BP 2014 Annual Report Download - page 116

2. Significant event – Gulf of Mexico oil spill – continued
payments will be made directly from the trust fund, and BP will be released from its corresponding obligation. The reimbursement asset is recorded
within Trade and other receivables on the balance sheet apportioned between current and non-current elements. The net increase in the provision for
items covered by the trust fund of $662 million relates principally to business economic loss claims as well as increases in the provision for claims
administration costs. During the year, cumulative charges to be paid by the Trust reached $20 billion. Subsequent additional costs, over and above
those provided within the $20 billion, are being expensed to the income statement as incurred.
At 31 December 2014, $3,855 million of the provisions and payables are eligible to be paid from the Trust. The table below shows movements in the
reimbursement asset during the period to 31 December 2014.
$ million
2014 2013
Cumulative since the
incident
At 1 January 4,899 6,442 –
Net Increase in provision for items covered by the trust fund 662 1,542 20,000
Amounts paid directly by the trust fund (1,706) (3,085) (16,145)
At 31 December 3,855 4,899 3,855
Of which – current 1,154 2,457 1,154
– non-current 2,701 2,442 2,701
As at 31 December 2014, the aggregate cash balances in the Trust and the QSFs amounted to $5.1 billion, including $1.1 billion remaining in the
seafood compensation fund which has yet to be distributed and $0.4 billion held for natural resource damage early restoration. A further $500-million
partial distribution from the seafood compensation fund has been recommended and disbursement of funds commenced in early 2015. The portion of
the provision and reimbursement asset that related to the seafood compensation fund were derecognized upon funding of the seafood compensation
fund QSF in 2012.
The EPD Settlement Agreement with the PSC provides for a court-supervised settlement programme which commenced operation on 4 June 2012.
See Provisions below for further information on the current status of the EPD Settlement Agreement. A separate claims administrator has been
appointed to pay medical claims and to implement other aspects of the Medical Benefits Class Action Settlement. For further information on the PSC
settlements, see Legal proceedings on page 228.
Other payables
BP reached an agreement with the US government in 2012, which was approved by the court in 2013, to resolve all federal criminal claims arising from
the incident. Under the agreement, BP agreed to pay $4 billion over a period of five years. At 31 December 2014, the remaining criminal claims
payable, within Other payables, was $2,995 million, of which $595 million falls due in 2015.
BP also reached a settlement with the US Securities and Exchange Commission (SEC) in 2012, resolving the SEC’s Gulf of Mexico oil spill-related civil
claims. As part of the settlement, BP agreed to a civil penalty of $525 million, with the final instalment paid during 2014.
Provisions and contingent liabilities
Provisions
BP has recorded provisions relating to the Gulf of Mexico oil spill in relation to environmental expenditure (including spill response costs), litigation and
claims, and Clean Water Act penalties that can be measured reliably at this time.
Movements in each class of provision during the year and cumulatively since the incident are presented in the tables below.
$ million
2014
Environmental
Litigation
and Claims
Clean Water
Act Total
At 1 January 1,679 4,157 3,510 9,346
Increase in provision 190 1,137 – 1,327
Unwinding of discount 1– –1
Change in discount rate 2– –2
Utilization – paid by BP (83) (307) – (390)
– paid by the trust fund (648) (1,033) – (1,681)
At 31 December 1,141 3,954 3,510 8,605
Of which – current 528 1,174 – 1,702
– non-current 613 2,780 3,510 6,903
$ million
Cumulative since the incident
Environmental
Litigation
and Claims
Clean Water
Act Total
Net increase in provision 14,599 26,595 3,510 44,704
Unwinding of discount 13 6 – 19
Change in discount rate 19 – – 19
Reclassified to other payables – (4,283) – (4,283)
Utilization – paid by BP (11,687) (4,080) – (15,767)
– paid by the trust fund (1,803) (14,284) – (16,087)
At 31 December 2014 1,141 3,954 3,510 8,605
Environmental
The environmental provision at 31 December 2014 includes the remaining $279 million for BP’s commitment to fund the Gulf of Mexico Research
Initiative, which is a 10-year research programme to study the impact of the incident on the marine and shoreline environment of the Gulf of Mexico. In
112 BP Annual Report and Form 20-F 2014