BP 2013 Annual Report Download - page 272

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transport Shah Deniz gas (both entities and related assets are located
outside Iran), in which Naftiran Intertrade Co. Limited and NICO SPV
Limited (collectively, ‘NICO’) or Iranian Oil Company (U.K.) Limited
(‘IOC UK’) have interests. Production was suspended at Rhum (in which
IOC UK has a 50% interest) in November 2010 and Rhum remains shut-
in. On 22 October 2013, the UK government announced a temporary
management scheme (the ‘Temporary Scheme’) under The Hydrocarbon
(Temporary Management Scheme) Regulations 2013 under which the
UK government will assume control of and manage IOC UK’s interest in
the Rhum field, thereby permitting operations to re-commence at Rhum
in accordance with applicable EU regulations and in compliance with US
laws and regulations.
The Shah Deniz field, its gas marketing entity and the gas pipeline entity
(in which NICO has a 10% or less non-operating interest) continue in
operation. The Shah Deniz joint operation and its gas marketing and
pipeline entities were excluded from the main operative provisions of the
EU regulations as well as from the application of the new US sanctions,
and fall within the exception for certain natural gas projects under
Section 603 of ITRA.
BP has no operations in Iran and it is BP’s policy that it shall not purchase
or ship crude oil or other products of Iranian origin. 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. It is also BP’s policy that BP shall not sell crude oil or other
products into Iran. Until January 2010, BP held an equity interest in an
Iranian joint venture that blended and marketed automotive lubricants for
sale to domestic consumers in Iran. BP sold its equity interest but
continued to sell small quantities of automotive lubricants and
components and license relevant trade marks to the current owner.
These sales of automotive lubricants and components were terminated
in June 2013. BP currently holds an interest in a non-BP operated joint
venture which sells crude oil to an Indian entity in which NICO holds a
minority, non-controlling stake.
In 2012, BP became aware that a Canadian university had been using
graduate students, some of whom were nationals of Iran, on a research
programme funded in part by BP. BP suspended the programme and
made a voluntary disclosure to OFAC. Also in 2012, BP became aware
that in 2010, as consideration for certain auditing services, BP effected a
transfer of funds to a local Iranian consulting firm which may have been
in violation of relevant EU notification requirements. BP has made a
voluntary disclosure to the applicable EU regulator of such transfer.
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 BP continues to supply aviation fuel to non-governmental
Syrian resellers outside of Syria.
BP sells lubricants in Cuba through a 50:50 joint arrangement and trades
in small quantities of lubricants. In the first quarter of 2013, BP sold a
small quantity of lubricants to a third-party drilling company for use in
Myanmar.
BP has equity interests in non-operated joint arrangements with air fuel
sellers, resellers, and fuel delivery services around the world. From time
to time, the joint arrangement 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 trade marks in Sanctioned Countries.
Disclosure pursuant to Section 219 of ITRA
To our knowledge, none of BP’s activities, transactions or dealings are
required to be disclosed pursuant to ITRA Section 219, with the following
possible exception:
The Rhum field (‘Rhum’), located in the UK sector of the North Sea, is
operated by BP Exploration Operating Company Limited (‘BPEOC’), a
non-US subsidiary of BP. Rhum is owned under a 50:50 unincorporated
joint arrangement between BPEOC and Iranian Oil Company (U.K.)
Limited (‘IOC’). The Rhum joint arrangement was originally formed in
1974. During the period of production from Rhum, the Rhum joint
arrangement supplied natural gas and certain associated liquids to the
UK. On 16 November 2010, production from Rhum was suspended in
response to relevant EU sanctions. Rhum remains shut-in.
During the year ended 31 December 2013, BP recorded gross revenues
of $5,297 related to Rhum due to changes in prices related to
hydrocarbon stock. These changes in prices were non-cash transactions
that were recorded as revenue in accordance with BP accounting policy.
BP had no net profits related to Rhum during the year ended
31 December 2013, recording an overall loss.
The re-commencement of operations at Rhum in accordance with the
Temporary Scheme (see above) remains contingent on the commitment
of third-party contractors and financial institutions to provide services to
Rhum. BP currently intends to continue to hold its ownership stake in the
Rhum joint arrangement, and to meet any applicable obligations in
respect of safety and maintenance of the facilities related to the Rhum
field. Subject to the availability of the Temporary Scheme in the future
and to the commitment of relevant third-party contractors and financial
institutions to provide services to Rhum, BP also intends to recommence
operations at Rhum in the future in accordance with the Temporary
Scheme.
Material contracts
On 6 August 2010, BP entered into a trust agreement with John S Martin, Jr
and Kent D Syverud, as individual trustees, and Citigroup Trust – Delaware,
N.A., as corporate trustee (the Trust Agreement) which established the
Deepwater Horizon Oil Spill Trust (the Trust) to be funded in the amount of
$20 billion (the trust fund) over the period to the fourth quarter of 2013.
During the fourth quarter of 2012, BP made a final contribution to the Trust
to complete the funding of the full $20-billion commitment. The trust fund is
available to satisfy legitimate individual and business claims that were
previously administered by the Gulf Coast Claims Facility (GCCF), state and
local government claims resolved by BP, final judgments and settlements,
state and local response costs, and natural resource damages and related
costs. The trust fund is available to satisfy claims that were previously
processed through the transitional court-supervised claims facility, to fund
the qualified settlement funds established under the terms of the settlement
agreements with the Plaintiffs’ Steering Committee (PSC) administered
through the court-supervised settlement programme, and to satisfy claims
processed through the separate BP claims programme in respect of
claimants not in the Economic and Property Damages class as determined
by the Economic and Property Damages Settlement Agreement or who
have requested to opt out of that settlement. Fines, penalties and claims
administration costs are not covered by the trust fund. Under the terms of
the Trust Agreement, BP has no right to access the funds once they have
been contributed to the trust fund. BP will receive funds from the trust fund
only upon its expiration, if there are any funds remaining at that point. BP has
the authority under the Trust Agreement to present certain resolved claims,
including natural resource damages claims and state and local response
claims, to the Trust for payment, by providing the trustees with all the
required documents establishing that such claims are valid under the Trust
Agreement. However, any such payments can only be made on the
authority of the trustee and any funds distributed are paid directly to the
claimants, not to BP. The Trust Agreement is governed by the laws of the
State of Delaware.
Property, plant and equipment
BP has freehold and leasehold interests in real estate in numerous
countries, but no individual property is significant to the group as a whole.
For more on the significant subsidiaries of the group at 31 December
2013 and the group percentage of ordinary share capital see Financial
statements – Note 38. For information on significant joint ventures and
associates of the group see Financial statements – Notes 17 and 18.
Related-party transactions
Transactions between the group and its significant joint ventures and
associates are summarized in Financial statements – Note 17 and Note
18. In the ordinary course of its business, the group enters into
transactions with various organizations with which some of its directors
or executive officers are associated. Except as described in this report,
the group did not have material transactions or transactions of an unusual
nature with, and did not make loans to, related parties in the period
commencing 1 January 2013 to 18 February 2014.
268 BP Annual Report and Form 20-F 2013