Plaintiffs' Response in Opposition to BP Motion

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1 CITY OF OAKLAND CITY AND COUNTY OF SAN FRANCISCO BARBARA J. PARKER, State Bar #069722 DENNIS J. HERRERA, State Bar #139669 2 City Attorney City Attorney MARIA BEE, State Bar #167716 RONALD P. FLYNN, State Bar #184186 3 Special Counsel Chief Deputy City Attorney ERIN BERNSTEIN, State Bar #231539 YVONNE R. MERÉ, State Bar #173594 4 Supervising Deputy City Attorney Chief of Complex and Affirmative Litigation MALIA MCPHERSON, State Bar #313918 ROBB W. KAPLA, State Bar #238896 5 Attorney Deputy City Attorney One Frank H. Ogawa Plaza, 6th Floor MATTHEW D. GOLDBERG, State Bar 6 Oakland, California 94612 #240776 Tel.: (510) 238-3601 Deputy City Attorney Fax: (510) 238-6500 City Hall, Room 234 7 Email: [email protected] 1 Dr. Carlton B. Goodlett Place San Francisco, California 94102-4602 8 Attorneys for Plaintiffs Telephone: (415) 554-4748 CITY OF OAKLAND and Facsimile: (415) 554-4715 9 PEOPLE OF THE STATE OF CALIFORNIA, Email: [email protected] acting by and through the Oakland City 10 Attorneys for Plaintiffs Attorney BARBARA J. PARKER CITY AND COUNTY OF SAN FRANCISCO [Other Counsel Listed on Signature Page] 11 and PEOPLE OF THE STATE OF CALIFORNIA, acting by and through the San

12 Francisco City Attorney DENNIS J. HERRERA 13 [Other Counsel Listed on Signature Page]

14 UNITED STATES DISTRICT COURT 15 NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 16

17 CITY OF OAKLAND, a Municipal Corporation, Case No.: 3:17-cv-06011-WHA and THE PEOPLE OF THE STATE OF 18 CALIFORNIA, acting by and through the PLAINTIFFS’ RESPONSE IN Oakland City Attorney, OPPOSITION TO BP P.L.C.’S 19 MOTION TO DISMISS FOR LACK OF Plaintiffs, PERSONAL JURISDICTION 20 v. 21 BP P.L.C., a public limited company of England Hearing Date: May 24, 2018 22 and Wales, CHEVRON CORPORATION, a Hearing Time: 8:00 a.m. Delaware corporation, CONOCOPHILLIPS, a Courtroom 12 (19th floor) 23 Delaware corporation, EXXON MOBIL Judge: Hon. William Alsup CORPORATION, a New Jersey corporation, 24 ROYAL DUTCH SHELL PLC, a public limited company of England and Wales, and DOES 1 25 through 10,

26 Defendants.

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1 CHEVRON CORP., 2 Third Party Plaintiff, 3 v.

4 STATOIL ASA,

5 Third Party Defendant. 6 CITY AND COUNTY OF SAN FRANCISCO, Case No.: 3:17-cv-06012-WHA 7 a Municipal Corporation, and THE PEOPLE OF THE STATE OF CALIFORNIA, acting by and 8 through the San Francisco City Attorney PLAINTIFFS’ RESPONSE IN DENNIS J. HERRERA, OPPOSITION TO BP P.L.C.’S 9 MOTION TO DISMISS FOR LACK OF Plaintiffs, PERSONAL JURISDICTION 10 v. 11 BP P.L.C., a public limited company of England Hearing Date: May 24, 2018 12 and Wales, CHEVRON CORPORATION, a Hearing Time: 8:00 a.m. Delaware corporation, CONOCOPHILLIPS, a Courtroom 12 (19th floor) 13 Delaware corporation, EXXON MOBIL Judge: Hon. William Alsup CORPORATION, a New Jersey corporation, 14 ROYAL DUTCH SHELL PLC, a public limited company of England and Wales, and DOES 1 15 through 10,

16 Defendants.

17 CHEVRON CORP., 18 Third Party Plaintiff, 19 v. 20 STATOIL ASA, 21 Third Party Defendant. 22

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1 TABLE OF CONTENTS Page 2 I. INTRODUCTION ...... 1 3 II. FACTUAL BACKGROUND ...... 2 4 A. BP makes the business decision within the BP Group to produce fossil fuels at 5 massive levels, taking into account climate change...... 2

6 B. BP engages in production, sales and promotion of fossil fuels in California...... 4

7 C. BP has contributed to the global warming nuisance, which is causing severe injuries to the Cities...... 6 8 III. LEGAL STANDARD ...... 6 9 IV. ARGUMENT ...... 7 10 A. This Court has specific jurisdiction over the Cities’ claims against BP...... 7 11 1. BP does not challenge that it puposefully directed its activities 12 to California...... 7

13 2. The Cities' claims arise out of or relate to BP's conduct in California...... 9 14 3. The Lombardo Declaration should be disregarded as inadmissible expert testimony…………………………………………………………….16 15 B. Exercising personal jurisdiction over BP is reasonable...... 18 16 C. Alternatively, the Cities are entitled to jurisdictional discovery...... 20 17 V. CONCLUSION ...... 21 18

19 20 21 22 23 24 25 26 27 28 i PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA Case 3:17-cv-06011-WHA Document 231 Filed 05/03/18 Page 4 of 29

1 TABLE OF AUTHORITIES Page(s) 2 Cases 3 In re “Agent Orange” Prod. Liab. Litig., 4 597 F. Supp. 740 (E.D.N.Y. 1984) ...... 14

5 Adidas Am., Inc. v. Cougar Sport, Inc., 6 169 F. Supp. 3d 1079 (D. Or. 2016) ...... 9 7 Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064 (9th Cir. 2017) ...... 7, 8 8 Bancroft & Masters, Inc. v. August Nat’l, Inc., 9 223 F.3d 1082 (9th Cir. 2000) ...... 18

10 Boim v. Holy Land Found. for Relief & Dev., 549 F.3d 685 (7th Cir. 2008) ...... 14 11 12 Brackett v. Hilton Hotels Corp., 619 F. Supp. 2d 810 (N.D. Cal. 2008) ...... 16 13 Brayton Purcell LLP v. Recordon & Recordon, 14 606 F.3d 1124 (9th Cir. 2010) ...... 6

15 Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) ...... 15 16 17 Burlington Northern & Santa Fe Ry. v. United States, 556 U.S. 599 (2009) ...... 14 18 California Brewing Co. v. 3 Daughters Brewing LLC, 19 2016 WL 1573399 (E.D. Cal. Apr. 19, 2016) ...... 9

20 California v. Gold Run Ditch & Mining Co., 4 P. 1152 (Cal. 1884) ...... 13 21 Chunghwa Telecom Global v. Medcom, 22 2016 WL 5815831 (N.D. Cal. Oct. 5, 2016) ...... 18 23 City of Tulsa v. Tyson Foods, Inc., 24 258 F. Supp. 2d 1263 (N.D. Okla. 2003) ...... 13

25 Copart, Inc. v. Sparta Consulting, Inc., 2018 WL 1871414 (E.D. Cal. Apr. 19, 2018) ...... 17 26 Cortina v. Bristol-Myers Squibb Co., 27 2017 WL 2793808 (N.D. Cal. June 27, 2017) ...... 10 28 ii PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA Case 3:17-cv-06011-WHA Document 231 Filed 05/03/18 Page 5 of 29

1 Cox v. City of Dallas, 256 F.3d 281 (5th Cir. 2001) ...... 12 2 Deflecto, LLC v. Dundas *Jafine Inc., 3 2015 WL 6755316 (W.D. Mo. Nov. 4, 2015) ...... 17, 18 4 Doe v. Am. Nat’l Red Cross, 5 112 F.3d 1048 (9th Cir. 1997) ...... 15 6 Doe v. Unocal Corp., 248 F.3d 915 (9th Cir. 2001) ...... 15 7 Dubose v. Bristol-Myers Squibb Co., 8 2017 WL 2775034 (N.D. Cal. June 27, 2017) ...... 10

9 Elec. Recyclers Int’l, Inc. v. Calbag Metals Co., 10 2015 WL 1529490 (E.D. Cal. Apr. 2, 2015) ...... 9 11 Exxon Mobil Corp. v. Attorney Gen., 2018 WL 1769759 (Mass. Apr. 13, 2018) ...... 12 12 Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 13 528 U.S. 167 (2000) ...... 12

14 Hendricks v. New Video Channel America, 15 2015 WL 3636983 (C.D. Cal. June 8, 2015) ...... 11 16 Holland America Line, Inc. v. Wartsila North America, Inc., 485 F.3d 450 (9th Cir. 2007) ...... 8 17 Hynix Semiconductor Inc. v. Rambus Inc., 18 2008 WL 504098 (N.D. Cal. Feb. 19, 2008) ...... 18

19 Illinois v. Milwaukee, 1973 U.S. Dist. LEXIS 15607 (N.D. Ill. Jan. 1, 1973) ...... 18 20 21 Illumina, Inc. v. Qiagen NV, 2016 WL 3902541 (N.D. Cal. July 19, 2016) ...... 20 22 Kabo Tool Co. v. Porauto Indus. Co., 23 2013 WL 5328496 (D. Nev. Sep. 20, 2013) ...... 19

24 Keeton v. Hustler Magazine, 465 U.S. 770 (1984) ...... 1, 9, 10 25 Landers v. East Texas Salt Water Disposal Co., 26 248 S.W.2d 731 (Tex. 1952) ...... 13 27 Laub v. United States DOI, 28 342 F.3d 1080 (9th Cir. 2003) ...... 20 iii PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA Case 3:17-cv-06011-WHA Document 231 Filed 05/03/18 Page 6 of 29

1 Learjet, Inc. v. Oneok, Inc., 715 F.3d 716 (9th Cir. 2013) ...... 9 2 Macias v. Waste Mgmt. Holdings, Inc., 3 2014 WL 4793989 (N.D. Cal. Sept. 25, 2014) ...... 20 4 Mavrix Photo, Inc. v. Brand Techs., Inc., 5 647 F.3d 1218 (9th Cir. 2011) ...... 11, 12 6 Michie v. Great Lakes Steel Div. Nat’l Steel Corp., 495 F.2d 213 (6th Cir. 1974) ...... 13 7 Milward v. Acuity Specialty Prods. Grp., 8 969 F. Supp. 2d 101 (D. Mass. 2013) ...... 13

9 Morin v. United States, 10 534 F. Supp. 2d 1179 (D. Nev. 2005) ...... 17 11 Mytee Prod. Inc. v. HD Prod. Inc., 2009 WL 10672416 (S.D. Cal. Mar. 12, 2009) ...... 17 12 North Sister Publ’g, Inc. v. Schefren, 13 2015 U.S. Dist. LEXIS 64637 (D. Or. Apr. 6, 2015) ...... 20

14 Panavision Int’l, L.P. v. Toeppen, 15 141 F.3d 1316 (9th Cir. 1998) ...... 18 16 Pebble Beach Co. v. Caddy, 453 F.3d 1151 (9th Cir. 2006) ...... 8 17 Picot v. Weston, 18 780 F.3d 1206 (9th Cir. 2015) ...... 12

19 Police & Fire Ret. Sys. of City of Detroit v. Watkins, 2011 WL 5307594 (E.D. Mich. Nov. 3, 2011) ...... 17 20 21 Richmond Techns., Inc. v. Aumtech Business Solutions, 2011 WL 2607158 (N.D. Cal. July 1, 2011) ...... 19 22 SA Luxury Expeditions LLC v. Latin Am. for Less, LLC, 23 2014 WL 6065838 (N.D. Cal. Nov. 12, 2014) ...... 20

24 Shute v. Carnival, 897 F.2d 377 (9th Cir. 1990) ...... 10 25 Sinatra v. National Enquirer, Inc., 26 854 F.2d 1191 (9th Cir. 1988) ...... 19 27 Sullivan v. Ford, 28 2016 WL 6520174 (N.D. Cal. Nov. 3, 2016) ...... 15 iv PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA Case 3:17-cv-06011-WHA Document 231 Filed 05/03/18 Page 7 of 29

1 Terracom v. Valley Nat’l Bank, 49 F.3d 555 (9th Cir. 1995) ...... 15, 16 2 The Lockwood Co. v. Lawrence, 3 77 Me. 297 (Me. 1885) ...... 13 4 United States v. Chem-Dyne Corp., 5 572 F. Supp. 802 (S.D. Ohio 1983) ...... 14 6 Universal Stabilization Techns., Inc. v. Advanced BioNutrition Corp., 2017 WL 1838955 (S.D. Cal. May 8, 2017)...... 19 7 Velsicol Chem. Corp. v. Rowe, 8 543 S.W.2d 337 (Tenn. 1976) ...... 13

9 Warren v. Parkhurst, 10 92 N.Y.S. 725 (N.Y. Sup. Ct. 1904) ...... 13 11 Wilden Pump & Eng’g Co. v. Versa-Matic Tool, Inc., 1991 WL 280844 (C.D. Cal. July 29, 1991) ...... 10, 11 12 Woodyear v. Schaefer, 13 57 Md. 1 (Md. 1881) ...... 13

14 Statutes 15 Outer Continental Shelf Lands Act ...... 11 16 Other Authorities 17 Fed. R. Civ. P. 4(k)(1)(A) ...... 7 18 Fed. R. Civ. P. 4(k)(2) ...... 8 19 Fed. R. Evid. 701 ...... 18 20 Fed. R. Evid. 702 ...... 16, 18 21 Restatement (Second) of Torts § 433B(2) ...... 12 22 23 Restatement (Second) of Torts § 840E (1979) ...... 13 24 Restatement (Second) of Torts § 881 cmt. d ...... 14 25 Richard Heede, Tracing Anthropogenic Carbon Dioxide and Methane Emissions to Fossil Fuel and Cement Producers, 1854–2010 ...... 6 26

27 28 v PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA Case 3:17-cv-06011-WHA Document 231 Filed 05/03/18 Page 8 of 29

1 I. INTRODUCTION 2 BP p.l.c. (“BP”) has, during the relevant time period, produced, imported, refined, sold and 3 promoted fossil fuels in California. Its promotion and sales in California continue to this day. These 4 California-based actions are substantial and an inextricable part of BP’s overall contribution to 5 global warming. BP does not contest that its in-state business operations constitute purposively 6 directing tortious activity to California. 7 BP’s primary argument against personal jurisdiction – that its California-based contribution 8 to global warming must cause all of the injury to the Plaintiffs (“Cities”) – is an incorrect statement 9 of the but-for personal jurisdiction causal standard. Courts routinely assert jurisdiction where the 10 plaintiff’s injury was produced by nationwide conduct that extends into the forum state, without 11 requiring the plaintiff to show that the injury was caused by just the slice that occurred in the forum. 12 Most notably, in Keeton v. Hustler Magazine, 465 U.S. 770 (1984), the Supreme Court sustained 13 jurisdiction in a defamation case based on the fact that the defendant had sold a few thousand 14 magazines in New Hampshire even though the injury was caused by the totality of the much greater 15 sales nationwide. Similarly, courts in this jurisdiction repeatedly have held – in cases where the 16 defendant’s overall conduct both in the forum and outside the forum have caused the plaintiff’s 17 injury – that the but-for causal test is satisfied regardless of whether the California conduct alone 18 would have produced the injury. These courts have rejected BP’s rigid version of the but-for rule, 19 which would require the California conduct alone to produce the entire injury, as leading to an 20 “absurd result.” The California-based conduct need only be “part” of the overall national (or 21 international) causal chain to satisfy the-but for test. This approach to personal jurisdiction causation 22 is particularly appropriate here, where causation on the merits is governed by a multiple contributor 23 rule that does not require each defendant’s contribution standing alone to cause the nuisance, only 24 that it knows that its contribution is combining with others’ to cause the nuisance. 25 26 27 28 1 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 II. FACTUAL BACKGROUND 2 A. BP makes the business decision within the BP Group to produce fossil fuels at massive levels, taking into account climate change. 3 BP is a publicly traded, multinational, vertically integrated oil and gas company that does 4 business in California. First Amended Complaint (“FAC”) ¶ 16.1 BP is one of the largest investor- 5 owned fossil fuel corporations in the world as measured by historic production of fossil fuels. Id. ¶¶ 6 2, 94. BP acknowledges that it is the ultimate parent company for numerous subsidiaries in the BP 7 group that find and produce oil and gas worldwide, that refine oil into fossil fuel products such as 8 gasoline, and that market and sell oil, fuel and other refined petroleum products, and natural gas 9 worldwide.2 BP states in its annual report for 2017 that the BP “group explores for oil and natural 10 gas under a wide range of licensing, joint arrangement and other contractual agreements,” but that 11 “[a]ll subsidiary undertakings are controlled by the group.”3 12 The BP parent company is the ultimate decisionmaker on the most fundamental decision 13 about the company’s core business, i.e., the level of companywide fossil fuels to produce. BP makes 14 this decision based on a number of factors, including climate change. BP states in its most recent 15 annual report that it brought “seven major projects in the Upstream [segment, i.e., exploration and 16 production] . . . online and under budget for the portfolio as a whole,” and these projects, “along with 17 six we brought online in 2016, have contributed to a 12% increase in our production.”4 It continued: 18 “That helps to put us on track to deliver 900,000 barrels of new product per day by 2021.”5 “We also 19 strengthened our portfolio with our most successful year of exploration since 2004, sanctioned three 20 exciting new projects in Trinidad, India and the Gulf of Mexico and added 143% reserves 21 22 23 1 The Cities’ first amended complaints are nearly identical; separate citations to each FAC are 24 provided only where necessary. 2 Declaration of Donna Sanker in Support of BP p.l.c.’s Motion to Dismiss (ECF No. 147-2), ¶ 3. 25 3 Decl. of Steve W. Berman in Support of Plaintiffs’ Response in Opposition to BP p.l.c.’s 26 Motion to Dismiss for Lack of Personal Jurisdiction (“Berman Decl.”), Ex. 1 (BP Annual Report and Form 20-F 2017) at 29, 231, filed concurrently herewith. 27 4 Id. at 9. 5 28 Id. 2 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 replacement for the group.”6 BP submits annual responses to climate change questionnaires from a 2 non-profit organization called CDP (formerly the Carbon Disclosure Project).7 In its 2016 response, 3 BP publicly stated that its “Board or individual/sub-set of the Board or other committee appointed by 4 the Board” is the highest level within the company with direct responsibility for climate change.8 5 Climate change is, of course, a major risk to BP’s business because fossil fuels emit carbon dioxide 6 and thus any significant climate change action may have an impact on BP’s business. BP thus 7 explains: 8 As part of BP’s annual planning process, we review the principal risks and uncertainties to the group. We identify those as having a high 9 priority for particular oversight by the board and its various committees in the coming year. BP manages, monitors and reports on 10 the principal risks and uncertainties that can impact our ability to deliver our strategy of meeting the world’s energy needs responsibly 11 while creating long-term shareholder value. Climate change and carbon pricing are explicitly assessed as risk factors. Our management 12 systems, organizational structures, processes, standards, code of conduct and behaviours together form a system of internal control that 13 governs how we conduct the business of BP and manage associated risks.9 14 BP further states: “Strategic climate-related policy and other relevant non-operational risk is assessed 15 at a group level.”10 BP in its CDP response also takes responsibility for companywide production of 16 fossil fuels by calculating the greenhouse gas emissions resulting from the use of its products by 17 consumers based on “BP’s total reported production of natural gas, natural gas liquids and refinery 18 throughputs.”11 BP as the parent company also takes responsibility for the global corporate family 19 on the issue of “stranded assets,” i.e. the possibility that fossil fuel reserves may become stranded 20

21 6 Id. While BP’s report states that “[u]nless otherwise stated, the text does not distinguish between the activities and operations of the parent company and those of its subsidiaries,” it is clear 22 that these statements refer to global companywide positions and production levels on the topics they discuss – the company’s production “portfolio,” new production figures for BP companywide, and 23 reserves replacements for the “group.” Id. at 299. 7 24 https://www.cdp.net/en. 8 Berman Decl., Ex. 2 (BP Responses to Climate Change 2016 Information Request from Carbon 25 Disclosure Project) at 1. BP’s response to the Carbon Disclosure questionnaire was on behalf of all of its segments, including upstream operations. Id. at 26. 26 9 Id. at 2. 27 10 Id. at 3. 11 28 Id. at 40. 3 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 assets if, prior to the end of their economic life, they no longer can earn an economic return because 2 of climate change: “BP is well aware of the so-called stranded assets debate and is considering it 3 carefully.”12 4 BP’s chief executive is responsible for maintaining “BP’s system of internal control” that is 5 “employed to conduct the business of BP,” and BP’s CDP response states: “Climate change risks are 6 reviewed through two executive committees - chaired by the group chief executive, and one working 7 group chaired by the executive vice president and group chief of staff, as part of BP’s established 8 management structure.”13 BP describes its “risk management procedures with regard to climate 9 change risks and opportunities,” as being “[i]ntegrated into multi-disciplinary companywide risk 10 management processes.”14 BP’s motion does not contest that it is the ultimate decisionmaker on 11 companywide production of fossil fuels, including as these decisions take into account climate 12 change risks.

13 B. BP engages in production, sales and promotion of fossil fuels in California. 14 BP does business in California, including through multiple agents and subsidiaries that do 15 business in California, have been registered to do business for decades and have a designated agent 16 for service of process in California, including BP America Production Company (registered to do 17 business in California since 1975); BP Amoco Chemical Company (1955); BP Corporation North 18 America (1987); BP Exploration (Alaska) Inc. (1974); BP Pipelines (North America) Inc. (2002); BP 19 Products North America Inc. (1960); and Atlantic Richfield Company (1985). FAC ¶ 35. 20 Atlantic Richfield Company was headquartered in Los Angeles, California from 1972 21 through 1999. Id. Between 1975 and 1999, Atlantic Richfield produced oil and natural gas in 22 California, and transported, marketed and sold fuel and other refined products in California, 23 including to and through ARCO-branded gasoline stations. Id. ¶ 36. BP agents and subsidiaries, BP 24

25 12 Id. at 3. 26 13 Id. at 2. 27 14 Id. 28 4 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 Exploration U.S.A. Inc. and BP Exploration Inc., have been listed as operators for approximately 34 2 oil and gas, and dry gas wells in California. Id. 3 BP through its subsidiary BP Exploration (Alaska) Inc. produces crude oil in Alaska for 4 shipment, in part, to California. Id. ¶ 37. Since 1977, BP subsidiaries have produced and shipped 5 Alaskan crude oil to various locations, including California and the Pacific Northwest Coast. Id. BP 6 through its subsidiary BP Shipping (USA) shipped approximately 2.56 billion barrels of crude oil 7 into California, from 1975 to 2010. Id. 8 BP, including through its subsidiaries, refined, marketed, and sold fossil fuel products in 9 California. Id. ¶¶ 36-41. BP and the other defendants created and operate a common distribution 10 system that moves fungible and commingled gasoline from refineries through pipelines to large 11 terminal storage tanks for delivery to consumers in California (and elsewhere). Id. ¶¶ 33, 39. BP, 12 including through its subsidiaries acting as its agents, owned and operated the Carson refinery near 13 Los Angeles from approximately 1966 through 2013 with a refining capacity of approximately 14 266,000 barrels of crude oil per day, and which BP described in a press release as “one of the largest 15 on the US West Coast.” Id. ¶ 38. BP acknowledged in a press release announcing the sale of this 16 refinery that it owned “integrated terminals and pipelines” related to the Carson refinery, including 17 the LA basin pipelines system that moved crude oil, fossil fuel products and intermediates to and 18 from the Carson refinery, and also had marketing agreements with retail gasoline station sites in 19 Southern California. Id. Through approximately 2013, BP, through its subsidiaries and agents, 20 owned or operated port facilities in California for receipt of crude oil, including Long Beach Port 21 berths 121 and 78 that supplied crude oil to the Carson refinery. Id. In a June 3, 2013 press release 22 posted on BP Global’s website, Jeff Pitzer, BP’s Northwest Fuels Value Chain President stated: 23 “California remains an important state for us and we remain committed to supplying our customers 24 in Northern California and the rest of the Pacific Northwest with the quality fuels they depend on.” 25 Id.

26 BP Global’s website currently states that “BP’s marketing and trading business has provided 27 energy products and services to California since 1984” and that “[t]oday, the business markets 28 enough natural gas in California to meet the needs of every home in the state’s four largest 5 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 metropolitan areas: Los Angeles, San Francisco, Riverside and San Diego.” Id. ¶ 40. It adds that 2 “BP markets enough natural gas in California to meet the energy needs of 6.9 million households.” 3 Id. And it states that “BP has a significant presence in hundreds of communities across California 4 through gas stations and convenience stores” and that its “footprint includes more than 280 ARCO- 5 licensed and ARCO-branded stations.” Id. BP also exercises control over gasoline product quality 6 and specifications at these ARCO-branded stations. Id. ¶ 39. In addition to these current ARCO 7 stations, BP previously owned and/or operated numerous BP-branded stations in California, and also 8 exercised control over gasoline product quality and specifications at those former gas stations in 9 California. Id. BP offers credit cards to consumers through its interactive website to promote sales 10 of gasoline and other products at its branded gasoline stations. Id.

11 C. BP has contributed to the global warming nuisance, which is causing severe injuries to the Cities. 12 BP, through its fossil fuel business, knowingly has contributed, and continues to contribute, 13 to the global warming nuisance. Id. ¶¶ 2, 34, 92, 94(d), 95, 104. BP is the fourth largest cumulative 14 producer of fossil fuels worldwide in history and is responsible for over 2 percent of total 15 atmospheric greenhouse gases (“GHGs”) from industrial sources. Id. ¶ 94.15 Defendants are 16 collectively responsible through their production, marketing and sale of fossil fuels for over 11% of 17 all GHG pollution from industrial sources; more than half of current pollution levels from 18 defendants’ fossil fuels is attributable to production since 1980. Id. ¶¶ 92, 94(b-c). Global warming 19 has caused and continues to cause accelerated sea level rise in San Francisco Bay and the adjacent 20 ocean with severe, and potentially catastrophic, consequences for the Cities and their residents. Id. 21 ¶¶ 125, 130-31. 22 III. LEGAL STANDARD 23 The Cities need make only a prima facie showing of jurisdictional facts to satisfy their 24 burden of demonstrating jurisdiction over BP, in the absence of an evidentiary hearing.16 The Court 25

26 15 See Table 3 of Richard Heede, Tracing Anthropogenic Carbon Dioxide and Methane Emissions to Fossil Fuel and Cement Producers, 1854–2010, Climactic Change, Jan. 2014, cited in 27 FAC at ¶ 101 n.71. 16 28 Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010). 6 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 must take uncontroverted allegations in the complaints as true, and resolve any factual conflicts and 2 draw all reasonable inferences in favor of the Cities.17

3 IV. ARGUMENT 4 A. This Court has specific jurisdiction over the Cities’ claims against BP. 5 Under Rule 4(k)(1)(A), this Court applies California’s long-arm statute to determine the 6 Court’s jurisdiction over a party, which authorizes jurisdiction to the full extent constitutionally 7 permitted.18 To exercise jurisdiction, three requirements must be met: 1) the defendant must 8 purposefully direct its activities toward the forum; 2) the claim must arise out of or relate to the 9 defendant’s forum-related activities; and 3) the exercise of jurisdiction must be reasonable, i.e., 10 comport with fair play and substantial justice.19 If the Cities meet the first two requirements, the 11 burden shifts to BP to present a compelling case that the exercise of jurisdiction would be 12 unreasonable.20

13 1. BP does not challenge that it purposefully directed its activities to California.

14 Although BP claims that “[n]one of the requirements for exercising specific jurisdiction is 15 met here,” it does not challenge purposeful direction.21 The Cities satisfy the purposeful direction 16 requirement because they allege numerous intentional acts purposefully directed at, and indeed 17 performed in, California, including:22

18  BP makes the companywide decision to produce massive amounts of fossil fuels, including taking into account climate change risks. BP directs its subsidiaries to 19 operationally carry out this companywide directive in California by producing crude 20 oil in Alaska that it ships to California, and directing its subsidiaries to substantially participate in the refining, marketing, and sales of fossil fuel products in California; 21  BP subsidiary and agent Atlantic Richfield Company located its headquarters in Los 22 Angeles, California and between 1975 and 1999 it extracted oil and natural gas in

23 17 Id. 24 18 Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1067 (9th Cir. 2017). 25 19 Id. at 1068. 20 26 Id. at 1068-69. 21 BP states that “solely for purposes of this motion it will assume that all fossil fuel production 27 in California or the United States by any indirect subsidiary may be imputed to BP p.l.c.” Br. 2. 22 28 See supra Section II. 7 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 California, and transported, marketed and sold fuel and other refined products in California, including to and through ARCO-branded gasoline stations; 2  BP Shipping (USA) shipped approximately 2.56 billion barrels of crude oil into 3 California, from 1975 to 2010; 4  BP Global’s website currently states that “BP has a significant presence in hundreds 5 of communities across California through gas stations and convenience stores” and that its “footprint includes more than 280 ARCO-licensed and -branded stations,” that 6 “BP’s marketing and trading business has provided energy products and services to California since 1984,” that “[t]oday, the business markets enough natural gas in 7 California to meet the needs of every home in the state’s four largest metropolitan 8 areas: Los Angeles, San Francisco, Riverside and San Diego,” and that “BP markets enough natural gas in California to meet the energy needs of 6.9 million households.” 9 These contacts amply support purposeful direction. 10 Alternatively, the Court may exercise jurisdiction over BP under Rule 4(k)(2), the federal 11 long-arm statute, which permits the Court to aggregate BP’s contacts with the United States as a 12 whole instead of a particular state forum.23 A defendant that seeks to preclude use of Rule 4(k)(2) 13 has only to name some other state in which the suit could proceed.24 Otherwise, the Court may 14 exercise jurisdiction over the defendant if the claim arises under federal law and the Court’s exercise 15 of personal jurisdiction comports with due process.25 This Court has determined that the Cities’ 16 nuisance claims “are necessarily governed by federal common law”26 (which the Cities treat as law 17 of the case while preserving all objections), and BP has not identified any court in the United States 18 in which it would submit to jurisdiction. 19 BP’s extensive contacts with the United States—fossil fuel production, marketing and sales, 20 and its extensive advertising and communications to promote pervasive use of its fossil fuel products 21 —directly contribute to global warming and the rising sea levels that cause the Cities’ injuries. For 22 example, BP began producing oil at Prudhoe Bay in Alaska in 1977, and has shipped it to various 23 24

25 23 Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1158 (9th Cir. 2006). 26 24 Holland America Line, Inc. v. Wartsila North America, Inc., 485 F.3d 450, 461 (9th Cir. 2007). 27 25 Axiom Foods, 874 F.3d at 1072. 26 28 ECF No. 134 at 3 in 3:17-cv-06012-WHA. 8 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 ports around the world.27 BP’s website states: “BP . . . operates the entire Greater Prudhoe Bay area, 2 which . . . produces around 55 percent of Alaska’s oil and gas, and in 2016 it averaged nearly 3 281,000 barrels of oil equivalent each day,” and that “BP also owns interests in seven other North 4 Slope oil fields, including Alaska’s newest oil and gas field, Point Thomson.”28 In addition to 5 Alaska and California, its website indicates that BP conducts significant fossil fuel production, 6 marketing and sales business in Colorado, Illinois, Indiana, Louisiana, New Jersey, New Mexico, 7 Ohio, Oklahoma, South Carolina, Washington, and Wyoming.29

8 2. The Cities’ claims arise out of or relate to BP’s conduct in California. 9 The second prong of the personal jurisdiction test involves a causal analysis. The Ninth 10 Circuit has adopted a but-for test: “Under the ‘but for’ test, ‘a lawsuit arises out of a defendant’s 11 contacts with the forum state if a direct nexus exists between those contacts and the cause of 12 action.’”30 Courts do not apply this test “stringently.”31 BP argues that the Cities cannot satisfy this 13 requirement because BP’s production, sales and promotion of fossil fuels in California did not by 14 themselves cause all of the Plaintiffs’ injuries. But where the plaintiff’s injuries have been caused by 15 the totality of national conduct, personal jurisdiction exists if the defendant undertook some of this 16 conduct within the forum. 17 For example, in Keeton v. Hustler Magazine, Inc., the Supreme Court held that a court could 18 exercise personal jurisdiction over a non-resident tortfeasor even though “the bulk of the harm done 19

20 27 FAC ¶ 42. 28 Id. 21 29 Id. 22 30 Learjet, Inc. v. Oneok, Inc., 715 F.3d 716, 742 (9th Cir. 2013) (quoting Fireman’s Fund Ins. Co. v. Nat'l Bank of Coops., 103 F.3d 888, 894 (9th Cir. 1996)), aff'd sub nom. Oneok, Inc. v. 23 Learjet, Inc., 135 S. Ct. 1591, 191 L. Ed. 2d 511 (2015). 31 24 Adidas Am., Inc. v. Cougar Sport, Inc., 169 F. Supp. 3d 1079, 1085, 1092–93 (D. Or. 2016) (test “should not be narrowly applied; rather, the requirement is merely designed to confirm that 25 there is some nexus between the cause of action and defendant’s contact with the forum”; sustaining jurisdiction where defendant’s infringing product was purchased over the web by only three people 26 in the forum) (quotation marks omitted); California Brewing Co. v. 3 Daughters Brewing LLC, 2016 WL 1573399, at *6 (E.D. Cal. Apr. 19, 2016) (“Despite its apparently strict language, many district 27 courts in the Ninth Circuit have not applied the ‘but for’ test stringently”); Elec. Recyclers Int’l, Inc. v. Calbag Metals Co., 2015 WL 1529490, at *4 (E.D. Cal. Apr. 2, 2015) (“Despite the apparently 28 strict language of the but-for test, the Ninth Circuit has not applied the [but-for] test stringently.”). 9 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 to [the plaintiff] occurred outside” the state.32 In Keeton, the defendant publisher was sued in New 2 Hampshire by a plaintiff seeking “nationwide damages” for allegedly libelous statements made in the 3 national publication.33 Even though New Hampshire represented only a tiny fraction of the 4 defendant’s national sales, and even though the libelous reports were apparently investigated, 5 written, edited, or produced elsewhere, the Court held that the defendant’s actions in “carrying on a 6 ‘part of its general business’ in New Hampshire . . . is sufficient to support jurisdiction when the 7 cause of action arises out of the very activity being conducted, in part, in New Hampshire.”34 8 Subsequent cases have continued to make clear that the defendant’s forum-based activities 9 need not cause the entire harm. For example, in Dubose v. Bristol-Myers Squibb Co., a resident of 10 South Carolina sued foreign corporations in California for failure to warn and fraudulent 11 misrepresentation with respect to a drug product that the defendants had tested at clinical trials in 12 California and many other states.35 The court, applying the Ninth Circuit’s but-for test and 13 upholding jurisdiction, rejected the defendants’ argument that there is a numerical threshold for in- 14 state conduct when the injury is caused by conduct spread across many jurisdictions: 15 What would that threshold be? If 25 percent of the clinical trials were conducted in California, would that be enough? 50 percent? 75 percent? The point is that our 16 existing case law provides no basis for imposing an arbitrary cut-off, and the Court is disinclined to fashion a new barrier to the exercise of its jurisdiction from whole 17 cloth.36 18 The court held that since the California clinical trials were “part of the unbroken chain of events 19 leading to plaintiff’s injury” they did not have to be the sole cause of the injury.37 Similarly, in 20 Wilden Pump & Engineering Co. v. Versa-Matic Tool, Inc., a California plaintiff sued a 21 22 32 465 U.S. 770, 780 (1984). 23 33 Id. at 775. 34 Id.; see also Shute v. Carnival, 897 F.2d 377, 386 (9th Cir. 1990) (upholding personal 24 jurisdiction where defendant had advertised in forum state but had no offices, employees or assets in the forum). 25 35 2017 WL 2775034 (N.D. Cal. June 27, 2017). The Dubose court simultaneously issued an 26 identical ruling in a companion case brought by a New York plaintiff. Cortina v. Bristol-Myers Squibb Co., 2017 WL 2793808 (N.D. Cal. June 27, 2017). 27 36 2017 WL 2775034 at *4. 37 28 Id. at *3 (emphasis added). 10 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 Pennsylvania manufacturer for patent infringement and the manufacturer’s sales of the product to 2 California were only one to three percent of its annual sales. The court rejected an interpretation of 3 the but-for test that would require just the California sales to cause the injury as leading to an “absurd 4 result.”38 5 Copyright cases have reached the same result. In Mavrix v. New Video Channel America, the 6 Ninth Circuit upheld specific jurisdiction where the defendant’s website largely “court[ed] a national 7 audience” but also had “specific ties” to California.39 And in Hendricks v. New Video Channel 8 America, the court held that defendants’ promotion and distribution of the copyrighted material in 9 California satisfied the causal relationship test, even though the defendants’ conduct had occurred 10 nationwide. Like Wilden Pump, the court interpreted the but-for test to avoid the “absurd result” that 11 California conduct contributing to a California injury could not give rise to specific personal 12 jurisdiction where the nature of the claim involved the defendant’s nationwide injurious conduct.40 13 These cases demonstrate that personal jurisdiction exists where a large and harmful course of 14 conduct extends into the forum state; forum conduct alone need not cause the injury.41 15 Here, BP engages or has engaged during the relevant time period in substantial in-state 16 conduct to produce, sell and promote its fossil fuels. Its website even “offers credit cards to 17 consumers … to promote sales of gasoline and other products at its branded gasoline stations, 18 including BP-branded retail stations in the United States,” and upon information and belief, formerly 19 did so for BP-branded retail stations in California, much like the website in Mavrix was the but-for 20 cause of injuries merely by making copyrighted photographs “accessible to users” in

