BP 2015 Annual Report Download - page 247

and the United States lifted certain nuclear related sanctions, with the EU
lifting nuclear related primary sanctions and the United States
suspending nuclear related secondary sanctions. BP will consider future
business opportunities in relation to Iran and engage in discussions with
Iranian government officials and other Iranian nationals, insofar as this is
in compliance with applicable sanctions.
BP has interests in and operates the North Sea Rhum field (Rhum) and
the Azerbaijan Shah Deniz field (Shah Deniz), in which Naftiran Intertrade
Co. Limited and NICO SPV Limited (collectively, NICO) or Iranian Oil
Company (U.K.) Limited (IOC UK) have interests. Additionally, BP has
interests in a gas marketing entity and a gas pipeline entity in which
NICO or IOC UK have interests, although both entities (and their related
assets) are located outside Iran. Production was suspended at Rhum (in
which IOC UK has a 50% interest) in November 2010. 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 assumed control of and managed IOC UK’s interest in the
Rhum field, thereby permitting Rhum operations to recommence in
accordance with applicable EU regulations and in compliance with a
licence from OFAC. Operations at the Rhum gas field recommenced in
mid-October 2014. Following Implementation Day, the Temporary
Management Scheme will cease and BP has applied for an amended
OFAC licence. In the meantime, operations have continued at Rhum.
Shah Deniz, 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 US sanctions, and fall
within the exception for certain natural gas projects under Section 603
of ITRA.
BP has no current operating activities in Iran. BP holds an interest in a
non-BP operated Indian joint venture*which sold crude oil to an Indian
entity in which NICO holds a minority, non-controlling stake. Those sales
had ceased in January 2014 but resumed in 2015.
Both the US and the EU have enacted strong sanctions against Syria,
including a prohibition on the purchase of Syrian-origin crude and a US
prohibition on the provision of services to Syria by US persons. The EU
sanctions against Syria include 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.
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 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 or other partners may sell or
deliver fuel to airlines from Sanctioned Countries or flights to Sanctioned
Countries without BP’s prior knowledge or consent. BP has registered
and paid required fees for patents and trade marks in Sanctioned
Countries.
BP sells lubricants in Cuba through a 50:50 joint arrangement and trades
in small quantities of lubricants.
During 2014 the US and the EU imposed sanctions on certain Russian
activities, individuals and entities, including Rosneft. Certain sectoral
sanctions also apply to entities owned 50% or more by entities on the
relevant sectoral sanctions list. Ruhr Oel GmbH (ROG) is a 50:50 joint
operation with Rosneft, operated by BP, which holds interests in a
number of refineries in Germany. To date, these sanctions have had no
material adverse impact on BP or ROG. On 15 January 2016 BP
announced that it had signed definitive agreements with Rosneft to
dissolve ROG.
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:
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 the field, 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. Operations at the Rhum gas field
recommenced in mid-October 2014 in accordance with the UK
government’s Temporary Scheme (see above). During the year ended
31 December 2015, BP recorded gross revenues of $104.5 million
related to its interests in Rhum. BP had a net profit of $88.7 million for
the year ended 31 December 2015, including an impairment reversal of
$67.6 million in the fourth quarter of 2015.
BP currently intends to continue to hold its ownership stake in the Rhum
joint arrangement and act as operator.
Material contracts
On 13 March 2014, BP, BP Exploration & Production Inc., and other BP
entities entered into an administrative agreement with the US
Environmental Protection Agency, which resolved all issues related to the
suspension or debarment of BP entities arising from the 20 April 2010
explosions and fire on the semi-submersible rig Deepwater Horizon and
resulting oil spill. The administrative agreement allows BP entities to
enter into new contracts or leases with the US government. Under the
terms and conditions of this agreement, which will apply for five years,
BP has agreed to a set of safety and operations, ethics and compliance
and corporate governance requirements. The agreement is governed by
federal law.
BP Exploration & Production Inc., BP Corporation North America Inc.,
BP p.l.c., the United States and the states of Alabama, Florida, Louisiana,
Mississippi and Texas (the Gulf states) entered into a proposed Consent
Decree to fully and finally resolve any and all natural resource damages
(NRD) claims of the United States, the Gulf states, and their respective
natural resource trustees and all Clean Water Act (CWA) penalty claims,
and certain other claims of the United States and the Gulf states. The
United States lodged the proposed Consent Decree with the district
court in MDL 2179 on 5 October 2015.
Concurrently, BP entered into a definitive Settlement Agreement with
the Gulf states (Settlement Agreement) with respect to State claims for
economic, property and other losses.
The proposed Consent Decree and the Settlement Agreement are
conditional upon each other and neither will become effective unless
there is final court approval of the Consent Decree. BP has filed the
proposed Consent Decree and the Settlement Agreement as exhibits to
its Annual Report on Form 20-F 2015 filed with the SEC. For further
details of the proposed Consent Decree and the Settlement Agreement,
see Legal proceedings on page 238.
Property, plant and equipment
BP has freehold and leasehold interests in real estate and other tangible
assets 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 2015 and the group percentage of ordinary share
capital see Financial statements – Note 36. For information on
significant joint ventures and associates*of the group see Financial
statements – Notes 15 and 16.
Related-party transactions
Transactions between the group and its significant joint ventures and
associates are summarized in Financial statements – Note 15 and
Note 16. In the ordinary course of its business, the group enters into
transactions with various organizations with which some of its directors
Additional disclosures
*Defined on page 256. BP Annual Report and Form 20-F 2015 243