BP 2012 Annual Report Download - page 238

36. Provisions continued
Provisions relating to the Gulf of Mexico oil spill
The Gulf of Mexico oil spill is described on pages 59-62 and in Note 2. Provisions relating to the Gulf of Mexico oil spill, included in the table above, are
separately presented below:
$ million
Environmental Spill response
Litigation and
claims
Clean Water Act
penalties Total
At 1 January 2012 1,517 336 9,970 3,510 15,333
New or increased provisions – items not covered by the trust funds 48 62 4,773 – 4,883
– items covered by the trust funds 753 47 1,185 – 1,985
Derecognition of provision for items that cannot be reliably estimated – – (794) – (794)
Unwinding of discount 1–6 –7
Utilization – paid by BP (76) (100) (1,064) – (1,240)
– paid by the trust funds (381) – (4,243) – (4,624)
– reclassified to other payables – – (350) – (350)
At 31 December 2012 1,862 345 9,483 3,510 15,200
Of which – current 845 277 4,327 – 5,449
– non-current 1,017 68 5,156 3,510 9,751
Of which – payable from the trust funds 1,438 47 4,957 – 6,442
$ million
Environmental Spill response
Litigation and
claims
Clean Water Act
penalties Total
At 1 January 2011 809 1,043 10,973 3,510 16,335
New or increased provisions – items not covered by the trust funds 34 586 525 – 1,145
– items covered by the trust funds 1,133 – 2,905 – 4,038
Unwinding of discount 6 – – – 6
Change in discount rate 17 – – – 17
Utilization – paid by BP (33) (1,293) (1,175) – (2,501)
– paid by the trust funds (449) – (3,258) – (3,707)
At 31 December 2011 1,517 336 9,970 3,510 15,333
Of which – current 961 282 8,194 – 9,437
– non-current 556 54 1,776 3,510 5,896
Of which – payable from the trust funds 1,066 – 8,809 – 9,875
As described in Note 2, BP has recorded provisions at 31 December 2012 relating to the Gulf of Mexico oil spill including amounts in relation to
environmental expenditure, spill response costs, litigation and claims, and Clean Water Act penalties, each of which is described below. The total
amounts that will ultimately be paid by BP are subject to significant uncertainty as described in Note 2 and below.
Environmental
The amounts committed by BP for a 10-year research programme to study the impact of the incident on the marine and shoreline environment of the
Gulf of Mexico have been provided for. BP’s commitment is to provide $500 million of funding, and the remaining commitment, on a discounted basis,
of $376 million was included in provisions at 31 December 2012. This amount is expected to be spent over the remaining life of the programme.
As a responsible party under the Oil Pollution Act of 1990 (OPA 90), BP faces claims by the United States, as well as by State, tribal, and foreign
trustees, if any, for natural resource damages (“Natural Resource Damages claims”). These damages include, among other things, the reasonable costs
of assessing the injury to natural resources. BP has been incurring natural resource damage assessment costs and a provision has been made for the
estimated costs of the assessment phase. Since May 2010, more than 200 initial and amended work plans have been developed to study resources and
habitat. The study data will inform an assessment of injury to the Gulf Coast natural resources and the development of a restoration plan to mitigate the
identified injuries. Detailed analysis and interpretation continue on the data that have been collected. The expected assessment spend is based upon
past experience as well as identified projects. During 2011, BP entered a framework agreement with natural resource trustees for the United States and
five Gulf coast states, providing for up to $1 billion to be spent on early restoration projects to address natural resource injuries resulting from theoil
spill, to be funded from the $20-billion trust fund. In 2012, work began on the initial set of early restoration projects identified under this framework. The
total amount provided for natural resource damage assessment costs and early restoration projects was $1,486 million at 31 December 2012. Until the
size, location and duration of the impact is assessed, it is not possible to estimate reliably either the amounts or timing of the remaining Natural
Resource Damages claims other than the assessment and early restoration costs noted above, therefore no additional amounts have been provided for
these items and they are disclosed as a contingent liability. See Note 43 for further information.
Spill response
Further amounts were provided relating to the spill response during 2012, totalling $0.1 billion (2011 $0.6 billion). By the end of 2012, the US Coast
Guard’s Federal On-Scene Coordinator (FOSC) had deemed removal actions complete on 4,029 miles of shoreline out of 4,376 miles that were in the
area of response. Approximately 108 shoreline miles were pending further monitoring or inspection and a determination that removal actions are
complete. The remaining 239 miles are in the patrolling and maintenance phase which will continue until the FOSC determines that operational removal
activity is complete.
Litigation and claims
BP faces various claims, principally under OPA 90 but also including under general maritime law, by individuals and businesses for removal costs,
damage to real or personal property, lost profits or impairment of earning capacity and loss of subsistence use of natural resources (“Individual and
Business Claims”) and by state and local government entities for removal costs, physical damage to real or personal property, loss of government
revenue and increased public services costs (“State and Local Claims”). BP also faces other litigation related to the Incident brought under US state law
236 Financial statements
BP Annual Report and Form 20-F 2012