21 38 1991 WL 280844, at *4 (C.D. Cal. July 29, 1991). 22 39 647 F.3d 1218, 1222 (9th Cir. 2011). 23 40 2015 WL 3616983, at *7 & n.11 (C.D. Cal. June 8, 2015). 41 24 And while BP accuses the Cities of taking a contrary position in their motion to remand, Br. 12, the Cities have in fact been consistent: their claims are “not dependent on any one subset of 25 defendants’ fossil fuel production activities” but stem from all of the conduct. ECF No. 64 at 25:24 in 3:17-cv-06012-WHA. In fact, it is defendants that have contradicted themselves by arguing that a 26 but-for jurisdictional test under the Outer Continental Shelf Lands Act (“OCSLA”) was satisfied by virtue of the fact that “some portion of [the Cities’] injuries – i.e. some amount of sea level rise – is 27 attributable to” the subset of Defendants fossil fuel production on the OCS and thus “would not have occurred absent Defendant’s operations on the [outer continental shelf].” ECF No. 92 at 31:13-19 in 28 3:17-cv-06011-WHA. 11 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 California.42 This conduct is another causal factor in the Cities’ injuries, insofar as the nuisance was 2 caused both by production and by activities promoting additional consumption – promotions aimed 3 in part at California, one of the largest markets for fossil fuels in the country. BP has numerous BP- 4 branded franchises in the United States (and also formerly in California) over which it exercises 5 substantial contractual control with respect to promotion of fossil fuels. Exxon Mobil Corp. v. 6 Attorney Gen., 2018 WL 1769759, at *4-6 (Mass. Apr. 13, 2018) (upholding personal jurisdiction 7 over Exxon based upon its advertising of its fossil fuel products in Massachusetts, its interactive web 8 site allowing consumers to locate over 300 Exxon branded gas stations in the state, and Exxon’s 9 control over the promotion of its products in the state by way of a master franchise agreement). 10 Moreover the personal jurisdiction analysis “depends, to a significant degree, on the specific 11 type of tort … at issue”43—which in this case is nuisance. Nuisance has a well-established causal 12 standard applicable in multiple tortfeasor cases that emphatically does not require the plaintiff to 13 untangle which molecules came from where. Nuisance liability only requires that a defendant 14 “contributes” to the nuisance. Cox v. City of Dallas, 256 F.3d 281, 292 n.19 (5th Cir. 2001). In a 15 tort case involving multiple contributors to a nuisance where the pollution has mixed together, there 16 is an indivisible injury and the plaintiff need only demonstrate that each defendant “contributed” to 17 the nuisance. The law emphatically does not put the plaintiff to the impossible burden of untangling 18 which molecules came from where. Indeed, the burden of apportionment is on the defendant.44 And 19 it is no defense that the defendant’s conduct by itself would not have caused the harm, even when 20 there are a great many contributors. So long as the defendant is aware that its conduct combines with 21 that of others to create the harm, the defendant may be held liable. Environmental cases involving 22 multiple contributors to an indivisible pollution problem are textbook examples of this principle. 23 24

42 25 FAC ¶ 39; Mavrix, 647 F.3d at 1228. 43 Picot v. Weston, 780 F.3d 1206, 1214 (9th Cir. 2015) (analyzing purposeful direction 26 element); cf. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 181 (2000) (courts may not “raise the standing hurdle higher than the necessary showing for success on 27 the merits in an action”). 44 28 Restatement (Second) of Torts § 433B(2). 12 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 Three seminal cases long ago established the principle that those who substantially contribute 2 to a nuisance are liable, even when there are very large numbers of others who also contribute to the 3 indivisible pollution problem.45 This principle is now set forth in the Restatement and has been 4 followed in many modern cases. As the Restatement notes, “the fact that other persons contribute to 5 a nuisance is not a bar to the defendant’s liability for his own contribution.”46 This is true even if 6 each defendant’s contribution to the nuisance, standing alone, would not subject him to liability – a 7 common fact pattern in pollution cases involving multiple polluters.47 Prosser and Keeton state the 8 same rule: 9 A number of courts have held that acts which individually would be innocent may be tortious if they thus combine to cause damage, in 10 cases of pollution . . . . The explanation is that the standard of reasonable conduct applicable to each defendant is governed by the 11 circumstances, including the activities of the other defendants.48 12 This causation principle in multiple-tortfeasor cases where there is indivisible environmental injury 13 is widely accepted.49 In a recent opinion, Judge Posner, writing for the en banc Seventh Circuit, 14 summarized the law:

15 45 See California v. Gold Run Ditch & Mining Co., 4 P. 1152, 1156 (Cal. 1884) (defendant’s 16 pollution alone would not have caused injury given the “vast amount” of mining previously and currently undertaken on the river by numerous others but defendant still liable for contributing to the 17 nuisance); Woodyear v. Schaefer, 57 Md. 1, 9 (Md. 1881) (“It is no answer to a complaint of nuisance that a great many others are committing similar acts of nuisance upon the stream.”) 18 (emphasis added); The Lockwood Co. v. Lawrence, 77 Me. 297 (Me. 1885) (same). 46 19 Restatement (Second) of Torts § 840E (1979); see also id. § 875. 47 Id. § 840E cmt. b; see also Milward v. Acuity Specialty Prods. Grp., 969 F. Supp. 2d 101, 111 20 n.5 (D. Mass. 2013) (defendant’s product by itself need not be a sufficient cause of the harm). 21 48 Prosser & Keeton § 52; see also id. § 88B (“One may pollute a stream to some extent without any harm, but if several do the same thing the plaintiff’s use of the stream may be destroyed. It has 22 been held consistently in these cases that each defendant is liable.”).

23 49 See, e.g., Michie v. Great Lakes Steel Div. Nat’l Steel Corp., 495 F.2d 213, 215-18 (6th Cir. 1974); City of Tulsa v. Tyson Foods, Inc., 258 F. Supp. 2d 1263, 1297 (N.D. Okla. 2003) (“[W]here 24 there are multiple tortfeasors and the separate and independent acts of codefendants ‘concurred, commingled and combined’ to produce a single indivisible injury for which damages are sought, 25 each defendant may be liable even though his/her acts alone might not have been a sufficient cause of the injury.”), vacated by settlement, 2003 U.S. Dist. LEXIS 23416 (N.D. Okla. July 16, 2003); 26 Velsicol Chem. Corp. v. Rowe, 543 S.W.2d 337, 343 (Tenn. 1976); Landers v. East Texas Salt Water Disposal Co., 248 S.W.2d 731, 734 (Tex. 1952); Warren v. Parkhurst, 92 N.Y.S. 725, 727 (N.Y. 27 Sup. Ct. 1904) (where “the act of one defendant would not so contaminate the stream that the plaintiff could complain of him” each is liable because “while each defendant acts separately, he is 28 acting at the same time in the same manner as the other defendants, knowing that the contributions 13 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 Even if the amount of pollution caused by each party would be too slight to warrant a finding that any one of them had created a nuisance 2 (the common law basis for treating pollution as a tort), “pollution of a stream to even a slight extent becomes unreasonable [and therefore a 3 nuisance] when similar pollution by others makes the condition of the stream approach the danger point. The single act itself becomes 4 wrongful because it is done in the context of what others are doing.” Keeton et al., supra, § 52, p. 354. . . . If “each [defendant] bears a like 5 relationship to the event” and “each seeks to escape liability for a reason that, if recognized, would likewise protect each other defendant 6 in the group, thus leaving the plaintiff without a remedy,” the attempt at escape fails; each is liable. Id., § 41, p. 268.50 7 This principle also has been applied in cases decided under federal common law. For 8 example, in Illinois v. Milwaukee, after the Supreme Court remitted the parties to federal district 9 court, the plaintiff proved a case involving eutrophication caused not only by the six municipal 10 defendants’ sewage facilities but by thousands if not millions of “non-point” sources of nitrogen and 11 phosphorous, such as farms and airborne sources, that were spread over the entire watershed of Lake 12 Michigan across multiple states and two sovereign nations.51 The defendants argued that the vast 13 number of contributors defeated liability but the district court disagreed and held the defendants 14 liable: “If defendants’ argument were to be adopted, it would be impossible to impose liability on 15 any polluter.”52 In short, the standard for causation on the merits in this multiple tortfeasor case 16 17

18 by himself and the others acting in the same way will result necessarily in the destruction of the 19 plaintiff’s property.”), aff’d, 93 N.Y.S. 1009 (App. Div. 1905), aff’d, 78 N.E. 579 (N.Y. 1906); see also In re “Agent Orange” Prod. Liab. Litig., 597 F. Supp. 740, 823 (E.D.N.Y. 1984) (“In the 20 pollution and multiple crash cases, the degree to which the individual defendant’s actions contributed to an individual plaintiff’s injuries is unknown and generally unascertainable,” yet “all defendants 21 have been held liable”). 50 22 Boim v. Holy Land Found. for Relief & Dev., 549 F.3d 685, 696-97 (7th Cir. 2008); accord Restatement (Second) of Torts § 881 cmt. d (“It is also immaterial that the act of one of them by 23 itself would not constitute a tort if the actor knows or should know of the contributing acts of the others.”). 24 51 See 1973 U.S. Dist. LEXIS 15607, at *15 (N.D. Ill. 1973). 52 25 Id. at *20-21, aff’d in rel. part and rev’d in part on other grounds, 599 F.2d 151 (7th Cir. 1979), vacated on other grounds, 451 U.S. 304 (1981). Federal courts apply this indivisible injury 26 rule as a matter of federal common law gap filling under CERCLA in cases that, like air or water pollution, typically involve very large numbers of contributors to hazardous waste sites. See 27 Burlington Northern & Santa Fe Ry. v. United States, 556 U.S. 599, 613–15 (2009) (adopting federal common law approach of “seminal” decision in United States v. Chem-Dyne Corp., 572 F. Supp. 802 28 (S.D. Ohio 1983)). 14 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 informs the personal jurisdiction analysis and is at odds with BP’s interpretation of the but-for test 2 that would require all of the Cities’ injuries to be caused solely by a subset of BP’s activities. 3 BP relies principally on Doe v. American National Red Cross, where the plaintiff sued 4 multiple Arizona defendants as well a non-resident FDA administrator, claiming that these 5 defendants contributed to her husband contracting AIDS from a blood transfusion he received at an 6 Arizona hospital.53 The court concluded that the plaintiff’s claims did not arise from the federal 7 defendant’s contacts with the forum because the federal officer had not “engaged in affirmative 8 conduct allowing or promoting the transaction of business in Arizona,” nor controlled distribution of 9 blood products.54 Here, however, BP has engaged in affirmative acts in the forum causing the Cities’ 10 injuries – producing oil and natural gas in California, producing oil in Alaska and shipping it to 11 California, owning and operating a gasoline refinery in California for over forty years, and owning 12 port facilities for receipt of crude oil in California. 13 Doe v. Unocal Corp., also cited by BP, is inapposite because the sole basis asserted for 14 exercising jurisdiction there was a contract defendant executed with a resident corporation, the 15 contract was not negotiated or executed in California, not governed by California law, and had 16 nothing to do with California.55 Sullivan v. Ford Motor Co., is likewise distinguishable because the 17 truck that was the subject of the plaintiff’s product liability claim was constructed and purchased out- 18 of-state and the tailgate that caused the injury was made by a third party, therefore there was no 19 causal connection between the defendant’s substantial presence in California and the plaintiff’s

20 claim.56 Similarly, in Bristol-Myers Squibb Co. v. Superior Court, the plaintiffs brought a product 21 defect claim in California, but their purchase, use and injury from the product all occurred elsewhere, 22 and the product was also designed and manufactured outside California.57 In Terracom v. Valley 23 National Bank, the link was too tenuous between the plaintiff’s claim of negligent investigation

24 53 112 F.3d 1048, 1051-52 (9th Cir. 1997). 25 54 Id. 26 55 Doe v. Unocal Corp., 248 F.3d 915, 924 (9th Cir. 2001). 56 27 2016 WL 6520174, at *1-3 (N.D. Cal. Nov. 3, 2016). 57 ___U.S.___ , ___, 137 S. Ct. 1773, 1781 (2017). 28 15 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 against the non-resident bank and its execution of a certificate of sufficiency in support of the bond 2 surety, when the bank had no knowledge that the certificate would be used in a federal works project 3 in California.58 BP also relies on Brackett v. Hilton Hotels Corp., but that case held that the claim 4 did arise out of the forum contacts because the defendant acquired plaintiff’s copyrighted artwork 5 “from this district.” 619 F. Supp. 2d 810, 818 (N.D. Cal. 2008).

6 3. The Lombardo declaration should be disregarded as inadmissible expert testimony. 7 The Lombardo Declaration is not relevant to the Court’s analysis of personal jurisdiction 8 because BP does not challenge that it purposefully directed itself at the forum and the Cities need not 9 prove that BP’s forum-related conduct is the sole or even primary cause of their injuries. The Court 10 also should disregard the declaration as improper expert testimony by an attorney with no apparent 11 expertise in the highly technical, scientific issues upon which he attests. 12 In a peer-reviewed study, Richard Heede and others concluded that BP is the fourth largest 13 cumulative producer of fossil fuels worldwide from the mid nineteenth century to present. FAC ¶ 14 94(b) & n.71. Without providing any basis to explain why he is qualified to engage in a highly 15 technical scientific analysis to calculate BP’s alleged contribution to greenhouse gas emissions, 16 global temperature increases and global sea level rise increases, Lombardo purports to do just this. 17 ECF No. 184-2 ¶ 10. Lombardo claims to have “replicated Heede’s approach and logic for this 18 motion, with adjustments,” purportedly to correct errors in Heede’s study. Id. ¶¶ 6, 9. He purports to 19 have “updated Heede’s analysis,” made “adjustments” to the time period and geographic territory 20 used for Heede’s study, used “linear interpolation” where certain data was not available, “estimated” 21 Atlantic Richfield’s California natural gas production volumes for certain years using “national sales 22 data,” and made “assumptions” to “estimate” BP’s purported total U.S. production of fossil fuels, 23 among other adjustments and assumptions. Lombardo claims to have relied on numerous scientific 24 and other sources not referenced in the amended complaints and attaches almost 400 pages of 25 exhibits to his declaration.59 26

27 58 49 F.3d 555, 557 (9th Cir. 1995). 59 28 See, e.g., Exs. 2, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18; see also, e.g., ¶¶ 21-24. 16 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 But an expert witness must be “qualified to testify” by “knowledge, skill, experience, 2 training, or education.”60 “In assessing whether an expert has the appropriate qualifications, the 3 court considers whether the expert offers some special knowledge, skills, experience, training or 4 education on the subject matter of the testimony contemplated.”61 “If an expert is not qualified to 5 render an opinion on a particular question or subject, it follows her opinion cannot assist the trier of 6 fact as to that particular question or subject.”62 7 Courts routinely exclude attorney-experts on substantive areas outside their legal 8 profession.63 For example, in Police & Fire Retirement Systems of City of Detroit v. Watkins, the 9 district court held inadmissible the proffered expert testimony by an attorney about the valuation of 10 companies, carbon credits and related topics: 11 Mr. Watkins is a lawyer. He does not have an advanced degree-or any degree-in business economics or accounting, nor is he a member of any 12 professional organizations that establish mandatory standards for business valuations. He has no training in environmental science or 13 carbon emissions that would qualify him to analyze or valuate carbon credits. He has not published any articles on asset valuation, and has 14 never testified as an expert witness.64 15 Similarly, in Deflecto, LLC v. Dundas *Jafine Inc., a patent case, the plaintiff sought to have an 16 attorney testify regarding venting technologies; while the attorney had some experience in the 17 subject matter, the court held that he was not qualified because “most if not all of his experience in 18

60 19 Copart, Inc. v. Sparta Consulting, Inc., 2018 WL 1871414, at *13 (E.D. Cal. Apr. 19, 2018); Fed. R. Evid. 702. 20 61 Copart, 2018 WL 1871414, at *13. 62 21 Id. 63 See Police & Fire Retirement Systems of City of Detroit v. Watkins, 2011 WL 5307594, at *3 22 (E.D. Mich. Nov. 3, 2011) (rejecting proposed attorney expert testimony: “an attorney who may develop some functional prowess in presenting a technical defense does not himself become a 23 qualified expert.”); Mytee Prod. Inc. v. HD Prod. Inc., 2009 WL 10672416, at *3 (S.D. Cal. Mar. 12, 2009) (excluding proposed expert testimony by attorney regarding potential risk of injury from air 24 movers and related topics because opinions are based upon “matters beyond his stated expertise”); cf. Deflecto, LLC v. Dundas *Jafine Inc., 2015 WL 6755316, at *1 (W.D. Mo. Nov. 4, 2015) (“Unless a 25 patent lawyer is also a qualified technical expert, his testimony on these kinds of technical issues is improper and thus inadmissible.”) (quotation omitted); Morin v. United States, 534 F. Supp. 2d 1179, 26 1185 (D. Nev. 2005) (even a “lawyer is not by general education and experience qualified to give an expert opinion on every subject of the law”) (quotation omitted), aff’d, 244 F. App’x 142 (9th Cir. 27 2007). 64 28 2011 WL 5307594, at *3. 17 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 HVAC, heating, ventilating, cooling, and venting was done as an attorney, not as an engineer.”65 2 Lombardo’s proposed testimony should be rejected for the same reasons here – he has no 3 qualifications in the relevant scientific disciplines. 4 Lombardo’s testimony also is inadmissible as lay opinion testimony. Such testimony must 5 not be “based on scientific, technical, or other specialized knowledge within the scope of Rule 702.” 6 Fed. R. Evid. 701. This requirement “was added in 2000 to prevent litigants from skirting the 7 Daubert standard or the expert disclosure guidelines by introducing expert opinion testimony as lay 8 opinion testimony.”66 Because attorney Lombardo purports to base his testimony on scientific, 9 technical or other specialized knowledge, it is also inadmissible as lay opinion testimony.67

10 B. Exercising personal jurisdiction over BP is reasonable. 11 Once Plaintiffs establish the first two elements of specific jurisdiction, the burden shifts to BP 12 to present a “compelling case” establishing that the exercise of jurisdiction is unreasonable.68 13 BP correctly identifies the seven factors courts in the Ninth Circuit apply to determine 14 whether the exercise of jurisdiction would be reasonable,69 but BP does not meet its “heavy burden 15 to present a compelling case that the exercise of jurisdiction is unreasonable.”70

16 The extent of the defendant’s purposeful interjection into the forum state 17 BP itself is the ultimate decision-maker for companywide fossil fuel production levels, 18 including taking into account climate change, and purposefully injected itself into the State of 19 California by engaging in (or authorizing) nuisance-inducing conduct, including directing its 20 21

22 65 Deflecto, 2015 WL 6755316, at *2. 66 23 Hynix Semiconductor Inc. v. Rambus Inc., 2008 WL 504098, at *3 (N.D. Cal. Feb. 19, 2008); see also Fed. R. Evid. 701, notes to 2000 amendments (rule meant to “eliminate the risk that the 24 reliability requirements set forth in Rule 702 will be evaded through the simple expedient of proffering an expert in lay witness clothing”). 25 67 The Cities reserve all rights to further object to this purported expert testimony, to further seek its exclusion, and to present their own expert evidence at the appropriate time. 26 68 Bancroft & Masters, Inc. v. August Nat'l, Inc., 223 F.3d 1082, 1088 (9th Cir. 2000). 27 69 Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1322 (9th Cir. 1998). 70 28 Chunghwa Telecom Global v. Medcom, 2016 WL 5815831, at *6 (N.D. Cal. Oct. 5, 2016). 18 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

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1 subsidiaries to operationally carry out in California BP’s decision to produce massive amounts of 2 fossil fuels.

3 The burden on the defendant in defending in the forum 4 The burden of defending in the State of California is not heavy, given BP’s responsibility for 5 companywide fossil fuel production levels and that its subsidiaries have conducted substantial, on- 6 going business in the State of California for decades that has contributed to Plaintiffs’ injuries.71 7 “[M]odern advances in communications and transportation have significantly reduced the burden of 8 litigating in another country.”72 [T]o present a ‘compelling case’ against jurisdiction, [BP] must do 9 more than simply claim, without elaboration, that litigation in a distant country presents an 10 unreasonable burden.”73

11 The extent of the conflict with the sovereignty of the defendant’s state 12 Other than to register an abstract objection to the exercise of personal jurisdiction over a 13 U.K.-based company, BP has not identified any substantive conflicts with the sovereignty of its 14 resident country.

15 The forum state’s interest in adjudicating the dispute 16 “California has an interest in protecting its residents [.]”74 That interest is particularly strong 17 in this case because Plaintiffs bring claims, in part, in their sovereign capacities to adjudicate injuries 18 to Plaintiffs, their residents, and the public. 19 20

21 71 Kabo Tool Co. v. Porauto Industrial Co., 2013 WL 5328496, at *7 (D. Nev. Sep. 20, 2013) (“While jurisdiction in Nevada may not be as convenient to the defendants, it does not present an 22 unreasonable burden. The defendants have been conducting business in Nevada for over 10 years. If the defendants have the ability to sufficiently conduct business, they also have the ability to defend 23 their actions in Nevada.”). 72 24 Sinatra v. Nat’l Enquirer, Inc., 854 F.2d 1191, 1199 (9th Cir. 1988). 73 Richmond Techns., Inc. v. Aumtech Business Solutions, 2011 WL 2607158, at *7 (N.D. Cal. 25 July 1, 2011) (finding the exercise of jurisdiction over defendants from India to be reasonable when “Defendants have not alleged that litigation in California would present a serious financial or 26 physical hardship, nor have they suggested that India or some other state has a greater interest in the litigation or would provide a more efficient forum for resolving the dispute.”). 27 74 Universal Stabilization Techns., Inc. v. Advanced BioNutrition Corp., 2017 WL 1838955, at *6 28 (S.D. Cal. May 8, 2017). 19 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

Case 3:17-cv-06011-WHA Document 231 Filed 05/03/18 Page 27 of 29

1 The most efficient judicial resolution of the controversy 2 California is the most efficient forum, given that the injuries alleged occurred in this state as 3 well as some of the injury-inducing conduct.

4 The importance of the forum to the plaintiff’s interest in convenient and effective relief 5 California offers convenient and effective relief for Plaintiffs’ nuisance claims; BP has not 6 identified any court that would be more effective or convenient.

7 The existence of an alternative forum 8 BP has not identified an alternative forum. If the United Kingdom is considered an alternate 9 forum, any inconvenience to BP of litigating in California would merely be transferred to Plaintiffs, 10 who would still be litigating in this Court against defendant Chevron Corporation. This factor favors 11 Plaintiffs.75

12 C. Alternatively, the Cities are entitled to jurisdictional discovery. 13 In the alternative, to the extent that the Court may not be inclined to deny BP’s motion 14 outright, the Cities should be allowed jurisdictional discovery.76 Discovery would be appropriate, for 15 example, regarding BP’s role as the ultimate decisionmaker with respect to levels of companywide 16 production of fossil fuels, its control over global climate policies, and its decisions to have its 17 subsidiaries and agents carry out decisions regarding fossil fuel production and climate policies in 18 California. If the Court considers the Lombardo Declaration and the multiple external sources on 19 which he purports to rely, to be relevant to this motion, the Cities request permission to take expert 20 discovery of Mr. Lombardo. 21 22 23 24 75 See, e.g., North Sister Publ’g, Inc. v. Schefren, 2015 U.S. Dist. LEXIS 64637, at *16 (D. Or. 25 Apr. 6, 2015). 76 See, e.g., Laub v. United States DOI, 342 F.3d 1080, 1093 (9th Cir. 2003); Illumina, Inc. v. 26 Qiagen NV, 2016 WL 3902541, at *4-5 (N.D. Cal. July 19, 2016); SA Luxury Expeditions LLC v. Latin America for Less, LLC, 2014 WL 6065838, at *2 (N.D. Cal. Nov. 12, 2014); Macias v. Waste 27 Mgmt. Holdings, Inc., 2014 WL 4793989, at *3 (N.D. Cal. Sept. 25, 2014). 28 20 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

Case 3:17-cv-06011-WHA Document 231 Filed 05/03/18 Page 28 of 29

1 V. CONCLUSION 2 Because BP’s oil and gas business has a direct nexus with Plaintiffs’ nuisance allegations, 3 BP’s forum contacts related to the nuisance. 4 Dated: May 3, 2018 Respectfully submitted, 5 ** /s/ Erin Bernstein 6 BARBARA J. PARKER (State Bar #069722) City Attorney 7 MARIA BEE (State Bar #167716) Special Counsel 8 ERIN BERNSTEIN (State Bar #231539) Supervising Deputy City Attorney 9 MALIA MCPHERSON (State Bar #313918) Attorney 10 One Frank H. Ogawa Plaza, 6th Floor Oakland, California 94612 11 Tel.: (510) 238-3601 Fax: (510) 238-6500 12 Email: [email protected]

13 Attorneys for Plaintiffs CITY OF OAKLAND and 14 PEOPLE OF THE STATE OF CALIFORNIA, acting by and through Oakland City Attorney 15 BARBARA J. PARKER

16 ** Pursuant to Civ. L.R. 5-1(i)(3), the electronic filer has obtained approval from this signatory. 17 ** /s/ Matthew D. Goldberg 18 DENNIS J. HERRERA, State Bar #139669 City Attorney 19 RONALD P. FLYNN, State Bar #184186 Chief Deputy City Attorney 20 YVONNE R. MERÉ, State Bar #173594 Chief of Complex and Affirmative Litigation 21 ROBB W. KAPLA, State Bar #238896 Deputy City Attorney 22 MATTHEW D. GOLDBERG, State Bar #240776 Deputy City Attorney 23 City Hall, Room 234 1 Dr. Carlton B. Goodlett Place 24 San Francisco, California 94102-4602 Tel.: (415) 554-4748 25 Fax.: (415) 554-4715 Email: [email protected] 26 Attorneys for Plaintiffs 27 CITY AND COUNTY OF SAN FRANCISCO and PEOPLE OF THE STATE OF CALIFORNIA, 28 acting by and through San Francisco City Attorney 21 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

Case 3:17-cv-06011-WHA Document 231 Filed 05/03/18 Page 29 of 29

1 DENNIS J. HERRERA

2 ** Pursuant to Civ. L.R. 5-1(i)(3), the electronic filer has obtained approval from this signatory. 3 /s/ Steve W. Berman 4 STEVE W. BERMAN (pro hac vice) [email protected] 5 HAGENS BERMAN SOBOL SHAPIRO LLP 1918 Eighth Ave. Suite 3300 6 Seattle, Washington 98101 Tel.: (206) 623-7292 7 Fax: (206) 623-0594 8 SHANA E. SCARLETT (State Bar #217895) HAGENS BERMAN SOBOL SHAPIRO LLP 9 715 Hearst Avenue, Suite 202 Berkeley, California 94710 10 [email protected] Tel.: (510) 725-3000 11 Fax: (510) 725-3001

12 MATTHEW F. PAWA (pro hac vice) [email protected] 13 BENJAMIN A. KRASS (pro hac vice) [email protected] 14 HAGENS BERMAN SOBOL SHAPIRO LLP 1280 Centre Street, Suite 230 15 Newton Centre, Massachusetts 02459 Tel.: (617) 641-9550 16 Fax: (617) 641-9551

17 Of Counsel Attorneys for Plaintiffs

18 19 20 21 22 23 24 25 26 27 28 22 PLS.’ OPPOSITION TO BP’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA

Case 3:17-cv-06011-WHA Document 231-1 Filed 05/03/18 Page 1 of 3

12 Francisco City Attorney DENNIS J. HERRERA 13 [Other Counsel Listed on Signature Page]

14 UNITED STATES DISTRICT COURT 15 NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 16

17 CITY OF OAKLAND, a Municipal Corporation, Case No.: 3:17-cv-06011-WHA and THE PEOPLE OF THE STATE OF 18 CALIFORNIA, acting by and through the DECLARATION OF STEVE W. Oakland City Attorney, BERMAN IN SUPPORT OF 19 PLAINTIFFS’ RESPONSE IN Plaintiffs, OPPOSITION TO BP P.L.C.’S 20 MOTION TO DISMISS FOR LACK OF v. PERSONAL JURISDICTION 21 BP P.L.C., a public limited company of England 22 and Wales, CHEVRON CORPORATION, a Delaware corporation, CONOCOPHILLIPS, a 23 Delaware corporation, EXXON MOBIL CORPORATION, a New Jersey corporation, 24 ROYAL DUTCH SHELL PLC, a public limited company of England and Wales, and DOES 1 25 through 10,

26 Defendants.

27 28

Case 3:17-cv-06011-WHA Document 231-1 Filed 05/03/18 Page 2 of 3

1 CHEVRON CORP., 2 Third Party Plaintiff, 3 v.

4 STATOIL ASA,

5 Third Party Defendant.

6 CITY AND COUNTY OF SAN FRANCISCO, Case No.: 3:17-cv-06012-WHA 7 a Municipal Corporation, and THE PEOPLE OF THE STATE OF CALIFORNIA, acting by and 8 through the San Francisco City Attorney DECLARATION OF STEVE W. DENNIS J. HERRERA, BERMAN IN SUPPORT OF 9 PLAINTIFFS’ OPPOSITION TO BP Plaintiffs, P.L.C.’S MOTION TO DISMISS FOR 10 LACK OF PERSONAL v. JURISDICTION 11 BP P.L.C., a public limited company of England 12 and Wales, CHEVRON CORPORATION, a Delaware corporation, CONOCOPHILLIPS, a 13 Delaware corporation, EXXON MOBIL CORPORATION, a New Jersey corporation, 14 ROYAL DUTCH SHELL PLC, a public limited company of England and Wales, and DOES 1 15 through 10,

16 Defendants.

17 CHEVRON CORP., 18 Third Party Plaintiff, 19 v. 20 STATOIL ASA, 21 Third Party Defendant. 22

23 24 25 26 27 28

Case 3:17-cv-06011-WHA Document 231-1 Filed 05/03/18 Page 3 of 3

1 I, STEVE W. BERMAN, declare as follows: 2 1. I am the managing partner of the law firm Hagens Berman Sobol Shapiro LLP, 3 attorneys for plaintiffs in the above-titled actions. I have personal knowledge of the matters stated 4 herein and, if called upon, I could and would competently testify thereto. 5 2. Attached hereto are true and correct copies of the following exhibits: 6 Exhibit 1: BP p.l.c.’s Annual Report and Form 20-F [2017]; and

7 Exhibit 2: Document entitled, “Climate Change 2016 – BP,” available at https://www.bp.com/content/dam/bp/en/corporate/pdf/sustainability- 8 report/group-reports/bp-cdp-submission-2016.pdf.

9 I declare under penalty of perjury under the laws of the United States that the foregoing is 10 true and correct. Executed this 3rd day of May, 2018 at Seattle, Washington. 11

12 s/ Steve W. Berman STEVE W. BERMAN 13

15 16 17 18 19 20 21 22 23 24 25 26 27

28 1 BERMAN DECL. IN OPPOSITION TO BP P.L.C.’S MOTION TO DISMISS – Case Nos. 17-cv-6011-WHA, 17-cv-6012-WHA Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 1 of 371

EXHIBIT 1

Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 2 of 371

A year of strong delivery and growth

BP Annual Report and Form 20-F 2017

4 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 3 of 371

Contents

Strategic report Corporate governance Additional disclosures Overview 60 Board of directors 247 Contents 2 BP at a glance 66 Executive team Including information on liquidity 4 How we run our business 70 Introduction from the chairman and capital resources, oil and gas 6 Chairman’s letter disclosures, upstream regional 72 Board activity in 2017 8 Group chief executive’s letter analysis and legal proceedings. 76 Shareholder engagement 10 The changing world of energy 76 International advisory board Strategy 77 Audit committee Shareholder information 12 Our strategy 84 Safety, ethics and environment 14 A year of delivery assurance committee 279 Contents Including information on dividends, 18 Measuring our progress 86 Remuneration committee our annual general meeting Performance 87 Geopolitical committee and share prices. 88 Chairman’s committee 20 Global energy markets 89 Nomination committee 21 Group performance 90 Directors’ remuneration report 289 Glossary 26 Upstream 113 Directors’ statements 294 Non-GAAP measures reconciliations 32 Downstream 297 Signatures 38 Rosneft 298 Cross-reference to Form 20-F 41 Other businesses and corporate Financial statements 299 Information about this report 41 Gulf of Mexico oil spill 42 Alternative Energy 115 Consolidated financial statements 44 Innovation in BP of the BP group Glossary 47 Sustainability Words with this symbol are 130 Notes on financial statements 47 Safety and security defined in the glossary on page 289. 50 Climate change 191 Supplementary information on 51 Managing our impacts oil and natural gas (unaudited) 51 Value to society 219 Parent company financial Cautionary statement 52 Human rights statements of BP p.l.c. This document should be read 52 Environment in conjunction with the cautionary 52 Ethical conduct statement on page 277. 53 Our people 55 How we manage risk 57 Risk factors Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 4 of 371

The energy we produce serves to power economic growth and lift people out of poverty. The way heat, light and mobility are delivered is changing. We aim to anchor our business in these changing patterns of demand, rather than in the quest for supply. We have a real contribution to make to the world’s ambition of a low carbon future.

BP Annual Report and Form 20-F 2017 1 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 5 of 371 BP at a glance

We are a global energy business Scale with wide reach across the 74,000 70 18,441 world’s energy system. We have employees countries million barrels of oil operations in Europe, North and equivalent – proved hydrocarbon reservesa South America, Australasia, Asia and Africa. 18,300 1.5bn retail sites barrels of oil equivalent transported by BP shipping

a On a combined basis of subsidiaries and equity-accounted entities.

BP in action US Europe Azerbaijan Achieved record crude Established Lightsource Signed a contract that Highlights of some of throughput levels at BP – Europe’s biggest will help maximize our activities in 2017. Whiting reﬁnery, and listed developer of large-scale recovery from the BP Midstream Partners as solar projects, and achieved Azeri-Chirag-Deepwater a separate company. record production at our Gunashli ﬁelds over Geel petrochemicals plant the next 32 years. in Belgium.

Trinidad Senegal Made two signiﬁcant Made a major gas gas discoveries with the discovery offshore Savannah and Macadamia Senegal with joint exploration wells. venture partner Kosmos Energy.

Mexico Gulf of Mexico Argentina Egypt Opened more than 120 retail Found significant additional Formed a new integrated Made a gas discovery sites, and became one of the oil resources at our Atlantis energy company with in the North Damietta first private companies field using new seismic Bridas, to create the Offshore Concession to supply natural gas imaging technology. country’s largest privately in the East Nile Delta. to its domestic market. owned energy company.

