BP News - 2011

News summaries from BP press releases and from unaffiliated news agencies are provided below. The summaries are sorted by month and are further categorized as upstream news, downstream news, and business/finance news.

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January

• Upstream news:

- Bob Dudley, BP's Chief Executive, has welcomed the achievement of a major production target in Iraq by the Rumaila Operating Organisation (ROO), of which BP is a major shareholder. The ROO has met a major milestone in the re-development of the super-giant field in Southern Iraq, increasing production by more than 10 per cent above the initial production rate.

- The Rumaila Operating Organisation (ROO) has met a major milestone in the re-development of the super-giant field in Southern Iraq by increasing production by more than 10 per cent above the 1.066 million barrels a day (b/d) initial production rate agreed in December 2009. Meeting this production target, and the approval of the Rumaila rehabilitation plan last year, represents the achievement of two significant contractual requirements of the technical services agreement (TSA) signed between BP, PetroChina, the Oil Marketing Company of Iraq (SOMO) and the South Oil Company in November 2009.

- BP and Rosneft announced that they have agreed a groundbreaking strategic global alliance. Rosneft and BP have agreed to explore and develop three license blocks - EPNZ 1,2,3 – on the Russian Arctic continental shelf. These licences were awarded to Rosneft in 2010 and cover approximately 125,000 square kilometres in a highly prospective area of the South Kara Sea. This is an area roughly equivalent in size and prospectivity to the UK North Sea. This historic agreement creates the first major equity-linked partnership between a national and international oil company. Following completion of this agreement, Rosneft will hold 5 per cent of BP’s ordinary voting shares in exchange for approximately 9.5 per cent of Rosneft’s shares. The share swap component of the alliance creates strategic alignment to pursue joint projects and demonstrates mutual confidence in the growth potential of both companies. BP and Rosneft have also agreed to establish an Arctic technology centre in Russia which will work with leading Russian and international research institutes, design bureaus and universities to develop technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf. The technology centre will build on BP’s deep offshore experience and learnings with full emphasis on safety, environmental integrity and emergency spill response capability.

- BP announced that it has been awarded four deepwater offshore blocks in the Ceduna Sub Basin within the Great Australian Bight, off the coast of South Australia. BP said that it will explore Exploration Permit for Petroleum (EPP) areas EPP 37, EPP 38, EPP 39 and EPP 40 covering an area of 24,000 km2 for oil and gas reserves, with the right to develop any commercially viable discoveries.

- World energy growth over the next twenty years is expected to be dominated by emerging economies such as China, India, Russia and Brazil while improvements in energy efficiency measures are set to accelerate, according to BP’s latest projection of energy trends, the BP Energy Outlook 2030. BP's 'base case' - or most likely projection - points to primary energy use growing by nearly 40% over the next twenty years, with 93% of the growth coming from non-OECD (Organisation of Economic Co-operation and Development) countries. Non-OECD countries are seen to rapidly increase their share of overall energy demand from just over half currently to two-thirds. Over the same period, energy intensity, a key measure of energy use per unit of economic output, is set to improve globally led by rapid efficiency gains in the same non-OECD economies, under these projections

• Downstream news:

• Business/Finance news:

February

• Upstream news:

- BP announced immediate plans to enter into arbitration proceedings to resolve the issues raised by Alfa Petroleum Holdings Limited and OGIP Ventures Limited in their application to the English High Court relating to the share swap agreement and Arctic exploration arrangements agreed between BP and Rosneft, announced on 14 January 2011. The Court issued an order, the terms of which were agreed by the parties, that the parties use their best endeavours to have an arbitral tribunal constituted on an expedited basis, with a view to deciding the questions which were before the court today, by 25 February 2011. In accordance with the Court order the share swap agreement with Rosneft will not be completed pending this expedited arbitration hearing.

- Reliance Industries Limited and BP announced a historic partnership between the two companies. Mr. Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, and Mr. Robert Dudley, BP Group Chief Executive, signed the relationship framework and transactional agreements in London. The partnership across the full value chain comprises BP taking a 30 per cent stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the producing KG D6 block, and the formation of a 50:50 joint venture between the two companies for the sourcing and marketing of gas in India. The joint venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India. The partnership will combine BP’s world-class deepwater exploration and development capabilities with Reliance’s project management and operations expertise.

- BP announced the intention of selling its interests in a number of operated oil and gas fields in the UK. The assets involved are the Wytch Farm onshore oilfield in Dorset and all of BP’s operated gas fields in the Southern North Sea, including associated pipeline infrastructure and the Dimlington terminal. BP anticipates that the staff currently working on these assets will transfer employment to the new buyer when the divestments are completed. These divestments will allow BP to focus resources and investment on its diverse central North Sea, northern North Sea, West of Shetland and Norway assets and on successful delivery of its new major projects.

• Downstream news:

- Aligned with changing trends in global demand, BP announced that it intends to reposition its refining and marketing (R&M) business in the US and divest two of its US refineries. It intends to seek buyers for the Texas City, Texas refinery and the Carson refinery near Los Angeles, California, together with its associated integrated marketing business in southern California, Arizona, and Nevada. Subject to regulatory and other approvals, BP plans to complete the sales by the end of 2012, thereby halving BP’s US refining capacity. BP plans to focus future downstream investment in the US on further improving and upgrading its other, more advantaged R&M networks in the country – based around the Whiting, Indiana and Cherry Point, Washington refineries and its 50 per cent interest in the Toledo, Ohio refinery. These refineries have greater flexibility to refine a range of crude oils including heavy grades, and on average are more diesel-capable than BP’s current portfolio. They are also well-integrated with BP’s marketing operations and benefit from advantaged and focussed logistics infrastructure. BP intends to sell both the Texas City refinery and the Carson refinery with its marketing network as going concerns and expects significant market interest in the assets. The planned sales will be subject to regulatory and other approvals, and BP will ensure that fulfillment of the current regulatory obligations associated with Texas City are reflected in any transaction.

- BP confirmed that it is proceeding with its project for a major increase in purified terephthalic acid (PTA) production capacity at the BP Zhuhai Chemical Company Limited (BP Zhuhai) site in Guangdong Province, China, a JV between BP and Zhuhai Port Co., Ltd. (formerly named Fu Hua Group) and also announced that it is planning to build a new world-scale PTA plant at the same site. The planned debottleneck at Zhuhai will increase capacity by more than 200,000 tonnes a year from its second unit (Z2), making the total PTA production capacity of the Zhuhai site some 1.7 million tonnes a year. BP has completed engineering design work for the Z2 debottleneck and expects the expansion to be fully operational in 1Q2012. A new third PTA plant in Zhuhai is under pre-engineering planning. With a capacity of 1,250,000 tonnes per year, it will be the first to employ BP’s latest generation PTA technology and, subject to approval from its shareholders and relevant Chinese government agencies, is expected to come on stream earliest 2014 to meet PTA demand growth in China. This will make Zhuhai the largest PTA site in BP’s global PTA system.

- BP is looking for buyers for its world famous Duckhams and Veedol lubricant brands. Both have been in existence since the invention of the motor car around the start of the 20th century. The successful buyer will get global rights to a wide portfolio of registered trade marks for the respective master brand as well as the associated product sub-brands and iconic logos. It will not include any sales or customer lists, nor any product formulation or rights, nor any commitment for supply or other operational support.

• Business/Finance news:

- The board of BP announced today that it has appointed Mr. Phuthuma Nhleko as a non-executive director of BP p.l.c. with immediate effect. Mr. Nhleko is currently Group President and Chief Executive Officer of the MTN Group, the mobile telephony multinational company based in South Africa, positions he has held since 2002. He will stand down from that role at the end of March 2011 and become Vice-President of MTN Group and Chairman of MTN International. Both roles are non-executive.

- BP announced that it has joined Chevron, ConocoPhillips ExxonMobil and Shell as a member of the Marine Well Containment Company LLC (MWCC). BP brings its marine response experience and equipment to the MWCC. Among the equipment BP will bring to the MWCC are riser, manifold and containment systems deployed for use during the Deepwater Horizon response. In addition to the transfer of equipment, BP also will bring to MWCC the company’s information and supporting records, drawings, permits, licenses and other technical information it developed throughout the spill response. These items will be part of the MWCC interim response system aimed at enhancing deepwater safety and environmental protection in the Gulf of Mexico, which accounts for 30 percent of U.S. oil and gas production and supports more than 170,000 American jobs. MWCC companies are involved with the engineering, procurement and construction of equipment and vessels for the system. BP is also actively involved in significant industry efforts to improve prevention, well intervention and spill response. This includes rig inspections and implementation of new requirements on blowout preventer certification and well design. The industry has proactively formed several multi-disciplinary task forces to further develop improved prevention, containment and recovery plans.

- In the eight months since Kenneth R. Feinberg took over the $20 billion fund to compensate victims of the Gulf of Mexico oil spill, he has been attacked by many of those filing claims and by coastal state politicians who argue that the process is opaque, arbitrary and slow. Many of them have also argued that Mr. Feinberg’s recently published estimates of future damage to those in the gulf are too optimistic, and thus his offer of compensation in a final settlement is too low. Now he is getting complaints from another quarter: BP. The oil giant is arguing that if anything, Mr. Feinberg’s proposed settlements are too generous. The planned payments far exceed the extent of likely future damages because they overstate the potential for future losses, the company insists in a strongly worded 24-page document that was posted on the fund’s Web site. Basing its estimates on much of the same data Mr. Feinberg used, the company concluded that there was “no credible support for adopting an artificially high future loss factor based purely on the inherent degree of uncertainty in predicting the future and on the mere possibility that future harm might occur.” Mr. Feinberg released the rules that will govern final settlements this month. In general, the program announced, settlements paid out by the fund would be double the 2010 losses for most of those filing claims, less any money previously paid by the fund. That payout plan is based on estimates of environmental and economic recovery for the region commissioned by Mr. Feinberg that were published with the new rules: while the fund stated “prediction is not an exact science,” it suggested a gulf recovery by the end of 2012. BP argues in its filing that the Feinberg estimate vastly overstates the likely damage, which it places in the range of just 25 percent to 50 percent of a claimants’ 2010 losses. The company noted that almost all of the closed fishing grounds had reopened, and economic recovery in tourism was well under way, with hotel and sales tax revenues in the fall of 2010 similar to those from the same period in the year before. Mr. Feinberg, appointed last June by BP and approved by the Obama administration, has given out more than $3.5 billion so far in emergency money. So far, some 100,000 people have filed for a final settlement. An additional 90,000 have opted to take a quick-pay process that settles all claims with a payment of $5,000 to individuals and $25,000 to businesses. Final payments will begin after the two-week public comment period. The BP filing says that uncertainty about the persistence of damage to the gulf could be handled through mechanisms already in place. Those who believe that Mr. Feinberg’s methodology underestimates future losses can wait and see how well or poorly the gulf recovers over time, and can continue to file for quarterly reimbursement for documented losses. This very public disagreement between BP and the administrator of its fund would seem to undercut the other major attack on Mr. Feinberg. Lawyers for those suing BP have alleged that Mr. Feinberg, while claiming to be independent of BP, is actually working in the oil company’s interests. In a response this month to a complaint filed by those lawyers, Judge Carl J. Barbier of Federal District Court in New Orleans, who is overseeing the federal suits, wrote that Mr. Feinberg should not refer to himself as fully independent of BP, that he must make clear to potential litigants that he is “acting for and on behalf of BP in fulfilling its legal obligations.” Judge Barbier called the relationship between Mr. Feinberg and the company a kind of hybrid, with Mr. Feinberg neither an employee nor fully neutral. The company, he noted, does not control evaluation of individual claims, but appointed Mr. Feinberg and pays him a flat fee. The judge did not order any substantive change in the way Mr. Feinberg conducts the fund. And neither, in its filing, does BP. The statement gives no indication that BP plans to intercede in the process it handed off to Mr. Feinberg, and BP is expected to abide by his decision, albeit grudgingly. The company wrote that it “respectfully requests” that Mr. Feinberg revise the rules “consistent with the comments set forth above.” A leading critic of BP in Congress reacted angrily to the news of BP’s complaint. Representative Edward J. Markey, Democrat of Massachusetts, issued a statement that “BP made errors in judgment that led to this oil spill, and now they’ve made another error in judgment by going after the very people their spill harmed,” he said. James P. Roy, liaison counsel to the lawyers suing BP, said, “For all its bloviating, BP has clearly learned nothing from this disaster, shamelessly trying to avoid accountability at all costs.”

