BP 2014 Annual Report Download - page 119

2. Significant event – Gulf of Mexico oil spill – continued
Natural resource damage claims
As described above in Provisions, a provision has been made for natural resource damage assessment and early restoration projects under the
$1-billion framework agreement. Natural resource damages resulting from the oil spill are currently being assessed. BP and the federal and state
trustees are collecting extensive data in order to assess the extent of damage to wildlife, shoreline, near shore and deepwater habitats, and
recreational uses, among other things. The study data will inform an assessment of injury to the Gulf Coast natural resources and the development of a
restoration plan to address the identified injuries.
Detailed analysis and interpretation continue on the data that have been collected. Any early restoration projects undertaken pursuant to the $1-billion
framework agreement could mitigate the total damages resulting from the incident. Accordingly, 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 damage claims and associated legal
costs, therefore no such amounts have been provided as at 31 December 2014.
Business economic loss claims under the PSC settlement
BP identified multiple business economic loss claim determinations under the PSC settlement that appeared to result from an interpretation of the EPD
Settlement Agreement by the claims administrator that BP believes was incorrect. The potential cost of business economic loss claims not yet
received, processed and paid (except where an eligibility notice had been issued before the end of the month following the balance sheet date and is
not subject to appeal by BP within the claims facility) is not provided for and is disclosed as a contingent liability. A significant number of business
economic loss claims have been received but have not yet been processed and paid and further claims are likely to be received. See Provisions above
for further information.
State and Local claims
As described above in Provisions, a provision has been made for State and Local claims that can be measured reliably. The States of Alabama,
Mississippi, Florida, Louisiana and Texas submitted or asserted claims to BP under OPA 90 for alleged losses including economic losses and property
damage as a result of the Gulf of Mexico oil spill. The amounts claimed, certain of which include punitive damages or other multipliers, are very
substantial. However, BP considers these claims unsubstantiated and the methodologies used to calculate these claims to be seriously flawed, not
supported by OPA 90, not supported by documentation, and to substantially overstate the claims. Similar claims have also been submitted by various
local government entities and a foreign government under OPA 90. The amounts alleged in the submissions for these State and Local Claims total
approximately $35 billion. BP will defend vigorously against these claims if adjudicated at trial; the timing of any outflow of resources in relation to State
and Local claims is dependent on the timing of the court process in relation to these claims.
Clean Water Act penalties
A provision has been maintained for BP’s obligation under the Clean Water Act, as described above in Provisions. Any obligation in relation to any
further liability for the Clean Water Act penalty arising in the event that BP is not successful in its appeal of the Phase 1 ruling is disclosed as a
contingent liability. The trial phase to determine the amount of the Clean Water Act penalty commenced in January 2015 and post-trial briefing is
scheduled to complete in April 2015. BP does not know when the district court will rule on the Penalty Phase of the trial and so the timing of any
payment continues to be uncertain.
Securities-related litigation
Proceedings relating to securities class actions (MDL 2185) pending in federal court in Texas, including a purported class action on behalf of purchasers
of American Depositary Shares under US federal securities law, are continuing. A jury trial is scheduled to begin in January 2016 and the timing of any
outflow of resources, if any, is dependent on the duration of the court process. No reliable estimate can be made of the amounts that may be payable
in relation to these proceedings, if any, so no provision has been recognized at 31 December 2014. In addition, no reliable estimate can be made of the
amounts that may be payable in relation to any other securities litigation, if any, so no provision has been recognized at 31 December 2014.
Other litigation
In addition to the State and Local claims and securities class actions described above, BP is named as a defendant in approximately 3,000 other civil
lawsuits brought by individuals, corporations and government entities in US federal and state courts, as well as certain non-US jurisdictions, resulting
from the Deepwater Horizon accident, the Gulf of Mexico oil spill, and the spill response efforts. Further actions are likely to be brought. Among other
claims, these lawsuits assert claims for personal injury or wrongful death in connection with the accident and the spill response, commercial and
economic injury, damage to real and personal property, breach of contract and violations of statutes, including, but not limited to, alleged violations of
US securities and environmental statutes. In addition, claims have been received, primarily from business claimants, under OPA 90 in relation to the
2010 federal deepwater drilling moratoria. Until further fact and expert disclosures occur, court rulings clarify the issues in dispute, liability and damage
trial activity nears or progresses, or other actions such as further possible settlements occur, it is not possible given these uncertainties to arrive at a
range of outcomes or a reliable estimate of the liabilities that may accrue to BP in connection with or as a result of these lawsuits, nor it is possible to
determine the timing of any payment that may arise. Therefore no amounts have been provided for these items as at 31 December 2014.
It is not possible to measure reliably any obligation in relation to other litigation or potential fines and penalties. There are a number of federal and state
environmental and other provisions of law, other than the Clean Water Act, under which one or more governmental agencies could seek civil fines and
penalties from BP. For example, a complaint filed by the United States sought to reserve the ability to seek penalties and other relief under a number of
other laws. Given the unsubstantiated nature of certain claims that may be asserted, it is not possible at this time to determine whether and to what
extent any such claims would be successful or what penalties or fines would be assessed. Therefore no amounts have been provided for these items.
Settlement and other agreements
Under the settlement agreements with Anadarko and MOEX, and with Cameron International, the designer and manufacturer of the Deepwater
Horizon blowout preventer, BP has agreed to indemnify Anadarko, MOEX and Cameron for certain claims arising from the accident. It is therefore
possible that BP may face claims under these indemnities, but it is not currently possible to reliably measure, nor identify the timing of, any obligation
in relation to such claims and therefore no amount has been provided as at 31 December 2014. There are also agreements indemnifying certain third-
party contractors in relation to litigation costs and certain other claims. A contingent liability is also disclosed in relation to other obligations under these
agreements.
The magnitude and timing of all possible obligations in relation to the Gulf of Mexico oil spill continue to be subject to a very high degree of uncertainty
as described further in Risk factors on page 48. Any such possible obligations are therefore contingent liabilities and, at present, it is not practicable to
estimate their magnitude or possible timing of payment. Furthermore, other material unanticipated obligations may arise in future in relation to the
incident.
Financial statements
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