2 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 6 of 371 Strategic report – overview Data as at or for the year ended Performance 31 December 2017 unless $3.4bn 3.6 18 otherwise stated. proﬁt attributable to million barrels of oil tier 1 process BP shareholders equivalent per day – safety events hydrocarbon production (2016 $115 million) KPI (2016 3.3mmboe/d) KPI (2016 16) KPI KPI See key performance indicators on page 18. $6.2bn 143% underlying replacement group proved reserves cost proﬁt replacement ratio a

(2016 $2.6 billion) KPI (2016 109%) KPI a On a combined basis of subsidiaries and equity-accounted entities.

Russia China We delivered seven major Agreed to develop Sold our interest in projects in 2017 resources in the SECCO petrochemical Kharampurskoe and company to Sinopec. 1 Festivalnoye licence areas Taurus and Libra jointly with Rosneft. 2 Trinidad onshore compression

3 Quad 204 4 Persephone 5 Juniper 6 Khazzan Phase 1 7 Zohr

See A year of delivery on page 14.

Indonesia Established a retail joint venture with AKR.

More information India Group performance Agreed to work with Page 21 Reliance Industries Upstream in areas such as Page 26 differentiated fuels and Downstream Page 32 lower carbon energy Rosneft solutions. Page 38 Alternative Energy Page 42

BP Annual Report and Form 20-F 2017 See Glossary 3 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 7 of 371 How we run our business

From the deep sea to the desert, Business model foundations from rigs to retail, we deliver energy products and services Safe and reliable operations Talented people to people around the world. We strive to create and maintain a safe We work to attract, motivate, develop and We provide customers with fuel for transport, operating culture where safety is front and retain the best talent the world offers and energy for heat and light, lubricants to keep centre. This is not only safer for people equip our people with the right skills for engines moving and the petrochemicals and the environment – it also improves the the future. Our performance and ability to products used to make everyday items such reliability of our assets. thrive globally depends on it. as paints, clothes and packaging. See Safety and security on page 47. See Our people on page 53. We have a diverse portfolio across businesses, resource types and geographies. Having upstream and downstream businesses, along with well-established trading capabilities, helps to mitigate the impact of commodity pricing cycles. Our Finding oil and gas geographic reach gives us access to growing markets and new resources, as well as diversifying exposure to geopolitical events. We believe that our long history, well-recognized brands and customer offers, combined with our unique partnership with Rosneft, help differentiate us from our peers.

Developing and extracting oil and gas

Our role in society Creating shareholder value The energy we produce helps to support economic growth and improve quality Finding oil and gas We also seek to grow or extend the life of of life for millions of people. We strive to New access allows us to renew our portfolio, existing fields – such as our Quad 204 major be a world-class operator, a responsible discover additional resources and replenish project which aims to unlock additional corporate citizen and a good employer. our development options. We focus our resources from the Schiehallion area We believe that the societies and exploration activities in the areas that are of the UK North Sea. communities we work in should benefit competitive in the portfolio, and develop and from our presence. In supplying energy use technology to reduce costs and risks. Transporting and trading we contribute to economies around the We move oil and gas through pipelines and world by employing local staff, helping Developing and extracting by ship, truck and rail. We also trade a variety to develop national and local suppliers, oil and gas of products including oil, natural gas, liquefied and through the taxes we pay to We create value by seeking to progress natural gas, power, carbon products and governments. Additionally, we aim hydrocarbon resources and turn them into currencies. BP’s traders complete around to create meaningful, sustainable and proved reserves or divest them if they do not 550,000 transactions and serve more positive impacts in those communities fit with our strategic priorities. We develop than 12,000 customers across some through our social investments. the resources that meet our return threshold, 140 countries in a year. Our customers and produce hydrocarbons that we then sell range from independent power producers bp.com/society to the market or distribute to our downstream to utilities and municipalities. In addition we are facilities. Our upstream pipeline of future helping to meet LNG demand in Asia including projects gives us choice about which we developments in China and Vietnam. pursue – see page 30.

4BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 8 of 371 Strategic report – overview

Technology, innovation and venturing Partnerships and collaboration Governance and oversight

New technologies are enabling us to produce We aim to build enduring relationships Our risk management systems and policy energy safely and more efﬁciently. We with governments, customers, partners, provide a consistent and clear framework selectively research and invest in areas with suppliers and communities in the countries for managing and reporting risks. The board the potential to add greatest value to our where we operate. regularly reviews how we identify, evaluate business now and in the future. and manage risks.

See Innovation in BP on page 44. See Rosneft on page 38. See How we manage risk on page 55.

Transporting and trading Manufacturing Marketing fuels and products

Generating renewable energy

We use our market intelligence to analyse Our lubricants business has premium Generating renewable energy supply and demand for commodities across brands and access to growth markets. We have been investing in renewables our global network. This helps us deliver It also leverages technology and customer for many years – and our focus today is on what the market needs, when it needs it, relationships, all of which we believe gives biofuels, biopower, wind energy and solar identify the best markets for BP’s crude us competitive advantage. We serve energy. We operate a biofuels business in oil, source optimal raw materials for our automotive, industrial, marine and energy Brazil, using one of the world’s most refineries and provide competitive supply markets across the world. sustainable and advantaged feedstocks to for our marketing businesses. produce both low carbon ethanol and low And in petrochemicals our proprietary carbon power. We provide renewable power technology solutions deliver leading cost Manufacturing and marketing fuels through our significant interests in onshore positions compared to our competitors. and products wind energy in the US, and develop In addition to our own petrochemicals We produce refined petroleum products at and deploy technology in our wind business plants, we work with partners and license our refineries and supply distinctive fuel and to drive efficiency. Through our acquisition of our technology to third parties. convenience retail services to consumers. Clean Energy’s renewable natural gas Our advantaged infrastructure, logistics business, we are helping to power vehicle network and key partnerships help us to fleets from organic waste. And in solar have differentiated fuels businesses and energy we will target the growing demand deliver compelling customer offers. for large-scale solar projects worldwide, including with our partner Lightsource.

BP Annual Report and Form 20-F 2017 5 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 9 of 371 Chairman’s letter

Dear fellow shareholder, In 2017, the global economy continued to be strong and to grow while concerns around the geopolitical environment increased. For BP, as a global business, this was the backdrop to our operations. Against this background we have had a strong year. A year in which there was delivery and growth across all our businesses as Bob describes later in his letter. This was achieved with continued strong focus on safety. It’s an impressive performance from a great team. They are now fully into their stride and are performing very well. All of this gave us confidence to continue the dividend at 10 cents per ordinary share through 2017 and shareholders can still take dividends in shares rather than cash. In the fourth quarter we restarted share buybacks to offset the dilutive effects of the scrip shares. Our goals aim to balance society’s need for more It remains the board’s policy to grow sustainable free energy with our clear ambition of playing our cash flow and distributions to shareholders. part in the transition to a lower carbon world. We So, a strong year and an important first year in the are investing for the future in both hydrocarbons delivery of the commitment we made in 2016 to shareholders. So, I’d like to take stock and reflect on and in technologies which will be important in where BP is now and the progress that we’ve made over that transition. the past eight years. BP’s path We were faced with a crisis in 2010 that could have threatened the very being of the company. A crisis that should never have happened. It required resolute action on many fronts to see us through and it is a great tribute to everyone in BP that the foundations were laid for our recovery. This involved doing things differently and thinking differently. We had to act simultaneously on many fronts. We had to address the issues in the US while restructuring our investments in Russia – and all the while ensuring that we had a clear strategy for delivering value for our shareholders. All of this in a world that is looking towards a transition to lower carbon. In addressing these challenges, BP showed a deep resilience. With the leadership of Bob and his team the whole organization was engaged with the board playing a full role. It is from this resilience that we have been able to set a clear strategy with goals out to 2021. A strategy which will grow BP and be responsive to the many changes that are happening in the world around us.

Our challenge for the future Our goals aim to balance society’s need for more energy with our clear ambition of playing our part in the transition to a lower carbon world. We are investing for the future in both hydrocarbons and in technologies which will be important in that transition. The world is changing quickly, quicker than we have seen before. There is no one solution and no one right way ahead. Our approach is clearly aimed at being ﬂexible and responsive.

Above: Meeting with investors at the 2017 annual general meeting.

6 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 10 of 371

Whatever scenario we look at, whether from BP or the Strategic report – overview IEA, there will need to be investment to ensure that sufﬁcient hydrocarbons are available during the transition $7.9 bn for the years to come. The world will continue to need total dividends distributed supplies of hydrocarbons. We need the understanding to BP shareholders and trust of society to make these investments to meet this global demand. Renewables cannot be developed quickly enough to meet the increasing need for energy. This is not a choice between two investment approaches, both are needed for the world to be able to 5.7% grow. Our strategic priorities address this. We are ordinary shareholders committed and we demonstrate that commitment in annual dividend yield reports that we will soon publish.

Remuneration Melody Meyer was elected to the board at the 2017 Executive remuneration remains a clear issue of focus AGM. Melody has an extensive career in global oil and for shareholders and society. I would like to thank our gas at Chevron. The board is proposing that Dame Alison shareholders for the support which you gave to our new Carnwath be elected as a director at the 2018 AGM. 5.7% remuneration report at the 2017 AGM. This was an Alison has extensive financial experience both as an ADS shareholders important step forward in regaining your confidence. executive and non-executive. She has worked with annual dividend yield As is clear from Dame Ann Dowling’s letter later in this global organizations and will bring a broad range of skills report, we are implementing this policy in a considered to the BP board and to the audit committee which she way. As is the case with the way remuneration works, will join upon appointment. Both these appointments there are awards maturing which are governed by our emphasize the board’s commitment to diversity. This will previous policy. We have carefully considered the impact continue to enhance independent thinking and healthy of these. Working with the executives, the committee challenge. has exercised appropriate discretion to reflect your experience as shareholders over the past three years. Our purpose Ann will be standing down from this committee at the BP has a clear purpose. Our role is to produce energy AGM after three years in the chair. I would like to thank which can power economic growth and lift people out her for all the work that she has done in leading the of poverty. We need to do this in a way that responds to committee through some very difficult times. Paula the ambition of a world for a low carbon future. We have Reynolds will take the chair of this committee. made considerable progress in 2017. It has been a great year, but we must not be complacent. We are in a The board competitive environment in a quickly changing world and our business needs to be ready to meet those demands. The board has continued to work with Bob and his team on many issues relating to our strategy, our oversight of Bob and his team have once again done an excellent job the risks that BP faces and our understanding of the in steering BP through this year and setting a course for evolving challenges of the lower carbon transition. the future. Thank you to Bob and the team, to my colleagues on the board and to all our employees for all Our oversight of these risks is principally carried out their work during the year. My thanks also go to you our through the work of our committees. However there are shareholders for your support of BP. certain risks, such as cyber security, where it is important that it is considered by the board. I will be standing down during 2018 at some time after the May AGM and as I look back I feel good about the As a board we know that we can only bring long-term company. It’s in a great position to grow. I am sure that I value to our shareholders if we understand the needs of will have the opportunity to thank you for the support you and serve the communities in which we work. We need have given me in due course. to listen to and be responsive to the voices of those communities and of our own employees. Membership of the board continues to evolve. Paul Anderson will be retiring at the AGM in May. Paul joined the board two months before the Deepwater Horizon accident. He has very deep experience of the energy Carl-Henric Svanberg industry and has been a major source of advice and Chairman counsel to me and to the board over these years. Paul 29 March 2018 has made a great contribution to the board and its committees over some difficult times. I thank him on my own behalf and on behalf of the board. Above: Visiting Aker’s Tranby technology centre near Oslo.

More information Corporate governance Page 59

BP Annual Report and Form 20-F 2017 See Glossary 7 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 11 of 371 Group chief executive’s letter

Dear fellow shareholder, In this report last year, BP set out a five-year strategy and promised a story of growth. One year into that five-year plan I am pleased to report that your company has just delivered a significant year of both disciplined execution and exciting growth. In many ways it was an extraordinary year for BP. Here are some of the headlines: • Underlying profit $6.2 billion. • Upstream production up 12%. • Record earnings in Downstream. • Our most successful year for exploration since 2004. • Group reserves replacement ratio the highest in 10 years. Of course, we were helped by an improving oil price. But that only tells part of the story. 2017 was a year We said that 2017 would be a very important where we again maintained our improved trend in year for BP. We set out ambitious plans for the safety performance for most of our main personal and process safety metrics, although we have seen a slight year and we delivered on them. increase in our tier 1 events. Better safety and improved operational reliability, combined with strong discipline in our cash and capital costs, fed through into our financial performance. In a complex and uncertain world this may seem like a simple equation – safe and reliable operations plus cost discipline is good for the bottom line. But it works and the numbers prove this. We plan for the long term and we also measure our progress year on year and quarter by quarter. We were disappointed that we had to increase the provision relating to claims associated with the Gulf of Mexico spill, although we made real progress during the year in our efforts to close out the remaining claims. The claims facility is now winding down although a number of claims remain to be resolved. Our five-year plan As I said, last year we set out our strategic priorities. Simply put, these are designed to meet the dual challenge: to produce more of the affordable energy that the world needs while producing and delivering it in new ways, with fewer emissions, that society wants. The key to this dual challenge is to recognize that this is not just a race to renewables, it’s a race to lower greenhouse gas emissions. So, while we are fully committed to the energy transition that is underway, we also see a lot of uncertainty around the pace and path of how this will unfold. $3.4bn Our aim is to build a strong and flexible strategy with a profit attributable to high-quality portfolio and the ability to adapt quickly as BP shareholders the pace and path become clearer. That means in the Upstream we are focused on growing oil and gas in a way that offers us advantages in terms of margin and value, with the reduced emissions in mind. In the Downstream we continue to develop advantaged manufacturing and marketing businesses that can create value from existing, new and emerging markets.

Above: Chairing the panel of the Oil and Gas Climate Initiative meeting in London.

8 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 12 of 371

We are preparing for a low carbon future by investing Strategic report – overview in new companies and technologies across BP while also leveraging knowledge from the development of our 95.3% existing Alternative Energy businesses. refining availability And we are modernizing how BP works, using technology and data to work more efficiently and digitizing our processes. Disciplined execution in 2017 We said that 2017 would be a very important year for BP. 94.7% We set out ambitious plans for the year and we delivered Upstream plant on them. reliability We promised to start up seven major projects in the Upstream. We brought these online and under budget for the portfolio as a whole. These projects, along with the emissions in our operations; improving the products our six we brought online in 2016, have contributed to a 12% customers use to help them reduce their emissions; increase in our production. That helps to put us on track creating new low carbon businesses and offers that to deliver 900,000 barrels of new production per day by complement our existing portfolio. 2021. We also strengthened our portfolio with our most In the low carbon space, we entered into a new successful year of exploration since 2004, sanctioned partnership with Lightsource, a global leader in the three exciting new projects in Trinidad, India and the Gulf development, acquisition and long-term management of Mexico and added 143% reserves replacement for the of large-scale solar projects. In new ventures, we have a group. pipeline of more than 40 active investments with more In the Downstream we promised to grow earnings. In than 200 partners looking to exploit opportunities in fact, we had our best ever year, with a replacement cost advanced mobility, bio products, carbon management profit of $7.2 billion, driven by strong earnings growth in and low carbon power and storage. our marketing and manufacturing businesses. This came These are a few examples that I believe show we are in from volume growth in our premium fuels and lubricants, great shape to act where we see opportunity to make a the growth of our successful convenience retail real difference to this transition and, at the same time, partnerships around the world and strong performance in create value for our shareholders. manufacturing. Strength in relationships Exciting growth opportunities The world is changing fast and there is a lot of This is a time of transformational change for our industry. uncertainty of what the future will actually look like. To An era of abundant resources and a changing fuel mix stay competitive a company needs to be in tune with mean that we must be competitive today and adapt fast society. While we are making progress with issues such to change for tomorrow. So, we must modernize how we as gender and ethnicity representation, we recognize we work, embrace new advanced technologies and maintain still have more to do. Beyond having the right strategy, our downward pressure on costs. We are already in to succeed and thrive in uncertainty requires strong and action across BP. trusting relationships. I am grateful to our partners, host In the Upstream we are growing gas and advantaged governments and other stakeholders who have stood oil on many fronts: signing a 25-year extension to our by us in hard times and continue to work with us to help ACG production-sharing agreement in Azerbaijan; shape our future and the future energy landscape. strengthening our relationship with Petrobras and I am also grateful to you, our shareholders who have accessing the prolific Santos basin in Brazil; extending shown great patience while we stabilized BP and built up our innovative alliance with Kosmos in West Africa; our resilience. I hope you see our recent performance as growing in Norway though our Aker BP joint venture; and signs that this patience is being rewarded. adding production from onshore Abu Dhabi following the deepening of our long-term strategic relationship with And last, but not least, I want to thank the global BP the Abu Dhabi National Oil Company (ADNOC) at the team. I don’t believe there is another company of our end of 2016. size and scale that can adapt and manage change better than we can. This spirit of invention and purpose has In the Downstream we are building competitively been alive across BP for over a century and will carry us advantaged businesses; extending our differentiated forward into what, I believe, is a very bright future. retail fuels offer in material new markets such as Mexico, India, Indonesia and China; entering into a new joint venture with DongMing Petrochemical as part of a Above: At the inauguration of focused growth strategy in China; renewing and creating the first phase of development of Oman’s giant Khazzan gas new partnerships in lubricants with Renault Nissan, Ford, field. VW and Volvo. Bob Dudley At the same time, we must look to produce and deliver Group chief executive More information energy in new ways, with fewer emissions, to help 29 March 2018 meet the world’s climate goals. At BP we have been Strategy Page 12 working on this challenge for over two decades and that Group performance has informed our approach today: working to reduce Page 21

BP Annual Report and Form 20-F 2017 See Glossary 9 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 13 of 371 The changing world of energy

The world of energy is changing every day. With rising concerns about climate, technological advances and geopolitical shifts, the energy mix is moving towards lower carbon sources.

2040 outlook

Growing demand for energy Energy mix is shifting People rely on energy for heat, light and mobility. Today, oil and gas account for almost 60% of all energy Growing economies need energy to support their used. Even in a scenario that is consistent with the Paris industry and infrastructure. How that energy is delivered goals of limiting warming to less than 2ºC, oil and gas is changing rapidly and the energy mix of the future will could provide around 40% of all energy used by 2040. become increasingly lower carbon. So it’s essential that action is taken to reduce emissions from their production and use. The demand for energy continues to grow – largely driven by rising incomes in emerging economies and In a low carbon world, gas offers a much cleaner a global population heading towards nine billion by alternative to coal for power generation and a valuable 2040. But this growth is much slower than in the back-up for renewables, for example when the sun previous 20 years. The extent of the increase is being and wind aren’t available. Gas also provides heat for curbed by gains in energy efficiency, as there is industry and homes and fuel for trucks and ships. greater attention around the world on using energy more sustainably. • To meet the rising demand for cleaner energy, we are increasing our gas production. Energy consumption by regiona (billion tonnes of oil equivalent) Renewables are the fastest-growing energy source and could account for at least 14% of all energy in 2040. 2040 • We are building up our renewable portfolio – focusing 2020 on biofuels, biopower, wind energy and solar energy. Oil is the primary fuel for transport today. We expect its 2000 share of the total energy mix will gradually decline as we see more energy efficiency in traditional engines, greater 0 3 6 9 12 15 18 use of biofuels and gas, and growth in fully electric and OECD Other Asia India Rest of World hybrid vehicles, as well as ride sharing, in the years China Africa ahead. a Evolving transition scenario. • We are developing new efficient fuels and lubricants that can help our customers and consumers to lower their emissions.

Advances in technology Insights from our Energy Outlook and Technology Outlook help shape our strategic thinking. We consider how policy, consumer behaviour and advances in technology could affect the pace of the energy transition and how we produce and use energy in the coming decades. • We prioritize certain new technologies for in-depth analysis – based on their ﬁt with our strategy and how soon and likely we think they are to break through technological and commercial barriers. We also invest in start-up companies to understand and participate in these potentially transformational technologies. See Innovation in BP on page 44.

Above: Our Ituiutaba sugar cane processing unit in Brazil.

10 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 14 of 371

Emerging greenhouse gas policy and Strategic report – overview regulation Governments are putting in place taxes, carbon trading schemes and other measures to limit greenhouse gas (GHG) emissions. A ﬁfth of the world’s GHG emissions are now covered by carbon pricing systems, double the coverage from just ﬁve years ago. We expect around two thirds of BP’s direct emissions will be in countries subject to emissions and carbon policies by 2020. And we have been active as a trader in the world’s current emissions trading systems since their inception. To help anticipate greater regulatory requirements affecting our GHG emissions, we use a carbon cost when evaluating our plans for large new projects and those for which emissions costs would be a material part 80-90% of the project. In industrialized countries, this is currently CO emissions $40 per tonne of carbon dioxide equivalent. 2

• We also stress test at a carbon price of $80 per tonne. Our carbon cost, along with energy efﬁciency Around 80-90% of carbon dioxide emissions from oil and gas products are considerations, encourages projects to be set up from their use by consumers in transportation, power plants, industries and in a way that will have lower GHG emissions. buildings. So one of the biggest contributions we can make to advance the energy transition is by providing products and services that help consumers lower their carbon footprint.

Energy consumption – 2040 projections

2016 Actual energy mix

33% 24% 28% 4% 7% 4%

2040 Evolving transition

27% 26% 21% 5% 7% 14%

2040 Faster transition

25% 22% 13% 25% 7% 8%

2040 Even faster transition

8% 8% 33% 22% 19% 10% 0369121518 Billion tonnes of oil equivalent. The sum of the fuel shares may not equal 100% due to rounding.

Oil Gas Coal Nuclear Hydro Renewables

Evolving transition Faster transition Even faster transition In this scenario, government policies, This scenario sees carbon prices rising faster This scenario matches carbon emissions technology and social preferences evolve in a than in the evolving transition scenario with similar to the International Energy Agency’s manner and speed seen in the recent past. The other policy interventions encouraging more sustainable development scenario which growing world economy requires more energy rapid energy efﬁciency gains and fuel aims to limit the global temperature rise but consumption increases less quickly than switching. to well below 2°C. in the past.

More information BP Energy Outlook Provides our projections of future energy trends and factors that could affect them out to 2040. See bp.com/energyoutlook Technology Outlook Describes how technology could inﬂuence the way we meet the energy challenge into the future. See bp.com/technologyoutlook

BP Annual Report and Form 20-F 2017 11 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 15 of 371 Our strategy

Our industry is changing at a pace not seen in decades. Oil, gas and Growing gas and renewables are becoming more advantaged oil in abundant and less costly. Through new technologies, energy will the upstream be produced more efficiently and in new ways, helping to meet the expected rise in demand. And the world is working towards a lower carbon future. Our strategy allows us to be competitive at a time when prices, policy, technology and customer preferences are evolving. Invest in more gas and We believe having a balanced portfolio with advantaged oil and gas, competitive oil, producing both with downstream and low carbon activities, increasing efficiency. as well as a dynamic investment strategy give us resilience. With the experience we have, the portfolio we have created and the flexibility of our strategy, we can embrace the energy Key highlights Major project start-ups transition in a way that enhances our Started up seven major projects , making a investor proposition, while meeting significant contribution to the 900,000 barrels the need for energy today. per day of expected new production by 2021.

Exploration successes Made six potentially commercial discoveries – two in the UK, two in Trinidad, one in Egypt and one in Senegal with our partner Kosmos Energy.

See page 27 Seismic success Found signiﬁcant additional oil resources at our Atlantis ﬁeld in the Gulf of Mexico using a new seismic imaging technique.

Enduring relationships Extended our contract in the Azeri-Chirag- Gunashi ﬁeld in Azerbaijan for a further 25 years, continuing our long-term advantaged More information oil production. Financial framework How this underpins our commitment to sustain the dividend for our shareholders. See page 25

12 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 16 of 371 Strategic report – strategy Market-led growth Venturing and Modernizing in the downstream low carbon across the whole group multiple fronts

Innovate with advanced Pursue new opportunities Simplify our processes and products and strategic to meet evolving technology, enhance our productivity retail partnerships. consumer and policy trends. through digital solutions.

Convenience partnerships Advancing biofuel technology Automating well construction Continued the rollout of our convenience Acquired the Nesika ethanol plant in Kansas, Launched DrillPlan® – a new technology partnership model across our retail network – with joint venture partner DuPont, to to automate the entire well construction adding more than 220 sites in 2017, bringing commercialize Butamax® bio-isobutanol process – at our Khazzan ﬁeld in Oman, the total to 1,100. technology. in partnership with Schlumberger.

Retail sites in Mexico Investing in artiﬁcial intelligence Serving customers digitally Became the ﬁrst global brand to enter Invested in AI software for the oil and gas Launched a range of digital apps to the Mexican retail fuels market since industry with venture partner Beyond Limits. enhance our customers’ experiences, deregulation – opening more than 120 such as BPMe and in partnership with BP-branded retail sites during the year. TomTom Telematics, BP FleetMove.

Speedier solutions Began a multi-year project to move our electronic information from physical data centres to the cloud.

See page 33 See page 46

Lower carbon products Renewable gas Expanded our lower carbon products Acquired Clean Energy’s renewable portfolio with Castrol EDGE BIO-SYNTHETIC natural gas business – giving BP access to its now available in the US, the supply of jet network of gas transport customers and helping to make biogas, made from organic biofuel in Sweden and Norway, and our PTAir See page 23 brand – now available globally. waste, more accessible to natural gas powered vehicle ﬂeets. Carbon trading High-quality lubricants Used our powerful market insights and Generating solar energy Announced plans to build a high-quality innovative platforms to help generate over lubricants blend plant in China. Partnered with Lightsource – Europe’s largest 12 million tonnes of CO2 reductions through solar development company – to help propel carbon offsetting projects to help customers its continuing and rapid expansion worldwide. meet their emissions commitments.

BP Annual Report and Form 20-F 2017 See Glossary 13 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 17 of 371 A year of delivery

This was a big year for BP with seven major projects coming onstream, making 1 Taurus and Libra 4 Persephone it one of the most signiﬁcant years for 2 Trinidad onshore 5 Juniper commissioning new projects in our history. compression (TROC) 6 Khazzan Phase 1 This puts us well on the way to achieving our 3 Quad 204 7 Zohr aim of 900,000 barrels of oil equivalent per day of new production from our new major projects by 2021.

1 Egypt: Taurus and Libra BP and its partners operate across 55,000km2 • Production around 20% above plan. in Egypt – about • Added signiﬁcant gas production the size of Croatia to the Egyptian market. 100% of the gas from the project will be used for the national grid

Fast facts Operator BP Partners BP (82.75%) RWE Dea (17.25%) Project type Conventional gas Peak annual average ~105mboe/d (gross) production ~80mboe/d (net)

2 Trinidad: TROC

• Increased production from low-pressure wells in our existing acreage in the Columbus Basin. • This onshore facility has the capacity to deliver nearly 200 million standard cubic feet of gas per day when fully operational.

+50 years as largest contributor to natural gas production in Trinidad Fast facts

Operator Atlantic LNG Partners 100% owned by BP Trinidad and Tobago which is owned by BP (70%) and Repsol (30%)

Project type Liqueﬁed natural gas Peak annual average ~35mboe/d (gross) production ~35mboe/d (net)

14 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 18 of 371 Strategic report – strategy

3 UK North Sea: Quad 204

• Extended the lives of the Schiehallion and Loyal fields out to 2035 and beyond. £2bn+ • Constructed and installed Glen Lyon, contracts awarded the world’s largest harsh-water floating to UK companies production, storage and offloading vessel. • Progressed BP’s aim to double UK North Sea production by 2020.

Fast facts

Operator BP Partners BP (36%) Shell (54%) Siccar Point Energy (10%) Quad 204 is expected to return the ﬁelds to Project type Conventional oil their historical peak Peak annual average ~125mboe/d (gross) production production ~45mboe/d (net)

4 Australia: Persephone

• Increased gas production from the North West Shelf project – Australia’s largest oil and gas resource development. • The North West Shelf project contributes around a third of Australia’s oil and gas production.

Fast facts Operator Woodside Partners BP (16.67%) BHP, Chevron, Shell, Woodside and Mitsubishi-Mitsui (16.67% each)

Project type Liqueﬁed natural gas Peak annual average ~50mboe/d (gross) production ~8mboe/d (net)

BP Annual Report and Form 20-F 2017 15 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 19 of 371

5 Trinidad: Juniper

• Our ﬁrst subsea ﬁeld development in Trinidad.

• We expect Juniper will make a signiﬁcant contribution to Trinidad & Tobago’s national gas production.

Fast facts

Operator BP

Partners 100% owned by BP Trinidad and Tobago, which is owned by BP (70%) and Repsol (30%)

Project type Liqueﬁed natural gas Peak annual average ~95mboe/d (gross) production ~95mboe/d (net) It weighs about 10,000 tons – equivalent to 20 Boeing 747s fully loaded for take off

6 Oman: Khazzan Phase 1 One of the biggest tight gas projects in the Middle East • Accessed gas in extremely hard rock at depths of up to 5km using expertise from our US Lower 48 business. • Conducted the world’s largest onshore seismic survey and 3D modelling of the subsurface. • Designed to be inherently efﬁcient and lower in greenhouse gas emissions.

Fast facts

Operator BP Partners BP (60%) Oman Oil (40%)

Project type Tight gas Peak annual average ~172mboe/d (gross) production ~103mboe/d (net)

16 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 20 of 371 Strategic report – strategy

7 Egypt: Zohr

• Started up in less than two and a half years from discovery – a record time for a ﬁeld of this size in deepwater.

• Thought to be the largest gas discovery in the Mediterranean.

Fast facts

Operator ENI

Partners BP (10%) Eni (60%) Rosneft (30%)

Project type Dry gas Peak annual average ~364mboe/d (gross) production ~36mboe/d (net)

~1.3 billion barrels of proved reserves

More information

Go to youtube.com/bp to watch the stories behind our seven major projects.

BP’s net share from our seven major projects at peak production (in thousand barrels of oil equivalent per day)

80 35 45 8 95 103 36

Taurus and Libra TROC Quad 204 Persephone Juniper Khazzan Phase 1 Zohr

Looking ahead

We plan to start-up 1 2 Egypt 5 US six projects in 2018. 3 UK North Sea 6 Russia More information 4 Azerbaijan Upstream project pipeline See page 30

BP Annual Report and Form 20-F 2017 17 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 21 of 371 Measuring our progress

We assess our performance Underlying replacement cost profit Operating cash flow ($ billion) ($ billion) REM REM across a wide range of 3.4 24.1 measures and indicators. 2017 2017 6.2 18.9 0.1 17.6 Our key performance indicators (KPIs) 2016 2016 2.6 10.7 provide a balanced set of metrics that give (6.5) 20.3 2015 2015 emphasis to both financial and non- 5.9 19.1 3.8 32.8 financial measures. These help the board 2014 2014 12.1 32.8 and executive management assess 23.5 21.2 2013 2013 performance against our strategic priorities 13.4 21.1 and business plans, with non-financial 0 Profit (loss) for the year Operating cash flow excluding Gulf of Mexico oil metrics playing a useful role as leading spill paymentsa Underlying RC profit for the year indicators of future performance. BP Operating cash flow management uses these measures to Underlying RC profit is a useful measure for investors Operating cash flow is net cash flow provided by operating evaluate operating performance and make because it is one of the profitability measures BP management activities, as reported in the group cash flow statement. uses to assess performance. It assists management in Operating activities are the principal revenue-generating financial, strategic and operating decisions. understanding the underlying trends in operational activities of the group and other activities that are not investing performance on a comparable year-on-year basis. or financing activities. We believe it is helpful to disclose net Changes to KPIs cash provided by operating activities excluding amounts related It reflects the replacement cost of inventories sold in the period to the Gulf of Mexico oil spill because this measure allows for and is arrived at by excluding inventory holding gains and losses more meaningful comparisons between reporting periods. We have added Upstream plant from profit or loss. Adjustments are also made for reliability to our KPIs this year to reflect non-operating items and fair value accounting effects . 2017 performance Operating cash flow was higher due to improved business results, including a more favourable price our strategy and align the measures 2017 performance Profit for the year and underlying RC profit environment and higher production as well as lower Gulf of used for Upstream and Downstream. It reflect higher oil and gas prices, and a stronger refining Mexico oil spill payments which amounted to $5.2 billion in 2017. environment compared with 2016, as well as the benefit a will also be used to assess performance of major project start-ups, and stronger refining operational These bars on the chart do not form part of BP’s Annual Report for the annual bonus in our 2018 performance. on Form 20-F as filed with the SEC. remuneration outcomes assessment. Major project delivery Production (mboe/d) We no longer report loss of primary REM containment as we are focusing on more comparable industry metrics. 2017 7 2017 3,595 And in light of our refreshed strategy, 2016 6 2016 3,268 announced in February 2017, we’ve 2015 4 2015 3,239 updated the employee survey questions 2014 7 2014 3,141 to reflect our new priorities and retired 2013 4 2013 3,230 the group priorities index, which was 2 4 6 8 3,200 3,400 3,600 based on priorities set in 2012. We monitor the progress of our major projects to gauge Production is a useful measure for tracking how our major Remuneration whether we are delivering our core pipeline of projects under projects are helping to grow our business. We report construction on time. production of crude oil, condensate, natural gas liquids (NGLs), To help align the focus of our board and Projects take many years to complete, requiring differing natural bitumen and natural gas on a volume per day basis for executive management with the interests amounts of resource, so a smooth or increasing trend should our subsidiaries and equity-accounted entities. Natural gas is not be anticipated. converted to barrels of oil equivalent at 5,800 standard cubic of our shareholders, certain measures are feet of natural gas = 1 boe. used for executive remuneration. Major projects are defined as those with a BP net investment of at least $250 million, or considered to be of strategic 2017 performance BP’s total reported production including importance to BP, or of a high degree of complexity. Upstream and Rosneft segments was 10% higher than in 2016 due to the Abu Dhabi onshore concession renewal and major REM Measures used for the remuneration policy 2017 performance We started up seven major projects in project start-ups. approved by shareholders at the 2017 AGM. Australia, Egypt, the UK North Sea, Oman and Trinidad.

Measures for the annual bonus are focused on safety, reliable operations Reported recordable injury frequencyb Tier 1 process safety eventsb and ﬁnancial performance. REM REM REM REM

Measures for performance shares are 2017 0.22 2017 18 focused on shareholder value, capital 2016 0.21 2016 16 discipline and future growth. 2015 0.24 2015 20 2014 0.31 2014 28 REM These measures were used for executive 2013 0.31 2013 20 remuneration under the terms of our 0.1 0.2 0.3 0.4 10 20 30 40 discontinued 2014-16 policy.

Reported recordable injury frequency (RIF) measures the We report tier 1 process safety events which are losses of number of reported work-related employee and contractor primary containment of greatest consequence – causing harm incidents that result in a fatality or injury per 200,000 hours to a member of the workforce, costly damage to equipment or worked. exceeding deﬁned quantities. 2017 performance We have seen a small increase in our RIF 2017 performance We have seen a slight increase in tier 1 compared with 2016. Improving safety in our operations is a process safety events, and we remain focused on our high priority and we are working on it right across the business. systematic approach to safety management and assurance. More information b This represents reported incidents occurring within BP’s Directors’ remuneration operational HSSE reporting boundary. That boundary includes Page 90 BP’s own operated facilities and certain other locations or situations.

18 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 22 of 371 Strategic report – strategy Total shareholder return (%) Return on average capital employed (%) Reserves replacement ratio (%) REM REM REM REM

20.0 2017 5.8 143 2017 2017 9.5 2016 2.8 2016 109 29.0 2016 2015 5.5 55.5 2015 61 (12.8) 2014 9.6 2014 63 2015 (8.3) 2013 10.2 2013 129 (16.5) 4 8 12 8060 100 120 140 160 2014 (11.6) 14.7 2013 14.0 -20 0 20 40 60 ADS basis Ordinary share basis

Total shareholder return (TSR) represents the change in value Return on average capital employed (ROACE) gives an Proved reserves replacement ratio is the extent to which the of a BP shareholding over a calendar year. It assumes that indication of a company’s capital efficiency, dividing the year’s production has been replaced by proved reserves added dividends are reinvested to purchase additional shares at the underlying RC profit after adding back net interest by average to our reserve base. closing price on the ex-dividend date. capital employed, excluding cash and goodwill. See page 295 The ratio is expressed in oil-equivalent terms and includes We are committed to maintaining a progressive and for more information including the nearest GAAP equivalent changes resulting from discoveries, improved recovery and sustainable dividend policy. data. extensions and revisions to previous estimates, but excludes 2017 performance Reduced TSR reflects lower share price In recent years, ROACE has been lower in the oil and gas changes resulting from acquisitions and disposals. The ratio growth in 2017 compared with 2016, while the dividend per sector, due to the impact of lower oil prices on earnings and the reflects both subsidiaries and equity-accounted entities. share was maintained at the same level. capital investment made during the preceding period of $100 This measure helps to demonstrate our success in accessing, per barrel oil prices. exploring and extracting resources. 2017 performance The 2017 increase in ROACE is due to a 2017 performance The ratio was higher due to development stronger environment and improved business performance. activity in Abu Dhabi and Rosneft, expansion of the Khazzan development in Oman and extension of the ACG licence.