- BP announced that it plans to resume the payment of quarterly dividends, which were suspended in June 2010 following the oil spill in the Gulf of Mexico. It also set out its strategic agenda to deliver higher value for shareholders through increased investment in new access and long-term growth opportunities and more active portfolio management, which will underpin a return to a progressive dividend policy. Consistent with this agenda and aligned with changing trends in global demand, the company also announced plans to divest half of its US refining capacity.In an update to investors, BP will confirm that its immediate priority is to complete the process of embedding world-class safety and operational risk management at the heart of the group's approach to all its activities and throughout all its operations. It will also reconfirm its commitment to meet all of its obligations arising from the Gulf of Mexico oil spill and in relation to the Texas City refinery, ensuring that the lessons it has learnt from the oil spill are applied across BP and shared effectively with industry and governments worldwide. Beyond this, the company will set out its agenda to rebuild its reputation and deliver sustainable value growth for its shareholders.

March

• Upstream news:

- BP announced that an arbitral tribunal has ruled that the interim injunction issued to prevent BP’s proposed transaction with Rosneft, which includes Arctic exploration and a share swap transaction, from proceeding should continue. BP will now apply for a determination whether the share swap may proceed on its own. BP said it looks forward to finding a way to resolve its differences with its Russian partners to allow these important Russian Arctic developments to proceed in future. BP has a long history as a leader in oil and gas exploration and the development of new technologies. BP intends to continue in that role for decades to come as the world looks to satisfy its increasing demand for secure, affordable energy supplies. BP has the scale and experience to use these new technologies to develop frontiers like the Russian Arctic. BP said it was disappointed that these agreements, which are important for Russia, for Rosneft and for BP, cannot for now go ahead in the form intended, due to legal challenge by AAR. BP intends to continue to honour the TNK-BP shareholders' agreement to which it is a party with AAR, and will respect the decision of the arbitrators. The arbitral tribunal was convened to resolve the issues raised by AAR relating to the share swap agreement and Arctic exploration arrangements agreed between BP and Rosneft and the parties' obligations under the TNK-BP shareholders' agreement.

• Downstream news:

- BP announced that it has agreed to acquire majority control of the Brazilian ethanol and sugar producer Companhia Nacional de Açúcar e Álcool (CNAA).When CNAA’s assets are fully developed, this is expected to increase BP’s overall Brazilian production capacity to around 1.4 billion litres of ethanol equivalent per year (nine million barrels). BP has agreed to pay approximately US$680 million to acquire 83 per cent of the shares of CNAA and to refinance 100 per cent of CNAA's existing long term debt. After the acquisition, which is subject to regulatory approval and agreed closing conditions, BP will become the operator of two producing ethanol mills, located in Goiás and Minas Gerais states. A third CNAA mill is currently under development in Minas Gerais state.

- BP Products North America announced that it has agreed to sell a package of 33 refined products terminals and 992 miles of pipelines across 13 states to Buckeye Partners L.P. Buckeye has also agreed to buy BP’s 50 per cent share in Inland Corporation, the pipeline joint venture in Ohio. Under the terms of the agreement Buckeye has agreed to pay BP $225 million in cash, subject to closing adjustments. Subject to regulatory approvals and pre-emption rights of co-owners, the transaction is expected to complete during the second quarter of 2011. The planned divestment was originally announced in October 2009 as a move to simplify BP’s downstream portfolio, increasing efficiency and decreasing capital employed while maintaining BP’s marketing footprint in the US. BP expects to continue to market its fuel through the terminals and will continue with the customer relationships currently in place .

- BP America Production Company announced that it has agreed to sell its 93 per cent interest in the Wattenberg, Colorado natural gas processing plant to a wholly-owned subsidiary of Anadarko Petroleum Corporation for $575.5 million in cash, subject to closing adjustments. The Wattenberg Plant, located in Adams County in northeast Colorado, has the capacity to process approximately 195 million cubic feet per day of natural gas and 15,000 barrels per day of natural gas liquids and gas condensate. The plant processes natural gas from the Denver Julesburg Basin, an area where BP no longer has equity gas production. The transaction is expected to close by mid-year, subject to regulatory approvals.

• Business/Finance news:

- In accordance with Section 203.01 of the New York Stock Exchange Listed Company Manual, BP plc announces that on March 2, 2011 it filed with the Securities and Exchange Commission an Annual Report on Form 20-F that included audited financial statements for the year ended December 31, 2010. BP’s Annual Report on Form 20-F is available online at BP’s website at www.bp.com and also online at www.sec.gov.

- In his first public address to oil industry executives since becoming chief of BP, Robert Dudley said the entire industry needed to change to prevent another devastating deepwater oil spill like the one BP suffered last year. He embraced the findings of the presidential investigative commission that came to a similar conclusion, and said BP was ready to share what it had learned. Mr. Dudley’s comments were in sharp contrast to the statements of other senior oil executives who said their companies would have designed wells differently from the Macondo well involved almost a year ago in a blowout that killed 11 workers and leaked millions of barrels of oil into the Gulf of Mexico. They said the accident would not have happened had rig workers and their supervisors followed industry procedures, conducted adequate tests and been properly trained. The chief executive of Exxon Mobil, Rex T. Tillerson, recently repeated his position at a conference in Austin, Tex., saying, “I do not agree that this is an industrywide problem.” Since he took over as chief executive last fall, Mr. Dudley has tried to reposition BP and return a sense of calm and confidence. Company shares have recovered well over half of the value lost when they plunged after the spill. With oil prices rising, the company recently reinstituted a dividend that had been suspended after the accident. Mr. Dudley has sold billions of dollars in assets to pay for damages from the Gulf accident. He has put up for sale half of BP’s refining assets in the United States, including the giant Texas City refinery where 15 workers were killed in a 2005 explosion, in an effort to raise $5 billion. But he has also tried to guide the company on a renewed growth path. Mr. Dudley has lined up more than 30 projects around the world, including in Russia, India and Canada. Only two weeks ago, BP announced that it would pay $7.2 billion to acquire a 30 percent stake in 23 oil and gas fields operated by Reliance Industries, India’s oil giant. BP will offer its expertise in deep-sea drilling and technology, a sign that last year’s accident had not affected its ability or desire to continue to drill in deep water. The Reliance deal came only weeks after BP reached a $7.8 billion agreement with the Russian company Rosneft to drill in the Arctic. That deal turned heads around the industry, and was seen as a coup giving BP access to exploration licenses in one of the world’s last giant oil and gas frontiers. A seal of approval from Moscow was viewed as particularly important since Russia is now the world’s largest oil producer. But the deal has also caused one more in a series of headaches in the country as BP tries to navigate Russia’s rough-and-tumble business environment. Another BP Russian partner, TNK-BP, has tried to halt the deal in a London court, saying it violated previous agreements. Last week Prime Minister Vladimir V. Putin of Russia expressed frustration, saying that BP had offered false assurances that the Rosneft agreement would not violate BP’s contracts with its other Russian partners. Wall Street analysts say that the company benefited from a report by the presidential commission investigating the fatal explosion because it held not only BP responsible but also the contractor Halliburton and the owner of the Deepwater Horizon rig Transocean for a series of mistakes leading up to the accident. In his speech, Mr. Dudley said the company had introduced new safety standards that had already born fruit. He said the company had already intervened several times to stop operations when corrective action was needed, and turned away rigs from contractors when they did not meet company standards.

- The joint venture, TNK-BP, said that BP’s deal to set up a strategic alliance with Rosneft, Russia’s largest oil producer, “would inevitably lead to conflicts of interest and new tensions between the shareholders.” A group of Russian billionaires who own shares of TNK-BP had proposed to replace BP in the planned partnership with Rosneft, an arrangement that was rejected at a meeting in Paris by all of BP’s directors on the TNK-BP board. In January, BP agreed to swap $7.8 billion in shares as part of a broader alliance with Rosneft, a deal that was given the blessing of Prime Minister Vladimir V. Putin’s Russian government. The Russian group of billionaires, BP’s partners in TNK-BP, opposed the plan and won an injunction to stop the transaction. The two groups of shareholders had a dispute in 2008, which led to Robert Dudley’s resignation from the top post at TNK-BP, Russia’s third largest oil producer. Mr. Dudley is now BP’s chief executive. BP proposed to allow TNK-BP to start talks with Rosneft about the Arctic exploration, while reserving the right to carry out a share swap with Rosneft. AAR, the entity that represents the billionaires, rejected the offer, BP said in a separate e-mailed statement.

