity interests in non-operated joint ventures with air
fuel sellers, re-sellers, and fuel delivery services around the world. From
time to time, the joint venture operator may sell or deliver fuel to airlines
from Sanctioned Countries or flights to Sanctioned Countries without
BP’s knowledge or consent. BP has registered and paid required fees for
patents and trademarks in Sanctioned Countries.