Upstream unit production costs ($/boe) Upstream plant reliability (%) Reﬁning availability (%) REM REM

2017 7.11 2017 94.7 2017 95.3 2016 8.46 2016 95.3 2016 95.3 2015 10.46 2015 95.0 2015 94.7 2014 12.75 2014 93.4 2014 94.9 2013 13.16 2013 91.7 2013 95.3 4 8 12 16 90 92 94 96 98 90 92 94 96 98

The upstream unit production cost indicator shows how BP-operated Upstream plant reliability is calculated as 100% Refining availability represents Solomon Associates’ supply chain, headcount and scope optimization impact cost less the ratio of total unplanned plant deferrals divided by operational availability. The measure shows the percentage of efficiency. installed production capacity. the year that a unit is available for processing after deducting the time spent on turnaround activity and all mechanical, 2017 performance The lower unit production costs in 2017 2017 performance The slight decrease in 2017 plant reliability process and regulatory downtime. reflect further efficiency increases and the benefit of new was due in part to our new major projects ramping up, however production start-ups. this was partly offset by solid performance across existing Refining availability is an important indicator of the operational assets. performance of our Downstream businesses. 2017 performance Refining availability was similar to 2016, reflecting continued strong operational performance in our portfolio. This performance is underpinned by our global reliability improvement programme which provides our refineries with a more structured and systematic approach to improving availability.

Greenhouse gas emissions Employee engagement (%) Diversity and inclusionc (%)

(million tonnes of CO2 equivalent)

2017 49.4 21 2017 73 2017 2016 50.1 2016 73 24 22 2015 49.0 2015 71 2016 23 2014 48.7 2014 73 19 2015 2013 50.3 2013 73 21 20 40 60 18 2014 21 18 2013 We provide data on greenhouse gas (GHG) emissions material We conduct an annual employee survey to understand and 21 to our business on a carbon dioxide-equivalent basis. This monitor levels of employee engagement and identify areas for 51015 20 25 30 includes carbon dioxide (CO ) and methane for direct improvement. 2 Women Non UK/USd emissions. Our GHG KPI encompasses all BP’s consolidated 2017 performance The overall employee engagement score entities as well as our share of equity-accounted entities other was up from two years ago, when we saw a decline that than BP’s share of Rosneft. coincided with the uncertainties of a low oil price environment. 2017 performance The primary reasons for the overall Each year we report the percentage of women and individuals decrease include operational changes such as planned from countries other than the UK and the US among BP’s shutdowns at several of our refineries for maintenance, and group leaders. actions taken by our businesses to reduce emissions in areas 2017 performance While the percentage of our group leaders such as flaring, methane and energy efficiency. who are women decreased slightly, the number of non-UK/US people rose. We are developing mentoring, sponsorship and coaching programmes to help more women advance.

c Relates to BP employees. d Figures for 2013-16 have been amended.

BP Annual Report and Form 20-F 2017 See Glossary 19 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 23 of 371 Global energy markets

Oil prices recovered in 2017, but averaged only half the prices seen in 2011-13. While the market continues to rebalance in the face of ongoing co-ordinated OPEC and non-OPEC production restraint, inventories remain above their recent historical average.

The world economy grew at 3.1% in 2017, its fastest rate of growth The surplus relative to the five-year average was well below the peak of since 2011. This was significantly faster than the 2.4% seen in 2016 366 million barrels seen in July 2016. and slightly more than the average of nearly 3% over the past 20 years. Growth in the OECD picked up to 2.4%, from just 1.7% in 2016, Natural gas benefiting from improvements in both consumption and investment Natural gas prices ($/mmBtu – quarterly average) Henry Hub across all major regions, and a pick-up in global trade. The non-OECD showed a similar broad-based improvement, growing by 4.3% in 2017, 12 compared with 3.8% in 2016. 10

8 Oil 6

Crude oil prices ($/bbl – quarterly average) Brent dated 4

150 2 08 09 10 11 12 13 14 15 16 2017 120 Prices 90 Gas prices rebounded in all key markets in 2017, as global markets tightened. Liquefied natural gas (LNG) supply increased more slowly 60 than expected, while LNG demand from China was unexpectedly strong, and high coal prices supported gas prices in the power 08 09 10 11 12 13 14 15 16 2017 generation sector. Prices Gas prices in the US averaged $3.11 per million British thermal units Dated Brent crude oil prices averaged $54.19 per barrel in 2017 – the (mmBtu), up by $0.65 compared with 2016 ($2.46). The Japanese spot first annual increase since 2012 but roughly half the average of over $110 price rebounded to $7.13/mmBtu in 2017 from $5.72/mmBtu in 2016, seen in 2011-13. Prices drifted lower over the first half of the year before driven by stronger Asian LNG demand, notably from China but also rebounding, ending the year at their monthly high point, averaging $64 Japan, Korea and Pakistan. The UK National Balancing Point hub in December. price was 44.95 pence per therm, 30% higher than in 2016 (34.63), Consumptiona supported by increasing coal prices. Meanwhile pipeline outages Global consumption increased by 1.6 million barrels per day (mmb/d) and cold weather put pressure on UK prices towards the end of 2017. to 97.8mmb/d for the year (1.6%) – due to continued low oil prices Broad differentials between regional gas prices have increased, and a recovering world economy. Demand once again grew most rapidly even though they remain at much lower levels than the peaks in Asia’s emerging economies (+1mmb/d), but OECD demand also observed in 2012 and 2013. increased for a third consecutive year. Consumptionb Productiona Global consumption is estimated to have grown more rapidly in 2017 Global oil production saw weak growth for a second consecutive year, than in 2016. Strong growth in Asia, the Middle East and Africa offset rising by just 0.4mmb/d. However, the source of global weakness was a decline in North American consumption, where higher gas prices different in 2017. After falling in 2016, non-OPEC production recovered caused gas to lose market share to coal in the US power sector. (+0.8mmb/d), led by the US. In contrast OPEC production declined Meanwhile demand in core European markets was broadly stable. And by 0.4mmb/d – the first decline since 2013 – as the group engaged higher weather-related demand towards the end of the year boosted with certain non-OPEC producers to restrain output. global annual demand. Inventoriesa Productionb These changes resulted in global demand exceeding supply in 2017. Total gas production is estimated to have increased substantially in 2017, As a result, oil inventories in the OECD began to decline, although they in contrast to 2016, which had similar production to 2015. Significant remained well above the recent historical range. At the end of November production increases were achieved in Australia – supported by the start OECD commercial inventories were roughly 100 million barrels less than of new LNG trains , and in Russia. 2016, but remained 90 million barrels above the five-year average. Global LNG supply capacity expanded strongly in 2017, adding almost three times as much new capacity as in 2016. Several trains came online More information in the US, Australia, Russia and Malaysia.

Prices and margins Pages 26 and 32 a From IEA Oil Market Report, 13 February 2018 ©, OECD/IEA 2018. b Based on BP estimates from the BP Energy Outlook. 20 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 24 of 371 Group performance Strategic report – performance

We had strong delivery and growth across BP in 2017, enabling the company to get back into balance. The full-year underlying result was more than double a year earlier and our ﬁnancial frame remains resilient. We recommenced share buybacks during the fourth quarter with the intention to offset any ongoing dilution from scrip dividends over time.

Brian Gilvary, group chief ﬁnancial ofﬁcer In summary

Segment RC profit (loss) before interest and tax $6.2bn $24.1bn ($ billion) underlying replacement operating cash flow excluding cost (RC) profit Gulf of Mexico oil spill 2017 payments a 2016 (2016 $2.6 billion) (2016 $17.6 billion) $3.4bn $18.9bn 2015 (20) (15)(10) (5) 051520 10 profit attributable to operating cash flow BP shareholders Upstream Downstream Rosneft Group RC profit (loss) before interest and tax Other businesses and corporate – other (2016 $115 million) (2016 $10.7 billion) Other businesses and corporate – Gulf of Mexico oil spill Consolidation adjustment – UPII

Financial and operating performance $ million except per share amounts 2017 2016 2015 Profit (loss) before interest and taxation 9,474 (430) (7,918) Finance costs and net finance expense relating to pensions and other post-retirement benefits (2,294) (1,865) (1,653) Taxation (3,712) 2,467 3,171 Non-controlling interests (79) (57) (82) Profit (loss) for the yearb 3,389 115 (6,482) Inventory holding (gains) losses , before tax (853) (1,597) 1,889 Taxation charge (credit) on inventory holding gains and losses 225 483 (569) Replacement cost profit (loss) 2,761 (999) (5,162) Net (favourable) adverse impact of non-operating items and fair value accounting effects , before tax 3,730 6,746 15,067 Taxation charge (credit) on non-operating items and fair value accounting effects (325) (3,162) (4,000) Underlying replacement cost profit 6,166 2,585 5,905 Dividends paid per share – cents 40.0 40.0 40.0 – pence 30.979 29.418 26.383 a This does not form part of BP’s Annual Report on Form 20-F as filed with the SEC. b Profit (loss) attributable to BP shareholders.

More information

Upstream Other businesses Page 26 and corporate Downstream Page 41 Page 32 Oil and gas disclosures Rosneft for the group Page 38 Page 259

BP Annual Report and Form 20-F 2017 See Glossary 21 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 25 of 371

Results Cash flow and net debt information Profit for the year ended 31 December 2017 was $3.4 billion, compared $ million with $115 million in 2016. Excluding inventory holding gains, 2017 2016 2015 replacement cost (RC) profit was $2.8 billion, compared with a loss of Operating cash flow excluding $1.0 billion in 2016. After adjusting for non-operating items of $3.3 billion Gulf of Mexico oil spill and net adverse fair value accounting effects of $96 million (both on a paymentsa 24,098 17,583 20,263 post-tax basis), underlying RC profit for the year ended 31 December Operating cash flow 18,931 10,691 19,133 2017 was $6.2 billion, an increase of $3.6 billion compared with 2016. Net cash used in investing The increase was predominantly due to higher results in both Upstream activities (14,077) (14,753) (17,300) and Downstream segments. The Upstream result reflected higher oil Net cash provided by (used in) and gas prices and increased production. The Downstream result financing activities (3,296) 1,977 (4,535) reflected strong refining performance, including an improved margin Cash and cash equivalents at environment and growth in fuels marketing. end of year 25,586 23,484 26,389 The profit for the year ended 31 December 2016 was $115 million, Capital expenditure b compared with a loss of $6.5 billion in 2015. Excluding inventory holding Organic capital expenditure (16,501) (16,675) N/A gains, RC loss was $1.0 billion, compared with a loss of $5.2 billion in Inorganic capital expenditure (1,339) (777) N/A 2015. After adjusting for non-operating items of $2.8 billion and net (17,840) (17,452) (20,202) adverse fair value accounting effects of $0.8 billion (both on a post-tax Gross debt 63,230 58,300 53,168 basis), underlying RC profit for the year ended 31 December 2016 was Net debt 37,819 35,513 27,158 $2.6 billion, a decrease of $3.3 billion compared with 2015. The Gross debt ratio (%) 38.6% 37.6% 35.1% reduction was predominantly due to lower results in both the Upstream Net debt ratio (%) 27.4% 26.8% 21.6% and Downstream segments reflecting lower oil and gas prices and the weaker refining environment. a This does not form part of BP’s Annual Report on Form 20-F as filed with the SEC. b From 2017 onwards we are reporting organic, inorganic and total capital expenditure on a cash basis which were previously reported on an accruals basis. This aligns with BP's Non-operating items financial framework and is now consistent with other financial metrics used when comparing The net charge for non-operating items was $3.6 billion pre-tax and $3.3 sources and uses of cash. An analysis of capital expenditure on a cash basis for 2015 is not billion post tax in 2017. The post-tax non-operating charge includes a available. charge of $1.7 billion recognized in the fourth quarter relating to business economic loss and other claims associated with the Gulf of Mexico oil Operating cash flow spill and a $0.9 billion deferred tax charge following the change in the US Net cash provided by operating activities for the year ended tax rate enacted in December 2017. In addition, the net charge also 31 December 2017 was $18.9 billion, $8.2 billion higher than the reflects an impairment charge in relation to upstream assets. $10.7 billion reported in 2016. Operating cash flow in 2017 reflects $5.3 billion of pre-tax cash outflows related to the Gulf of Mexico oil spill The net charge for non-operating items of $5.7 billion pre-tax and $2.8 billion (2016 $7.1 billion). Compared with 2016, operating cash flows in 2017 post tax in 2016 mainly related to additional charges for the Gulf of Mexico were impacted by improved business results, including a more oil spill which were partially offset by net impairment reversals. Non- favourable price environment and higher production, working capital operating items in 2016 also included a restructuring charge of $0.8 billion effects, and a $2.5 billion increase in income taxes paid. (2015 $1.1 billion). Movements in inventories and other current and non-current assets and More information on non-operating items and fair value accounting liabilities adversely impacted cash flow in the year by $3.4 billion. There effects can be found on pages 250 and 294. See Financial statements was an adverse impact on working capital from the Gulf of Mexico oil – Note 2 for further information on the impact of the Gulf of Mexico oil spill of $5.2 billion. Other working capital effects, arising from a variety of spill on BP’s financial results. different factors had a favourable effect of $1.8 billion. Receivables and inventories increased during the year principally due to higher oil prices. Taxation The effect of this on operating cash flow was more than offset by a The charge for corporate income taxes in 2017 includes a one-off corresponding increase in payables. BP actively manages its working deferred tax charge of $0.9 billion in respect of the revaluation of capital balances to optimize cash flow. deferred tax assets and liabilities following the reduction in the US federal corporate income tax rate from 35% to 21% enacted in There was a decrease in net cash provided by operating activities of December 2017. The effective tax rate (ETR) on the profit or loss for the $8.4 billion in 2016 compared with 2015, of which $6.0 billion related to year was 52% in 2017, 107% in 2016 and 33% in 2015. The ETR for all higher pre-tax cash outflows associated with the Gulf of Mexico oil spill. three years was impacted by various one-off items. Cash flows were impacted by the continuing low oil price environment, with a lower average oil price in 2016 compared with 2015, working Adjusting for inventory holding impacts, non-operating items which capital effects, and a reduction of $0.7 billion in income taxes paid. include the impact of the US tax rate change, fair value accounting effects and the deferred tax adjustments as a result of the reductions in Movements in inventories and other current and non-current assets and the UK North Sea supplementary charge in 2016 and 2015, the adjusted liabilities adversely impacted cash flow in 2016 by $3.2 billion. There ETR on RC profit was 38% in 2017 (2016 23%, 2015 31%). The was an adverse impact from the Gulf of Mexico oil spill of $4.8 billion. adjusted ETR for 2017 is higher than 2016 predominantly due to Other working capital effects, arising from a variety of different factors, changes in the geographical mix of profits, notably the impact of the had a favourable impact of $1.6 billion. Inventories increased during 2016 renewal of our interest in the Abu Dhabi onshore oil concession. The because volumes were increased in our trading business to benefit from adjusted ETR for 2016 was lower than 2015 predominantly due to market opportunities, and due to higher prices towards the end of the changes in the geographical mix of profits as a result of the lower oil year. The increase in inventory was largely offset by a corresponding price and the absence of foreign exchange impacts from the increase in payables, limiting the increase in working capital. strengthening of the US dollar in 2015. In the current environment, the adjusted ETR in 2018 is expected to be above 40%.

22 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 26 of 371 Strategic report – performance

Modernizing the whole group

Speedier Activity on 7,000 solutions servers in four datacentres moving to the cloud

From our headquarters in We have already moved our corporate London to the underwater website to Amazon Web Services®, and facilities in Western Australia we now plan to close all our physical datacentres over several years, fully – our modernization embracing the agility and power of programme is transforming cloud technologies. how we work across BP. Microsoft Azure® is intended to become We are simplifying how we operate to a group-wide platform for collaboration create a more agile organization and and data analytics, with services such working to change mindsets so that as visualization and predictive tools they fit the increasingly competitive and to help us analyse data, gain insights margin-dependent industry. At the and make decisions faster. same time, we're digitizing and We are also piloting the use of automating more of our work. blockchain database technology in our We are in the process of systematically oil and gas trading business to help migrating our vast amounts of data from increase efficiency in terms of speed physical centres to the cloud, and verification of transactions. embracing the agility and power of Blockchain is a digital ledger system cloud technologies, while maintaining that records online transactions and necessary levels of data security. helps to streamline financial processes and cut back office costs.

BP Annual Report and Form 20-F 2017 23 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 27 of 371

Net cash used in investing activities statements – Note 25 for gross debt, which is the nearest equivalent Net cash used in investing activities for the year ended 31 December measure on an IFRS basis, and for further information on net debt. 2017 decreased by $0.7 billion compared with 2016. Cash and cash equivalents at the end of 2017 were $2.1 billion higher The decrease mainly reflected an increase of $0.8 billion in than 2016. disposal proceeds. For information on financing the group’s activities, see Financial The decrease of $2.5 billion in 2016 compared with 2015 reflected a statements – Note 27 and Liquidity and capital resources on page 251. reduction in cash outflow in respect of capital expenditure, including investment in joint ventures and associates , of $2.8 billion. The Group reserves and production (including Rosneft segment)a reduction in cash capital expenditure in 2016 reflected the group’s 2017 2016 2015 response to the lower oil price environment. Estimated net proved reserves (net of royalties) There were no significant cash flows in respect of acquisitions in 2017, 2016 and 2015. Liquids (mmb) 10,672 10,333 9,560 Natural gas (bcf) 45,060 43,368 44,197 The group has had significant levels of capital investment for many Total hydrocarbons (mmboe) 18,441 17,810 17,180 years. Total capital expenditure for 2017 was $17.8 billion (2016 $17.5 Of which: billion), of which organic capital expenditure was $16.5 billion (2016 Equity-accounted entitiesb 8,949 8,679 7,928 $16.7 billion). Sources of funding are fungible, but the majority Production (net of royalties) of the group’s funding requirements for new investment comes from cash generated by existing operations. We expect organic capital Liquids (mb/d) 2,260 2,048 2,007 expenditure to be in the range of $15-16 billion in 2018. Natural gas (mmcf/d) 7,744 7,075 7,146 Total hydrocarbons (mboe/d) 3,595 3,268 3,239 Disposal proceeds for 2017 were $3.4 billion (2016 $2.6 billion, 2015 Of which: $2.8 billion), including amounts received for the disposal of our interest Subsidiaries 2,164 1,939 1,969 in the SECCO joint venture. In addition, we received $0.8 billion in Equity-accounted entitiesc 1,329 1,270 relation to the initial public offering of BP Midstream Partners LP’s 1,431 common units, shown within financing activities in the cash flow a Because of rounding, some totals may not agree exactly with the sum of their component statement, and total proceeds for the year were $4.3 billion. In 2016 parts. b disposal proceeds included amounts received for the sale of certain Includes BP’s share of Rosneft. See Rosneft on page 38 and Supplementary information on oil and natural gas on page 191 for further information. midstream assets in the Downstream fuels business and our Decatur c Includes BP’s share of Rosneft. See Rosneft on page 38 and Oil and gas disclosures petrochemicals complex. In addition, we received $0.6 billion in relation for the group on page 259 for further information. to the sale of 20% from our shareholding in Castrol India Limited, shown Total hydrocarbon proved reserves at 31 December 2017, on an within financing activities in the cash flow statement, giving total oil-equivalent basis including equity-accounted entities, increased by proceeds of $3.2 billion for the year. We expect disposal proceeds to be 4% compared with 31 December 2016. The change includes a net in the range of $2-3 billion in 2018. increase from acquisitions and disposals of 47mmboe (increase of 90mmboe within our subsidiaries, decrease of 43mmboe within our Net cash used in financing activities equity-accounted entities). Acquisition activity in our subsidiaries Net cash used in financing activities for the year ended 31 December occurred in Egypt, the US and the UK, and divestment activity in our 2017 was $3.3 billion, compared with $2.0 billion provided by financing subsidiaries was in the UK. In our equity-accounted entities, acquisitions activities in 2016. This was mainly the result of a reduction of $3.5 billion occurred in Aker BP and Rosneft and divestments occurred in Aker BP in net proceeds from financing. The total dividend paid in cash in 2017 and in Pan American Energy. was $1.5 billion higher than in 2016, see below for further information. Our total hydrocarbon production for the group was 10% higher In 2016 the net cash provided by financing activities reflected higher net compared with 2016. The increase comprised a 12% increase (12% proceeds from financing of $3.6 billion ($4.0 billion higher net proceeds increase for liquids and 11% increase for gas) for subsidiaries and from long-term debt offset by a decrease of $0.4 billion in short-term an 8% increase (9% increase for liquids and 5% increase for gas) debt). In addition, there was a cash inflow of $0.9 billion relating to for equity-accounted entities. increases in non-controlling interests, including the sale of 20% from our shareholding in Castrol India Limited described above. The total dividend paid in cash in 2016 was $2.1 billion lower than in 2015 – see below for further information. Total dividends distributed to shareholders in 2017 were 40.00 cents per share, the same as 2016. This amounted to a total distribution to shareholders of $7.9 billion (2016 $7.5 billion, 2015 $7.3 billion), of which shareholders elected to receive $1.7 billion (2016 $2.9 billion, 2015 $0.6 billion) in shares under the scrip dividend programme. The total amount distributed in cash amounted to $6.2 billion during the year (2016 $4.6 billion, 2015 $6.7 billion).

Debt Gross debt at the end of 2017 increased by $4.9 billion from the end of 2016. The gross debt ratio at the end of 2017 increased by 1%. Net debt at the end of 2017 increased by $2.3 billion from the 2016 year-end position. The net debt ratio at the end of 2017 increased by 0.6%. We continue to target a net debt ratio in the range of 20-30%. Net debt Above: On board Glen Lyon, our ﬂoating production storage and ofﬂoading vessel in the UK North Sea. and the net debt ratio are non-GAAP measures. See Financial

24 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 28 of 371 Strategic report – performance Focused on delivering competitive returns BP’s financial framework We expect our strong balance sheet to be With a constant capital frame, we intend underpins our commitment able to deal with any near-term volatility. to grow sustainable free cash flow to sustain the dividend Beyond that, we aim to increase operating and distributions to shareholders in cash flow – from our planned upstream the long term. for our shareholders. We start-ups and growth in the downstream. have been meeting those expectations each year.

Our ﬁnancial framework

Principle 220117 achhievveemeent 20181 guidaance Looking ahead – 2019 to 2021

Optimize capital Organic capital expenditure a We expect organic capital We expect organic capital expenditure was $16.5 billion*. This was expenditure of $15-16 billion. expenditure of $15-17 billion within our original guidance of per year. $15-17 billion. Make selective Total divestment and other We expect divestments We expect $2-3 billion of divestments proceeds of $4.3 billionb achieved. of $2-3 billion. divestments per year. This was just under our expected guidance of $4.5-5.5 billion for the year. Payments related to the 2017 payments totalled We expect just over We expect around $2 billion in Gulf of Mexico oil spill $5.2 billion. $3 billion of cash payments. 2019, then stepping down to around $1 billion per year.

Maintain ﬂexibility Gearing at the end of 2017 Within the 20-30% band. Within the 20-30% band. around gearing was 27.4%** within our target range.

Group return on average ROACE was 5.8%***. Further improvement. We are aiming to exceed capital employed (ROACE) 10% by 2021 at real oil prices around $55/barrel.

a From 2017 onwards we are reporting organic, inorganic and total capital expenditure on a cash basis, which were previously reported on an accruals basis. This aligns with BP's ﬁnancial framework and is now consistent with other ﬁnancial metrics used when comparing sources and uses of cash. b This includes proceeds of $0.8 billion received in relation to the initial public offering of BP Midstream Partners LP’s common units. Divestment proceeds for 2017 were $3.4 billion.

Balancing our sources and uses of cashc Organic sources and uses of cash ($ billion) For the year ended 31 December We rebalanced organic sources and uses of 2017 2016 cash in 2017 – operating cash ﬂow excluding 28 28 24 24 Gulf of Mexico oil spill payments exceeded 20 20 organic capital expenditure, cash dividend 16 16 payments to BP shareholders and share 12 12 8 8 buybacks by $1.1 billion. This was achieved at 4 4 an average Brent oil price of $54 per barrel. Sources Uses Sources Uses

Other sources and uses of cash ($ billion) For the year ended 31 December 2017 2016 12 12 8 8 Nearest GAAP equivalent measures 4 4 * Capital expenditure : $17.8 billion. Sources Uses Sources Uses ** Gross debt ratio: 38.6%. Organic sources Organic uses *** Numerator: Profit attributable to BP shareholders $3.4 billion; Operating cash flow excluding Gulf of Organic capital expenditure Denominator: Average capital employed $159.4 billion. Mexico oil spill payments Cash dividends paid Others Share buyback Other sources Other uses Divestment and other proceedsd Operating cash flow – Gulf of Mexico oil spill Inorganic capital expenditure c This does not form part of BP’s Annual Report on Form 20-F as filed with the SEC. d 2017 includes proceeds of $0.8 billion received in relation to the initial public offering of BP Midstream Partners LP’s common units and 2016 includes proceeds of $0.6 billion received in relation to the sale of 20% from our shareholding in Castrol India Limited. These proceeds are shown within financing activities in the cash flow statement.

BP Annual Report and Form 20-F 2017 See Glossary 25 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 29 of 371 Upstream

2017 was a strong year of delivery, demonstrated by the start-up of seven major projects. This shows we are creating real value and tangible growth – with opportunities out to 2021 and beyond.

Bernard Looney, chief executive, Upstream

In summary

28,000km2 94.7% 6 Upstream profitability ($ billion) 5.2 2017 new exploration access BP-operated upstream successful completion 5.9 plant reliability of turnarounds 0.6 2016 -0.5 (2016 71,000km2) (2016 95.3%) (2016 11) -0.9 2015 1.2 8.9 2014 3 80.5% 2.5 15.2 16.7 2013 final investment BP-operated upstream million barrels of oil equivalent 18.3 decisions operating efficiency per day – hydrocarbon production Replacement cost (RC) profit (loss) before interest and tax Underlying RC profit (loss) before interest and tax (2016 5) (2016 2.2mmboe/d)

Business model The Upstream segment is responsible for our activities in oil and natural gas exploration, ﬁeld development and production. We do this through ﬁve global technical and operating functions:

Exploration Global wells Global operations organization organization

The exploration function is responsible for The global wells organization and the global The global operations organization is renewing our resource base through access, projects organization are responsible for the responsible for safe, reliable and compliant exploration and appraisal, while the reservoir safe, reliable and compliant execution of wells operations, including upstream production development function is responsible for (drilling and completions) and major projects . assets and midstream transportation and the stewardship of our resource portfolio processing activities. over the life of each ﬁeld.

Strategy Our strategy has three parts and is enabled by:

Quality execution Growing gas and advantaged oil Returns-led growth We want to be the best at what we do – We will manage our portfolio through We want to grow – but not at any cost. everywhere we work. This starts with disciplined investment in the world’s best oil We always look to grow returns and value. executing our activity safely. In every basin, and gas basins. We plan to grow both oil and We believe this growth will come from many we will benchmark against the competition gas production. Natural gas is a big lever for sources – production growth, expanding and and aim to be the best – whether it be reducing greenhouse gas emissions. This managing our margins, operational efﬁciency, operating facilities reliably and cost means taking a leadership role in tackling the unit cost reduction, and capital efﬁciency with effectively, with a focus on emissions, drilling challenge of methane. Around half of our disciplined levels of capital reinvestment. wells, managing our reservoirs, exploring, portfolio is currently gas and we expect this to building projects, or deploying technology. grow as we bring our major projects on line. Our gas portfolio will be complemented by Through the quality of our execution, scale advantaged oil assets – oil we can produce and infrastructure, we aim to be the low-cost at a higher margin or at a lower cost, creating a developer and producer in each basin, and portfolio that is resilient whatever the price as a business, get more from a unit of capital environment. than our competitors.

26 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 30 of 371

In addition to our core Upstream exploration, development and In 2016 we identified a future growth target of 900,000 barrels of oil Strategic report – production activities, the segment is responsible for midstream equivalent per day of production from new projects by 2021 and we transportation, storage and processing. We also market and trade remain on track to deliver that. We expect this production to deliver 35% natural gas, including liquefied natural gas (LNG), power and natural higher operating cash margins on average than our 2015 upstream gas liquids (NGL). In 2017 our activities took place in 29 countries. assets, which supports our value over volume strategy. performance With the exception of our US Lower 48 onshore business, we deliver We see our scale and long history in many of the great basins in the our exploration, development and production activities through five world as a differentiator for BP and believe in the strength of our global technical and operating functions. incumbent positions. We are resilient and balanced – in terms of geography, hydrocarbon type and geology – and rather than being We optimize and integrate the delivery of these activities across 13 restricted by a traditional way of working, we have and will continue to regions, with support provided by global functions in specialist areas of use creative business models to generate value. We are also investing expertise: technology, finance, procurement and supply chain, human to modernize and transform the Upstream – embracing innovation, resources, information technology and legal. The US Lower 48 digitization and the adoption of big data, which we believe can drive continues to operate as a separate, asset-focused, onshore business. a real step change in performance and efficiency.

Largest contributor to natural Growing gas and gas production in Trinidad advantaged oil 50+ years

Expanding gas projects in Trinidad

Trinidad & Tobago is a key We also made two significant gas contributor to BP's growing discoveries with our Savannah and gas portfolio and 2017 was a Macadamia exploration wells in offshore Trinidad. This demonstrates pivotal year for our business the benefit of our investment in in the country. seismic technology, which is helping us access the full potential of the We started up two major gas projects Columbus Basin. in 2017: Juniper – our first subsea field Our next planned major project in development in Trinidad and the area’s Trinidad is the development of the largest project for several years, and Angelin natural gas field, which will Trinidad onshore compression – the include construction of our fifteenth first project of its kind in the region and offshore production facility in Trinidad. for BP. We expect first gas in early 2019. And we completed the Sercan 2 field development – a joint venture with EOG Resources. But these are just the start.

Extendinging thee life of ouro r GaleotaGa terminalinn l foror

20+0 yearsyears 15 million tonnes per annum capacity at our Atlantic liquefaction plant

BPBP Annual Annual Report and FormForm 20-F 20-F 2017 2017 See Glossary 27 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 31 of 371

Financial performance Market prices Brent remains an integral marker to the production portfolio, from which $ million a signiﬁcant proportion of production is priced directly or indirectly. 2017 2016 2015 Certain regions use other local markers that are derived using Sales and other operating differentials or a lagged impact from the Brent crude oil price. revenuesa 45,440 33,188 43,235 RC proﬁt (loss) before interest Brent ($/bbl)

and tax 5,221 574 (937) 150 Net (favourable) adverse impact of non-operating items and 120 fair value accounting effects 644 (1,116) 2,130 Underlying RC proﬁt (loss) before 90 interest and tax 5,865 (542) 1,193 Organic capital expenditure b 13,763 14,344 N/A 60 BP average realizationsc $ per barrel 30 Crude oild 51.71 39.99 49.72 2017 2016 2015 Five-year range

Natural gas liquids 26.00 17.31 20.75 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Liquids 49.92 38.27 47.32 $ per thousand cubic feet Natural gas 3.19 2.84 3.80 The dated Brent price in 2017 averaged $54.19 per barrel. Prices drifted lower over the ﬁrst half of the year before rebounding, ending the year US natural gas 2.36 1.90 2.10 $ per barrel of oil equivalent at their monthly high point, averaging $64 in December. After falling in Total hydrocarbons 35.38 28.24 35.46 2016, non-OPEC production recovered (+0.8mmb/d), led by the US. In contrast OPEC production declined by 0.4mmb/d – the ﬁrst decline Average oil marker pricese $ per barrel since 2013 – as the group engaged with certain non-OPEC producers to Brent 54.19 43.73 52.39 restrain output. West Texas Intermediate 50.79 43.34 48.71

Average natural gas Henry Hub ($/mmBtu)

marker prices $ per million British thermal units 9 Average Henry Hub gas pricef 3.11 2.46 2.67 pence per therm Average UK National Balancing 6 Point gas price e 44.95 34.63 42.61 a Includes sales to other segments. b A reconciliation to GAAP information at the group level is provided on page 249. Organic 3 capital expenditure on a cash basis in 2015 is not available. c Realizations are based on sales by consolidated subsidiaries only, which excludes equity-accounted entities. 2017 2016 2015 Five-year range d Includes condensate and bitumen. e All traded days average. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec f Henry Hub First of Month Index.

The 2017 Henry Hub First of Month Index price was higher than 2016 ($2.46). The UK National Balancing Point hub price was 44.95 pence per therm, 30% higher than in 2016 (34.63), supported by increasing coal prices. Meanwhile pipeline outages and cold weather put pressure on UK prices towards the end of 2017. For more information on the global energy market in 2017 see page 20. Financial results Sales and other operating revenues for 2017 increased compared with 2016, primarily reﬂecting higher liquids realizations, higher production and higher gas marketing and trading revenues. The decrease in 2016 compared with 2015 primarily reﬂected lower liquids and gas realizations and lower gas marketing and trading revenues.

Above: Dolphin Island vessel overlooking our Atlantis platform in the Gulf of Mexico.

28 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 32 of 371

Replacement cost profit before interest and tax for the segment In the current environment, we are spending less on exploration and Strategic report – performance included a net non-operating charge of $671 million. This primarily we will spend a material part of our exploration budget on lower-risk, relates to impairment charges associated with a number of assets, shorter-cycle-time opportunities around our incumbent positions. following changes in reserves estimates, and the decision to dispose of New access in 2017 certain assets. See Financial statements – Note 4 for further information. We gained access to new acreage covering almost 28,000km2 in eight Fair value accounting effects had a favourable impact of $27 million countries – Brazil, Canada, Côte D’Ivoire, Mauritania, Mexico, Senegal, relative to management’s view of performance. the UK and the US. The 2016 result included a net non-operating gain of $1,753 million, Exploration success primarily related to the reversal of impairment charges associated with a We participated in six potentially commercial discoveries in 2017 number of assets, following a reduction in the discount rate applied and – Qattameya in Egypt, Macadamia and Savannah in Trinidad, changes to future price assumptions. Fair value accounting effects had Yakaar-1 in Senegal, and Achmelvich and Capercaillie in the UK. an adverse impact of $637 million. The 2015 result included a net non-operating charge of $2,235 million, primarily related to a net Exploration and appraisal costs impairment charge associated with a number of assets, following a Excluding lease acquisitions, the costs for exploration and appraisal further fall in oil and gas prices and changes to other assumptions. Fair were $1,655 million (2016 $1,402 million, 2015 $1,794 million). value accounting effects had a favourable impact of $105 million relative These costs included exploration and appraisal drilling expenditures, to management’s view of performance. which were capitalized within intangible fixed assets, and geological and geophysical exploration costs, which were charged to income After adjusting for non-operating items and fair value accounting effects, as incurred. the underlying replacement cost result before interest and tax was a profit, compared with a loss in 2016. This improved result primarily Approximately 12% of exploration and appraisal costs were directed reflected higher liquids realizations, and higher production including the towards appraisal activity. We participated in 41 gross (25.03 net) impact of the Abu Dhabi onshore concession renewal and major exploration and appraisal wells in nine countries. projects start-ups, partly offset by higher depreciation, depletion and Exploration expense amortization, and higher exploration write-offs. Total exploration expense of $2,080 million (2016 $1,721 million, Compared with 2015 the 2016 result reflected significantly lower liquids 2015 $2,353 million) included the write-off of expenses related to and gas realizations, as well as adverse foreign exchange impacts and unsuccessful drilling activities, lease expiration or uncertainties around lower gas marketing and trading results. This was partly offset by lower development in Angola ($729 million), Egypt ($368 million), the Gulf costs including benefits from simplification and efficiency activities, of Mexico ($213 million) and others ($349 million), partially offset by lower exploration write-offs, lower depreciation, depletion and a net write-back of $56 million in block KG D6 in India (see Financial amortization expense and lower rig cancellation charges. statements – Note 6). Organic capital expenditure on a cash basis was $13.8 billion. Reserves booking Reserves bookings from new discoveries will depend on the results In total, disposal transactions generated $1.2 billion in proceeds in 2017, of ongoing technical and commercial evaluations, including appraisal with a corresponding reduction in net proved reserves of 10.6mmboe drilling. The segment’s total hydrocarbon reserves on an oil-equivalent within our subsidiaries. The major disposal transactions during 2017 basis, including equity-accounted entities at 31 December 2017, were the disposal of 25% of our interest in the Magnus field in the UK increased by 2% (an increase of 4% for subsidiaries and a decrease and a portion of our interests in the Perdido offshore hub in the US. of 12% for equity-accounted entities) compared with proved reserves More information on disposals is provided in Upstream analysis by at 31 December 2016. region on page 253 and Financial statements – Note 3. Proved reserves replacement ratio Outlook for 2018 The proved reserves replacement ratio for the segment in 2017 was 127% for subsidiaries and equity-accounted entities (2016 96%), 133% • We expect to start up six new major projects in 2018. for subsidiaries alone (2016 101%) and 78% for equity-accounted • We expect underlying production to be higher than 2017. The actual entities alone (2016 61%). For more information on proved reserves reported outcome will depend on the exact timing of project start-ups, replacement for the group see page 259. acquisitions and divestments, OPEC quotas and entitlement impacts in our production-sharing agreements . Upstream proved reserves(mmboe) • Capital investment is expected to decrease, largely reflecting our commitment to continued capital discipline and the rephasing and Liquids refocusing of our activities and major projects where appropriate in 1. Subsidiaries 4,447 4 response to the current business environment. 2. Equity-accounted entities 692

• We expect oil prices will continue to be challenging in the near term. Total 5,139 1

Exploration Gas 3. Subsidiaries 5,045 3 The group explores for oil and natural gas under a wide range of 4. Equity-accounted entities 392 licensing, joint arrangement and other contractual agreements. Total 5,437 2 We may do this alone or, more frequently, with partners. Our exploration and new access teams work to enable us to optimize our resource base and provide us with a greater number of options.