April

• Upstream news:

- BP has asked United States regulators for permission to resume drilling in the Gulf of Mexico, two company officials said, creating a delicate situation for the Obama administration as it seeks to balance safety concerns with a desire to increase domestic oil production. The petition comes less than 12 months after a rig BP had leased there exploded, causing a huge oil spill and killing 11 workers. The accident tarnished BP’s image and raised questions about its safety procedures. The Justice Department confirmed that it was considering a range of civil and criminal penalties against BP, including potential manslaughter charges for the deaths of the rig workers, as part of its ongoing investigation into the accident. At the same time, President Obama, in a major statement on energy policy, said the administrations was seeking to reduce dependence on imported oil in part by increasing domestic production, both onshore and off. BP was one of the major producers in the gulf before the accident. BP is seeking permission to continue drilling at 10 existing deepwater production and development wells in the region in July in exchange for adhering to stricter safety and supervisory rules, said one of the officials. An agreement could be reached within the next month but would not include new drilling, the official said. Drilling in the Gulf of Mexico was halted last summer as a result of the accident involving BP’s Macondo well, which spilled 4.9 million barrels of oil into the ocean. The ban was lifted in October. Melissa Schwartz, a spokeswoman for the Bureau of Ocean Energy Management, Regulation and Enforcement, the federal agency that oversees the development of resources in the gulf, said that there was no deal with BP. Toby Odone, a spokesman for BP, declined to comment. The regulator had recently started to permit some deepwater drilling in the Gulf of Mexico. Royal Dutch Shell won approval to drill off the coast of Louisiana on the condition that rigorous new safety standards were met. Other companies that have been allowed to continue drilling in the region include Exxon Mobil, Chevron and BHP Billiton. Federal officials have said any company that wants to resume drilling in the gulf would have to meet the new safety requirements. But granting permission to BP would be more controversial because the British oil company is still paying for costs related to the oil spill, the cleanup and the continuing civil and criminal investigations into the accident. BP so far has set aside more than $40 billion to cover those costs. The administration has pressed BP to ensure that victims of the spill are compensated, but the company has said publicly it needs to resume drilling in the gulf in order to have the financial resources to pay the claims submitted by federal and state officials, and individuals and businesses. The Obama administration has spent 11 months dealing with the aftermath of the Macondo well blowout and writing new rules to try to prevent similar accidents. Allowing BP to resume operations in the gulf would send a mixed message — that even as the administration was trying to increase the safety of offshore drilling and punish bad actors, it was responding to critics in Congress and the oil industry who say the administration is choking off production and driving up energy prices. What seems clear is that the gulf will not return to full production until all the major players are allowed to resume drilling. BP is eager for that to happen, and its chief executive, Robert Dudley, has repeatedly said the company remains committed to its operations in the United States. Mr. Dudley has pledged to make improving BP’s safety record his priority. He set up a new division last year to monitor safety and suspended some operations in Alaska and the North Sea after the projects failed to meet the new standards. Gaining permission to resume drilling in the gulf would help Mr. Dudley to move BP beyond its painful and expensive recent history in the region, which has eroded shareholder trust. It would also give BP a boost of confidence. The British oil company suffered a setback in its expansion strategy last month when a Swedish court blocked a $10 billion cooperation agreement with Rosneft of Russia, which was supposed to give the company access to the Arctic. The drilling ban had cost oil companies tens of millions of dollars as they were required to keep rigs warm and ready to drill. The Obama administration lifted the drilling ban early but said that companies must meet the new safety standards before they could resume drilling. They include new standards for well design, casing and cementing. Companies would also require verification from a third party that safety devices like blowout preventers, which failed during the BP spill, were properly designed and tested. Some environmental groups had criticized the decision, saying it was too early to grant drilling permits again while details of the accident were still being investigated.

- BP confirmed that it has signed four new coalbed methane (CBM) production sharing contracts (PSCs) in the Barito basin of South Kalimantan, Indonesia. BP and co-owner Pertamina were jointly awarded the Tanjung IV CBM PSC through a direct award from the Government of Indonesia. BP will hold a 44 per cent participating interest in the PSC with Pertamina holding the remaining 56 per cent. BP and co-owner PT Sugico Graha (Sugico) were jointly awarded the Kapuas I, II and III CBM PSCs through a direct offer from the Government of Indonesia. BP will hold a 45 per cent participating interest in the PSCs with Sugico holding the remaining 55 per cent. Together, the four PSCs cover an area of approximately 4,800 square kilometres.

- BP announced the arbitral tribunal has ruled that the interim injunction prohibiting closing of the share swap transaction with Rosneft will remain in place until further notice. However BP is now able to discuss the possibility of an extension of the April 14 deadline under which the share swap agreement will terminate. The Arctic opportunity remains under injunction pending further hearings. The share swap and the Arctic opportunity announced January 14 remain subject to the final decision of the arbitral tribunal.

- BP announced that it has agreed with Rosneft to extend the deadline for completing the share swap agreement (previously announced on 14 January) to 16 May 2011. The agreement between the two companies followed the 8 April decision of the arbitral tribunal to allow them to discuss extension of the deadline. This means that the share swap agreement will now not terminate on 14 April 2011. The share swap agreement, between BP and Rosneft, together with the related Arctic Opportunity, were originally announced on 14 January 2011. Both the share swap agreement and the Arctic Opportunity remain subject to an interim injunction. BP intends to continue with the arbitration process to obtain a final award on all outstanding issues, including whether or not the interim injunction should continue.

• Downstream news:

- BP announced that it has agreed the sale of its wholly-owned subsidiary, ARCO Aluminum Inc. to a special purpose vehicle incorporated by a consortium of Japanese companies. ARCO Aluminum is a supplier of rolled aluminium sheet, used primarily in the production of beverage cans. Under the terms of the agreement the consortium - comprised of Sumitomo Light Metal Industries, Ltd. (40 per cent), Furukawa Sky Aluminum Corp. (35 per cent), Sumitomo Corporation (20 per cent), Itochu Corporation (2 per cent), and Itochu Metals Corporation (3 per cent) - will pay BP $680 million in cash, subject to closing adjustments. Subject to obtaining required regulatory approvals, the parties expect to complete the transaction in the third quarter of 2011.

• Business/Finance news:

- BP will provide $1 billion for early oil spill restoration efforts in the Gulf of Mexico in a voluntary agreement with the federal government and five states, company and government officials announced. The agreement, the largest of its kind in an oil pollution case, does not absolve BP of legal liability for the explosion and spill that occurred April 20, 2010, or from the costs of any additional economic and environmental damages. The company faces fines and penalties of as much as $21 billion as a result of the disaster, the worst offshore drilling accident in United States history. The company could face additional penalties under a Justice Department criminal and civil investigation. The advance payment, to be divided among the states and the two lead federal agencies overseeing restoration efforts, will be used to rebuild coastal marshes, replenish damaged beaches, conserve ocean habitat and restore barrier islands. The $1 billion does not represent the governments’ estimate of the ultimate environmental cost of the explosion and spill, which poured nearly five million barrels of oil into the gulf over 87 days last year. Federal and state officials are conducting a review known as a natural resource damage assessment to measure the injury to the gulf habitat and devise a plan for restoring it, a process that generally takes years. Any restoration efforts financed by the $1 billion will count toward the company’s final liability, officials said. As the leaseholder on the well and the party responsible for the spill, BP is responsible for the entire cost, although this week it filed suit against its drilling partners, Transocean, Halliburton and Cameron International, blaming them for the accident and seeking to recover tens of billions of dollars in compensation. The agreement allows the complex work of environmental restoration to proceed more quickly and ends some of the squabbling over financing among states and the federal government. The five states involved — Alabama, Florida, Louisiana, Mississippi and Texas — will each get $100 million, as will the Department of the Interior and the National Oceanic and Atmospheric Administration. The remaining $300 million will be used for projects proposed by the states and selected by the federal agencies. Jane Lubchenco, the NOAA administrator, said the BP spill posed unusual challenges because it affected not only beaches, marshes and wildlife, but also the deep-sea environment and the ocean floor. She said that it was impossible today to estimate the total harm to the gulf but that the $1 billion pledged by BP would allow repair work to begin sooner and create cleanup jobs in the region. Lamar McKay, president of BP America, said that the company was not legally obligated to make such payments until the full assessment was complete, but that financing restoration projects would speed healing in the gulf.

- BP Exploration & Production, Inc. (BP) announced it has signed a ground breaking agreement with federal and state agencies that will accelerate work starting this year to restore areas of the Gulf of Mexico that were affected by the Deepwater Horizon accident. The agreement commits up to $1 billion to projects that will restore injured natural resources in the Gulf at the earliest opportunity. It allows projects important to the Gulf’s recovery to begin now, as early restoration projects, rather than waiting for the Trustees to complete all of the Natural Resource Damage Assessment (NRDA) studies that are underway. The projects will undergo public review before they are funded, and priority will be assigned to projects aimed at improving areas that offer the greatest benefits to wildlife, habitat, and recreational use.

- BP and the Gulf of Mexico Alliance announced that the independent Research Board of the Gulf of Mexico Research Initiative (GRI) has released its Request for Proposals for studies into the effects of the Deepwater Horizon incident and the potential associated impact on the environment and public health. The $500 million GRI is funded by BP and administered by the Gulf of Mexico Alliance.

- From April into midsummer last year, Americans watched BP's oil spew from the seafloor into the Gulf of Mexico with outrage and guilt that came to feel like a chronic stomachache. Then, on July 15, it stopped. And within a couple of weeks the bad feelings for a lot of us stopped too. There were reports that the surface oil was quickly disappearing. There was a government study that hopeful journalists misinterpreted to mean that most of the oil was gone. But the oil wasn't gone, and it still isn't. Tar balls are washing around the gulf. Marshes are dying. Scientists say it's still too early to know the greatest share of the spill's environmental damage. The nation flits from one spectacle to the next with ever-accelerating speed, but the processes of nature unfold at their same, deliberate pace. Quick, superficial information alienates us from the ecosystems that sustain life, and that's made it more difficult to solve environmental problems. The rate at which environmental disasters recede in our collective rearview mirror marks how fast the culture is moving. The Exxon Valdez oil spill in 1989 stuck in our consciousness much longer than BP's spill. Alaska's disaster happened in March; in August it was still major national news when Exxon tried to back off on needed cleanup efforts — the spotlight forced the company to promise more work. Public attention on the Alaska mess kept Congress focused until historic oil spill legislation passed, a year and a half after the accident. Going back to an even slower time, historians credit the Santa Barbara blowout and oil spill of 1969 as starting the modern environmental movement. Images of oiled animals stuck around long enough to mobilize the public and power legislation and policy for years. Results included the Clean Water Act (1972), a beefed-up Clean Air Act (1970), the National Environmental Policy Act (1970) and the first Earth Day (1970). Now, the anniversary of the BP spill comes with a feeling of "Whatever happened to…?" Legislative efforts have stalled, and they're not particularly ambitious anyway. The BP spill spawned a commission, but its recommendations to Congress have been ignored. Viles calls the situation "this national ADD about environmental issues." The attention deficit has many causes. Scholars have documented reduced interest in environmental issues when the economy is down. Storytelling biases also play a role. The story "Oil is still there" doesn't thrill like a starlet's fresh scandal or the predicament of the Chilean miners, which in August 2010 pulled the spotlight away from underwater oil plumes and potential gulf dead zones. Compared with 1969 and 1989, the news cycle is on fast-forward, and our information sources are fractured. "Now it is so much easier to turn the page or click the channel and not have to deal with this stuff," said Anthony Leiserowitz of the Yale School of Forestry and Environmental Studies, "because we're creating these self-reflective mirrored halls where we don't have to see anything we don't want to think about." Our disintegrating attention span matches our disintegrating common will to act on shared problems, at least at the national level. The country has needed federal policy on energy and climate change for decades, but that seems further away than ever. And even the largest oil spill in history, shown live on TV, couldn't spawn a national discussion about our energy sources. But we do still act at the local level, where people still share knowledge and sustained interest. The newspapers of the Gulf Coast have stayed with the oil spill story, in all its complexity. Viles' Restoration Network has brought together 46 concerned groups to guide response and prevention efforts. On climate change, as well, action has happened locally, in communities, cities, states and public-spirited businesses. University of Colorado policy scientist Ronald D. Brunner maintains that that's how it has to work: Social change must always precede dramatic political change. Brunner has studied how communities that are empowered to deal with environmental threats tend to make the right decisions. Examples are diverse, including preparing for floods in the Midwest and dealing with melting permafrost in the Arctic. The key is giving those who live in an ecosystem the power to care for it. That's an idea that has worked in Alaska, where post-spill legislation set up a well-funded local advisory council that has monitored oil handling in Prince William Sound and fought for improvements — like powerful tugboats to escort tankers all the way to open ocean — that have demonstrably prevented another accident. We can't count on the federal government to stop disasters, because we can't count on the media or ourselves to pay attention to all the risks that face us as a nation. But community by community, we can watch over our own land and water. And we can demand that the nation respect our decisions.