BP Annual Report and Form 20-F 2017 See Glossary 29 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 33 of 371

Estimated net proved reserves (net royalties)a Our project pipeline Gas 2017 2016 2015 *BP operated Liquids million barrels Oil Crude oilb Project Location Type Subsidiaries 4,129 3,778 3,560 2017 start-ups Equity-accounted entitiesc 674 771 694 Juniper* Trinidad 4,803 4,549 4,254 Khazzan Phase 1* Oman Natural gas liquids Persephone Australia Subsidiaries 318 373 422 Trinidad onshore compression* Trinidad c Equity-accounted entities 18 16 13 West Nile Delta Taurus/Libra* Egypt 336 389 435 Zohr Egypt Total liquids Quad 204* UK North Sea Subsidiariesd 4,447 4,151 3,982 c Equity-accounted entities 692 787 707 Expected start-ups 2018-2021 5,139 4,938 4,689 Projects currently under construction Natural gas billion cubic feet Angelin* Trinidad Subsidiariese 29,263 28,888 30,563 Atoll Phase 1*a Egypt Equity-accounted entitiesc 2,274 2,580 2,465 Culzean UK North Sea 31,537 31,468 33,027 KG D6 R-Series India Total hydrocarbons million barrels of oil equivalent Shah Deniz Stage 2* Azerbaijan Subsidiaries 9,492 9,131 9,252 Tangguh expansion* Indonesia Equity-accounted entitiesc 1,085 1,232 1,132 West Nile Delta Giza/Fayoum* Egypt 10,577 10,363 10,384 Western Flank B Australia a Because of rounding, some totals may not agree exactly with the sum of their component Clair Ridge* UK North Sea parts. b Includes condensate and bitumen. Constellation US Gulf of Mexico c BP’s share of reserves of equity-accounted entities in the Upstream segment. During 2017 upstream operations in Argentina, Bolivia, Russia and Norway as well as some of our Mad Dog Phase 2* US Gulf of Mexico operations in Angola, Abu Dhabi and Indonesia, were conducted through equity-accounted Taas Expansion Russia entities. d Includes 14 million barrels (16 million barrels at 31 December 2016 and 19 million barrels at Thunder Horse North West Expansion* US Gulf of Mexico 31 December 2015) in respect of the 30% non-controlling interest in BP Trinidad & Tobago LLC. Expected start-ups 2018-2021 e Includes 1,860 billion cubic feet of natural gas (2,026 billion cubic feet at 31 December 2016 and 2,359 billion cubic feet at 31 December 2015) in respect of the 30% non-controlling Design and appraisal phase interest in BP Trinidad & Tobago LLC. Cassia compression Trinidad KG D6 D55 India Developments KG D6 Satellites India We achieved seven major project start-ups in 2017: one in Australia, Khazzan Phase 2* Oman two in Egypt, one in Oman, two in Trinidad, and one in the UK North Sea. In addition to these, we made good progress on projects in AGT Tortue Phase 1* Mauritania and (Azerbaijan, Georgia, Turkey), Egypt, the Gulf of Mexico, and the UK. Senegal Alligin* UK North Sea • Azerbaijan, Georgia, Turkey – the Shah Deniz Stage 2 project is now almost 99% complete in terms of engineering, procurement, Atlantis Phase 3* US Gulf of Mexico construction and commissioning and remains on target for production Vorlich* UK North Sea of ﬁrst gas in 2018. Zinia 2 Angola

• Egypt – work to achieve start-up of the Giza/Fayoum wells in late 2018 a Production commenced in early 2018. is underway in the West Nile Delta with a revised scope and an amended plan of development. Beyond 2021 We have a deep hopper of projects that are currently under • Gulf of Mexico – the first development well on the Anadarko- operated Constellation project was drilled and completed in 2017. First appraisal. Our focus here is to ensure we maximize value and production is expected in late 2018. select the optimum project concept before we move it forward into design. We do not expect to progress all of the projects – only the • UK – commissioning offshore is well underway at the Clair Ridge best. This includes: development following completion of the construction phase in 2016. First oil is expected in 2018. • a mix of resource types: split across conventional oil, deepwater oil, conventional gas and unconventionals . Subsidiaries’ development expenditure incurred, excluding midstream activities, was $10.7 billion (2016 $11.1 billion, 2015 $13.5 billion). • geographic spread: across six of the seven continents. • a range of development types: from exploration to brownfield and near-field.

30 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 34 of 371

Production Gas marketing and trading activities Strategic report – performance Our offshore and onshore oil and natural gas production assets include Our integrated supply and trading function markets and trades our own wells, gathering centres, in-field flow lines, processing facilities, storage and third-party natural gas (including LNG), biogas, power and NGLs. facilities, offshore platforms, export systems (e.g. transit lines), This provides us with routes into liquid markets for the gas we produce pipelines and LNG plant facilities. These include production from and generates margins and fees from selling physical products and conventional and unconventional (coalbed methane and shale) assets. derivatives to third parties, together with income from asset Our principal areas of production are Angola, Argentina, Australia, optimization and trading. This means we have a single interface with Azerbaijan, Egypt, Iraq, Trinidad, the UAE, the UK and the US. gas trading markets and one consistent set of trading compliance and risk management processes, systems and controls. We are expanding With BP-operated plant reliability increasing from around 86% in our LNG portfolio, which includes global partnerships with utility 2011 to 95% in 2017, efficient delivery of turnarounds and strong infill companies, gas distributors and national oil and gas companies, and in drilling performance, we have maintained base decline at less than 2017 we supplied the first commercial LNG contact based on offshore 3% on average over the last five years. Our long-term expectation ship-to-ship transfer. for managed base decline remains at the 3-5% per annum guidance we have previously given. The activity primarily takes place in North America, Europe and Asia, and supports group LNG activities, managing market price risk and Production (net of royalties)a creating incremental trading opportunities through the use of commodity derivative contracts. It also enhances margins and 2017 2016 2015 generates fee income from sources such as the management of price Liquids thousand barrels per day risk on behalf of third-party customers. Crude oilb Subsidiaries 1,064 943 933 Our trading financial risk governance framework is described in Financial statements – Note 27 and the range of contracts used is Equity-accounted entitiesc 199 179 165 described in Glossary – commodity trading contracts on page 289. 1,263 1,122 1,099 Natural gas liquids Subsidiaries 85 82 88 Equity-accounted entitiesc 8 47 93 86 95 Total liquids Subsidiaries 1,149 1,025 1,022 Equity-accounted entitiesc 207 184 172 1,356 1,208 1,194 Natural gas million cubic feet per day Subsidiaries 5,889 5,302 5,495 Equity-accounted entitiesc 547 494 456 6,436 5,796 5,951 Total hydrocarbons thousand barrels of oil equivalent per day Subsidiaries 2,164 1,939 1,969 Equity-accounted entitiesc 302 269 251 2,466 2,208 2,220 a Because of rounding, some totals may not agree exactly with the sum of their component parts. b Includes condensate and bitumen. c Includes BP’s share of production of equity-accounted entities in the Upstream segment. Above: Smart glasses are used to share data with off-site technical experts at our Our total hydrocarbon production for the segment in 2017 was 11.7% Lower 48 operations in Colorado. higher compared with 2016. The increase comprised an 11.6% increase (12.1% for liquids and 11.1% for gas) for subsidiaries and a 12.2% increase (12.9% for liquids and 10.8% for gas) for equity-accounted entities compared with 2016. For more information on production see Oil and gas disclosures for the group on page 259. In aggregate, underlying production increased versus 2016. The group and its equity-accounted entities have numerous long-term sales commitments in their various business activities, all of which are expected to be sourced from supplies available to the group that are not subject to priorities, curtailments or other restrictions. No single contract or group of related contracts is material to the group.

BP Annual Report and Form 20-F 2017 31 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 35 of 371 Downstream

The execution of our strategy is delivering results and building a business that is ﬁt for now and the future. In 2017, we had our best year ever, with a replacement cost proﬁt of $7.2 billion.

Tufan Erginbilgic, chief executive, Downstream

In summary

>10% 1,10 0 4 4% Downstream profitability ($ billion) 7.2 fuels marketing earnings convenience of lubricant sales 2017 7.0 growth versus prior year partnership sites were premium grade 5.2 2016 (2016 >20%) (2016 880) (2016 43%) 5.6 7.1 2015 7.5 3.7 2014 95.3% 1.7 15.3 4.4 2.9 refining availability million barrels of oil million tonnes of 2013 3.6 refined per day petrochemicals produced Replacement cost (RC) profit before interest and tax (2016 95.3%) (2016 1.7mmb/d) (2016 14.2mmte) Underlying RC profit before interest and tax

Business model The Downstream segment has global marketing and manufacturing operations. It is the product and service-led arm of BP, made up of three businesses:

Fuels Lubricants Petrochemicals

Includes refineries, logistic networks and Manufactures and markets lubricants Manufactures and markets products fuels marketing businesses, which together and related products and services to the that are produced using industry-leading with global oil supply and trading activities, automotive, industrial, marine and energy proprietary BP technology, and are then make up our integrated fuels value chains markets globally. We add value through used by others to make essential consumer (FVCs). We sell refined petroleum products brand, technology and relationships, such products such as food packaging, textiles including gasoline, diesel and aviation fuel, as collaboration with original equipment and building materials. We also license our and have a significant presence in the manufacturing partners. technologies to third parties. convenience retail sector.

Strategy We aim to run safe and reliable operations across all our businesses, supported by leading brands and technologies, to deliver high-quality products and services that meet our customers’ needs. Our strategy is to deliver underlying performance improvement in order to expand earnings and cash ﬂow potential and improve our resilience to a range of market conditions. We also aim to further build competitively advantaged businesses. The execution of our strategy in 2017 has continued to deliver, with growth in underlying earnings and cash ﬂow at attractive returns.

Safe and reliable operations Advantaged manufacturing Simplification and efficiency This remains our core value and first priority We aim to have a competitively advantaged This remains central to what we do to support and we continue to drive improvement in refining and petrochemicals portfolio performance improvement and make our personal and process safety performance. underpinned by operational excellence and businesses even more competitive. to grow earnings potential, making the

businesses more resilient to margin volatility. Proﬁtable marketing growth Transition to a lower carbon We invest in higher-returning fuels marketing and digitally enabled future and lubricants businesses with growth We are developing new products, offers potential and reliable cash ﬂows. and business models that support the transition to a lower carbon and digitally enabled future over the longer term.

32 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 36 of 371 Strategic report –

Market-led growth performance Growing retail business

Every second of every day vehicles are Each day more filling up with BP fuel across 18,300 sites – than 250,000 making retail big business for BP. consumers in Mexico are Our premium fuel volumes grew by 6% in 2017 and choosing BP’s generated margins that are higher than our standard grades. With a retail network that spans 19 countries, we differentiated have one of the top three positions in terms of market offer. share in most of the markets where we operate. But we’re not stopping there. We also have a significant and growing retail convenience partnership offer which we plan to continue to expand across our markets. This builds on the success we have had with other industry leading food retailers – like M&S Simply Food® and REWE to go®. Our loyalty schemes, such as PAYBACK® and Nectar®, are helping to strengthen customer relationships in key markets – with loyalty card customers tending to shop more frequently and spend more per visit. We are also expanding our global portfolio into major growth markets such as Mexico, China and Indonesia. For the first time in 75 years, companies outside Mexico can invest in its fuels market. We were the first global brand to open retail sites there in early 2017 and by the end of the year we had more than 120 BP-branded sites, serving thousands of customers a day. Mexico is one of the world’s largest consumer gasoline and diesel markets globally and we plan to have around 1,500 sites by 2021.

1,100 convenience partnership sites globally

Some examples of our partnerships.

Digital and advanced mobility We are rolling out new digital and advanced mobility customer offers. This includes our new BPme app, which helps customers ﬁnd a is now convenient BP site, order coffee and pay for fuel available in from their vehicle, and our investment in FreeWire, a manufacturer of mobile electric vehicle rapid 15 countries charging systems, which we plan to roll out to selected European retail sites in 2018.

BP Annual Report and Form 20-F 2017 33 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 37 of 371

Financial performance Our fuels business $ million Our fuels strategy focuses primarily on fuels value chains (FVCs). This 2017 2016 2015 includes building an advantaged refining portfolio through operating Sale of crude oil through spot reliability and efficiency, location advantage and feedstock flexibility, as and term contracts 47,702 31,569 38,386 well as commercial optimization opportunities. We believe that having a Marketing, spot and term sales quality refining portfolio connected to strong marketing positions is core of refined products 159,475 126,419 148,925 to our integrated FVC businesses as this provides optimization Other sales and operating opportunities in highly competitive markets. revenues 12,676 9,695 13,258 Our fuels marketing business comprises retail, business-to-business Sales and other operating revenuesa 219,853 167,683 200,569 and aviation fuels. It is a material part of Downstream with a good track record of growth. We have an advantaged portfolio of assets with good RC profit before interest and taxb growth potential, attractive returns and reliable cash flows. We continue Fuels 4,679 3,337 5,858 to grow our fuels marketing business through our differentiated Lubricants 1,457 1,439 1,241 marketing offers and strategic convenience partnerships. We also Petrochemicals 1,085 386 12 partner with leading retailers, creating distinctive retail offers that aim 7,221 5,162 7,111 to deliver good returns and reliable profit growth and cash generation. Net (favourable) adverse Underlying RC profit before interest and tax for our fuels business was impact of non-operating items higher compared with 2016, reflecting stronger refining performance and fair value accounting effects and growth in fuels marketing, partially offset by a weaker contribution Fuels 193 390 137 from supply and trading. Compared with 2015, the 2016 result was Lubricants 22 84 143 lower, reflecting a significantly weaker refining environment and the Petrochemicals (469) (2) 154 impact from a particularly large turnaround at our Whiting refinery. This (254) 472 434 was partially offset by lower costs, reflecting the benefits from our Underlying RC profit before simplification and efficiency programmes, an increased fuels marketing interest and taxb performance driven by retail growth and higher refining margin capture Fuels 4,872 3,727 5,995 in our operations. Lubricants 1,479 1,523 1,384 Refining marker margin Petrochemicals 616 384 166 We track the refining margin environment using a global refining marker 6,967 5,634 7,545 margin (RMM). Refining margins are a measure of the difference Organic capital expenditure c 2,399 2,102 N/A between the price a refinery pays for its inputs (crude oil) and the market price of its products. Although refineries produce a variety of petroleum a Includes sales to other segments. b Income from petrochemicals produced at our Gelsenkirchen and Mülheim sites in Germany products, we track the margin environment using a simplified indicator is reported in the fuels business. Segment-level overhead expenses are included in the fuels that reflects the margins achieved on gasoline and diesel only. The business result. RMM may not be representative of the margin achieved by BP in any c A reconciliation to GAAP information at the group level is provided on page 249. Organic capital expenditure on a cash basis in 2015 is not available. period because of BP’s particular refinery configurations and crude and product slates. In addition, the RMM does not include estimates of Financial results energy or other variable costs. Sales and other operating revenues in 2017 were higher due to higher crude and product prices as well as higher sales volumes. Sales and $ per barrel other operating revenues in 2016 were lower than 2015 due to lower Region Crude marker 2017 2016 2015 crude and product prices. US North West Alaska North Slope 18.8 16.9 24.0 Replacement cost (RC) profit before interest and tax for the year ended US Midwest West Texas 31 December 2017 included a net non-operating gain of $389 million, Intermediate 16.9 13.2 19.0 primarily reflecting the gain on disposal of our share in the SECCO joint Northwest Europe Brent 11.7 10.0 14.5 venture in petrochemicals. The 2016 result included a net non- Mediterranean Azeri Light 10.4 9.0 12.7 operating charge of $24 million, mainly relating to a gain on disposal in Australia Brent 12.9 10.9 15.4 our fuels business which was more than offset by restructuring and other charges, while the 2015 result included a net non-operating charge BP RMM 14.1 11.8 17.0 of $590 million, mainly relating to restructuring charges. In addition, fair BP refining marker margin ($/bbl) value accounting effects had an adverse impact of $135 million, compared with an adverse impact of $448 million in 2016 and a 32 favourable impact of $156 million in 2015.

After adjusting for non-operating items and fair value accounting effects, 24 underlying RC proﬁt before interest and tax in 2017 was $6,967 million.

16 Outlook for 2018

We anticipate higher discounts for North American heavy crude oil 8 differentials but lower industry reﬁning margins. We also expect the 2017 2016 2015 Five-year range level of turnaround activity to be similar in total, although higher in our petrochemicals business. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

34 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 38 of 371 Strategic report – performance The average global RMM in 2017 was $14.1/bbl, $2.3/bbl higher than in 2017 2016 2015 2016. The increase was driven by tighter global supply demand balances Refinery throughputsa thousand barrels per day as well as lower product inventories compared with 2016. US 713 646 657 Europe 773 803 794 Refining b At 31 December 2017 we owned or had a share in 11 refineries Rest of world 216 236 254 producing refined petroleum products that we supply to retail and Total 1,702 1,685 1,705 commercial customers. For a summary of our interests in refineries % and average daily crude distillation capacities see page 258. Refining availability 95.3 95.3 94.7

Underlying growth in our refining business is underpinned by our a Refinery throughputs reflect crude oil and other feedstock volumes. multi-year business improvement plans, which comprise globally b Bulwer refinery in Australia ceased refining operations in 2015. consistent programmes focused on operating reliability and efficiency, Fuels marketing and logistics advantaged feedstocks and commercial optimization. Operating Across our fuels marketing businesses, we operate an advantaged reliability is a core foundation of our refining business and in 2017 infrastructure and logistics network that includes pipelines, storage operations remained strong, with refining availability sustained at terminals and tankers for road and rail. We seek to drive excellence around 95.3%, refinery utilization rates at 90% (2016 91%) and overall in operational and transactional processes and deliver compelling throughputs in 2017 higher compared with 2016. Our refinery portfolio – customer offers in the various markets where we operate. Through along with our supply capability – enables us to process advantaged our retail business, we supply fuel and convenience retail services to crudes. For example, in the US, our three refineries all have location- consumers through company-owned and franchised retail sites, as advantaged access to Canadian crudes which are typically cheaper than well as other channels, including dealers and jobbers. We also supply other crudes. In 2017 we processed record levels of advantaged crude commercial customers in the transport and industrial sectors. across our portfolio. Our commercial optimization programme aims to maximize value from our refineries by capturing opportunities in every Retail is the most material part of our fuels marketing business and step of the value chain, from crude selection through to yield a significant source of earnings growth through our strong market optimization and utilization improvements. positions, brands and distinctive customer offers. This is underpinned by the strength of our retail convenience partnerships, technology such Refining performance was stronger in 2017 compared with 2016, as our most advanced premium fuels and our use of digital technology, reflecting continued strong operational performance, capturing higher as well as our customer relationships. This differentiation enables our industry refining margins, efficiency benefits as well as increased growth in existing markets and supports our plans to expand our commercial optimization including the benefits of higher levels of footprint in new material markets such as Mexico, India, Indonesia and advantaged feedstock. This was, however, partially offset by a higher China. In Mexico we became the first international oil company to open level of planned turnaround activity. This stronger performance in 2017 a branded network since deregulation of the fuel market, and we resulted in an underlying improvement of more than 15% in our net cash announced new retail joint ventures in Indonesia and, most recently, margin per barrel. Compared with 2015, refining performance in 2016 China in February 2018. was lower, reflecting a significantly weaker refining environment and the impact of a particularly large turnaround at the Whiting refinery. This was We have a clear strategic frame to develop new customer offers in partially offset by higher refining margin capture in our operations and mobility and to transition our business to a lower carbon future over lower costs from our simplification and efficiency programmes. the longer term, building on our capabilities, retail assets and brand strengths. We are actively developing new offers and business models centred around digital and advanced mobility trends, for example we have invested in FreeWire Technologies Inc., a manufacturer of mobile electric vehicle rapid charging systems, and we have plans to roll out FreeWire’s Mobi Charger units at selected BP retail sites in Europe in 2018, see Innovation in BP on page 46. Our acquisition of Clean Energy Fuel Corporation’s biomethane production assets in 2017 means we are now the largest supplier of renewable natural gas to the US transport sector. In 2017, we also completed the initial public offering of common units in BP Midstream Partners LP, our subsidiary , which has interests in certain crude oil, natural gas and refined product pipelines in the US.

Above: Engineers at our Cherry Point reﬁnery in the US.

BP Annual Report and Form 20-F 2017 See Glossary 35 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 39 of 371

Aviation Our Air BP business is one of the world’s largest aviation fuels suppliers, selling fuel to major commercial airlines as well as the general aviation sector in over 800 locations across more than 50 countries globally. We also provide aviation fuel consultancy services to airlines and airports including the design, build and operation of aviation fuelling facilities. Our Air BP business is differentiated through its strong market positions, brand strength, partnerships, technology and customer relationships. Our strategy aims to maintain a strong presence in our core locations in Australia, New Zealand, Europe and the US, while expanding into major growth markets that offer long-term competitive advantages, such as in Asia and Latin America. We have marketing sales of more than 420,000 barrels per day, and in 2017 began marketing in Mexico, one of the world’s fastest-growing aviation markets. We are developing new offers and solutions in response to the needs of our customers. In 2017 we entered into a strategic partnership and preferred fuel supplier agreement with Victor, one of the world’s leading Above: Over-wing fuelling at Adelaide airport in Australia. on-demand marketplaces for private jet charters. We also recognize the Fuels marketing performance in 2017 was higher compared with 2016, lower carbon commitments of the airline industry and continue to reflecting continued earnings growth supported by higher premium fuel develop our capability to meet the industry’s needs. In 2017 we began volumes, which grew by 6%, and the continued rollout of our supply of jet biofuel at two further locations in Sweden and Norway, in convenience partnership model to over 220 more sites, bringing the total addition to Norway’s Oslo airport where in 2016, we became the number of convenience partnership sites to 1,100 across our retail world’s first supplier for commercial jet biofuel using existing fuelling network. Compared with 2015, fuels marketing performance in 2016 infrastructure. was higher, reflecting retail growth. Supply and trading Our integrated supply and trading function is responsible for delivering thousand barrels per day value across the overall crude and oil products supply chain. This Sales volumes 2017 2016 2015 structure enables our downstream businesses to maintain a single Marketing salesa 2,799 2,825 2,835 interface with oil trading markets and operate with one set of trading Trading/supply salesb 3,149 2,775 2,770 compliance and risk management processes, systems and controls. Total refined product sales 5,600 5,605 5,948 It has a two-fold purpose: Crude oilc 2,616 2,169 2,098 Total 8,564 7,769 7,703 First, it seeks to identify the best markets and prices for our crude oil, source optimal raw materials for our refineries and provide competitive a Marketing sales include branded and unbranded sales of refined fuel products and lubricants supply for our marketing businesses. We will often sell our own crude to both business-to-business and business-to-consumer customers, including service station and purchase alternative crudes from third parties for our refineries dealers, jobbers, airlines, small and large resellers such as hypermarkets as well as the military. where this will provide incremental margin. b Trading/supply sales are fuel sales to large unbranded resellers and other oil companies. c Crude oil sales relate to transactions executed by our integrated supply and trading function, Second, it aims to create and capture incremental trading opportunities primarily for optimizing crude oil supplies to our refineries and in other trading. 2017 includes by entering into a full range of exchange-traded commodity derivatives , 103 thousand barrels per day relating to revenues reported by the Upstream segment. over-the-counter contracts and spot and term contracts . In Number of BP-branded retail sites combination with rights to access storage and transportation capacity, Retail sitesd 2017 2016 2015 this allows it to access advantageous price differences between US 7,200 7,100 7,000 locations and time periods, and to arbitrage between markets. Europe 8,100 8,100 8,100 The function has trading offices in Europe, North America and Asia. Rest of world 3,000 2,800 2,900 Our presence in the more actively traded regions of the global oil Total 18,300 18,000 18,000 markets supports overall understanding of the supply and demand d Reported to the nearest 100. Includes sites not operated by BP but instead operated by forces across these markets. dealers, jobbers, franchisees or brand licensees under a BP brand. These may move to or from the BP brand as their fuel supply or brand licence agreements expire and are Our trading financial risk governance framework is described in Financial renegotiated in the normal course of business. Retail sites are primarily branded BP, statements – Note 27 and the range of contracts used is described in ARCO and Aral and include our interest in equity-accounted entities. Glossary – commodity trading contracts on page 289.

36 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 40 of 371

Our lubricants business which include operational efficiency, deploying our industry-leading Strategic report – performance proprietary technology, commercial optimization and competitive We manufacture and market lubricants and related products and feedstock sourcing. We also aim to grow our third-party technology services to the automotive, industrial, marine and energy markets licensing income to create additional value. across the world. Our key brands are Castrol, BP and Aral. Castrol is a recognized brand worldwide that we believe provides us with significant In line with our strategy to focus our portfolio on areas where we have competitive advantage. We are one of the largest purchasers of base industry-leading proprietary technologies and competitive advantage, oil in the market, but have chosen not to produce it or manufacture in 2017 we divested our 50% shareholding in the Shanghai SECCO additives at scale. Our participation choices in the value chain are Petrochemical Company Limited joint venture in China for a focused on areas where we can leverage competitive differentiation consideration of $1.7 billion. and strength. In 2017 the petrochemicals business delivered a higher underlying RC profit before interest and tax compared with 2016 – which in turn was higher than 2015. The 2017 result reflected an improved margin environment, stronger margin optimization, the benefits from our efficiency programmes and a lower level of turnaround activity. This was partially offset by the impact of the divestment of our interest in the SECCO joint venture, which completed in the fourth quarter of 2017 and was classified as held for sale in the group balance sheet at 30 September. In 2017 we reduced our cash breakeven by more than 40% compared with 2014, making our business more resilient to volatility in the environment. Compared with 2015, the higher result in 2016 reflected strong operations and margin capture supported by the continued rollout of our latest advanced technology, as well as benefits from a slightly improved environment particularly in olefins and derivatives. Our petrochemicals production of 15.3 million tonnes in 2017 was higher Above: Castrol EDGE engine oil. than 2016 and 2015 (2016 14.2mmte, 2015 14.8mmte). Production Our strategy is to focus on our premium lubricants and growth was higher in 2017, reflecting record levels of production at a number markets while leveraging our strong brands, technology and customer of our plants, a lower level of turnaround activity and the increase in our relationships – all of which are sources of differentiation for our business. interest in the Gelsenkirchen and Mülheim sites following the dissolution With more than 60% of profit generated from growth markets and more of our German refining joint operation with Rosneft in 2016. These than 44% of our sales from premium grade lubricants, we have an increases were partially offset by the divestments of our share in the excellent base for further expansion and sustained profit growth. SECCO joint venture in 2017 and the Decatur petrochemicals complex in 2016. We have a robust pipeline of technology development through which we seek to respond to engine developments and evolving consumer In 2017 we completed the upgrade of our PTA plant at Cooper River in needs and preferences, including lower carbon options. We apply South Carolina, US, to our industry-leading proprietary technology. This our expertise to create differentiated, premium lubricants and technology is also used at our key PTA sites at Zhuhai in China and Geel high-performance fluids for customers in on-road, off-road, sea and in Belgium. Since its deployment, new production records have been set industrial applications. In 2017 in the US, we launched Castrol EDGE at Zhuhai and Geel. BIO-SYNTHETIC, an engine oil that uses 25% plant-derived oil We have also leveraged this technology to develop a lower carbon PTA compounds while delivering a high level of performance. solution for manufacturers, brand owners and their customers. Our The lubricants business delivered an underlying RC profit before interest PTAir brand, which was first launched in Europe in 2016, is now available and tax that was similar compared with 2016 – which in turn was higher globally. The introduction of PTAir in China in 2017 has demonstrated our compared with 2015. The 2017 results reflected growth in premium long-term commitment to both promoting improved sustainability in the brands and growth markets, offset by the adverse lag impact of polyester industry and helping China to move towards a lower carbon increasing base oil prices. The 2016 results also reflected continued future. strong performance in growth markets and premium brands as well as lower costs achieved through simplification and efficiency programmes.

Our petrochemicals business Our petrochemicals business manufactures and markets three main product lines: purified terephthalic acid (PTA), paraxylene (PX) and acetic acid. These have a large range of uses including polyester fibre, food packaging and building materials. We also produce a number of other specialty petrochemicals products. In addition, we manufacture olefins and derivatives at Gelsenkirchen and solvents at Mülheim in Germany, the income from which is reported in our fuels business. Along with the assets we own and operate, we have also invested in a number of joint arrangements in Asia, where our partners are leading companies in their domestic market. Our strategy is to grow our underlying earnings and ensure the business is resilient to margin volatility, positioning ourselves to capture growth and investment opportunities in an attractive and growing market. We do this through the execution of our business improvement programmes

BP Annual Report and Form 20-F 2017 See Glossary 37 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 41 of 371 Rosneft

Rosneft is the largest oil company in Russia, with a strong portfolio of current and future opportunities.

BP and Rosneft • Rosneft completed the transaction for the sale of a 20% interest in its • BP’s 19.75% shareholding in Rosneft allows us to benefit from Verkhnechonskneftegaz subsidiary to the Beijing Gas Group in June, a diversified set of existing and potential projects in the Russian for around $1.1 billion. oil and gas sector. • Rosneft completed the transaction to acquire a 49.13% stake in Essar • Russia has one of the largest and lowest-cost hydrocarbon Oil Limited (EOL), an Indian downstream business, from Essar Energy resource bases in the world and its resources play an important Holdings Limited and its affiliates (the Essar group) in August. As a role in long-term energy supply to the global economy. result of this transaction, Rosneft acquired an interest in the Vadinar refinery and related infrastructure in India, which is among the top 10 • BP’s strategy in Russia is to support Rosneft’s overall refineries in terms of scale and complexity worldwide. EOL’s business performance and growth through our participation in the Rosneft also includes a network of Essar-branded retail outlets across India. Board of Directors, collaboration on safety, technology and best The acquisition price totalled $3.9 billion. practice, and to build a material business based on standalone projects with Rosneft in Russia and internationally. BP remains • Rosneft completed the acquisition of a 30% stake in a concession committed to our strategic investment in Rosneft, while agreement to develop the Zohr field in Egypt from the Italian company complying with all relevant sanctions. Eni S.p.A. (Eni) for $1.1 billion in October. Rosneft is also refunding its share in past project costs to Eni, which is estimated at $1.1 billion. Eni retains a 60% stake and BP holds the remaining 10%. 2017 summary • Two BP nominees, Bob Dudley and Guillermo Quintero, serve on • Rosneft continued optimizing its portfolio and increased total Rosneft’s Board. The number of directors on the Board increased hydrocarbon production by 6.5%. from nine to 11 in September. Bob Dudley became chairman of its • BP received $190 million, net of withholding taxes, in July (2016 Strategic Planning Committee, and Guillermo Quintero $332 million, 2015 $271 million), representing its share of Rosneft’s is a member of its HR and Remuneration Committee. dividend of 5.98 Russian roubles per share. This dividend was • US and EU sanctions imposed in 2014 remain in place on certain 35% of Rosneft’s 2016 IFRS net profit. Russian activities, individuals and entities, including Rosneft. • Rosneft implemented a new dividend policy in September, which In 2017 the US imposed additional sanctions on certain Russian provides for a target level of dividends of no less than 50% of IFRS and international activities and entities, including Rosneft. net profit, and a target frequency of dividend payments of at least twice a year. About Rosneft • BP received $124 million, net of withholding taxes, in October, • Rosneft is the largest oil company in Russia and the largest publicly representing its share of Rosneft’s interim dividend of 3.83 Russian traded oil company in the world, based on hydrocarbon production roubles per share. This dividend was 50% of Rosneft’s IFRS net volume. Rosneft has a major resource base of hydrocarbons onshore profit for the first half of 2017. and offshore, with assets in all Russia’s key hydrocarbon regions. Rosneft’s hydrocarbon production reached a record of 5.7mmboe/d • Rosneft completed the acquisition of a 100% interest in the Kondaneft in 2017. Gas production for the year increased by 2% compared with project in April, which is developing four licence areas in the Khanty- 2016 to 68.4bcma or 6.62bcf/d. Mansiysk Autonomous District in West Siberia. The acquisition price was approximately $700 million.

38 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 42 of 371

• BP holds a 20% interest in Taas-Yuryakh Neftegazodobycha (Taas), Strategic report – performance a joint venture with Rosneft and a consortium comprising Oil India Limited, Indian Oil Corporation Limited and Bharat PetroResources Limited. Taas is developing the Srednebotuobinskoye oil and gas condensate field. BP‘s interest in Taas is reported through the Upstream segment. • Rosneft (51%) and BP (49%) jointly own Yermak Neftegaz LLC (Yermak). This joint venture conducts onshore exploration in the West Siberian and Yenisei-Khatanga basins and currently holds seven exploration and production licences. The venture is also carrying out further appraisal work on the Baikalovskoye field, an existing Rosneft discovery in the Yenisei-Khatanga area of mutual interest. BP’s interest in Yermak is reported through the Upstream segment. • Rosneft, BP and Western GeCo (a subsidiary of Schlumberger) continued their collaboration on seismic research and the development of an innovative cableless onshore seismic acquisition technology. The technology aims to revolutionize the design and acquisition of seismic surveys and increase the efficiency of exploration, appraisal and field development. • Rosneft and BP signed an agreement on strategic co-operation in • Rosneft is the leading Russian refining company based on throughput. gas and a memorandum of understanding in respect to the sale and It owns and operates 13 refineries in Russia. Rosneft also owns and purchase of natural gas in Europe in June. We agreed to develop operates more than 2,960 retail service stations in Russia and abroad. integrated co-operation in gas and aim to jointly implement gas These include Rosneft-branded sites, as well as BP-branded sites projects focused on gas exploration and production, LNG operating under a licensing agreement. Downstream operations production, supply and marketing in Russia and abroad. include jet fuel, bunkering, bitumen and lubricants. Rosneft refinery • In June Rosneft and BP also signed an agreement for collaboration throughput in 2017 reached a record level of 2,288mb/d versus in labour protection, and industrial and fire safety, including in the 2,028mb/d in 2016. implementation of joint oil and gas projects. • Rosneft’s largest shareholder is Rosneftegaz JSC (Rosneftegaz), which is wholly owned by the Russian government. Rosneftegaz's shareholding in Rosneft is 50% plus one share.

BP’s strategy in Russia Our strategy is to work in co-operation with Rosneft to increase total shareholder return and partner with it in building a material business outside of the shareholding. This strategy is implemented through our activities in four areas: • Rosneft Board of Directors – BP has two nominees on the Rosneft Board of Directors and two of its committees. • Technology – develop and apply technology to improve oil and gas ﬁeld and reﬁning performance in collaboration with Rosneft. • Joint ventures – partner with Rosneft to generate incremental value from joint ventures that are separate from BP’s core shareholding. • Technical services – collaborate on the provision of technical and HSE services on a contractual basis to improve asset performance.

The following developments and activities in 2017 have served to support and progress this strategy: • In December Rosneft and BP announced an agreement to form a joint venture to develop subsoil resources within the Kharampurskoe and Festivalnoye licence areas in Yamalo-Nenets Autonomous Okrug in northern Russia. Rosneft will hold a majority stake of 51% and BP will hold a 49% stake. Completion of the deal, subject to external approvals, is expected in 2018.

BP Annual Report and Form 20-F 2017 See Glossary 39 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 43 of 371

Rosneft segment performance Balance sheet $ million BP’s investment in Rosneft is managed and reported as a separate 2017 2016 2015 segment under IFRS. The segment result includes equity-accounted Investments in associates c earnings, representing BP’s 19.75% share of the profit or loss of (as at 31 December) 10,059 8,243 5,797 Rosneft, as adjusted for the accounting required under IFRS relating to BP’s purchase of its interest in Rosneft and the amortization of Production and reserves the deferred gain relating to the disposal of BP’s interest in TNK-BP. 2017 2016 2015 See Financial statements – Note 15 for further information. Production (net of royalties) (BP share) $ million Liquids (mb/d) 2017 2016 2015 Crude oild 900 836 809 Profit before interest and taxa b 923 643 1,314 Natural gas liquids 4 4 4 Inventory holding (gains) losses (87) (53) (4) Total liquids 904 840 813 RC profit before interest and tax 836 590 1,310 Natural gas (mmcf/d) 1,308 1,279 1,195 Net charge (credit) for non-operating items – (23) – Total hydrocarbons (mboe/d) 1,129 1,060 1,019 e Underlying RC profit before interest and tax 836 567 1,310 Estimated net proved reserves (net of royalties) (BP share) Average oil marker prices $ per barrel Liquids (million barrels) Urals (Northwest Europe – CIF) 52.84 41.68 50.97 Crude oild 5,402 5,330 4,823 a BP’s share of Rosneft’s earnings after finance costs, taxation and non-controlling interests Natural gas liquids 131 65 47 is included in the BP group income statement within profit before interest and taxation. Total liquidsf 5,533 5,395 4,871 b Includes $(2) million (2016 $3 million, 2015 $16 million) of foreign exchange (gain)/losses Natural gas (billion cubic feet)g 11,900 11,169 arising on the dividend received. 13,522 Total hydrocarbons (mmboe) 7,864 7,447 6,796 Market price c See Financial statements – Note 15 for further information. d Includes condensate. The price of Urals delivered in North West Europe (Rotterdam) averaged e Because of rounding, some totals may not agree exactly with the sum of their component $52.84/bbl in 2017, $1.35/bbl below dated Brent . The differential to parts. f Includes 338 million barrels of crude oil (347 million barrels at 31 December 2016) in respect Brent narrowed from $2.06/bbl in 2016 as OPEC production cuts of the 6.31% non-controlling interest (6.58% at 31 December 2016) in Rosneft, held assets tightened the market for medium sour crude. in Russia including 32 million barrels (28 million barrels at 31 December 2016) held through BP’s equity-accounted interest in Taas-Yuryakh Neftegazodobycha. g Includes 306 billion cubic feet of natural gas (300 billion cubic feet at 31 December 2016) in Financial results respect of the 2.30% non-controlling interest (2.53% at 31 December 2016) in Rosneft held assets in Russia including 12 billion cubic feet (3 billion cubic feet at 31 December 2016) Replacement cost (RC) profit before interest and tax for the segment held through BP’s equity-accounted interest in Taas-Yuryakh Neftegazodobycha. for 2016 included a non-operating gain of $23 million, whereas the 2017 and 2015 results did not include any non-operating items. After adjusting for non-operating items, the increase in the underlying RC profit before interest and tax compared with 2016 primarily reflected higher oil prices. The result also benefited from a $163-million gain representing the BP share of a voluntary out-of-court settlement between Sistema, Sistema-Invest and the Rosneft subsidiary, Bashneft. These positive effects were partially offset by adverse foreign exchange effects. Compared with 2015, the 2016 result was primarily affected by lower oil prices and increased government take, partially offset by favourable duty lag effects. See also Financial statements – Notes 15 and 30 for other foreign exchange effects.

40 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 44 of 371 Other businesses and corporate Strategic report – performance Comprises our alternative energy business, shipping, treasury and corporate activities, including centralized functions and the costs of the Gulf of Mexico oil spill.

Financial performance $ million 2017 2016 2015 Sales and other operating revenuesa 1,469 1,667 2,048 RC profit (loss) before interest and tax Gulf of Mexico oil spill (2,687) (6,640) (11,709) Other (1,758) (1,517) (1,768) RC profit (loss) before interest and tax (4,445) (8,157) (13,477) Net adverse impact of non-operating items Gulf of Mexico oil spill 2,687 6,640 11,709 Other 160 279 547 Net charge (credit) for non-operating items 2,847 6,919 12,256 Underlying RC profit (loss) before interest and tax (1,598) (1,238) (1,221) Organic capital expenditure b 339 229 N/A a Includes sales to other segments. b A reconciliation to GAAP information at the group level is provided on page 249. Organic capital expenditure on a cash basis in 2015 is not available.

The replacement cost (RC) loss before interest and tax for the year ended 31 December 2017 was $4,445 GulfGulf of Mexico oil spilspilll million (2016 $8,157 million, 2015 $13,477 million). The FurtherFurther significantsignificant progressprogress was made in 2017 2017 result included a net charge for non-operating items toward resolving outstanding matters related of $2,847 million, primarily relating to costs for the Gulf of to the 2010 Gulf of Mexico oil spill. The court Mexico oil spill (2016 $6,919 million, 2015 $12,256 susupervisedpervised settsettlementlement pprogramme’srogramme’s million). For further information, see Financial statements detedeterminationrmination ofof busbusinessiness ecoeconomicnomic cclaimslaims waswas – Note 2. substantiallsubstantiallyy comcompleted,pleted, althoughalthough a sisignificantgnificant After adjusting for these non-operating items, the nunumbermber ofof individualindividual claimsclaims detedeterminedrmined havehave beenbeen underlying RC loss before interest and tax for the year aandnd continue to be apappealedppeap led byy BP anand/ord/or the ended 31 December 2017 was $1,598 million, higher cclaimants.laimants. DeterminationsDeterminations wwithith respect to than 2016 due to weaker business results, higher rremainingemainingg business economic loss claims are corporate costs and adverse foreign exchange effects expected to be issued in the first half of 2018. which had a favourable effect in 2016. The underlying RC TThehe pprocessrocess sasafetyfety monitor’s term ofof appointmentappointment loss before interest and tax in 2016 was $1,238 million, came to an endend inin JanuaryJanuary 2018. TheThe ethicsethics similar to the loss of $1,221 million in 2015. mmonitor’sonitor’s termterm ofof aappointmentppointment will comecome to an end in 20192019 and we continuecontinue to workwork withwithhh himhim Outlook to review onongoinggoig ngg progress.prop greg ss. Other businesses and corporate annual charges, A ffurtherurther $2.7 billion pre-tax charge was recorded excluding non-operating items, are expected iinn 2017 and the cucumulativemulative ppre-taxre-tax iincomencome to be around $1.4 billion in 2018. statement cchargeharge ssinceince thethe incidentincident inin AprilApril 2010 aamountedmounted to $65.8$65.8 billion as at 31 DecembeDecemberr 20172017 FForor furthfurtherer information,information, seesee Financial statementsstatements – Note 22..

BP Annual Report and Form 20-F 2017 See Glossary 41 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 45 of 371

Alternative Energy Left: Lightsource BP's ﬂoating solar farm on the Queen Elizabeth II reservoir, just outside London.

We have been investing in renewables Advanced biofuels for many years – and our focus today Butamax®, our 50/50 joint venture with DuPont, has is on biofuels, biopower, wind energy developed technology that converts sugars from corn and solar energy. into an energy-rich biofuel known as bio-isobutanol. It can be blended with gasoline at higher concentrations than ethanol and transported through existing fuel pipelines Renewables are the fastest growing form of energy. and infrastructure. Butamax® plans to upgrade its recently They account for around 4% of energy demand today acquired ethanol plant in Kansas to enable it to produce (excluding large-scale hydroelectricity). By 2040 that bio-isobutanol to demonstrate the technology to ethanol could grow to at least 14% – an exceptional rate of producers. growth for the energy industry. As part of our approach to building our alternative energy Biopower business, we are looking to grow our existing businesses We create biopower by burning bagasse, the fibre that and to develop further new businesses and partnerships remains after crushing sugar cane stalks. In 2017 our to deliver sustainable value. three biofuels manufacturing facilities produced around 850GWh of electricity – enough renewable energy Biofuels to power all of these sites and export the remaining 70% We believe that biofuels offer one of the best large-scale to the local electricity grid. solutions to reduce emissions from transportation. This is a low carbon power source, with the CO2 emitted We produce ethanol from sugar cane in Brazil. This ethanol from burning bagasse offset by the CO2 absorbed by has life cycle greenhouse gas emissions that are 70% sugar cane during its growth. lower than conventional transport fuels. In 2017 our three sites produced 776 million litres of ethanol equivalent. Wind energy Brazil is one of the largest markets globally for ethanol We have interests in 14 sites in the US with a net fuel. To better connect our ethanol production with the generating capacity of 1,432MW, making BP one of country’s main fuels markets, we are partnering with the top wind energy producers in the country. We Copersucar, the world’s leading ethanol and sugar trader, continue to optimize our business by seeking out to operate a major ethanol storage terminal. technological advancements and finding ways to deliver power more efficiently. Our largest biofuels mill is certified to Bonsucro, an independent standard for sustainable sugar cane production. Solar energy BP has partnered with Lightsource, Europe’s largest solar Our strategy is enabled by: development company, which focuses on the acquisition, • Safe and reliable operations – continuing to drive development and long-term management of large- improvements in personal, process and transport scale solar projects. We are bringing our global scale, safety. relationships and trading capabilities to help accelerate • Competitive feedstock – concentrating our efforts Lightsource’s expansion worldwide. The company in Brazil, which has one of the most cost-competitive has been rebranded as Lightsource BP. We are investing biofuel sources currently available in the world. $200 million in Lightsource BP over three years and will hold a 43% stake in the company with two seats on its • Domestic and international markets – selling board. bioethanol and sugar domestically in Brazil and also to international markets such as the US and Europe through our integrated supply and trading function.

42 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 46 of 371 Strategic report – performance

Right: Looking out to sea from our BP-operated British Renown oil tanker in the US. Shipping Treasury BP’s shipping and chartering activities help to ensure Treasury manages the financing of the group centrally, the safe transportation of our hydrocarbon products with responsibility for managing the group’s debt profile, using a combination of BP-operated, time-chartered share buyback programmes and dividend payments, and spot-chartered vessels. At 31 December 2017 BP while ensuring liquidity is sufficient to meet group had four vessels supporting operations in Alaska and requirements. It also manages key financial risks 49 BP-operated and 22 time-chartered vessels for our including interest rate, foreign exchange, pension funding international oil and gas shipping operations. In 2017 and investment, and financial institution credit risk. From 13 new oil tankers were delivered into the BP-operated locations in the UK, US and Singapore, treasury provides fleet. There are no new oil tankers planned for delivery the interface between BP and the international financial in 2018. However, we have six technically advanced markets and supports the financing of BP’s projects LNG tankers on order and planned for delivery into the around the world. Treasury holds foreign exchange and BP-operated fleet between 2018 and 2019. interest rate products in the financial markets to hedge The LNG tankers are currently under construction in group exposures. In addition, treasury generates Daewoo Shipbuilding and Marine Engineering in South incremental value through optimizing and managing cash Korea. The first ship was launched in September and flows and the short-term investment of operational cash will be delivered in the first half of 2018. When balances. For further information, see Financial delivered they will be the largest and most fuel statements – Note 27. efficient LNG ships BP has ever built. Their advanced gas burning diesel engines allow a step change in Insurance flexibility and efficiency. The ships also have the The group generally restricts its purchase of insurance to facilities to re-liquefy gas and use it for cargo situations where this is required for legal or contractual conditioning – making them extremely commercially reasons. Some risks are insured with third parties and flexible. All vessels conducting BP shipping activities reinsured by group insurance companies. This approach are required to meet BP approved health, safety, is reviewed on a regular basis or if specific circumstances security and environmental standards. require such a review.

BP Annual Report and Form 20-F 2017 43 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 47 of 371 Innovation in BP

3,600 patents and applications 8 major technology centres

Technology is ever-present Technology across the business in all that we do – from safely The right technology is central to the safety apply technology that enhances operational discovering and recovering oil and reliability of our operations. In Upstream, integrity, boosts conversion efﬁciency, and gas, to renewable energy, we seek to increase recovery and gain new reduces CO2 emissions or helps to provide digital, and lower carbon access. And in Downstream we develop and high-performance products for our customers. fuels and products.

We seek innovations that help to make Between our operations and products more 8-15% efficient and sustainable. fuel savings And by partnering with early and growth stage start-ups, we invest in emerging technologies that are scalable and commercially viable. We also complement our comprehensive research capability with external collaborations that provide a range of specialisms, supported by innovative academic programmes. We have scientists and technologists at eight major technology centres in the US, UK, Asia and Germany. In 2017 we invested $391 million in research and development (2016 $400 million, 2015 $418 million). This excludes the investment in technology Helping heavy-duty vehicles reduce carbon emissions made through venturing – which gives us While the focus of reducing emissions We are working to improve the safety and alternative access to innovation. has been on battery power for passenger efficiency of trucks through our investment BP and its subsidiaries hold more than and small vehicle fleets, the solution in Peloton Technology. The business has 3,600 granted patents and pending patent for heavy-duty vehicles such as lorries developed connected and automated vehicle applications throughout the world. isn’t as obvious. To help tackle this, we are technology for commercial vehicles, using developing a number of technologies the same approach as cyclists who race in bp.com/technology that offer a range of ways for heavy-duty close formation to travel as fast as the leader vehicles to reduce emissions. but with less effort. Linked pairs of trucks have synchronized acceleration and braking Our acquisition of the renewable natural to maintain a safe distance between the gas business of Clean Energy Fuel Corp. is vehicles. Travelling in this way can reduce helping to make renewable energy more emissions and result in estimated fuel accessible for natural gas powered vehicle More information savings of between 8-15%. fleets, including trucks. Biogas is produced Technology Outlook entirely from organic waste and is estimated How technology could influence to result in up to 70% lower greenhouse the way we meet the energy challenge into the future. gas emissions than from equivalent gasoline bp.com/technologyoutlook or diesel-fuelled vehicles.

44 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 48 of 371 Strategic report – performance Improving oil and gas recovery Operational decision-making is being transformed by a combination of cloud ~2,500 technology and big data software solutions. wells with Argus Our wells data platform Argus holds historical real-time data and real-time data in our proprietary data lake on nearly all of the 2,500 wells we operate 00101001101100101001010101011001101001010011010100110101 globally, making data available to any relevant 00100101010101101011010101010011 11001011100110101001010101011011 010001100110001101001010010110100101010100110011 engineer, anytime. Well reviews that used 001101100011001010101010110 010110010100110011 to take days of preparation can now be 001101100101001101010 110 101 done live using Argus, leaving more time 01010101011001101010010010110011001010101011000110011 to explore new ways to deliver efficiencies 001010101010110101010100101001 and improve production rates. 0011010110101010010011001 We recently deployed a new proprietary seismic processing algorithm called Full Waveform Inversion in our Gulf of Mexico business, which lets us see through the salt to the reservoirs below. Applied to BP’s four hubs in the Gulf of Mexico, it has helped us identify significant additional resources. We ran that algorithm in just two weeks at our centre for high performance computing Using fibre optics cables inside our wells, Through our venturing partnership with in Houston – in 1999 that would have we ‘listen’ to the rock, so we can intervene BiSN, we help to protect oil production rates taken us more than 2,000 years using if issues arise. We have deployed this by shutting off unwanted water and gas. available computer power. technology in more than 30 wells to date BiSN applies heat technology in a well to – with many more planned globally, and melt alloys so they can flow into any spaces Sand production caused from weak rock are now investigating other applications within the cemented well. When cooled, breaking down under pressure creates a for the technology, including 4D seismic the alloys solidify and seal the well, inhibiting challenge for our industry. If sand enters oil and well integrity monitoring. water or gas entry. We have deployed production facilities, it can cause erosion this novel BiSN technology successfully and disrupt production efficiency. in the Gulf of Mexico and Angola.

Creating low carbon businesses Working in partnership Carbon capture, use and storage New technologies can help pave the way technology (CCUS), where CO2 can be to a lower carbon future. We are building captured and prevented from entering the low carbon into what we do, across the $400 million+ atmosphere, is another important means business – in ways that can help generate invested in corporate venturing since of reducing emissions. BP is working with value over the long term. 2006 – $100 million in 2017 alone. the Oil and Gas Climate Initiative (OGCI) to We are an investor and an end-user speed up wide-scale use of CCUS, which of the technologies we invest in. is one of the main focus areas for OGCI’s 40+ $1-billion investment vehicle. In 2017 Our approach is not about trying to we committed funding through OGCI to do everything, but to focus on the areas active investments in our venturing advance designs for a full-scale gas power that have the greatest potential value portfolio, with more than 200 plant with CCUS – one that can receive to our business now and in the future. co-investors and 12 technologies government support and attract private Our venturing partnerships help us used in BP. sector investors. to understand and develop solutions for the future. We invest to help companies develop Sustainable raw materials technology quickly – often for our own use. We are helping commercialize production Our investments include: of new high-performance wood. Tricoya technology changes the physical properties • Advanced mobility of wood chips that are used to make MDF • Carbon management panels with enhanced durability and stability. • Low carbon power and storage The panels can be used outside and in wet areas – where concrete, plastic or metal • Bio and low carbon products materials would usually be needed. The • Digital energy. lightweight and sustainable raw material offers beneﬁts to the construction, joinery and civil engineering industries. BP and Tricoya have formed a consortium to build a plant in the UK, producing more durable wood chips.

BP Annual Report and Form 20-F 2017 45 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 49 of 371

Turning carbon into concrete Our investment in Solidia, a cement and concrete company, is supporting a new technology to produce cement in a way that generates fewer emissions – using

CO2 instead of water to cure the concrete. The technology has the potential to lower emissions in concrete production by up to 70%, and allows 80% of the water used in its production process Rapid mobile charging to be recycled. BP has invested $5 million in FreeWire, a US manufacturer of mobile electric 70% vehicle rapid charging systems, and we potential plan to roll out the charging facilities for emissions use at selected BP retail sites in Europe reduction during 2018. This investment will help to build our understanding of this fast- evolving market.

Venturing and low carbon across multiple fronts

Going beyond the limits $20 million invested in Beyond Limits

20+ years supporting NASA

Previously used in deep space knowledge to simulate human reasoning, exploration – our venturing with the same exploration techniques partnership with Beyond Limits that NASA’s Curiosity Rover used on the surface of Mars. is using artificial intelligence (AI) technology to transform We are supporting this work to help accelerate its delivery and provide the the way we manage reservoirs energy sector with new levels of process here on Earth. automation and better insight and effectiveness across all operations. Our investment in the start-up company The work supports BP’s vision of using is helping develop and commercialize the digital technology to help transform our same technology that successfully organization. And we believe that it could supported NASA’s space programme for fundamentally change how we locate more than 20 years for the oil and gas and develop reservoirs, produce and industry. refine crude oil, market and supply refined Beyond Limits aims to adapt and deliver products and make unmanned repairs its AI software to tackle industrial and possible for dangerous maintenance. business challenges on Earth. The Alternative work uses machine learning and human thinking New Disruptive technologies business models

46 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 50 of 371 Sustainability Strategic report – performance We aim to create long-term value for our shareholders, partners and society by helping to meet growing energy demand in a safe and responsible way.

In summary

Our 2017 sustainability focus Safety and security Human rights These sustainability issues are the ones that Climate change Environment could impact our business the most and that are of greatest interest to our stakeholders: Managing our Ethical conduct impacts Our people Value to society

Process safety events More information Safety and security (number of incidents) Safety is a core value and our number one priority. Our stated aim is to 150 have no accidents, no harm to people and no damage to the environment. 100

We are working to continuously improve personal and 50 process safety and operational risk management across BP, with our group-wide operating management 2013 2014 2015 2016 2017 system at its core. Our approach builds on our Tier 1 Tier 2 experience, including learning from incidents, operations audits, annual risk reviews and sharing lessons learned with our industry peers. Recordable injury frequency BP Sustainability Report (workforce incidents per 200,000 hours worked) Publishes April In 2017 BP reported one fatality – a ﬁreﬁghter who died in the course of his duties for our biofuels business in 0.8 Brazil. Nothing matters more than every one of our 0.6 people returning home safely each day. We deeply regret this loss and continue to work towards eliminating 0.4 injuries and fatalities in our work. 0.2 Preventing incidents 2013 2014 2015 2016 2017 We carefully plan our operations, identifying potential Workforce 0.31 0.31 0.24 0.21 0.22 hazards and managing risks at every stage. We design Employees 0.25 0.27 0.20 0.19 0.20 our facilities to appropriate standards and manage them Contractors 0.36 0.34 0.28 0.22 0.23 a throughout their lifetime. American Petroleum Institute US benchmark International Association of Oil & Gas Producers benchmarka We track our safety performance using industry metrics aAPI and OGP 2016 data reports are not available until May 2017. such as the American Petroleum Institute recommended Advancing the energy transition practice 754 and the International Association of Oil & Publishes April Gas Producers recommended practice 456.

BP Annual Report and Form 20-F 2017 See Glossary 47 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 51 of 371

2017 2016 2015 Managing safety a Tier 1 process safety events 18 16 20 BP-operated businesses are responsible for identifying and managing b Tier 2 process safety events 61 84 83 operating risks and bringing together people with the right skills and Oil spills – numberc 139 149 146 competencies to address them. They are required to carry out self- Oil spills contained 81 91 91 verification and are also subject to independent scrutiny and assurance. Oil spills reaching land and water 58 58 55 Our safety and operational risk team works alongside BP-operated Oil spilled – volume (thousand litres) 886 677 432 businesses to provide oversight and technical guidance, while our group Oil unrecovered (thousand litres) 265 311 142 audit team visits sites on a risk-prioritized basis, to check how they are managing risks. a Tier 1 process safety events are losses of primary containment of greater consequence – such as causing harm to a member of the workforce, costly damage to equipment or Operating management system exceeding defined quantities. BP’s OMS is a group-wide framework designed to help us manage b Tier 2 events are those of lesser consequence. risks in our operating activities and drive performance improvements. c Number of spills greater than or equal to one barrel (159 litres, 42 US gallons). It brings together BP requirements on health, safety, security, the In 2017 we continued to see a reduction in the overall number of process environment, social responsibility and operational reliability, as well safety events, despite a slight increase in tier 1, the more serious events. as related issues, such as maintenance, contractor relations and We investigate safety incidents and near misses, including low organizational learning, into a common management system. probability, high consequence events. And we use leading indicators, We review and amend our group requirements within OMS from time like inspections and equipment tests, to monitor the strength of controls to time to reflect BP’s priorities and experience. Any variations in the to prevent incidents. What we learn from performance insights helps us application of OMS, in order to meet local regulations or circumstances, focus our safety efforts. For example, we are introducing techniques for are subject to a governance process. teams to analyse and redesign tasks to reduce the chance of mistakes OMS also helps us improve the quality of our activities by setting occurring. a common framework that our operations must work to. Recently Proactively managing equipment corrosion is also a focus for us – and acquired operations need to transition to OMS. See page 49 for we believe this is helping to deliver improvements in process safety in information about contractors and joint arrangements . our upstream and downstream businesses.

Keeping people safe All members of our workforce have the responsibility and the authority to stop unsafe work. Our golden rules of safety guide our workers on staying safe while performing tasks with the potential to cause most harm. The rules are aligned with our operating management system and focus on areas such as working at heights, lifting operations and driving safety. We monitor and report on key workforce personal safety metrics and include both employees and contractors in our data.

2017 2016 2015 Recordable injury frequencyd 0.22 0.21 0.24 Day away from work case frequencye 0.055 0.051 0.061 Severe vehicle accident ratef 0.03 0.05 0.11 d Incidents that result in a fatality or injury per 200,000 hours worked. e Incidents that result in an injury where a person is unable to work for a day (shift) or more per 200,000 hours worked. f The ﬁgures for 2016 and 2017 are based on our new deﬁnition which aligns with industry practice. We have seen a small increase in our recordable injury frequency and day away from work case frequency compared to last year. Improving safety in our operations is a high priority and we are working on it right across the business.

Above: Monitoring global events at our 24-hour response information centre in the UK.

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We use a range of measures to manage this risk, including the use Strategic report – performance of cyber security policies and procedures, security protection tools, ongoing detection and monitoring of threats, and testing of response and recovery procedures. We collaborate closely with governments, law enforcement and industry peers to understand and respond to new and emerging threats. To encourage vigilance among our employees, our cyber security programme covers topics such as email phishing and the correct classiﬁcation and handling of our information.

Working with contractors and partners More than half of the hours worked by BP are carried out by contractors. So their skills and performance are vital to our ability to carry out our work safely and responsibly. Our standard model contracts include health, safety and security requirements. Through bridging documents, we define the way our safety management system co-exists with those Above: Operations at our Cherry Point refinery in the US. of our contractors to manage risk on a site. And for our contractors facing the most serious risks, we conduct quality, technical, health, safety and security audits before awarding contracts. Once they start Technology work, we continue to monitor their safety performance. New technologies are helping us increase the amount and quality of data Our OMS includes requirements and practices for working with we gather from our operations and speed up our analysis, allowing us to contractors. We expect and encourage our contractors and their act more quickly. For example, our wells data platform Argus holds employees to act in a way that is consistent with our code of conduct. historical and real-time data on nearly all of the 2,500 wells we operate We take appropriate action if those expectations, or their contractual globally, giving our engineers the ability to access and analyse alerts obligations, are not met. quickly and remotely. This enables early identification and rapid Our partners in joint arrangements response should an issue arise (see page 45). In joint arrangements where we are the operator, our OMS, code of conduct and other policies apply. We aim to report on aspects of our Emergency preparedness and response business where we are the operator – as we directly manage the The scale and spread of BP’s operations means we must be prepared to performance of these operations. respond to a range of possible disruptions and emergency events. We Where we are not the operator, our OMS is available as a reference maintain disaster recovery, crisis and business continuity management point for BP businesses when engaging with operators and plans and work to build day-to-day response capabilities to support local co-venturers. We have a group framework to assess and manage BP’s management of incidents. exposure related to safety, operational and bribery and corruption risk Security from our participation in these types of arrangements. As a global business, BP monitors for hostile actions that could harm our We monitor performance and how risk is managed in our joint people or disrupt our operations. We particularly look at operating areas arrangements, whether we are the operator or not. affected by political and social unrest, terrorism, armed conflict or criminal activity. We also run exercises and drills to test our procedures and help ensure our people are prepared in the event of an emergency. We take steps to help people stay safe when they are travelling on business. Our 24-hour response information centre keeps watch over global events and related developments. This meant that in March 2017 we were aware of the terrorist attack in London’s Westminster almost immediately. Within minutes we knew which employees had scheduled meetings or travel plans in the surrounding area, so we were able to confirm their safety and provide advice. Oil spill preparedness Our requirements for oil spill preparedness and response planning incorporate updated external requirements and what we have learned over many years. We are also using technologies to strengthen our response to oil spills. Working with Oil Spill Response Limited, an industry-funded co-operative, and others, we used satellites, drones and autonomous underwater vehicles in an oil spill response exercise. This enabled us to study an oil plume from a small controlled release and the effectiveness of dispersant in helping it to biodegrade. Cyber threats Cyber attacks are on the rise and our industry is subject to evolving risks from a variety of cyber threat actors, including nation states, criminals, terrorists, hacktivists and insiders. We have experienced threats to the security of our digital infrastructure, but none of these had a significant effect on our business in 2017.

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Climate change Task Force on Climate-related Our strategy sets us up to help advance the energy Financial Disclosures transition, while meeting the needs for energy today. The TCFD was established by the Financial Stability Board with the aim of improving disclosure of climate-related To help drive the energy transition, we are working to reduce our risks and opportunities. Our reporting provides information operational emissions, produce new efficient fuels and lubricants for relevant to each of the four TCFD recommendations. our customers and to build up our low carbon businesses. Governance Reducing emissions in our operations Annual Report (page 70), Sustainability Report (page 73) We have set an emissions reduction target of 3.5 million tonnes Strategy out to 2025. Our operating businesses aim to deliver this through Annual Report (page 12) and Sustainability Report (pages 4-5) and improved efficiency, less methane emissions and reduced flaring our Energy Outlook (pages 3-5) – leading to permanent, quantifiable GHG reductions. Risk management Improving our products Annual Report (page 55) We are increasing gas in our portfolio, helping to meet the rising Metrics and targets demand for cleaner energy. We are continuing to innovate with Sustainability Report (pages 6 and 14) efficient fuels, lubricants and chemicals that can help our customers and consumers lower their emissions – as well as exploring opportunities to use our retail network to support the Reporting on greenhouse gas emissions electrification of transport. We report on direct and indirect GHG emissions on a carbon dioxide Creating low carbon businesses equivalent (CO2e) basis. Direct emissions include CO2 and methane from the combustion of fuel and the operation of facilities, and indirect We are building up our renewable energy portfolio – focusing on emissions include those resulting from the purchase of electricity and biofuels, biopower, wind and solar. And we have established a steam. dynamic venturing arm that is working on multiple fronts – through joint ventures , creative collaborations and new business There was a slight decrease in our direct GHG emissions in 2017. The models. primary reasons for this include operational changes such as planned shutdowns at several of our refineries for maintenance, and actions Working with others taken by our businesses to reduce emissions in areas such as flaring, We are collaborating with others to help address this global methane and energy efficiency.

challenge. As one example, the Oil and Gas Climate Initiative Greenhouse gas emissions (MteCO2e) (OGCI) – currently chaired by our chief executive Bob Dudley – 2017 2016 2015 brings together 10 oil and gas companies working to reduce the Operational controla GHG emissions from our industry’s operations and the use of our Direct emissions 50.5 51.4 51.2 products. In 2017, OGCI announced its intent to provide technical Indirect emissions 6.1 6.2 7.0 and ﬁnancial support for the world’s ﬁrst global methane study. BP equity shareb Direct emissions 49.4 50.1 49.0 Advancing Low Carbon programme Indirect emissions 6.8 6.2 6.9 BP's new Advancing Low Carbon accreditation programme is designed to motivate every part of BP to pursue lower carbon opportunities – by a Operational control data comprises 100% of emissions from activities that are operated by BP, going beyond the IPIECA guidelines by including emissions from certain other activities highlighting BP activities that demonstrate a better carbon outcome. The such as contracted drilling activities. activities initially selected include emission reductions in our operations, b BP equity share comprises our share of BP’s consolidated entities and equity-accounted carbon neutral products and investments in low carbon technologies. entities, other than BP’s share of Rosneft. The ratio of our total GHG emissions reported on an operational control See bp.com/advancinglowcarbon for more information. basis to gross production was 0.24teCO2e/te production in 2017 (2016

0.24 teCO2e/te, 2015 0.24teCO2e/te). Gross production comprises Calling for a price on carbon upstream production, refining throughput and petrochemicals produced. BP believes that carbon pricing by governments provides the right Our approach to reporting GHG emissions broadly follows the IPIECA/ incentives for everyone – energy producers and consumers alike – to API/IOGP Petroleum Industry Guidelines for Reporting GHG Emissions. play their part in reducing emissions. It makes energy efficiency more We calculate CO2 emissions based on the fuel consumption and fuel attractive and makes lower carbon solutions, such as renewables and properties for major sources. We do not include nitrous oxide, CCUS, more cost competitive. hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride as To help anticipate greater regulatory requirements affecting our GHG they are not material and it is not practical to collect this data. emissions, we use a carbon cost when evaluating our plans for large new projects and those for which emissions costs would be a material part of the project. In industrialized countries, this is currently $40 per tonne of CO2 equivalent, and we also stress test at a carbon price of $80 per tonne.

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Managing our environmental and We aim to recruit our workforce from the community or country in Strategic report – performance which we operate. In Angola, for example, around 88% of our workforce social impacts is Angolan. We assess potential impacts through the We contributed $89.5 million in social investment in 2017. One area life of our operations. in which we focus our investment is education. We support science, technology, engineering and mathematics programmes in countries such as the UK, the US and India, to encourage more young people to consider careers in these ﬁelds.

See bp.com/society for more information on how we generate value to society.

Tax and transparency BP is committed to complying with tax laws in a responsible manner and having open and constructive relationships with tax authorities. We paid $5.8 billion in income and production taxes to governments in 2017 (2016 $2.2 billion, 2015 $3.5 billion). We support transparency in the flow of revenue from oil and gas activities to governments. Transparency helps citizens hold public authorities to account for the way they use funds received through taxes and other agreements. We are a founding member of the Extractive Industries’ Transparency Initiative (EITI), which requires disclosure of payments made to and Above: Uncovering a cultural heritage site in Azerbaijan. received by governments in relation to oil, gas and mining activity. As part of the EITI, we work with governments, non-governmental In planning our projects, we identify actions we need to take to address organizations and international agencies to improve the transparency of potential impacts from our activities in areas such as labour rights, payments to governments. In 2017 we supported EITI implementation water use and protected areas. If our screening process shows that in a number of countries where we operate, including Iraq and Trinidad a proposed project could enter or affect an international protected area, & Tobago. we work to identify ways to first avoid, and if needed, minimize and In addition, we disclose information on payments to governments mitigate any potential impact. for our upstream activities on a country-by-country and project basis We consult with stakeholders who may be affected by our activities. For under national reporting regulations such as those in effect in the UK. example, we met with more than 2,600 community members in We also make payments to governments in connection with other parts Mauritania and Senegal over the course of 2017 to discuss issues of our business – such as the transporting, trading, manufacturing and ranging from local employment to our ability to respond to an oil spill. marketing of oil and gas. These consultations will contribute to an environmental and social See bp.com/tax for our approach to tax and our payments to impact assessment in 2018. governments report. Every year, our major operating sites review their performance and set local improvement targets. These can include measures on flaring, Human rights greenhouse gas emissions and the use of water. We are committed to respecting the rights and Value to society dignity of all people when conducting business. We aim to have a positive and enduring impact We respect internationally recognized human rights as set out in the on the communities in which we operate. International Bill of Human Rights and the International Labour Organization’s Declaration on Fundamental Principles and Rights at We contribute to economies through our core business activities, such Work. These include the rights of our workforce and those living in as helping to develop national and local suppliers, and through the taxes communities affected by our activities. we pay to governments. Additionally, our social investments support We set out our commitments in our human rights policy and our code communities’ efforts to increase their incomes and improve standards of conduct. Our operating management system contains guidance on of living. respecting the rights of workers and community members. As one example, we are equipping women living in rural areas of Turkey We are aligning our business processes with the UN Guiding Principles, close to the Baku-Tbilisi-Ceyhan pipeline with entrepreneurial skills so which set out how companies should prevent, address and remedy they can set up their own businesses, or enhance existing ones. In 2017 human rights impacts. Our current focus areas include the recruitment, we provided training to more than 250 women and supported around working and living conditions of contracted workforces at our sites, 25 start-up companies. responsible security, community grievance mechanisms and channels We run programmes to build the skills of businesses and develop the for workforces to raise their concerns. local supply chain in a number of locations. For example, our enterprise In 2017 our actions included: development programme in Azerbaijan enables local companies to build • Reviewing the risk of modern slavery in prioritized locations. their skills so that they can improve their competitiveness when bidding for work with international firms. And in Indonesia we have set a target • Delivering additional human rights training specifically on of sourcing 38% of our services and project materials from local modern slavery. suppliers for our Tangguh expansion project.