- An increase in oil prices over the last year helped BP’s first-quarter earnings, but not enough to outweigh the costs of the Gulf of Mexico oil spill. But there are signs that the high prices have started to hurt demand in the United States and other developed countries, which could start pushing prices down again. Lower prices could make the rest of 2011 more difficult for BP and other big oil companies. BP’s rivals, including Royal Dutch Shell and Exxon Mobil, are still expected to report strong results when they release their first-quarter performances. But some analysts said oil prices could drop about $20 a barrel in the near term, raising questions about whether such companies could keep up the stellar profit growth of last year. An improving world economy returned oil prices to higher levels in 2010 after a sharp drop in 2009. Exxon Mobil, the largest American oil company, reported a 53 percent increase in profit for the fourth quarter of last year. Chevron earnings in that period rose 72 percent, and ConocoPhillips reported a 46 percent rise. BP was the first of the largest publicly traded oil companies to report first-quarter earnings. For BP, a higher oil price was offset by asset sales to pay for the repercussions from the Gulf of Mexico oil spill. Earnings were $5.48 billion in the first three months of this year, down from $5.6 billion in the period a year earlier. The company has sold more than $24 billion of assets to raise money to cover the oil spill costs. Production fell as a result. Including lost production from the Gulf accident, production fell 11 percent in the first quarter from a year earlier. BP set aside an additional $384 million for the oil spill in the first quarter, bringing the total to $41 billion. BP’s shares have fallen 23 percent in the last 12 months, while those of its largest competitors have risen at least 18 percent. To win back investors, the company focused on exploration and signed cooperation agreements in India and Russia. But its Russian deal with the government-owned Rosneft was held up this year because of a legal challenge from its Russian shareholders. Russia has surpassed Saudi Arabia as the biggest oil producer in the world. New oil from the region could play an important part in ensuring sufficient supplies and the future level of oil prices. Those analysts who predicted a decline in the price of oil said concerns about political tensions in North Africa and the Middle East had increased prices but were likely to fade. At the same time, there are signs that high oil prices discourage consumers from filling their tanks just as the summer vacation season starts in the northern hemisphere. Still, oil prices are expected to remain high enough for companies to increase investments in drilling aimed at raising production in the longer term. Exxon Mobil said last month that it planned to spend about $100 million a day for the next six years on new oil and gas projects. The drilling for reserves in more remote and harder-to-reach areas has increased costs for oil companies as they compete for talent and technology. The Gulf of Mexico oil spill also led regulators to tighten safety.

May

• Upstream news:

- The arbitral panel has issued a consent order permitting BP and the Alfa-Access-Renova (AAR) consortium to assign the Arctic opportunity to TNK-BP, subject to Rosneft consent. The order also permits the proposed share swap between BP and Rosneft to proceed subject to Rosneft having consented to assign the Arctic opportunity to TNK-BP. For the share swap to proceed, both BP and Rosneft would also have to agree that any shares received as a result of the share swap would be held for investment purposes only and placed in trust, with voting rights exercised by independent trustees, together with certain other technical amendments. Neither company would have representatives on the others board in respect of these holdings.As a result of the consent order, BP can now seek agreement from Rosneft on the assignment of the Arctic opportunity to TNK-BP and modification of the terms of the share swap agreement. Rosneft’s consent will be required for both of these matters to proceed.The interim injunction on both the share swap and the Arctic opportunity remain in place, subject to obtaining Rosneft's consents as described above.

- The oil giant BP made a crucial concession in an attempt to salvage a share-swap agreement with Rosneft, the Russian state-controlled oil company. BP said it would agree to hand over a potentially lucrative exploration deal in the Arctic to its Russian joint venture, TNK-BP, in exchange for completing the share-swap, a move that would comply with a arbitration panel ruling released Friday. Any changes are subject to approval by Rosneft, which did not return calls seeking comment. BP hopes the concession will end a three-month dispute with the Russian billionaires who are its partners in TNK-BP and who had opposed the Rosneft deal. The partners had blocked BP’s $7.8 billion agreement with Rosneft, which included access to exploration blocks in Russia’s Arctic that might hold billions of barrels of oil. The partners argued that the deal breached their shareholder agreement with BP and demanded to be part of any new business in Russia. BP’s deal with Rosneft initially lifted its shares because it promised to strengthen the British oil company’s position in the world’s biggest oil-producing country. It also guaranteed access to potential new oil reserves at a time of heightened competition and growing demand for oil. Handing the exploration deal to its joint venture would make it less profitable for BP. The arrangement would cede some operational control over the venture in the Arctic Ocean to BP’s litigious Russian partners, even as BP contributed the technology to make it possible. The share-swap would still strengthen BP’s presence in Russia and could ease its participation in future oil deals. It also highlights the significance of access to a site off Russia’s northern coast, given the lawsuits and environmental reviews stalling drilling on the other side of the Arctic Ocean in Alaska and Canada. BP’s chief executive, Robert W. Dudley, came under pressure from some investors over the last month to find a solution to the standoff with the TNK-BP partners. The dispute had angered some investors, who had accused Mr. Dudley of misreading Russian politics and of failing to steer BP clear of difficulties so shortly after the oil spill in the Gulf of Mexico. The company now has to seek approval from Rosneft to make the changes, which would include putting any shares that are part of the share swap in a trust. In that case, neither company would have any direct voting rights in the other. BP and Rosneft would also have no seats on each others’ boards. BP’s Russian partners previously rejected cash offers from the company and said that its agreement with BP gave TNK-BP exclusive rights to pursue opportunities in Russia. Despite the disagreements with its partners, TNK-BP remains a financial success for BP. After contributing about $6 billion in cash and assets to the founding of the TNK-BP venture in 2003, BP has since then made $14.3 billion in dividends from it, and it still retains 50 percent of the assets. The venture accounts for a quarter of BP’s production.

- On May 6, the Parliament of the Republic of Azerbaijan ratified the new production sharing agreement (PSA) between BP and SOCAR on joint exploration and development of the Shafag-Asiman structure in the Azerbaijan sector of the Caspian Sea. The ratification follows the signing of the PSA in Baku in October, 2010. Under the PSA, which is for 30 years, BP Exploration (Azerbaijan) Limited will be the operator with 50 per cent interest while SOCAR will hold the remaining 50 per cent equity.The block lies some 125 kilometers (78 miles) to the SE of Baku. It covers an area of some 1100 square kilometers and has never been explored before. It is located in a deepwater section of about 650-800 meters with reservoir depth of about 7000 meters.

- BP announced it has received final approval to complete the purchase of ten exploration and production blocks in Brazil from Devon Energy. The regulatory approvals from the Brazilian National Petroleum, Natural Gas and Biofuels Agency (ANP) were the last required to conclude the agreement announced in March last year. It is expected formal completion of the acquisition will take place shortly. The blocks acquired will give BP a diverse and broad deepwater exploration acreage position offshore Brazil with interests in eight licence blocks in the Campos and Camamu-Almada basins in water depths ranging from 330 to 9,100 feet (100-2,780 metres), as well as two onshore licences in the Parnaiba basin. The Campos basin blocks include four discoveries – Xerelete, pre-salt Wahoo, Itaipu and Fragata – and the Polvo field, which is currently producing around 25,000 barrels of oil per day.

- BP announced that it has agreed to sell its interests in the Wytch Farm, Wareham, Beacon and Kimmeridge fields to Perenco UK Ltd ('Perenco') for up to $610m in cash. The price includes $55m contingent on Perenco's future development of the Beacon field and on oil prices in 2011-13. The sale of these interests is part of BP's plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Before today's agreement, BP had already announced sales agreements totalling around $25 billion.

- BP and Alfa- Access- Renova (“AAR”) announced that they would intensify their efforts to ensure TNK-BP’s continued success following the lapse of the BP-Rosneft share swap transaction (and the related Arctic exploration opportunity) originally announced on 14 January 2011. In recent months, BP has conducted detailed negotiations with AAR and Rosneft to seek a reasonable and businesslike solution that would allow the agreements to proceed to the satisfaction of all parties. Such a solution has not been found at this time, although talks will continue. BP and AAR each acknowledge the active engagement and support provided by Rosneft throughout the recent discussions. Both BP and AAR see significant advantages in continuing to deepen this dialogue and cooperation with Rosneft.

• Downstream news:

- BP and Davy Process Technology announce collaborations with three EPC contractors to promote the commercialisation of the BP/Davy Fischer Tropsch Process. CB&I Lummus UK Limited (NYSE:CBI), Jacobs Engineering Group Inc (NYSE:JEC) and The Shaw Group (NYSE:SHAW) have signed agreements to work individually with BP/Davy to seek deployment opportunities for the proven BP/Davy Fischer Tropsch (FT) process that transforms syngas into liquid hydrocarbons. The BP/Davy fixed-bed FT process is a low technology risk option to producing diesel, jet fuel (JP8) and naphtha from natural gas, bio-mass or coal derived syngas. This technology has been successfully demonstrated in Nikiski, Alaska, with full scale fixed-bed reaction tubes where the nominal 300 barrel per day complex met or exceeded all of its performance targets. This process is now available for license to third parties, and BP’s and Davy’s continuing development is focussed on retrofit enhancements.