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• Publishing our expectations of suppliers on the way they do business Hydraulic fracturing with and for BP in line with our code of conduct, including respect for Some stakeholders have raised concerns about the potential human rights. environmental and community impacts of hydraulic fracturing during • Continued implementation of the Voluntary Principles on Security and unconventional gas development. BP seeks to apply responsible well Human Rights, with periodic internal assessments to identify areas for design practices to mitigate these risks. For example, our wells are improvement. designed, constructed, operated and decommissioned to prevent gas and hydraulic fracturing fluids entering underground aquifers such as See bp.com/humanrights for more information about our approach to human rights. drinking water sources. We list the chemicals that we use at each site. We also submit data Environment on their use in our hydraulically fractured wells in the US, to the We work to avoid, minimize and mitigate extent allowed by our suppliers, who own the chemical formulas, at fracfocus.org or other state-designated websites. environmental impacts from our activities. Ethical conduct We consider local conditions when determining which issues would benefit from the greatest focus. At a site close to communities, for Our code of conduct defines our commitment example, the immediate concern may be air quality, whereas a remote to high ethical standards. desert site may require greater consideration of water management issues. See pages 48-49 for information on our oil spill performance and Our values preparedness. Our values of safety, respect, excellence, courage and one team, Water represent the qualities and actions we wish to see in BP. They guide the way we do business and the decisions we make. We use these values Each year we review water risks in our portfolio – considering the local as part of our recruitment, promotion and individual performance availability, quantity, quality and regulatory requirements. We assess assessment processes. different approaches for optimizing freshwater withdrawals and wastewater treatment performance. In our gas operations in Oman – an See bp.com/values for more information. area where the availability of fresh water is extremely scarce – we use saline water from a local underground aquifer. We desalinate the water The BP code of conduct and use it for drilling and hydraulic fracturing. We continue to look for Our code of conduct is based on our values and sets clear expectations for ways in which we can reduce our demand, such as reusing treated how we work at BP. It applies to all BP employees and members of the board. wastewater. Employees, contractors or other third parties who have a question See bp.com/water for information about our approach to water. about our code of conduct or see something that they feel is unsafe or unethical can discuss these with their managers, supporting teams, Air quality works councils (where relevant) or through OpenTalk, a confidential We put measures in place to manage our air emissions, in line with helpline operated by an independent company. regulations and guidelines designed to protect the health of local A total of 817 concerns or enquiries were received through OpenTalk in communities and the environment. We are introducing six liquefied 2017 (2016 956, 2015 1,158). The most common concerns related to the natural gas (LNG) carriers with energy efficiency enhancements to our people section of the code. This includes treating people fairly, with shipping fleet. They are designed to use approximately 25% less fuel dignity and giving everyone equal opportunity; creating a respectful, and emit less nitrogen oxides than our older LNG ships. harassment-free workplace; and protecting privacy and confidentiality. We take steps to identify and correct areas of non-conformance and take disciplinary action where appropriate. In 2017 our businesses dismissed 70 employees for non-conformance with our code of conduct or unethical behaviour (2016 109, 2015 132). This excludes dismissals of staff employed at our retail service stations.

See bp.com/codeofconduct for more information. Anti-bribery and corruption We operate in some of the world’s highest risk countries from an anti-bribery and corruption perspective. We have a responsibility to our employees, our shareholders and to the countries and communities in which we do business to be ethical and lawful in all our work. Our code of conduct explicitly prohibits engaging in bribery or corruption in any form. Our group-wide anti-bribery and corruption policy and procedures include measures and guidance to assess risks, understand relevant laws and report concerns. They apply to all BP-operated businesses. We provide training to employees appropriate to the nature or location of their role. A total of 12,500 employees completed anti-bribery and corruption training in 2017 (2016 13,000, 2015 13,500).

Above: Engineers on a wind turbine at our Sherbino wind farm in Texas.

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Our people Strategic report – performance BP’s success depends on having a talented and diverse workforce.

BP employees Number of employees at 31 Decembera 2017 2016 2015 Upstream 17,700 18,700 21,700 Downstream 42,100 41,800 44,800 Other businesses and corporate 14,200 14,000 13,300 Total 74,000 74,500 79,800 Service station staff 16,800 16,200 15,600 Agricultural, operational and seasonal workers in Brazil 4,300 4,600 4,800 Total excluding service station staff and workers in Brazil 52,900 53,700 59,400 Above: A team meeting at the BP ofﬁce in Baku, Azerbaijan. a Reported to the nearest 100. For more information see Financial Statements – Note 33. We have reshaped our organization over the past few years to adapt to We assess any exposure to bribery and corruption risk when working a lower oil price environment. Our focus is on retaining the skills we with suppliers and business partners. Where appropriate, we put in require to maintain safe and reliable operations while developing and place a risk mitigation plan or we reject them if we conclude that risks attracting individuals with capabilities we judge important to growing are too high. the business in new ways. We also conduct anti-bribery compliance audits on selected suppliers The group people committee helps facilitate the group chief executive’s when contracts are in place. For example, our upstream business oversight of policies relating to employees. In 2017 the committee conducts audits for a number of suppliers in higher-risk regions to discussed remuneration policy, progress in our diversity and inclusion assess their compliance with our anti-bribery and corruption contractual programme, modernizing and strengthening our attractiveness as an requirements. Potential areas for improvement are shared with our employer, and long-term people priorities. suppliers and we often work with them to ﬁnd the best ways to strengthen their procedures, such as improvements to training and Attraction and retention management of subcontractors. We issued a total of 36 audit reports in A total of 314 graduates joined BP in 2017 (2016 231, 2015 298). We 2017 (2016 25, 2015 35). We take corrective action with suppliers and were named the UK’s leading recruiter in the oil and gas sector in The business partners who fail to meet our expectations, which may include Times newspaper’s Graduate Employer rankings in 2017. terminating contracts. We invest in our employees’ development – with an average spend of Lobbying and political donations around $3,300 per person. This includes online and classroom-based We prohibit the use of BP funds or resources to support any political courses and resources, supported by a wide range of on-the-job learning candidate or party. and mentoring programmes.

We recognize the rights of our employees to participate in the political Diversity process and these rights are governed by the applicable laws in the countries in which we operate. For example, in the US we provide We are committed to making our workplaces reﬂect the communities in administrative support for the BP employee political action committee which we are based. (PAC), which is a non-partisan committee that encourages voluntary The gender balance across BP as a whole is steadily improving, with employee participation in the political process. All BP employee PAC women representing 34% of BP’s total population (2016 33%, 2015 contributions are reviewed for compliance with federal and state law and 32%). We are working to improve these numbers further by, for are publicly reported in accordance with US election laws. example, developing mentoring, sponsorship and coaching programmes We work with governments on a range of issues that are relevant to to help more women advance. That said, we still have work to do at the our business, from regulatory compliance, to understanding our tax executive and senior levels. liabilities, to collaborating on community initiatives. The way in which we We have published 2017 data on our gender pay gap in the UK at interact with those governments depends on the legal and regulatory bp.com/ukgenderpaygap. framework in each country.

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At the end of 2017 there were three female directors (2016 3, 2015 3) Share ownership on our board of 13. Our nomination committee remains mindful of We encourage employee share ownership and have a number of diversity when considering potential candidates. employee share plans in place. For example, under our ShareMatch For more information on the composition of our board, see page 73. plan, which operates in more than 50 countries, we match BP shares purchased by our employees. We also operate a group-wide Workforce by gender Members as at 31 December Male Female Female % discretionary share plan, which allows employee participation at Board directors 10 3 23 different levels globally and is linked to the company’s performance. Group leaders 310 84 21 Subsidiary directors 1,155 218 16 All employees 48,795 25,239 34

We are also committed to increasing the national diversity of our workforce to reﬂect the countries in which we operate. A total of 24% of our group leaders came from countries other than the UK and the US in 2017 (2016 23%, 2015 21%).

Inclusion Our goal is to create an environment of inclusion and acceptance, where everyone is treated equally and without discrimination. To promote an inclusive culture we provide leadership training and support employee-run advocacy groups in areas such as gender, sexual orientation and parenting. As well as bringing employees together, these groups support BP’s recruitment programmes and provide feedback on the potential impact of policy changes. Each group is sponsored by a senior executive. We aim to ensure equal opportunity in recruitment, career development, promotion, training and reward for all employees – regardless of ethnicity, national origin, religion, gender, age, sexual orientation, marital status, disability, or any other characteristic protected by applicable laws. Where existing employees become disabled, our policy is to provide continued employment, training and occupational assistance where needed.

Employee engagement Managers hold regular team and one-to-one meetings with their staff, complemented by formal processes through works councils in parts of Europe. We regularly communicate with employees on factors that affect BP’s performance, and seek to maintain constructive relationships with labour unions formally representing our employees. Each year, we survey our employees to gauge how they feel about BP. The overall employee engagement score in 2017 was 73% – up from two years ago when we saw a decline which coincided with the uncertainties of a low oil price environment. Pride in working for BP increased to 75% in 2017, compared with 73% in 2016 and 68% in 2015. Scores for diversity, inclusion and respect also recorded strong improvements. We are considering how to address employee dissatisfaction with opportunities to develop their skills – which had lower scores in 2017.

54 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 58 of 371 How we manage risk

BP manages, monitors and reports on the principal risks and Oversight and governance – throughout the year functional Strategic report – performance uncertainties that can impact our ability to deliver our strategy of leadership, the executive team, the board and relevant committees meeting the world’s energy needs responsibly while creating provide oversight of how significant risks to BP are identified, assessed long-term shareholder value. These risks are described in the Risk and managed. They help to ensure that risks are governed by relevant factors on page 57. policies and are managed appropriately. Our management systems, organizational structures, processes, BP’s group risk team analyses the group’s risk profile and maintains standards, code of conduct and behaviours together form a system of the group risk management system. Our group audit team provides internal control that governs how we conduct the business of BP and independent assurance to the group chief executive and board as to manage associated risks. whether the group’s system of internal control is adequately designed and operating effectively to respond appropriately to the risks that are BP’s risk management system significant to BP. BP’s risk management system and policy is designed to be a consistent and clear framework for managing and reporting risks from the group’s Risk oversight and governance operations to the board. The system seeks to avoid incidents and Key risk oversight and governance committees include the following: maximize business outcomes by allowing us to: • Understand the risk environment, identify the specific risks and assess Executive committees the potential exposure for BP. • Executive team meeting – for strategic and commercial risks. • Determine how best to deal with these risks to manage overall • Group operations risk committee – for health, safety, security, potential exposure. environment and operations integrity risks. • Manage the identified risks in appropriate ways. • Group financial risk committee – for finance, treasury, trading • Monitor and seek assurance of the effectiveness of the management and cyber risks. of these risks and intervene for improvement where necessary. • Group disclosure committee – for financial reporting risks. • Report up the management chain and to the board on a periodic basis • Group people committee – for employee risks. on how significant risks are being managed, monitored, assured and • Group ethics and compliance committee – for legal and regulatory the improvements that are being made. compliance and ethics risks. • Resource commitment meeting – for investment decision risks. Our risk management activities

Board and its committees Day-to-day risk Business and Oversight and management strategic risk governance • BP board. management • Audit committee. • Safety, ethics and environment assurance committee. Identify, Plan, manage Set policy and manage and performance monitor principal • Geopolitical committee. report risks and assure risks

See Board activity in 2017 on page 72, committee reports on pages 77-89 and Risk management and internal control on page 113. Facilities, Business Executive and Board assets and segments and corporate Risk management processes operations functions functions As part of BP’s annual planning process, we review the group’s principal risks and uncertainties. These may be updated throughout the year in response to changes in internal and external circumstances.

We aim for a consistent basis of measuring risk to allow comparison on a Day-to-day risk management – management and staff at our facilities, like-for-like basis, taking into account potential impact and likelihood, and assets and functions seek to identify and manage risk, promoting safe, to inform how we prioritize specific risk management activities and compliant and reliable operations. BP requirements, which take into invest resources to manage them. account applicable laws and regulations, underpin the practical plans developed to help reduce risk and deliver these safe, compliant and reliable operations as well as greater efficiency and sustainable financial results. Business and strategic risk management – our businesses and functions integrate risk management into key business processes such as strategy, planning, performance management, resource and capital allocation, and project appraisal. We do this by using a standard framework for collating risk data, assessing risk management activities, making further improvements and planning new activities.

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Our risk profile Safety and operational risks The nature of our business operations is long term, resulting in many Process safety, personal safety and environmental risks of our risks being enduring in nature. Nonetheless, risks can develop The nature of the group’s operating activities exposes us to a wide range and evolve over time and their potential impact or likelihood may vary of significant health, safety and environmental risks such as incidents in response to internal and external events. associated with releases of hydrocarbons when drilling wells, operating facilities and transporting hydrocarbons. We identify high priority risks for particular oversight by the board and its various committees in the coming year. Those identified for 2018 are Our operating management system helps us manage these risks and listed in this section. These may be updated throughout the year in drive performance improvements. It sets out the rules and principles response to changes in internal and external circumstances. The which govern key risk management activities such as inspection, oversight and management of other risks, for example technological maintenance, testing, business continuity and crisis response planning change or the transition to a lower carbon economy, is undertaken in the and competency development. In addition, we conduct our drilling normal course of business and in the executive team, the board and activity through a global wells organization in order to promote a relevant committees. consistent approach for designing, constructing and managing wells. There can be no certainty that our risk management activities will Security mitigate or prevent these, or other risks, from occurring. Hostile acts such as terrorism or piracy could harm our people and disrupt our operations. We monitor for emerging threats and Further details of the principal risks and uncertainties we face are set vulnerabilities to manage our physical and information security. out in Risk factors on page 57. Our central security team provides guidance and support to our Risks for particular oversight by the board and its businesses through a network of regional security advisers who advise committees in 2018 and conduct assurance with respect to the management of security risks affecting our people and operations. We continue to monitor The risks for particular oversight by the board and its committees in threats globally and maintain disaster recovery, crisis and business 2018 have been reviewed and updated. These risks remain the same continuity management plans. as for 2017. Compliance and control risks Strategic and commercial risks Ethical misconduct and legal or regulatory non-compliance Financial liquidity Ethical misconduct or breaches of applicable laws or regulations could External market conditions can impact our financial performance. Supply damage our reputation, adversely affect operational results and and demand and the prices achieved for our products can be affected by shareholder value, and potentially affect our licence to operate. a wide range of factors including political developments, global economic conditions and the influence of OPEC. Our code of conduct and our values and behaviours, applicable to all employees, are central to managing this risk. Additionally, we have We seek to manage this risk through BP’s diversified portfolio, our various group requirements and training covering areas such as financial framework, liquidity stress testing, regular reviews of market anti-bribery and corruption, anti-money laundering, competition/ conditions and our planning and investment processes. anti-trust law and international trade regulations. We seek to keep Geopolitical abreast of new regulations and legislation and plan our response to The diverse locations of our operations around the world expose us to them. We offer an independent confidential helpline, OpenTalk, for a wide range of political developments and consequent changes to employees, contractors and other third parties. Under the terms of the the economic and operating environment. Geopolitical risk is inherent 2014 settlement with the US Environmental Protection Agency, an to many regions in which we operate, and heightened political or ethics monitor is reviewing and providing recommendations concerning social tensions or changes in key relationships could adversely affect BP’s ethics and compliance programme. the group. Trading non-compliance We seek to manage this risk through development and maintenance of In the normal course of business, we are subject to risks around our relationships with governments and stakeholders and by becoming trading activities which could arise from shortcomings or failures in our trusted partners in each country and region. In addition, we closely systems, risk management methodology, internal control processes or monitor events and implement risk mitigation plans where appropriate. employees. Cyber security We have specific operating standards and control processes to manage The targeted and indiscriminate threats to the security of our digital these risks, including guidelines specific to trading, and seek to monitor infrastructure continue to evolve rapidly and are increasingly prevalent compliance through our dedicated compliance teams. We also seek to across industries worldwide. The oil and gas industry is subject to maintain a positive and collaborative relationship with regulators and the evolving risks from a variety of cyber threat actors, including nation industry at large. states, criminals, terrorists, hacktivists and insiders. A cyber security breach could disrupt our business, injure people, harm the environment or our assets, or result in legal or regulatory breaches. We seek to manage this risk through a range of measures, which include cyber security standards, security protection tools, ongoing detection and monitoring of threats and testing of cyber response and recovery procedures. We collaborate closely with governments, law enforcement agencies and industry peers to understand and respond to new and emerging cyber threats. We build awareness with our staff, share information on incidents with leadership for continuous learning and conduct regular exercises including with the executive team to test response and recovery procedures.

56 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 60 of 371 Risk factors

The risks discussed below, separately or in combination, could have An event such as a significant operational incident, legal proceedings Strategic report – performance a material adverse effect on the implementation of our strategy, our or a geopolitical event in an area where we have significant activities, business, financial performance, results of operations, cash flows, could reduce our credit ratings. This could potentially increase financing liquidity, prospects, shareholder value and returns and reputation. costs and limit access to financing or engagement in our trading activities on acceptable terms, which could put pressure on the group’s liquidity. Credit rating downgrades could also trigger a requirement for Strategic and commercial risks the company to review its funding arrangements with the BP pension Prices and markets – our financial performance is impacted by trustees and may cause other impacts on financial performance. In the fluctuating prices of oil, gas and refined products, technological change, event of extended constraints on our ability to obtain financing, we could exchange rate fluctuations, and the general macroeconomic outlook. be required to reduce capital expenditure or increase asset disposals in order to provide additional liquidity. See Liquidity and capital resources Oil, gas and product prices are subject to international supply and on page 251 and Financial statements – Note 27. demand and margins can be volatile. Political developments, increased supply from new oil and gas sources, technological change, global Joint arrangements and contractors – varying levels of control economic conditions and the influence of OPEC can impact supply and over the standards, operations and compliance of our partners, demand and prices for our products. Decreases in oil, gas or product contractors and sub-contractors could result in legal liability and prices could have an adverse effect on revenue, margins, profitability reputational damage. and cash flows. If significant or for a prolonged period, we may have to write down assets and re-assess the viability of certain projects, which We conduct many of our activities through joint arrangements , may impact future cash flows, profit, capital expenditure and ability to associates or with contractors and sub-contractors where we may maintain our long-term investment programme. Conversely, an increase have limited influence and control over the performance of such in oil, gas and product prices may not improve margin performance as operations. Our partners and contractors are responsible for the there could be increased fiscal take, cost inflation and more onerous adequacy of the resources and capabilities they bring to a project. If terms for access to resources. The profitability of our refining and these are found to be lacking, there may be financial, operational or petrochemicals activities can be volatile, with periodic over-supply or safety risks for BP. Should an incident occur in an operation that BP supply tightness in regional markets and fluctuations in demand. participates in, our partners and contractors may be unable or unwilling to fully compensate us against costs we may incur on their behalf or on Exchange rate fluctuations can create currency exposures and impact behalf of the arrangement. Where we do not have operational control of underlying costs and revenues. Crude oil prices are generally set in US a venture, we may still be pursued by regulators or claimants in the dollars, while products vary in currency. Many of our major project event of an incident. development costs are denominated in local currencies, which may be subject to fluctuations against the US dollar. Digital infrastructure and cyber security – breach of our digital security or failure of our digital infrastructure including loss or misuse of Access, renewal and reserves progression – our inability to access, sensitive information could damage our operations, increase costs and renew and progress upstream resources in a timely manner could damage our reputation. adversely affect our long-term replacement of reserves. The oil and gas industry is subject to fast-evolving risks from cyber threat Delivering our group strategy depends on our ability to continually actors, including nation states, criminals, terrorists, hacktivists and replenish a strong exploration pipeline of future opportunities to access insiders. A breach or failure of our digital infrastructure – including control and produce oil and natural gas. Competition for access to investment systems – due to breaches of our cyber defences, or those of third opportunities, heightened political and economic risks in certain parties, negligence, intentional misconduct or other reasons, could countries where significant hydrocarbon basins are located and seriously disrupt our operations. This could result in the loss or misuse of increasing technical challenges and capital commitments may adversely data or sensitive information, injury to people, disruption to our business, affect our strategic progress. This, and our ability to progress upstream harm to the environment or our assets, legal or regulatory breaches and resources and sustain long-term reserves replacement, could impact legal liability. Furthermore, the rapid detection of attempts to gain our future production and financial performance. unauthorized access to our digital infrastructure, often through the use of sophisticated and co-ordinated means, is a challenge and any delay Major project delivery – failure to invest in the best opportunities or or failure to detect could compound these potential harms. These could deliver major projects successfully could adversely affect our financial result in significant costs including the cost of remediation or performance. reputational consequences. We face challenges in developing major projects, particularly in Climate change and the transition to a lower carbon economy – geographically and technically challenging areas. Operational challenges policy, legal, regulatory, technology and market change related to the and poor investment choice, efficiency or delivery at any major project issue of climate change could increase costs, reduce demand for our that underpins production or production growth could adversely affect products, reduce revenue and limit certain growth opportunities. our financial performance. Changes in laws, regulations, policies, obligations, social attitudes and Geopolitical – exposure to a range of political developments and customer preferences relating to the transition to a lower carbon consequent changes to the operating and regulatory environment economy could have a cost impact on our business, including increasing could cause business disruption. compliance and litigation costs, and could impact our strategy. Such We operate and may seek new opportunities in countries and regions changes could lead to constraints on production and supply and access where political, economic and social transition may take place. to new reserves. Technological improvements or innovations that Political instability, changes to the regulatory environment or taxation, support the transition to a lower carbon economy, and customer international sanctions, expropriation or nationalization of property, preferences or regulatory incentives related to such changes that alter civil strife, strikes, insurrections, acts of terrorism and acts of war may fuel or power choices, such as towards low emission energy sources, disrupt or curtail our operations or development activities. These may could impact demand for oil and gas. Depending on the nature and in turn cause production to decline, limit our ability to pursue new speed of any such changes and our response, this could adversely opportunities, affect the recoverability of our assets or cause us to affect the demand for our products, investor sentiment, our financial incur additional costs, particularly due to the long-term nature of many performance and our competitiveness. See Climate change on of our projects and significant capital expenditure required. page 50. Events in or relating to Russia, including trade restrictions and other Competition – inability to remain efficient, maintain a high quality sanctions, could adversely impact our income and investment in or portfolio of assets, innovate and retain an appropriately skilled workforce relating to Russia. Our ability to pursue business objectives and to could negatively impact delivery of our strategy in a highly competitive recognize production and reserves relating to these investments could market. also be adversely impacted. Our strategic progress and performance could be impeded if we are Liquidity, financial capacity and financial, including credit, unable to control our development and operating costs and margins, or exposure – failure to work within our financial framework could impact to sustain, develop and operate a high-quality portfolio of assets our ability to operate and result in financial loss. efficiently. We could be adversely affected if competitors offer superior terms for access rights or licences, or if our innovation in areas such as Failure to accurately forecast or work within our financial framework exploration, production, refining, manufacturing, renewable energy or could impact our ability to operate and result in financial loss. Trade and new technologies lags the industry. Our performance could also be other receivables, including overdue receivables, may not be recovered negatively impacted if we fail to protect our intellectual property. and a substantial and unexpected cash call or funding request could disrupt our financial framework or overwhelm our ability to meet our obligations.

BP Annual Report and Form 20-F 2017 See Glossary 57 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 61 of 371

Our industry faces increasing challenge to recruit and retain skilled and Compliance and control risks experienced people in the fields of science, technology, engineering and mathematics. Successful recruitment, development and retention of US government settlements – failure to comply with the terms of our specialist staff is essential to our plans. settlement with the US Environmental Protection Agency related to the Gulf of Mexico oil spill may expose us to further penalties or liabilities or Crisis management and business continuity – failure to address an could result in suspension or debarment of certain BP entities. incident effectively could potentially disrupt our business. Failure to satisfy the requirements or comply with the terms of the Our business activities could be disrupted if we do not respond, or are administrative agreement with the US Environmental Protection Agency perceived not to respond, in an appropriate manner to any major crisis or (EPA), under which BP agreed to a set of safety and operations, ethics if we are not able to restore or replace critical operational capacity. and compliance and corporate governance requirements, could result in suspension or debarment of certain BP entities. Insurance – our insurance strategy could expose the group to material uninsured losses. Regulation – changes in the regulatory and legislative environment could increase the cost of compliance, affect our provisions and limit our BP generally purchases insurance only in situations where this is legally access to new growth opportunities. and contractually required. Some risks are insured with third parties and reinsured by group insurance companies. Uninsured losses could have a Governments that award exploration and production interests may material adverse effect on our financial position, particularly if they arise impose specific drilling obligations, environmental, health and safety at a time when we are facing material costs as a result of a significant controls, controls over the development and decommissioning of a field operational event which could put pressure on our liquidity and cash and possibly, nationalization, expropriation, cancellation or non-renewal flows. of contract rights. Royalties and taxes tend to be high compared with those imposed on similar commercial activities, and in certain jurisdictions there is a degree of uncertainty relating to tax law Safety and operational risks interpretation and changes. Governments may change their fiscal and Process safety, personal safety, and environmental risks – regulatory frameworks in response to public pressure on finances, exposure to a wide range of health, safety, security and environmental resulting in increased amounts payable to them or their agencies. risks could result in regulatory action, legal liability, business interruption, increased costs, damage to our reputation and potentially denial of our Such factors could increase the cost of compliance, reduce our licence to operate. profitability in certain jurisdictions, limit our opportunities for new access, require us to divest or write down certain assets or curtail or Technical integrity failure, natural disasters, extreme weather or a cease certain operations, or affect the adequacy of our provisions for change in its frequency or severity, human error and other adverse pensions, tax, decommissioning, environmental and legal liabilities. events or conditions could lead to loss of containment of hydrocarbons Potential changes to pension or financial market regulation could also or other hazardous materials or constrained availability of resources used impact funding requirements of the group. Following the Gulf of Mexico in our operating activities, as well as fires, explosions or other personal oil spill, we may be subjected to a higher level of fines or penalties and process safety incidents, including when drilling wells, operating imposed in relation to any alleged breaches of laws or regulations, which facilities and those associated with transportation by road, sea or could result in increased costs. pipeline. Ethical misconduct and non-compliance – ethical misconduct or There can be no certainty that our operating management system or breaches of applicable laws by our businesses or our employees could other policies and procedures will adequately identify all process safety, be damaging to our reputation, and could result in litigation, regulatory personal safety and environmental risks or that all our operating activities action and penalties. will be conducted in conformance with these systems. See Safety and security on page 47. Incidents of ethical misconduct or non-compliance with applicable laws and regulations, including anti-bribery and corruption and anti-fraud laws, Such events or conditions, including a marine incident, or inability to trade restrictions or other sanctions, or non-compliance with the provide safe environments for our workforce and the public while at recommendations of the ethics monitor appointed under the terms of our facilities, premises or during transportation, could lead to injuries, the EPA settlements, could damage our reputation, result in litigation, loss of life or environmental damage. As a result we could face regulatory action and penalties. regulatory action and legal liability, including penalties and remediation obligations, increased costs and potentially denial of our licence to Treasury and trading activities – ineffective oversight of treasury and operate. Our activities are sometimes conducted in hazardous, remote trading activities could lead to business disruption, financial loss, or environmentally sensitive locations, where the consequences of regulatory intervention or damage to our reputation. such events or conditions could be greater than in other locations. We are subject to operational risk around our treasury and trading Drilling and production – challenging operational environments and activities in financial and commodity markets, some of which are other uncertainties could impact drilling and production activities. regulated. Failure to process, manage and monitor a large number of complex transactions across many markets and currencies while Our activities require high levels of investment and are sometimes complying with all regulatory requirements could hinder profitable conducted in challenging environments such as those prone to natural trading opportunities. There is a risk that a single trader or a group of disasters and extreme weather, which heightens the risks of technical traders could act outside of our delegations and controls, leading to integrity failure. The physical characteristics of an oil or natural gas field, regulatory intervention and resulting in financial loss, fines and and cost of drilling, completing or operating wells is often uncertain. We potentially damaging our reputation. See Financial statements – may be required to curtail, delay or cancel drilling operations because of Note 27. a variety of factors, including unexpected drilling conditions, pressure or irregularities in geological formations, equipment failures or accidents, Reporting – failure to accurately report our data could lead to regulatory adverse weather conditions and compliance with governmental action, legal liability and reputational damage. requirements. External reporting of financial and non-financial data, including reserves Security – hostile acts against our staff and activities could cause harm estimates, relies on the integrity of systems and people. Failure to report to people and disrupt our operations. data accurately and in compliance with applicable standards could result in regulatory action, legal liability and damage to our reputation. Acts of terrorism, piracy, sabotage and similar activities directed against our operations and facilities, pipelines, transportation or digital infrastructure could cause harm to people and severely disrupt operations. Our activities could also be severely affected by conflict, civil strife or political unrest. Product quality – supplying customers with off-specification products could damage our reputation, lead to regulatory action and legal liability, and impact our financial performance. Failure to meet product quality standards could cause harm to people and the environment, damage our reputation, result in regulatory action and legal liability, and impact financial performance.

The Strategic report was approved by the board and signed on its behalf by David J Jackson, company secretary on 29 March 2018.

58 See Glossary BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 62 of 371 Corporate 60 Board of directors governance 66 Executive team 68 Executive management teams

70 Introduction from the chairman 71 Governance framework 71 Board and committee attendance

72 Board activity in 2017 72 Role of the board 73 Skills and expertise 73 Diversity 73 Independence 73 Appointment and time commitment 74 Training and induction Corporate governance 74 Board evaluation 75 Site visits

76 Shareholder engagement 76 Institutional investors 76 Private investors 76 AGM 76 UK Corporate Governance Code compliance

76 International advisory board

77 Committee reports 77 Audit committee 84 Safety, ethics and environment assurance committee 86 Remuneration committee 87 Geopolitical committee 88 Chairman’s committee 89 Nomination committee

90 Directors’ remuneration report 93 Summary of pay and performance 94 Summary of policy approach 95 Single ﬁgure table 96 Alignment with strategy 98 Pay and performance for 2017 102 Implementation of policy for 2018 105 Stewardship 107 Non-executive directors 108 Executive directors’ interests 110 Policy summary tables

113 Directors’ statements 113 Statement of directors’ responsibilities 113 Risk management and internal control 114 Longer-term viability 114 Going concern 114 Fair, balanced and understandable

BP Annual Report and Form 20-F 2017 59 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 63 of 371 Board of directors See BP’s board governance principles relating As at 29 March 2018 to director independence on page 275.

Carl-Henric Svanberg Bob Dudley Brian Gilvary Nils Andersen Chairman Group chief executive Chief ﬁnancial ofﬁcer Independent non-executive Chair of the nomination and director chairman’s committees; attends Member of the audit and a SEEA , remuneration and chairman’s committees geopolitical committees

Paul Anderson Alan Boeckmann Admiral Frank Bowman Ian Davis Independent non-executive Independent non-executive Independent non-executive Senior independent director director director non-executive director Member of the SEEA, geopolitical Chair of SEEA committee; member Member of the SEEA, Member of the remuneration, and chairman’s committees of the remuneration, nomination geopolitical and chairman’s geopolitical, nomination and and chairman’s committees committees chairman’s committees

Professor Dame Ann Dowling Melody Meyer Brendan Nelson Paula Rosput Reynolds Independent non-executive Independent non-executive Independent non-executive Independent non-executive director director director director Chair of the remuneration Member of the SEEA, geopolitical Chair of the audit committee; Member of the audit, chairman’s committee; member of the and chairman’s committees member of the chairman’s and and remuneration committees SEEA, nomination and remuneration committees chairman’s committees

Sir John Sawers David Jackson Independent non-executive Company secretary director Chair of the geopolitical committee; member of the SEEA, nomination and chairman’s committees a Safety, ethics and environment assurance

60 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 64 of 371

Career Carl-Henric Svanberg Bob Dudley became group chief executive on 1 October 2010. Chairman Bob joined Amoco Corporation in 1979, working in a variety of Tenure engineering and commercial posts. Between 1994 and 1997 he worked Appointed 1 September 2009 on corporate development in Russia. In 1997 he became general Board and committee activities manager for strategy for Amoco and in 1999, following the merger Chair of the nomination and chairman’s committees; attends the safety, between BP and Amoco, was appointed to a similar role in BP. ethics and environment assurance, remuneration and geopolitical Between 1999 and 2000 he was executive assistant to the group committees chief executive, subsequently becoming group vice president for BP’s Outside interests renewables and alternative energy activities. In 2002 he became group • Chairman of AB Volvo vice president responsible for BP’s upstream businesses in Russia, the Caspian region, Angola, Algeria and Egypt. Age 65 Nationality Swedish From 2003 to 2008 he was president and chief executive officer of Corporate governance TNK-BP. On his return to BP in 2009, he was appointed to the BP board Career and oversaw the group’s activities in the Americas and Asia. Between Carl-Henric Svanberg became chairman of the BP board on 1 January 2010. 23 June and 30 September 2010, he served as the president and chief He spent his early career at Asea Brown Boveri and the Securitas Group, executive officer of BP’s Gulf Coast Restoration Organization in the US. before moving to the Assa Abloy Group as president and chief executive He was appointed a director of Rosneft in March 2013 following BP’s officer. acquisition of a stake in Rosneft. From 2003 until December 2009, he was president and chief executive Relevant skills and experience officer of Ericsson, also serving as the chairman of Sony Ericsson Bob Dudley has spent his whole career in the oil and gas industry. As group Mobile Communications AB. He was a non-executive director of chief executive, Bob has transformed BP into a safer, stronger and simpler Ericsson between 2009 and 2012. He was appointed chairman and a business. This approach, governed by a consistent set of values, has guided member of the board of AB Volvo in April 2012. BP to a position of greater resilience, enabling it to continue delivering results in an uncertain economic environment. Bob has demonstrated excellent He is a member of the External Advisory Board of the Earth Institute at leadership and vision throughout. Bob continues to lead the development Columbia University and a member of the Advisory Board of Harvard of the group’s strategy, as we adapt to the challenges of the transition to a Kennedy School. He is also the recipient of the King of Sweden’s medal lower carbon economy. Under Bob’s leadership, BP successfully delivered for his contribution to Swedish industry. seven major projects in 2017. Relevant skills and experience Bob Dudley’s performance has been considered and evaluated by the Carl-Henric Svanberg is a highly experienced leader of global chairman’s committee. corporations. He has served as chief executive officer and chairman to several high profile businesses, leading them through both periods of growth and restructuring. These experiences bring not only a deep Brian Gilvary understanding of international strategic and commercial issues, but the Chief financial officer skills to co-ordinate the diverse range of knowledge and perspectives Tenure provided by the board. He therefore enables the board to present Appointed to the board 1 January 2012 clear and united leadership on behalf of shareholders. Carl-Henric has successfully led the board for the past eight years and has announced Outside interests his intention to stand down before the AGM in 2019. • Non-executive director and member of audit committee of L’Air Liquide Carl-Henric’s performance has been evaluated by the chairman’s • Non-executive director and vice chair of audit committee committee, led by Ian Davis. of the Navy Board • Vice chair of the 100 Group Committee Bob Dudley • Member of Trilateral Commission • Visiting professor at Manchester University Group chief executive • Great Britain Age Group triathlete Tenure Age 56 Nationality British Appointed to the board 6 April 2009 Outside interests Career • Fellow of the Royal Academy of Engineering • Non-executive director of Rosneft Brian Gilvary was appointed chief financial officer on 1 January 2012. • Member of the Tsinghua Management University Advisory Board, The role includes responsibility for finance, tax, treasury, mergers Beijing, China and acquisitions, investor relations, audit, global business services, • Member of the BritishAmerican Business International Advisory information technology and procurement. He also has accountability for Board both integrated supply and trading, and the shipping division responsible • Member of the US Business Council for BP's tanker fleet. • Member of the US Business Roundtable Brian joined BP in 1986 after obtaining a PhD in mathematics from the • Member of the UAE/UK CEO Forum University of Manchester. Following a broad range of roles in upstream, • Member of the Emirates Foundation Board of Trustees downstream and trading in Europe and the US, he became downstream’s • Member of the World Economic Forum (WEF) International commercial director from 2002 to 2005. From 2005 until 2009 he was Business Council • Chair of the WEF Oil and Gas Climate Initiative chief executive of the integrated supply and trading function, BP’s • Member of the Russian Geographical Society Board of Trustees commodity trading arm. In 2010 he was appointed deputy group chief financial officer with responsibility for the finance function. Age 62 Nationality American and British

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He was a director of TNK-BP over two periods, from 2003 to 2005 and from 2010 until the sale of the business and BP’s acquisition of Rosneft Paul Anderson equity in 2013. He served on the HM Treasury Financial Management Independent non-executive director Review Board from 2014 to 2017. Tenure Relevant skills and experience Appointed 1 February 2010 Brian Gilvary has spent his entire career with BP. Brian has broad Board and committee activities experience across the group which gives him a deep insight into BP’s Member of the safety, ethics and environment assurance, geopolitical assets and businesses. This knowledge has been invaluable as BP has and chairman’s committees implemented its strategy to transform into a ‘value not volume’ based business where trading is a key creator of value. Outside interests No external appointments His strong understanding of finance and trading has been vital in adjusting capital structures and operational costs while ensuring the group continues Age 73 Nationality American to be capable of meeting new opportunities. Brian has been at the centre of the group’s work on addressing cyber risk. Career Brian Gilvary’s performance has been evaluated by the group chief Paul Anderson was formerly chief executive at BHP Billiton and executive and considered by the chairman’s committee. Duke Energy, where he also served as chairman of the board. Having previously been chief executive officer and managing director of BHP Limited and then BHP Billiton Limited and BHP Billiton Plc, he rejoined Nils Andersen these latter two boards in 2006 as a non-executive director, retiring in Independent non-executive director January 2010. Previously he served as a non-executive director of BAE Tenure Systems PLC and on a number of boards in the US and Australia, and Appointed 31 October 2016 was also chief executive officer of Pan Energy Corp. Board and committee activities Relevant skills and experience Member of the audit and chairman’s committees Paul Anderson has spent his career in the energy industry working with global organizations, and brings the skills of an experienced chairman Outside interests and chief executive officer to the board. His specific experience of • Non-executive director of Unilever Plc and Unilever NV driving safety-related cultural change throughout a business has • Chairman of Dansk Supermarked Group A/S been invaluable during his tenure as chair of the safety, ethics, and • Chairman of Unifeeder Group A/S environment assurance committee from 2012 to 2016, and he remains • Chairman of Faerch Plast A/S a valuable member of the committee. Age 59 Nationality Danish Paul’s experience of business in the US and its regulatory environment is a great asset to the geopolitical committee. Career Paul Anderson will be retiring from the board at the 2018 AGM in May. Nils Andersen was group chief executive of A.P. Møller-Mærsk from 2007 to June 2016. Prior to this he was executive vice president of Carlsberg A/S and Carlsberg Breweries A/S from 1999 to 2001, Alan Boeckmann becoming president and chief executive officer from 2001 to 2007. Independent non-executive director Previous roles include non-executive director of Inditex S.A. and William Tenure Demant A/S. He has also served as managing director of Union Cervecera, Appointed 24 July 2014 Hannen Brauerei and chief executive officer of the drinks division of Board and committee activities the Hero Group. Nils has been nominated for election as a member Chair of the safety, ethics and environment assurance committee; and chairman of the supervisory board of Akzo Nobel N.V. following his member of the remuneration, nomination and chairman’s committees successful appointment at their AGM in April 2018. Outside interests Nils received his graduate degree from the University of Aarhus. • Non-executive director of Sempra Energy Relevant skills and experience • Non-executive director of Archer Daniels Midland Nils Andersen has extensive experience in consumer goods, retail and Age 69 Nationality American logistics, having led global corporations with integrated operations worldwide. He has substantial skill, knowledge and experience in marketing, brand and reputation issues. He has broad shipping Career and upstream energy industry experience which aligns with BP’s Alan Boeckmann retired as non-executive chairman of Fluor Corporation shipping business. His leadership earlier in his career focused on the in February 2012, ending a 35-year career with the company. Between transformation of businesses, leaner organizations and increasing 2002 and 2011 he held the post of chairman and chief executive officer, competitiveness, as well as increasing transparency and communication having previously been president and chief operating officer from 2001 with stakeholders. Nils’ economics and broad financial background to 2002. His tenure with the company included responsibility for global make him well suited to his role on the audit committee. operations. As chairman and chief executive officer, he refocused the company on engineering, procurement, construction and maintenance services. After graduating from the University of Arizona with a degree in electrical engineering, he joined Fluor in 1974 as an engineer and worked in a variety of domestic and international locations, including South Africa and Venezuela.