- BP welcomed Rosneft as its new partner in its German refining joint venture, Ruhr Oel GmbH (ROG). This follows the completion of the deal announced last October in which BP’s existing partner, PdVSA of Venezuela, agreed to sell its 50 per cent interest in the joint venture to Rosneft. The deal became effective from 1 May 2011.

• Business/Finance news:

- BP has reached an agreement with the U.S. Department of Justice to settle the federal civil suit that arose from the Prudhoe Bay oil transit line leaks in March and August of 2006. The agreement is in the form of a consent decree, which, if approved after a public review and comment period, would include three main elements: Compliance with a set of requirements covering Prudhoe Bay pipeline operations; Retention of an Independent Contractor to monitor Prudhoe Bay pipeline operations and report on compliance with the consent decree; Payment of a civil penalty of $25 million. BP did not admit any liability nor was there any per barrel penalty assessed in the agreement.

- BP and the Royal Opera House announced together in the presence of Olympic gold medallist Jonathan Edwards that they are collaborating with The Olympic Museum to create a free and unique exhibition telling the Olympic story through the endeavours of ancient and modern Olympians. Called The Olympic Journey: The Story of the Games , the exhibition will be created and staged at the Royal Opera House for the duration of the Olympic Games next summer from 27th July to 12th August 2012. It will include unique artefacts, graphics, film and audio from The Olympic Museum in Lausanne being shown in London for the very first time, and promises to be a highlight of the London 2012 Festival, the finale of the Cultural Olympiad.

- BP announced that it has reached agreement with MOEX Offshore 2007 LLC (“MOEX”) and its affiliates, Mitsui Oil Exploration Co., Ltd. and MOEX USA Corporation to settle all claims between the companies related to the Deepwater Horizon accident. MOEX – which had a ten per cent interest in the Macondo well – has joined BP in recognising and acknowledging the findings by the Presidential Commission that the accident was the result of a number of separate risk factors, oversights and outright mistakes by multiple parties and a number of causes. Like BP, MOEX Offshore has also recognised and acknowledged the conclusions of the United States Coast Guard that, among other things, the safety management systems of both Transocean and its Deepwater Horizon rig had significant deficiencies that rendered them ineffective in preventing the accident. MOEX has concluded that entering into a settlement with BP is in its best interest. The agreement is not an admission of liability by any party regarding the accident. Under the settlement agreement, MOEX USA Corporation, the parent company of MOEX Offshore 2007, will pay BP $ 1.065 billion. BP will immediately apply the payment to the $20 billion trust it established to meet individual, business and government claims, as well as the cost of the Natural Resource Damages. The parties have also agreed to mutual releases of claims against each other. BP has agreed to indemnify MOEX for compensatory claims arising from the accident. BP’s indemnity excludes civil, criminal or administrative fines and penalties, claims for punitive damages, and certain other claims.

- BP has struck a deal to receive about $1 billion from one of its minority partners in the blown-out Gulf of Mexico well. BP said that MOEX Offshore 2007, which had a 10% interest in the Macondo well, has agreed to pay $1.065 billion to settle all claims between the companies over the accident on the Deepwater Horizon rig. Under the settlement, MOEX, a unit of Japanese trading house Mitsui & Co., agreed to recognize findings by the U.S. Presidential Commission that the accident "was the result of a number of separate risk factors, oversights and outright mistakes by multiple parties and a number of causes." It also recognized findings from the U.S. Coast Guard that "the safety management systems of both Transocean and its Deepwater Horizon rig had significant deficiencies that rendered them ineffective in preventing the accident." Shares in BP closed 2.7% higher after analysts said the deal puts pressure on BP's other minority partner, Anadarko, to reach a similar deal and leaves rig operator Transocean open to a combined assault for compensation. Jonathan Jackson, head of equities at Killik & Co., said he was "slightly disappointed" by the size of the settlement, but the news was positive. "It is the first time that a company involved in the well has joined BP in helping to meet the cost of the accident, and it appears to reinforce the likelihood that BP will not be found grossly negligent, an outcome that would bring a much larger liability under the Clean Water Act," Jackson said. He added that BP might reach a global settlement that rolls up into a single deal the liability for fines, damages and other penalties. BP said that it would continue to pursue Texas-based Anadarko, which had a 25% interest in the well, Switzerland-based Transocean and cement contractor Halliburton to pay their share of billions of dollars in cleanup costs, oil-spill damages and pollution fines. BP has already booked a $32.2-billion charge to cover the long-term costs of the gulf spill. It is targeting $30 billion in asset sales by the end of the year to shore up funds. The settlement from MOEX will immediately be paid into the $20-billion trust BP has established to meet individual, business and government claims relating to last year's oil spill.

June

• Upstream news:

- BP said that it would focus on oil exploration outside Russia, in the wake of its collapsed deal with the Russian oil company Rosneft. At the same time, BP said it had no plans to sell its stake in a separate Russian company, TNK-BP, a joint venture whose Russian partners had opposed BP’s Rosneft deal.

• Downstream news:

- BP said it has substantially restored capacity at its 475,000 barrel-per-day Texas City refinery following the power outages which hit the south eastern Texas area the week of the 25th of April. A number of refineries and petrochemical plants belonging to other industry participants were affected in separate incidents.

• Business/Finance news:

- China became the world’s largest energy consumer in 2010 overtaking the USA during a year which saw the rebound in the global economy drive consumption higher and at a rate not seen since the aftermath of the 1973 oil price shocks. Demand for all forms of energy grew strongly in 2010 and increases in fossil fuel consumption suggest that global carbon dioxide (CO2) emissions from energy use rose at their fastest rate since 1969. The growth in energy consumption was broad-based, with both mature OECD economies and non-OECD countries growing at above-average rates. The figures come from today’s publication of the 60th annual BP Statistical Review of World Energy, the longest-running, consistent set of objective, global energy data used by business, academics, and governments to inform policy and decision making.

- BP and the Mariinsky Theatre, St Petersburg’s renowned opera and ballet company, announced a joint programme that will give music lovers in the United Kingdom the chance to experience the very best of Russian opera, ballet and classical music. BP will provide support for the Mariinsky Opera, Ballet and Orchestra tours to the UK in the three years to 2013.

- BP announced that it has reached agreement with Weatherford U.S., L.P. ("Weatherford") to settle potential claims between the companies related to the Deepwater Horizon accident. BP and Weatherford have agreed to mutual releases of potential claims against each other, and BP has agreed to indemnify Weatherford for compensatory claims resulting from the accident, including claims brought relating to pollution damage stemming from the accident. BP's indemnity excludes civil, criminal or administrative fines and penalties, claims for punitive damages, and certain other claims. The agreement is not an admission of liability by any party regarding the accident. Weatherford has become the second party in the last month to join BP in acknowledging findings by the Presidential Commission that the Deepwater Horizon incident was the product of complex causes involving multiple parties. Weatherford is the first of BP's contractors to formally agree with BP that the entire industry can and should learn from the Deepwater Horizon incident. Accordingly, Weatherford has committed to working with BP to take actions to improve processes and procedures, managerial systems, and safety and best practices in offshore drilling operations. BP and Weatherford will encourage other companies in the drilling industry to join them in this improvement and reform effort. Weatherford and BP have concluded that entering into this settlement is in their mutual best interests. Under the settlement and indemnity agreement, Weatherford, which manufactured the float collar used in the well, will pay BP $75 million. BP will immediately apply the payment to the $20 billion trust it established to meet individual, business and government claims, as well as the cost of the Natural Resource Damages.

July

• Upstream news:

- BP is pleased to announce an agreement to progress a major re-development of the Schiehallion and Loyal oil fields to the west of the Shetland Islands. Schiehallion and Loyal have produced nearly 400 million barrels of oil since production started in 1998 and an estimated 450 million barrels of resource is still available. The investment of circa £3 billion in the re-development of the fields will take production out to 2035 and possibly beyond.

- BP Exploration & Production Inc. (BPXP) will implement a new set of deepwater oil and gas drilling standards for its operations in the US Gulf of Mexico, demonstrating the company's commitment to safe and reliable operations. The announcement was made in a letter to the director of the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), Michael Bromwich. The voluntary performance standards go beyond existing regulatory obligations and reflect the company's determination to apply lessons it learned from the Deepwater Horizon accident and subsequent oil spill.

- BP announced that it has been awarded two deepwater exploration and production blocks by the Government of the Republic of Trinidad and Tobago. BP was awarded a 100 per cent interest in blocks 23(a) and TTDAA 14, both in deepwater frontier acreage offshore Trinidad’s east coast, under production sharing contracts.

• Downstream news:

- BP Wind Energy announced that it has entered into two long-term power purchase agreements (PPAs) totaling 105 megawatts (MW) from its proposed Mehoopany Wind Farm in Wyoming County, Pennsylvania. One PPA is for 75 MW with Old Dominion Electric Cooperative (ODEC) and a second with Southern Maryland Electric Cooperative Inc. (SMECO) for 30 MW. The PPAs were negotiated by the National Renewables Cooperative Organization (NRCO). The Mehoopany Wind Farm will be located approximately 20 miles northwest of Scranton, PA (between Mehoopany and Noxen, PA). The wind farm is expected to generate up to 144 MW of energy and is anticipated to utilize approximately 90 GE 1.6 MW wind turbines. BP Wind Energy will market the remaining capacity to other customers in the Northeast U.S. merchant market.

• Business/Finance news:

- BP's second quarter replacement cost profit was $5,309 million, compared with a loss of $16,973 million a year ago. For the half year, replacement cost profit was $10,790 million, compared with a loss of $11,375 million a year ago.

- BP said that it expects future cash flows generated by its worldwide operations to grow faster than output. This growth is expected in both its upstream and downstream businesses as the company delivers its strategic priorities, increases its investment in future growth opportunities and portfolio work continues.

August

• Upstream news:

- There are online reports claiming that the Macondo well is leaking and BP has responded with boats and boom. None of this is true. The well was capped on July 15th, 2010, when all oil flow was stopped, and finally cemented and sealed on Sept 19th, 2010. The well is monitored.

- BP confirmed through a standard visual wellhead inspection that there is no release of oil from the Macondo well (MC252). In addition, BP also conducted a visual inspection of the Macondo relief well confirming the same result.

- BP Trinidad and Tobago (bpTT) announced the start of natural gas production from the Serrette field, offshore Trinidad. Serrette is located in 280 feet (90 metres) of water off Trinidad's south east coast. BPTT holds a 100 per cent interest in the field.

- Reliance Industries Limited (RIL) and BP announced the completion of BP's acquisition of a 30 per cent stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG D6 block. This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing. The completion of the deal delivers one of the largest ever foreign direct investments into India. The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

• Downstream news:

- BP has entered into agreements with JBF RAK LLC under which JBF RAK LLC is to build a new 390,000 tonne per year polyethylene terephthalate (PET) production unit in Geel, Belgium, subject to required approvals. The agreements provide JBF rights to build and operate this PET unit on BP’s existing petrochemicals complex in Geel, adjacent to BP’s world-class purified terephthalic acid (PTA) facility. BP will in return supply PTA directly to this new PET manufacturing unit. Startup of the unit is scheduled in 2014.

• Business/Finance news:

- BP along with a group of the UK's leading companies, the Mayor of London and local authorities have joined forces to help businesses across the country recover from the damage caused by this month's riots. BP has contributed an initial £500,000 into the fund.

- In the wake of the Deepwater Horizon oil spill, BP sought and obtained permission to use dispersants, detergent-like compounds, to break up the 200 million gallons of Louisiana sweet crude, into tiny droplets that would mix throughout the water column, trying to lessen the immediate impact of the oil slick on fragile coastal ecosystems. The dispersants selected, Corexit 9500 and Corexit 9527, were used in large quantities (1.84 million gallons) and also in ways never before used — they were applied directly underwater to the source of the spill. One month after oil first started gushing into the Gulf of Mexico, the federal Environmental Protection Agency gave BP 24 hours to identify, and 72 hours to begin using, a less toxic alternative. There were, at the time, 14 dispersants listed on the National Contingency Plan Product Schedule — a list of emergency-use products maintained by the E.P.A. for combating oil spills. BP, however, continued using Corexit, citing a vast paucity of data concerning the environmental impacts of any of the alternative dispersants. As the situation in the Gulf worsened and questions about the safety of Corexit spread like, well, leaking oil, Earthjustice, a nonprofit environmental law firm, filed a Freedom of Information Act request to obtain information about the composition and safety of the dispersants listed as eligible for use. When the federal agency did not comply, Earthjustice sued on behalf of the Gulf Restoration Network and the Florida Wildlife Federation. In response, the E.P.A. published the full chemical composition of Coexit 9500 and Corexit 9527 and nearly a year later, released an aggregate list of 57 chemical components found in the 14 dispersants, although they provided no information about which chemicals were found in which dispersants, citing an obligation to protect what had been deemed as confidential business information by the manufacturers. A review has now been published by Earthjustice, in collaboration with Toxipedia, an online toxicology Wiki, of all the scientific literature concerning the potential health impacts of these 57 chemicals. The report finds that “Of the 57 ingredients: 5 chemicals are associated with cancer; 33 are associated with skin irritation from rashes to burns; 33 are linked to eye irritation; 11 are or are suspected of being potential respiratory toxins or irritants; 10 are suspected kidney toxins; 8 are suspected or known to be toxic to aquatic organisms; and 5 are suspected to have a moderate acute toxicity to fish.” While words like “associated with” or “linked to” may sound weak and unconvincing, the syntax highlights just how little is actually known about these chemicals. For 13 of the dispersant ingredients, no relevant data could be found. Earthjustice is calling for “more research, greater disclosure of the information that is known, comprehensive toxicity testing, establishment of safety criteria for dispersants, and careful selection of the least toxic dispersants for application in oil spill response.”

September

• Upstream news:

- BP is pleased to announce an agreement to invest up to £700 million to progress a project to develop the Kinnoull reservoir in the central North Sea. Kinnoull is the largest of three reservoirs that are being developed as part of the Andrew Area developments project, and contains 45 million barrels of oil equivalent. The reservoir will be connected to BP’s Andrew platform and enable production to be extended to 2020 and beyond. Production from Kinnoull is forecast to peak at 45,000 barrels per day and be exported via the existing Forties pipeline system to Kinneil and the CATS pipeline system to Teesside.

- BP announced the drilling of a successful appraisal well in a previously untested northern segment of the Mad Dog field in the US Gulf of Mexico. The well results confirm a significant resource extension for the Mad Dog Field complex, which includes the existing field, in production since 2005, and appraisal drilling of the Mad Dog South field in 2008 and 2009. Pending confirmation through future appraisal drilling, the total hydrocarbons initially in place in the Mad Dog field complex are now estimated to be up to four billion barrels of oil equivalent. The well, drilled by BHP Billiton on behalf of the unit operator BP, is located on Gulf of Mexico Green Canyon block 738 approximately 140 miles (225 kilometres) south of Grand Isle, LA., in about 4,500 feet (1,371 metres) of water. The well encountered about 166 net feet (50 metres) of hydrocarbons in the objective Miocene hydrocarbon-bearing sands and discovered an oil column of more than 300 feet (91 metres).

• Downstream news:

- BP has now completed the sale to Puma Energy of its fuels marketing businesses in Namibia, Botswana, Zambia, Malawi and Tanzania. The sale of the final business in Tanzania completed on September 1. Puma Energy paid BP a total of US$296 million in cash, (before working capital and net debt adjustments), for its interests in BP Namibia (Proprietary) Limited (100 per cent share), BP Botswana (Proprietary) Limited (100 per cent), BP Zambia Plc. (75 per cent), BP Malawi Limited (50 per cent), and BP Tanzania Limited (50 per cent). The sale of the assets, which does not include the refining and marketing businesses in South Africa and Mozambique, follows BP’s strategic review of its southern African refining and marketing businesses last year.

- BP has announced that it has agreed to acquire an additional 3 per cent share of Brazilian sugar and ethanol producer Companhia Nacional de Açúcar e Álcool (CNAA) from LDC Bioenergia S.A. for a price of approximately US$25 million. Following the acquisition in April 2011 of 83 per cent of the shares of CNAA and subsequent conversion of CNAA’s long-term debt to equity, BP will own 99.97 per cent of the shares of the company – the remaining shares are owned by minority private shareholders. The acquisition is subject to agreed closing conditions.

- BP announced that it has agreed to increase its share in Brazilian biofuel company Tropical BioEnergia S.A. to 100 per cent, by acquiring the remaining 50 per cent of the company from its current joint venture partners for a total cash consideration of approximately US$71 million. BP's current joint venture partners in Tropical BioEnergia S.A. are Maeda S.A. Agroindustrial (25 per cent) and LDC-SEV Bioenergia S.A. (25 per cent).

• Business/Finance news:

- The bailiff of the Federal Bailiff Service (FSSP) for Moscow passed a resolution to postpone the execution of enforcement procedures against BP Exploration Operating Company Limited (BP EOC) until 10 September 2011. The postponement was introduced in response to a petition filed by BP EOC regarding the necessity to get clarification from the Arbitration Court of Tyumen Region. The required clarifications concern the judicial act which was the basis for the executive actions. BP EOC believes that the Court Decision which allowed the inspection and copying of documents in the Moscow office of the company contradicts the applicable Russian legislation, contains outrageous requirements and was made in support of an unfounded lawsuit. BP EOC is not a defendant in the legal claim by TNK-BP Holding minority shareholders and is neither a direct nor an indirect shareholder of TNK-BP Holding. The keywords "oil" and "gas", on which the search in documents was authorized to be carried out, allows the seizure of virtually all corporate documentation of BP EOC, including confidential documents. In addition, the Arbitration Court of Tyumen ordered the bailiffs to allow the representatives of Andrei Prokhorov, a minority shareholder of TNK-BP, to participate in the examination and confiscation of documents and then to turn them over to such representatives instead of the court. BP EOC believes that this process has been a misuse of the Russian Arbitration Procedure Code. The decision taken by the bailiffs will allow BP EOC time to appeal against the decision of the Arbitration Court of Tyumen region under normal conditions and to require the complete cancellation of any enforcement proceedings under the unfounded lawsuit by Andrei Prokhorov. At present, all examined documents of BP EOC remain in office in a sealed cabinet. The company expects to resume normal operation of the office on Monday, 5 September.

- BP is aware of the claims filed against the company on 1 September 2011 by Halliburton. The company is now reviewing the contents of the claims and until this is complete cannot comment in detail. However, BP believes this lawsuit is the latest attempt by Halliburton to divert attention from its role in the Deepwater Horizon incident and its failure to meet its responsibilities, and to deflect all blame to BP. BP will vigorously contest the claims should they come to court. BP has co-operated with the various investigation bodies, providing detailed information. Investigations published so far have concluded that multiple parties contributed to the incident, including Halliburton. Multiple independent investigations have identified serious problems with the cementing of the well as a potential contributory factor to the Deepwater Horizon disaster – not only BP’s own investigation.

- BP, running weeks behind schedule and tens of millions of dollars over budget in trying to complete its troubled Macondo well in the Gulf of Mexico, took many shortcuts that contributed to the disastrous blowout and oil spill there last year, federal investigators concluded. The central cause of the explosion aboard the Deepwater Horizon drilling rig was a failure of the cement at the base of the 18,000-foot-deep well that was supposed to contain oil and gas within the well bore. That led to a cascade of human and mechanical errors that allowed natural gas under tremendous pressure to shoot onto the drilling platform, causing an explosion and fire that killed 11 of the 126 crew members and caused an oil spill that took 87 days to get under control.

- A minnowlike fish that is a major source of food in wetland marshes along the Gulf of Mexico is showing early signs of biological damage from the BP oil spill, a peer-reviewed study found. Exposure to toxic chemicals from the BP disaster, which spewed 4.9 million barrels off the coast of Louisiana in 2010, has altered the gulf killifish’s cellular functions in ways that have been predictive of a lack of reproduction in other fish, according to the study, which appears in the Proceedings of the National Academy of Sciences. Tests of the fish showed cellular changes like poorly regulated estrogen, potentially signaling an impact on reproduction. Other cellular changes could point to impaired biological performance and health, the study said.

- BP agrees with the report's core conclusion consistent with every other official investigation that the Deepwater Horizon accident was the result of multiple causes, involving multiple parties, including Transocean and Halliburton. From the outset, BP acknowledged its role in the accident and has taken concrete steps to further enhance safety and risk management throughout its global operations, including the implementation of new voluntary standards and practices in the Gulf of Mexico that exceed current regulatory requirements and strengthen the oversight of contractors.

- BP has launched a global search for new talent among post-graduates with proven technical skills who have an ambition to shape the future of BP's Refining and Marketing businesses and its Information Technology function to potentially become senior leaders of the future.

- BP Target Neutral announced that they are inviting London 2012 ticketholders, from across the world, to try and set a new world record for the most number of people offsetting their travel carbon to a single event. In so doing, BP’s not-for-profit Target Neutral carbon management scheme is seeking to create awareness of the environmental impact of all journeys and will invite ticketholders to sign up to have their travel carbon footprint offset at no cost to themselves.

October

• Upstream news:

- BP is pleased to announce the completion of a major milestone on the Devenick gas project in the central North Sea. A 600 tonne module, recently fabricated in McNulty’s South Shields yard, was successfully lifted on to Marathon Oil’s East Brae platform, the host for the new subsea development. The module will receive gas and condensate from the Devenick reservoir, and separate them before onward transportation through two existing pipeline networks. The Devenick gas project was approved by the Government in late 2010 and is on track to provide an important new source of domestic gas for the UK from 2012. Production from the field is due to peak in 2013 at up to 200 million standard cubic feet per day, equivalent to approximately 3 per cent of UK gas production.

- BP, on behalf of its co-venturers ConocoPhillips, Chevron and Shell, announced the successful completion of a well drilled to establish a southwest extension of the Clair field, west of Shetland in the UK. The giant Clair field is the UK’s largest hydrocarbon resource, with total volumes initially in place across the entire field currently estimated at more than 7 billion barrels of oil equivalent. This latest well confirms recoverable oil from a new portion of the field, further increasing confidence in the potential of the greater Clair field area.

- After an internal debate, the Obama administration announced that BP would be allowed to bid on new oil leases in the Gulf of Mexico. Just a day before, the Interior Department cited BP, the British oil company, and its two principal contractors for numerous safety and environmental violations related to the explosion that sank the Deepwater Horizon rig in April 2010.

- BP and its co-venturers ConocoPhillips, Chevron and Shell announced that approval has been received from the UK Government to proceed with the second phase of development of the giant Clair field, located to the west of the Shetland Islands. The development – called Clair Ridge – will involve the construction and installation of two new, bridge-linked platforms, scheduled to be installed in 2015 with production expected to commence in 2016. The new facilities are being designed for 40 years of production and will require a total capital investment of circa £4.5 billion. The new development will have the capability to produce an estimated 640 million barrels of oil and will provide a hub for future expansion, subject to further appraisal. Peak production is expected to be up to 120,000 barrels of oil per day.

- BP and its partners are developing four new oil and gas projects that together will involve a total investment of almost £10 billion in the UK’s oil industry over the next five years and help to maintain BP’s production from the North Sea for decades to come. The UK Government granted BP and its partners - Shell, ConocoPhillips and Chevron - approval to proceed with the £4.5 billion Clair Ridge project, the second phase of development of the giant Clair field, west of the Shetland Islands.

- BP Egypt announced the Salmon gas discovery in the North El Burg Offshore Concession, Nile Delta. Salmon is the third gas discovery BP has made in the concession following Satis-1 and Satis-3 Oligocene deep gas discoveries. Salmon, drilled by IEOC, the affiliate of ENI in Egypt, on behalf of concession operator BP, is located 50 kilometers to the north of Damietta. The wireline logs and pressure readings confirmed the presence of gas in two shallow Pleistocene intervals. The well was drilled by Scarabeo IV rig in water depths of 87m and reached a total depth of 1600m. Further appraisal work to evaluate the resources is underway.

• Downstream news:

- BP Wind Energy announced that it has signed wind turbine supply and maintenance agreements totaling over $750 million to further build out its wind portfolio in the US. A total of 350 wind turbine units will be delivered to BP projects that when in operation will have a combined power generation of 560 megawatts (MW). Some 88 wind turbines will be delivered to BP’s Mehoopany Wind Farm located on a 9,000-acre site in Wyoming County, PA some 20 miles northwest of Scranton. When in full operation, the project will generate approximately 144 MW of energy. The remaining 262 units will be delivered to the Flat Ridge 2 Wind Farm located in south-central Kansas. The project will generate 419 megawatts of renewable power when in full operation. Both projects are expected to be on line by year-end 2012.

• Business/Finance news:

- BP announced that it has appointed Michael Townshend as a non-executive director of TNK-BP with immediate effect. Townshend will also continue as president of BP in Iraq, overseeing the expansion of Rumaila, the world’s fourth largest oilfield. He takes up the position on the TNK-BP board recently vacated by Tony Hayward.

- BP announced that it has reached agreement with Anadarko Petroleum Company (“Anadarko”) to settle all claims between the companies related to the Deepwater Horizon accident. Anadarko – which had a 25 per cent interest in the MC252 (Macondo) prospect – and BP have concluded that entering into a settlement is in the best interest of the parties to resolve pending disputes. The agreement is not an admission of liability by any party regarding the accident. Under the settlement agreement, Anadarko will pay BP $4 billion in a single cash payment. BP will apply the payment to the $20 billion trust it established that is available to meet individual, business and government claims, as well as the cost of the natural resource damages. Anadarko will also transfer all of its 25 per cent interest in the MC252 lease to BP. In addition, Anadarko will no longer pursue its allegations of gross negligence with respect to BP. Anadarko and BP have agreed to work cooperatively with respect to indemnified claims, and Anadarko has the opportunity for a 12.5 per cent participation in future recoveries from third parties or insurance proceeds cumulatively exceeding $1.5 billion, up to a total cap of $1 billion. Finally, the parties have also agreed to mutual releases of claims against each other. BP has agreed to indemnify Anadarko for certain claims arising from the accident. However, BP’s indemnity excludes civil, criminal or administrative fines and penalties, claims for punitive damages, and certain other claims.

- TNK-BP shareholders Alfa, Access, Renova (AAR) and BP have agreed a number of decisions regarding senior management roles at TNK-BP. It is expected that these decisions will be formally approved by the Board of Directors and implemented before the close of the current year. The decisions reflect the shared commitment of the joint-venture partners to the continued success and development of TNK-BP. The shareholders have agreed to form a new management committee that will run TNK-BP on a day-to-day basis. This will consist of four executive directors along with the chief executive officer and chief financial officer.

- BP's third quarter replacement cost profit was $5,140 million, compared with $1,847 million a year ago. For the nine months replacement cost profit was $15,930 million compared with a loss of $9,528 million a year ago. Replacement cost profit or loss for the group is a non-GAAP measure. For further information see pages 4 and 17.

- As BP announced its financial results for the third quarter of 2011 group chief executive Bob Dudley set out more details on BP’s future direction and strategic priorities, saying the company had reached a clear turning point. Progress made through 2011 in reshaping and focussing the company is creating a stronger and safer BP, able now to deliver both sustainable growth and higher shareholder returns.

- The board of BP plc announced that Brian Gilvary will join the board and become the company's chief financial officer (CFO) with effect from 1 January 2012. Byron Grote, the current CFO, will take up a new role as executive vice president, corporate business activities, on the same date. Dr Grote will also continue as a member of the board.

November

• Upstream news:

- BP announced that a Notification of Discovery for the Itaipu-2 pre-salt appraisal well, located in block BM-C-32 in the deepwater sector of the Campos Basin, has been lodged with the Brazilian National Petroleum Agency (ANP). The well, approximately 130km offshore Brazil, was drilled to a total depth of 4,877 metres in 1,420 metres water depth. Itaipu-2 delineates the discovery made in 2009-10 in Itaipu-1 some 7km to the northwest..Itaipu-2 encountered strong shows on drilling including elevated gas, gas wetness and fluorescence within the cuttings. Well logging indicates a fluid contact within the target Upper Sag reservoir comprising a 19 metre gross petroleum-bearing interval overlying good quality porous water-bearing carbonates.

- BP (NYSE: BP) announced that it has agreed to sell its interests in the Pompano and Mica fields in the deepwater Gulf of Mexico to Stone Energy Offshore, LLC, a subsidiary of Stone Energy Corp (NYSE: SGY). Under the agreement, Stone Energy will pay BP $204 million in cash. The agreement includes the sale of BP’s 75 per cent operated working interest (WI) in the Pompano field and assets and 50 per cent non-operated WI in the Mica field, together with a 51 per cent operated WI in Mississippi Canyon block 29 and interests in certain leases located in the vicinity of the Pompano field.

- BP confirmed that it has been awarded two oil and gas production sharing contracts (PSCs) by the Government of Indonesia. The company has been awarded 100 per cent interests in the offshore West Aru I and II PSCs in the Arafura Sea, Indonesia. The West Aru I and II PSCs are located approximately 500 kilometres southwest of the BP-operated North Arafura PSC and 200 km west of the Aru island group, in the Maluku province of Indonesia. The West Aru I PSC covers an area of approximately 8,100 square kilometres and the West Aru II PSC covers an area of approximately 8,300 square kilometres. The two blocks have water depths ranging between 200 metres and 2,500 metres. BP expects to commence seismic operations in these blocks in the near future.

• Downstream news:

- Japan's largest airline, All Nippon Airways (ANA) has specified Air BP’s industry-leading turbine lubricants for the engines and auxiliary power units on its brand new Boeing 787 Dreamliner aircraft. ANA is the world’s first commercial customer for Boeing’s innovative new aircraft, having taken delivery in September 2011 of the first of 55 planes ordered.

• Business/Finance news:

- On 5 November 2011, BP received from Bridas Corporation a notice of termination of the agreement for their purchase of BP's 60 per cent interest in Pan American Energy LLC (PAE). As a result of Bridas Corporation’s decision and action, the share purchase agreement governing this transaction, originally agreed on 28 November 2010, has been terminated. The closing of this transaction had been delayed because the Argentine anti-trust and Chinese regulatory approvals required to satisfy the conditions precedent to closing of the transaction had not been obtained by Bridas Corporation. Under the terms of the agreement, Bridas Corporation had exclusive responsibility for obtaining these approvals. As a result of Bridas Corporation’s termination of the agreement, BP will now repay the deposit for the transaction of $3.53 billion received at the end of 2010. This deposit had been held by BP as short-term debt and will be repaid by 14 November 2011. This repayment will not affect BP's level of gearing, which stood at 19 per cent at the end of September.

- After 18 months of sustained effort to clean the shoreline of the Gulf of Mexico following the Deepwater Horizon accident, the U.S. Coast Guard’s federal on-scene coordinator (FOSC) has approved the shoreline clean-up completion plan, paving the way for restoration work. Under the plan, the FOSC will determine which shoreline segments have completed the active clean-up measures and can transition out of the response phase. That will allow the federal and state trustees to move forward with BP-funded restoration activities.

- BP and its co-venturers in the Shah Deniz consortium announced their new programme to support Turkey’s Middle East Technical University (METU) in providing technical training and international certification to Turkish engineers. Under this programme, funding from the Shah Deniz consortium will enable a technical training and certification programme to be run at METU. The technical training will be focused on quality assurance for pipelines and gas transportation systems, in such areas as mechanical engineering, materials, and civil/structural engineering. The international certifications will focus on areas such as non-destructive testing (NDT), welding, inspections, electrical and instrumentation, and corrosion.

December

• Upstream news:

- BP announced that it has agreed to sell its Canadian natural gas liquids (NGL) business to Plains Midstream Canada ULC (Plains Midstream), a wholly-owned subsidiary of Plains All American Pipeline, L.P. (NYSE:PAA). Plains Midstream will pay BP a total of US$1.67 billion in cash, subject to customary adjustments, for the business. BP’s Canadian NGLs business owns, operates and has contractual rights to assets involved in the extraction, gathering, fractionation, storage, distribution and wholesale marketing of NGLs across Canada and in the Midwest United States. Assets include NGL extraction plants; pipeline gathering systems; fractionation plants; and storage and specification product distribution facilities. In total, the business owns or has rights to approximately 4,000 kilometres of pipeline systems; 21 million barrels of storage capacity; 232,000 barrels per day of fractionation capacity; and NGLs produced from 8.3 billion cubic feet per day of gas processing capacity.

- BP confirmed that it has gained access to five more deepwater exploration and production blocks offshore Angola. These give BP a leading position in Angola, with interests in nine blocks accounting for a total acreage of 32,650 square kilometres (km2). In a ceremony in Luanda, in the presence of state oil company Sonangol’s president Manuel Vincente and BP group chief executive Bob Dudley, the production sharing agreements were signed for four new blocks covering 19,400 km2 in the Kwanza and Benguela basins. Separately, BP has recently taken a 40% stake in the 4,840 km2 Block 26 in the Benguela basin, by agreeing a farm-in deal with Brazilian national oil company, Petrobras, which operates the block.

• Downstream news:

- Air BP announced the purchase of aviation fuel assets at seven Brazilian airports from Shell Brasil Holding B.V. and Cosan S.A. Indústria e Comercio for R$185 million (ca. US$100 million). The acquisition will give Air BP access to Guarulhos, Recife, Viracopos, Curitiba and Pampulha airports, as well as increasing capacity at existing Air BP operations in Galeão and Brasília. The deal is expected to be completed in the first quarter of 2012 subject to regulatory approvals. On completion, Air BP will be present at 18 Brazilian airports which together account for some 66 percent of aviation fuel demand in Brazil. The deal adds physical assets such as storage tanks, vehicles and pipelines for into-plane refuelling, allowing Air BP to market fuel direct to commercial airlines and general aviation customers at the new locations.

• Business/Finance news:

- The board of BP p.l.c. announced that Andrew Shilston will join the Board as a non-executive director with effect from 1st January 2012. Andrew Shilston is currently chief financial officer at Rolls-Royce Holdings plc.

- The findings of the National Academy of Engineering/National Research Council are consistent with the consensus which has emerged from every official investigation: that the Deepwater Horizon accident was complex and was the result of multiple causes, involving multiple parties. From the outset, BP has acknowledged its role in the accident and has taken concrete steps to further enhance safety and risk management throughout its global operations. We have stepped up to meet our obligations in the Gulf, and we continue to encourage Transocean and Halliburton to similarly acknowledge their responsibilities and contribute to those economic and environmental restoration efforts.

- State and federal Trustees today unveiled the first set of early environmental restoration projects that are proposed for funding under the landmark agreement BP Exploration & Production, Inc. (BP) signed with the Trustees in April 2011. The eight proposed projects are located in Alabama, Florida, Louisiana and Mississippi. Collectively, the projects will restore and enhance wildlife, habitats, the services provided by those habitats, and provide additional access for fishing, boating and related recreational uses. More early restoration projects are anticipated in the future. Under the unprecedented April agreement, BP voluntarily committed to provide up to $1 billion to fund projects that will accelerate restoration efforts in Gulf Coast areas that were impacted by the Deepwater Horizon accident. The agreement enables work on restoration projects to begin at the earliest opportunity, before all of the studies under the Natural Resource Damage Assessment (NRDA) process are complete, and before funding is required by the Oil Pollution Act (OPA).

- A Gulf Coast task force appointed by President Obama recommended that a “significant portion” of the billions of dollars in fines that BP is expected to pay for last year’s Deepwater Horizon oil spill go to ecological restoration. Issuing its final recommendations, the federal-state task force said that a permanent panel should be created to champion and coordinate actions like limiting excess nutrients flowing into the Gulf of Mexico from farm states along the Mississippi. It recommended that river engineers put freshwater and sediment flows on an equal footing with issues like flood control. The recommendations of the task force, which was created by Mr. Obama in the aftermath of the oil-well blowout in 2010, were similar to those in a draft report it issued in October and are not binding. Under federal law, any civil penalties paid by BP under the Clean Water Act are to go to an oil spill liability trust fund with limited capacity to do restoration. Legislation being considered in Congress would allocate at least 80 percent of the possible Clean Water penalties to gulf restoration but would define restoration efforts in the broadest terms. One version, to be reviewed in a House committee meeting, calls for a new joint federal-state council for ecological restoration to direct or influence the flow of 60 percent of the money. A full 35 percent would go directly to states to be used at their discretion, including for the purpose of economic restoration like rebuilding boardwalks or a convention center. Five percent would be available for research. The explosion and blowout on a BP oil rig in April 20, 2010, killed 11 people and caused nearly five million barrels of crude to flow into the gulf, the largest oil spill in the nation’s history.

- BP announced that it has reached agreement with Cameron International Corporation (“Cameron”), the designer and manufacturer of the Deepwater Horizon blowout preventer, to settle all claims between the companies related to the Deepwater Horizon accident and spill. BP and Cameron have concluded that the settlement is in their mutual best interests, and the agreement is not an admission of liability by either party. Under the settlement agreement, Cameron will pay BP $250 million. BP will immediately apply the payment to the $20 billion trust it established to meet individual, business and government claims, as well as the cost of the natural resource damages.

- Four of the UK’s major cultural institutions - the British Museum, the National Portrait Gallery, the Royal Opera House, and Tate Britain - announced the renewal and extension of their long-standing partnerships with BP. In total, BP will invest almost £10 million in the four partnerships over the next five years. Taken together, these agreements represent one of the most significant long-term corporate investments in UK arts and culture.

- BP announced the launch of a new corporate social responsibility (CSR) programme in Russia, one of the biggest of its kind undertaken by a foreign company. The five year (2011-2105) $50 million programme in a range of technology, education and culture projects is designed to bolster research and skills in the energy sector. This new investment will enable BP to build on the successful five year programme it started in 2004 in partnership with three leading Russian universities, and which has since been extended to include ten additional educational and research centres across Moscow and St. Petersburg.

- BP Russia and the Skolkovo Foundation are pleased to announce an agreement to set up a major research collaboration with Russia’s Boreskov Institute of Catalysis, one of the world’s largest research centres, specialising in catalysis, and Imperial College London, one of the world’s leading universities. The parties will now work together to define a three to five year GBP 9.3 million energy efficiency research programme which will, subject to the conclusion of the collaboration agreement, be co-funded by BP Russia and the Skolkovo Foundation.

- The petroleum industry and federal regulators focused more on exploration and production than safety in the years leading up to the 2010 Gulf of Mexico oil spill, helping to set the stage for the worst offshore environmental disaster in U.S. history, according to a new independent report by the National Academy of Engineering and the National Research Council. Conducted at the behest of Interior Secretary Ken Salazar, the report said the "multiple flawed decisions that led to a blowout" on the Deepwater Horizon rig resulted from "a deficient overall systems approach to safety" among the corporations that ran the drilling of the Macondo well, including BP, Transocean and Halliburton. The report, titled "Macondo Well — Deepwater Horizon Blowout, Lessons for Improving Offshore Drilling Safety," echoed many findings from previous studies of the disaster. But it added new levels of detail and put the nation's top engineering peer group behind a call for redesigning a massive set of valves, rams and hydraulic devices once thought to be fail-safe: the blowout preventer that failed to stem the flow of more than 200 million gallons into the Gulf of Mexico. The fragmented nature of offshore oil drilling, with different companies responsible for highly specialized tasks, means that few people on a rig may have a complete sense of the risks involved in the drilling operation, the report concluded. The report committee's chairman, former Navy Secretary Donald C. Winter, said that improvements in regulatory oversight and in industry response to offshore disasters gave him confidence that offshore drilling should continue. But he stressed that more work needed to be done. The Interior Department said in a statement that it welcomed the report's findings, which it said backed the regulatory policies it has pursued since the Deepwater Horizon explosion on April 20, 2010. The department introduced more stringent environmental and safety regulations, and the industry responded by developing new oil spill response and containment systems, incorporating lessons from the gulf disaster. But the report expressed concerns about how serious and sustained industry efforts might be, given that its research and development efforts over the last 20 years have been shrunk and outsourced. And most of those efforts have "been focused disproportionately on exploration, drilling, and production technologies as opposed to safety."

- BP announced the creation of a $4.5 million high school scholarship program aimed at providing financially challenged students with the opportunity to study abroad and gain intercultural skills needed to succeed in a global economy. The program, BP Global Citizens of Tomorrow, was developed with AFS Intercultural Programs, the non-profit cultural exchange organization.

- BP is launching a new nationwide television advertising campaign to update the American people on progress being made to clean up and restore the Gulf Coast region in the wake of the Deepwater Horizon accident. The initial advertisement in the series, which will debut on December 26, 2011, marks the first time since late last year that BP has gone on the air nationally with ads providing such an update. It comes as the cleanup phase of the Gulf of Mexico oil spill response is nearing completion and the first set of early restoration projects is preparing to move forward.

- Bad news for the Gulf of Mexico: a study released sheds new light on the toxicity of oil in aquatic environments, and shows that environmental impact studies currently in use may be inadequate. The report is to be published in the Proceedings of the National Academy of Sciences. The study, spearheaded by the UC Davis Bodega Marine Laboratory in collaboration with NOAA, looked into the aftermath of the 2007 Cusco Busan spill, when that tanker hit the San Francisco-Oakland Bay Bridge and spilled 54,000 gallons of bunker fuel into the bay. The key finding involved the embryos of Pacific herring that spawn in the bay. The fish embryos absorbed the oil and then, when exposed to UV rays in sunlight, physically disintegrated. This is called phototoxicity, and has not previously been taken into account when talking about oil spills. This is another big jump in understanding the real damages from oil spills. Studies of the 1989 Exxon Valdez spill created an entirely new understanding of oil damage when it was found that oil was toxic in minute quantities measured in parts-per-billion and even parts-per-trillion – much lower than previously recognized. This finding of phototoxicity, however, presents a new challenge. Phototoxicity is a phenomenon that is well known to human users of certain antibiotics, which can cause a rash if the person is exposed to direct sunlight. It has also long been associated with crude oil and creosote, which can cause a nasty redness on human skin when combined with sun exposure.