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Alan was previously a non-executive director of BHP Billiton and the Relevant skills and experience Burlington Santa Fe Corporation, and has served on the boards of Frank Bowman’s exemplary safety record in running the US Navy’s the American Petroleum Institute, the National Petroleum Council, nuclear submarine program indicates his deep understanding of process the Eisenhower Medical Center and the advisory board of Southern safety and its implementation. Frank makes a substantial contribution to Methodist University’s Cox School of Business. the safety culture within BP. Combined with his speciﬁc knowledge of BP’s safety goals from his work on the BP Independent Safety Review He led the formation of the World Economic Forum’s ‘Partnering Panel and his special interest in climate change, he brings an important Against Corruption’ initiative in 2004. perspective to the board and the SEEAC. He has led the oversight of BP’s Relevant skills and experience compliance with the agreements with the US government stemming from Alan Boeckmann has worked in a wide range of industries including the Deepwater Horizon accident. engineering, construction, chemicals and the energy sector. He has Frank’s experience of the US and global political and regulatory systems is been involved in delivering very large projects particularly in the energy a valuable asset to the geopolitical committee. industry. In his senior roles he directed the focus of global corporations

towards the advanced technology needed to remain competitive Corporate governance in response to the growth of the internet, e-commerce and the Ian Davis globalization of the workforce. At the same time he actively promoted Senior independent non-executive director fairness, transparency, accountability and responsibility in business dealings through the ‘Partnering Against Corruption’ initiative. Tenure Appointed 2 April 2010 This overall experience makes Alan ideal to lead the SEEAC. His remuneration experience on other boards means that he makes a Board and committee activities strong contribution to the remuneration committee. Member of the remuneration, geopolitical, nomination and chairman’s committees Admiral Frank Bowman Outside interests • Chairman of Rolls-Royce Holdings plc Independent non-executive director • Non-executive director of Majid Al Futtaim Holding LLC Tenure • Non-executive director of Johnson & Johnson, Inc. Appointed 8 November 2010 • Non-executive director of Teach for All Board and committee activities Age 67 Nationality British Member of the safety, ethics and environment assurance, geopolitical and chairman’s committees Career Outside interests Ian Davis is senior partner emeritus of McKinsey & Company. He was a • President of Strategic Decisions, LLC partner at McKinsey for 31 years until 2010 and served as chairman and • Director of Morgan Stanley Mutual Funds managing director between 2003 and 2009. • Director of Naval and Nuclear Technologies, LLP Ian has a MA in Politics, Philosophy and Economics from Balliol College, Age 73 Nationality American University of Oxford. Relevant skills and experience Career Ian Davis brings global financial and strategic experience to the board. Frank L Bowman served for more than 38 years in the US Navy, rising to He has worked with and advised global organizations and companies in the rank of Admiral. He commanded the nuclear submarine USS City of a wide variety of sectors including oil and gas and the public sector. He is Corpus Christi and the submarine tender USS Holland. After promotion able to draw on knowledge of diverse issues and outcomes to assist the to flag officer, he served on the joint staff as director of political-military board and its committees. affairs and as the chief of naval personnel. He served over eight years Ian led the board’s oversight of the response in the Gulf and chaired the as director of the Naval Nuclear Propulsion Program where he was Gulf of Mexico committee from its formation in 2010 until it was stood responsible for the operations of more than 100 reactors aboard the down in 2016. He was previously a non-executive director in the Cabinet US Navy’s aircraft carriers and submarines. Office giving him an important perspective on government affairs which After his retirement as an Admiral in 2004, he was president and chief is an asset to both the board and the geopolitical committee. executive officer of the Nuclear Energy Institute until 2008. He served In his role as the senior independent director, Ian is responsible for the on the BP Independent Safety Review Panel and was a member of the annual evaluation of the chairman’s performance and is leading the BP America External Advisory Council. He holds two masters degrees search for the successor to the chairman. in engineering from the Massachusetts Institute of Technology. He was appointed Honorary Knight Commander of the British Empire in 2005. He was elected to the US National Academy of Engineering in 2009. Frank is a member of the US CNA military advisory board and has participated in studies of climate change and its impact on national security, and on future global energy solutions and water scarcity. Additionally he was co-chair of a National Academies study investigating the implications of climate change for naval forces.

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Professor Dame Ann Dowling Melody Meyer Independent non-executive director Independent non-executive director Tenure Tenure Appointed 3 February 2012 Appointed 17 May 2017 Board and committee activities Board and committee activities Chair of the remuneration committee; member of the safety, ethics Member of the safety, ethics and environment assurance, geopolitical and environment assurance, nomination and chairman’s committees and chairman’s committees Outside interests Outside interests • President of the Royal Academy of Engineering • President of Melody Meyer Energy LLC • Deputy vice-chancellor and professor of Mechanical Engineering • Director of the National Bureau of Asian Research at the University of Cambridge • Trustee of Trinity University • Member of the Prime Minister’s Council for Science and Technology • Non-executive director of AbbVie Inc. • Non-executive director of the Department for Business, Energy and • Senior Advisor to Cairn India Limited Industrial Strategy (BEIS) • Non-executive director of National Oilwell Varco, Inc. Age 65 Nationality British Age 60 Nationality American

Career Career Dame Ann Dowling is a deputy vice-chancellor at the University of Melody Meyer started her career with Gulf Oil in Houston. Gulf Oil Cambridge where she was appointed a professor of mechanical later merged with Chevron where Melody remained until her retirement engineering in the department of engineering in 1993. She was head in 2016. of the department of engineering at the university from 2009 to 2014. During her career with Chevron, Melody had key leadership roles in Her research is in fluid mechanics, acoustics and combustion, and she global exploration and production, working on international projects and has held visiting posts at MIT and at Caltech. She chairs BP’s technical operational assignments. In 2004 Melody became the vice president advisory council. for the Gulf of Mexico business unit, and in 2008 became president Dame Ann is a fellow of the Royal Society and the Royal Academy of the Chevron Energy Technology Company. From 2011 Melody was of Engineering and a foreign associate of the US National Academy president of Asia Pacific Exploration and Production, responsible for of Engineering, the Chinese Academy of Engineering and the French the financial and operating performance of the upstream assets in nine Academy of Sciences. She has honorary degrees from 15 universities, countries in Chevron’s Asia Pacific region. Melody was the executive including the University of Oxford, Imperial College London and sponsor of the Chevron Women’s Network and continues as a mentor the KTH Royal Institute of Technology, Stockholm. and advocate for the advancement of women in the industry. She was recognized as a 2009 Trinity Distinguished Alumni, with the BioHouston She was elected President of the Royal Academy of Engineering Women in Science Award, was the ASME Rhodes Petroleum Industry in September 2014 and in December 2015 was appointed to the Leadership Award recipient and in 2018 as an Influential Woman Order of Merit. in Energy. Relevant skills and experience Relevant skills and experience Dame Ann is an internationally respected leader in engineering research Melody Meyer has spent her entire career in the oil and gas industry. and the practical application of new technology in industry. Her The breadth, variety and geographic scope of her experience is contribution in these fields has been widely recognized by universities distinctive. Her career has been marked by a focus on excellence, safety around the world. Her academic background provides balance to the and performance improvement. She has expertise in the execution board and brings a different perspective to the SEEAC and nomination of major capital projects, creation of businesses in new countries, committee. strategic and business planning, merger integration and safe and reliable Dame Ann became chair of the remuneration committee in 2015. operations. Following an extensive consultation, a revised remuneration policy was Melody brings a world class operational perspective to the board, with approved by shareholders at the 2017 AGM. This was a direct result of a deep understanding of the factors influencing safe, efficient and Dame Ann's leadership of the committee. Dame Ann will hand the chair commercially high-performing projects in a global organization. of the committee to Paula Reynolds after the 2018 AGM. Brendan Nelson Independent non-executive director Tenure Appointed 8 November 2010 Board and committee activities Chair of the audit committee; member of the chairman’s and remuneration committees Outside interests • Non-executive director and chairman of the group audit committee of The Royal Bank of Scotland Group plc • Member of the Financial Reporting Review Panel Age 68 Nationality British

64 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 68 of 371

Career Her experience with international and US companies, including several Brendan Nelson is a chartered accountant. He was made a partner of restructuring processes and mergers, gives her insight into strategic and KPMG in 1984. He served as a member of the UK board of KPMG from regulatory issues, which is an asset to the board. 2000 to 2006, subsequently being appointed vice chairman until his Paula joined the remuneration committee in 2017. Paula currently serves retirement in 2010. At KPMG International he held a number of senior as the chair of the remuneration committee of BAE Systems positions including global chairman, banking and global chairman, Ltd and will take the chair of BP’s remuneration committee after the financial services. 2018 AGM. He served for six years as a member of the Financial Services Practitioner Panel and in 2013 was the president of the Institute of Sir John Sawers Chartered Accountants of Scotland. Independent non-executive director Relevant skills and experience Brendan Nelson has completed a wide variety of audit, regulatory and Tenure Appointed 14 May 2015 due-diligence engagements over the course of his career. He played Corporate governance a significant role in the development of the profession’s approach to Board and committee activities the audit of banks in the UK, with particular emphasis on establishing Chair of the geopolitical committee; member of the safety, ethics and auditing standards. He continues to contribute in his role as a member environment assurance, nomination and chairman’s committees of the Financial Reporting Review Panel. Outside interests This wide experience makes him ideally suited to chair the audit • Chairman and partner of Macro Advisory Partners LLP committee and to act as its financial expert. He brings related input • Visiting professor at King’s College London from his role as the chair of the audit committee of a major bank. His • Governor of the Ditchley Foundation specializm in the financial services industry allows him to contribute Age 62 Nationality British insight into the challenges faced by global businesses by regulatory frameworks. Career Brendan led the successful tendering of BP’s audit services and Sir John Sawers spent 36 years in public service in the UK, working on joined the remuneration committee in 2017. foreign policy, international security and intelligence. Sir John was chief of the Secret Intelligence Service, MI6, from 2009 to Paula Rosput Reynolds 2014 – a period of international upheaval and growing security threats, Independent non-executive director as well as closer public scrutiny of the intelligence agencies. Prior to Tenure that, the bulk of his career was in diplomacy, representing the British Appointed 14 May 2015 government around the world and leading negotiations at the UN, in the European Union and in the G8. He was the UK ambassador to the Board and committee activities United Nations (2007-09), political director and main board member Member of the audit and chairman’s committees of the Foreign Office (2003-07), special representative in Iraq (2003), Outside interests ambassador to Egypt (2001-03) and foreign policy adviser to the Prime • Non-executive director of BAE Systems Ltd Minister (1999-01). Earlier in his career, he was posted to Washington, • Non-executive director of TransCanada Corporation South Africa, Syria and Yemen. • Non-executive director of CBRE Group Sir John is now chairman of Macro Advisory Partners, a firm that Age 61 Nationality American advises clients on the intersection of policy, politics and markets. Relevant skills and experience Career Sir John Sawers’ deep experience of international political and Paula Rosput Reynolds is the former chairman, president and chief commercial matters is an asset to the board in navigating the executive officer of Safeco Corporation, a Fortune 500 property and geopolitical issues faced by a modern global company. Sir John brings a casualty insurance company that was acquired by Liberty Mutual unique perspective and broad experience which makes him ideal to lead Insurance Group in 2008. She also served as vice chair and chief the geopolitical committee. His knowledge and skills related to analysing restructuring officer for American International Group (AIG) for a and negotiating on a worldwide basis are invaluable to both the board period after the US government became the financial sponsor from and the SEEAC. 2008 to 2009. Previously Paula was an executive in the energy industry. She was David Jackson chairman, president and chief executive officer of AGL Resources Inc., Company secretary an operator of natural gas infrastructure in the US, now a subsidiary of Southern Company. Prior to this, she led a subsidiary of Duke Energy Tenure Corporation that was a merchant operator of electricity generation. Appointed 2003 She commenced her energy career at PG&E Corp. Paula was awarded the National Association of Corporate Directors David Jackson, a solicitor, is a director of BP Pension Trustees Limited. (US) Lifetime Achievement Award in 2014. Relevant skills and experience Paula Rosput Reynolds has had a long career leading global companies in the energy and financial sectors. Her financial background and deep experience of trading makes her ideally suited to serve on the audit The ages of the board are committee. correct as at 29 March 2018.

BP Annual Report and Form 20-F 2017 65 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 69 of 371 Executive team As at 29 March 2018

Tufan Erginbilgic Andy Hopwood Chief executive, Downstream Executive vice-president, chief operating officer, Executive team tenure strategy and regions, Upstream Appointed 1 October 2014 Executive team tenure Outside interests • Independent non-executive Appointed 1 November 2010 director of GKN plc Outside interests • Member of the Turkish-British No external appointments Chamber of Commerce & Industry Board of Directors Age 60 Nationality British • Member of the Strategic Advisory Board of the University Career of Surrey Andy Hopwood is responsible for BP’s upstream strategy, portfolio and Age 58 Nationality British and Turkish leadership of its global regional presidents. Andy joined BP in 1980, spending his first 10 years in operations in Career the North Sea, Wytch Farm and Indonesia. In 1989 Andy joined the Tufan Erginbilgic was appointed chief executive, Downstream on corporate planning team formulating BP’s upstream strategy and 1 October 2014. subsequent portfolio rationalization. Andy held commercial leadership Prior to this, Tufan was the chief operating officer of the fuels business, positions in Mexico and Venezuela before becoming the Upstream’s accountable for BP’s fuels value chains worldwide, the global fuels planning manager. businesses and the refining, sales and commercial optimization Following the BP-Amoco merger, Andy spent time leading BP’s functions for fuels. Tufan joined Mobil in 1990 and BP in 1997 and has businesses in Azerbaijan, Trinidad & Tobago and onshore North held a wide variety of roles in refining and marketing in Turkey, various America. In 2009 he joined the Upstream executive team as head of European countries and the UK. portfolio and technology and in 2010 was appointed executive vice In 2004 he became head of the European fuels business. Tufan took up president, exploration and production. leadership of BP’s lubricant business in 2006 before moving to head the group chief executive’s office. In 2009 he became chief operating officer Bernard Looney for the eastern hemisphere fuels value chains and lubricants businesses. Chief executive, Upstream Executive team tenure Bob Fryar Appointed 1 November 2010 Executive vice president, Outside interests safety and operational risk • Fellow of the Royal Academy Executive team tenure of Engineering Appointed 1 October 2010 • Member of the Stanford University Graduate School of Outside interests Business Advisory Council No external appointments • Fellow of the Energy Institute Age 54 Nationality American Age 47 Nationality Irish

Career Career Bob Fryar is responsible for strengthening safety, operational risk Bernard Looney is responsible for the Upstream segment which management and the systematic management of operations across consists of exploration, development and production. the BP group. He is group head of safety and operational risk, with accountability for group-level disciplines including engineering, health, Bernard joined BP in 1991 as a drilling engineer, working in the North safety, security, remediation management and the environment. In this Sea, Vietnam and the Gulf of Mexico. In 2005 he became senior vice capacity, he looks after the group-wide operating management system president for BP Alaska before becoming head of the group chief implementation and capability programmes. executive’s office in 2007. Bob has over 30 years’ experience in the oil and gas industry, having In 2009 he became the managing director of BP’s North Sea business joined Amoco Production Company in 1985. Between 2010 and in the UK and Norway. At the same time, Bernard became a member 2013, Bob was executive vice president of the production division, of the Oil & Gas UK Board. He became executive vice president, accountable for safe and compliant exploration and production developments, in October 2010, and in February 2013 became chief operations and stewardship of resources across all regions. operating officer, production, serving in the role until April 2016. Prior to this, Bob was chief executive of BP Angola and also held several management positions in Trinidad, including chief operating officer for Atlantic LNG and vice president of operations. Bob has also served in a variety of engineering and management positions in onshore US and the deepwater Gulf of Mexico.

66 BP Annual Report and Form 20-F 2017 Corporate governance 67 British and Indian and British Austrian Nationality Nationality 52 Nationality 57 Independent non-executive Independent director of Man Group plc GlobalAccenture Energy the BoardMember of Member, International Advisory Board of the Ministry of Petroleum and Natural Gas, Government of India Member of the Board of Advisors of the Fletcher School of Law and University Tufts Diplomacy, Non-executive director of Ivoclar Vivadent AG, Germany • • • • • Helmut SchusterHelmut president, vice Executive group human resources tenure team Executive Appointed 1 March 2011 interests Outside Dev Sanyal Dev alternative executive, Chief energy and executive vice president, regions tenure team Executive Appointed 1 January 2012 interests Outside Age Age Career Dev Sanyal is responsible for alternative energy and for the Europe and and government management, risk for functionally and Asia regions political affairs, economics and policy. Dev joined BP in 1989 and has held a variety of international roles in Istanbul, Vienna manager, Dubai. general London, and was He Athens, Former SovietUnion and Eastern Europe, prior being to appointed chief 1999. in Mediterranean Fuels Eastern BP executive, In November 2003 he was appointed chief executive officer of Air BP International and in June 2006 was appointed head of the group chief office. executive’s He was appointed group vice president and group treasurer in 2007. During this period, he was also chairman of ManagemeBP Investment nt Ltd and was accountable for the group’s aluminium interests. Until April 2016, Dev was executive vice president, regions. and strategy Career in (HR) director resources human became Schuster Helmut group In this roleMarch he is accountable 2011. for the BP human resources function. He completed his post graduate diploma in international relations and his PhD in economics at the University of Vienna and then began his career working for Henkel in a marketing capacity. Since joining BP in 1989 Helmut has held a number of leadership roles. He has worked in BP in the US, UK and continental Europe and within most parts of refining, power. and gas and trading marketing, Before taking on his current role, his portfolio of responsibilities as vice president, HR included the refining and marketing segment of BP and corporate and functions. That role saw him leading the people agenda businesses 60,000 included roughly that globe the for across people such as petrochemicals, fuels value chains, lubricants and functional group. the experts across Outside of his role, Helmut is a non-executive director of Ivoclar Vivadent. Additionally, he is an alumni and advocate of AFS, an organization. exchange international The executive team represents the principal executive leadership of the BP group. Its members include BP’s executive directors (Bob Dudleyand Dr Brian Gilvary whose biographies appear on pages 61-65) and the senior management listed on these pages. The ages of the executive team are correct as at 29 March 2018. Annual Report and Form 20-F 2017 BP American American Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 70 of 371 70 Page 05/03/18 Filed 231-2 Document 3:17-cv-06011-WHA Case Nationality Nationality 55 Nationality Nationality 59 Eric Nitcher Eric counsel general Group Executive team tenure Appointed 1 January 2017 interests Outside appointments No external Age Lamar McKay Deputy group chief executive Executive team tenure June 2008Appointed 16 interests Outside appointments No external Age Career Eric Nitcher is responsible for legal matters across the BP group. Eric began his career in the late 1980s working as a litigation and regulatory lawyer in Wichita, Kansas. He joined Amoco in 1990 and over the years US. the outside and within both roles, wide variety a of held has In 2000, Eric moved London to work to in the mergers and acquisitions legal team where he played role a key in the formation of the Russian joint venture TNK-BP. Eric returned Houston to in 2007 where he served as special counsel and chief of staff BP to America’s chairman and president. Deepwater the of settlement the in role leading a played he Most recently Horizon government claims and resolution of most of the remaining private claims being litigated in New Orleans. Career long-term and strategy group for Lamar McKay accountable is planning, safety and operationalrisk and group technology. In addition various on focuses also he executive, supporting chief group to the compliance. and ethics including activities governance corporate Lamar started his career in 1980 with Amoco and held a range of roles. leadership and technical During 1998 to 2000, he worked on the production and BP-Amoco exploration the for planning and strategy of head as merger and served 2000 In business. North central the leader became for unit he business production, and exploration staff for of 2001Sea. In became chief he and subsequently for BP’s deputy group chief executive. Lamar became Kazakhstan and 2003. Russia in vice president, group served He a as member of the board of directors of TNK-BP between February 2004 and May 2007. America. BP 2008 In president, vice executive 2007In appointed was he BP’s led he where projects special president, vice executive became he efforts restructure to the governance framework for TNK-BP. In 2009 Lamar was appointed chairman and president of BP America, serving as BP’s chief representativein the US. In January 2013, he became chief and development exploration, for responsible Upstream, executive, production, serving in the role until April 2016. Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 71 of 371 Executive management teams

Upstream

1. Andy Hopwood 3. Kerry Dryburgh 5. Bernard Looney 7. Nigel Jones Chief operating officer, Head of human resources Chief executive Associate general counsel strategy and regions 4. Tony Brock 6. Murray Auchincloss 8. Gordon Birrell 2. James Dupree Head of safety and Chief financial officer Chief operating officer, production, Chief operating officer, operational risk transformation and carbon developments and technology

2 5 4 6 8

1 3 7

Other business and functions leaders

1. David Eyton 4. Richard Hookway 7. Dev Sanyal 11. Geoff Morrell Group head of technology Chief operating ofﬁcer of global Chief executive, alternative Group head of communications business services and information energy and executive and external affairs 2. Dominic Emery technology and systems vice president, regions Vice president, group 12. Lucy Knight strategic planning 5. David Jardine 8. Joan Wales Human resources vice president, Group head of audit Head of safety and operational corporate business activities 3. Laura Folse risk, alternative energy and functions Chief executive ofﬁcer, 6. Robert Lawson wind, alternative energy Global head of mergers 9. Craig Marshall 13. Trudi Charles and acquisitions Group head of investor relations Associate general counsel, integrated supply and trading 10. Spencer Dale Group chief economist

13 6 8 5 12

68 BP Annual Report and Form 20-F 2017 Corporate governance 69 25 10 24. Camille Drummond global of Head servicesbusiness 25. David Bucknall Group controller and chief financial officer, other businesses and corporate Wayth Nick 26. Chief development officer, energyalternative 9. Guy 9. Moeyens Chief operating officer, fuels, Europe and SouthernAfrica Holmes Andy 10. Chief operating officer, fuels ASPAC and Air BP 24 9 22 7 8 Our diverse and talented leaders have a wide range of skills and disciplines that support our executive team’s work. These finance, energy, renewable as such expertsfields include in Job titles treasury. tax and and digital, and technology trading, correct asat 1 January 2018. 20. Jan Lyons tax of head Group Alan21. Haywood Chief executive officer, integrated trading and supply Lin William 22. Head of group chief executive’s office 23. Carol Howle Head of group chief executive’s office 6. Tufan Erginbilgic Tufan 6. executive Chief Singh Mandhir 7. Chief operating officer, lubricants Gardiner Evelyn 8. resources human of Head 5 46 Annual Report and Form 20-F 2017 18 BP 3 17. Rahul Saxena Rahul 17. officer compliance and ethics Group Lindenhayn Mario 18. Chief executive officer, biofuels, energy alternative 19. Susan Dio Chief executive officer, shipping 4. Doug Sparkman Doug 4. Chiefoperating officer, Northfuels, America Strank Angela 5. Head of technology and scientist chief BP 2 16 1 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 72 of 371 72 Page 05/03/18 Filed 231-2 Document 3:17-cv-06011-WHA Case Downstream Griffin Rita 1. Chiefoperating officer, petrochemicals 2. Mike O’Sullivan officer financial Chief Michael Sosso3. counsel,Associate general shipping BP and downstream 14. David Anderson officer, financial Chief energy alternative Pillai Ashok 15. reward group Vice president, Thomson Kate 16. treasurer Group Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 73 of 371 Introduction from the chairman

The board has a clear focus on the issues that are crucial to the long-term sustainability of the company.

The work of the board continued to progress in 2017. We I will be standing down as chairman at an appropriate focused on the development and implementation of our time after the 2018 AGM. Ian Davis, the senior strategy out to 2021 that we communicated to investors independent director, has already begun the search for last year. We have seen substantial variations in the oil my successor. I will have served as chairman for almost price and have had to ensure that BP is robust for all nine years by the time I stand down. financial cycles. The board has faced and risen to many challenges during We believe there will be a continuing demand for that time and membership has evolved and remained hydrocarbons over the coming decades. Our strategy is balanced. I believe that we are well placed for the future designed to balance our role in supplying energy for the – with the appropriate mix of skills, experience and world with the growing need to be part of the transition diversity. Throughout I have wanted to ensure that we to a lower carbon global economy. The board’s focus has used our time wisely as it was essential that we had been on this dual challenge, which is crucial to the the space in our meetings to discuss strategy and the company’s long-term sustainability. direction of the company. In 2010 we formed the Gulf of Mexico committee, originally to have oversight of our The role of business in society remains a major issue commitment on the ground following the accident. The which all boards must address. In the UK, the Financial work of this committee evolved into considering the Reporting Council has published its consultation on a reports on the causes of the accident and subsequently material revision to the UK Corporate Governance Code. leading the work around the ensuing litigation. The There is a clear emphasis on the need for boards to focus committee sat for five years. We also formed a special on their relationship with all those with whom the committee to oversee negotiations in Russia which company comes into contact. In particular, boards are eventually led to our equity ownership in Rosneft. This encouraged to ensure they find ways to hear the voice experience led to the formation of the geopolitical of the employee in the board room. committee which is now well in its stride. We are participating in this consultation and have already We have used the evaluations of the board and the established a variety of ways to speak and listen to our committees to ensure that we have been focusing on the employees around the world. We will need to ensure that right issues and adding value. I am pleased that over the all voices – those of shareholders, employees, customers summer we will be carrying out an externally facilitated and communities – find their way to the board. Our evaluation, which I am sure will assist my successor. long-term investments and relationships in many countries have already helped with this. I am very grateful to Bob, his executive colleagues and all my fellow directors for all the work that they have done Remuneration continued to be an area of focus in the during the year. BP has an exciting future and we have year. We are grateful to our shareholders for their support the right team to take advantage of the opportunities that of the remuneration report at the 2017 AGM. This was it will bring. very important to us. The remuneration committee continued its work this year, as it implements the new policy and some legacy awards from the 2014 policy. The committee has again had some challenging decisions to take. Dame Ann Dowling will be standing down from the committee at the 2018 AGM after three years in the chair. I would like to thank her and pay tribute to her work. Carl-Henric Svanberg Paula Reynolds, already an experienced remuneration Chairman committee chair, will succeed Dame Ann.

70 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 74 of 371

BP governance framework The board operates within a system of governance that is set out in the This system is reﬂected in the governance of the group’s subsidiaries. BP board governance principles. These principles deﬁne the role of the See bp.com/governance for the board governance principles. board, its processes and its relationship with executive management.

Owners/shareholders Delegation BP board Monitoring, BP board information governance and assurance principles: Nomination Remuneration Chairman’s SEEAC Geopolitical Audit • Group audit • BP goal committee committee committee committee committee Corporate governance • Finance See page 89 See page 86 See page 88 See page 84 See page 87 See page 77 • Governance • Safety and process operational risk • Delegation • Group ethics model Strategy/group risks/annual plan and compliance • Executive • Business integrity limitations

Group chief executive • External market Delegation and reputation Delegation of research authority through Group chief executive’s delegations • Independent policy with auditor monitoring Executive management • Independent Accountability adviser Assurance through • Independent monitoring and advice reporting Resource Group people Group disclosure Group ﬁnancial Group operations Group ethics and (if requested) commitments committee committee risk committee risk committee compliance meeting (RCM) (GPC) (GDC) (GFRC) (GORC) committee (GECC) Accountability

Board and committee attendance in 2017

Board Audit SEEAC Joint audit/ Remuneration Geopolitical Nomination Chairman’s committee SEEAC committee committee committee committee Non-executive directors ABABABABABABABAB Carl-Henric Svanberg+ 11 11 Nils Andersen 11 11 13 13 4 4 7 7 Paul Anderson 1111 6644 33 1010 Alan Boeckmann+ 1110 664487 331010 Frank Bowman1111 6644 33 1010 Cynthia Carroll 55 2111 10 32 Ian Davis 1111 8833331010 Ann Dowling+ 1111 664488 331010 Melody Meyer6644332277 Brendan Nelson+ 11 11 13 13 4 4 4 4 10 10 Paula Rosput Reynolds 11 10 13 13 4 3 2 2 10 9 John Sawers+ 1111 6644 33331010 Andrew Shilston 5455 1144111133 Executive directors AB Bob Dudley 11 11 Brian Gilvary 11 11

A = Total number of meetings the director was eligible to attend. Nils Andersen did not attend meetings of the chairman’s committee when succession B = Total number of meetings the director did attend. was discussed. + Committee chair. Alan Boeckmann missed the telephone meetings of the board and remuneration committee that had been called at short notice, due to a clash with another board. Paula Reynolds missed a board, joint audit-SEEAC and chairman’s committee meeting due to travel arrangements. Cynthia Carroll missed a SEEAC, geopolitical committee and chairman’s committee meeting due to a clash with an external commitment. Andrew Shilston missed a board meeting immediately prior to the 2017 AGM as he was retiring from the board.

BP Annual Report and Form 20-F 2017 71 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 75 of 371 Board activity in 2017

Role of the board The board is responsible for the overall conduct of the group’s business. Directors have duties under both UK company law and BP’s Articles of Association. The primary tasks of the board include:

1Active consideration and direction Monitoring of BP’s Ensuring that the principal risks and Board and executive of long-term strategy and approval performance against the uncertainties to BP are identiﬁed and that management of the annual plan strategy and plan systems of risk management and control succession are in place

Strategy Performance and monitoring

During the year the board It received regular reports on the The board reviews ﬁnancial and The board reviews the quarterly provided input on the group’s progress and implementation of operational performance at each and full-year results, including strategy to senior management. the strategy – through updates meeting. It receives regular the shareholder distribution This included a two-day strategy from management and by updates on the group’s policy. The 2017 annual report session in September where it means of a strategic performance for the year across was assessed in terms of the examined developments in the performance scorecard which a range of metrics as well as the directors’ obligations and wider environment and debated is discussed at each full board latest view on expected full-year appropriate regulatory strategic themes relating to BP’s meeting. delivery against external requirements. segments, key functions and the scorecard measures. Updates impact of the lower carbon The board monitored the The board monitors employee are also given on various transition on the group’s company’s performance against opinion via an annual ‘pulse’ components of value delivery for business model. The board the annual plan for 2017 and survey which includes BP’s business. Regular reports discussed the transition to a approved the forward measurement of how the BP presented to the board include: lower carbon world frequently framework for the annual plan values are incorporated into during the year. in 2018. • Chief executive’s report. culture around our global operations. The board reviewed the BP • Group performance report. Energy Outlook, updated • Group ﬁnancial outlook. in February 2018, which looks at • Effectiveness of investment long-term energy trends and review. projections for world energy • Quarterly and full-year results. markets. • Shareholder distributions.

Risk Succession

The board, either directly The board reviewed the group The board, in conjunction with • Cynthia Carroll and Andrew or through its monitoring risk of cyber security in 2017 the nomination and chairman’s Shilston stood down from committees, regularly reviews – with the audit committee and committees, reviews succession the board at the 2017 AGM. the processes whereby risks SEEAC assessing elements of plans for executive and non- • Melody Meyer was elected are identified, evaluated and cyber security risk in their work executive directors on a regular as a director at the 2017 AGM. managed. programme for the year. The basis. The board needs to ensure On appointment she joined allocation of the group cyber that potential candidates are Activities include: the SEEA and geopolitical security risk to the board (with identified and evaluated as • Assessing the effectiveness of committees. additional monitoring by the current directors reach the end the group’s system of internal • Brendan Nelson and Paula audit and SEEA committees) of their recommended term of control and risk management Reynolds joined the remains unchanged for 2018. office, including in the event as part of the review of the remuneration committee in of a director leaving BP Annual Report and Form The group risks allocated to the May and September 2017 20-F 2017. committees for review over the unexpectedly. respectively. year are outlined in the reports • Identification and allocation The board employs executive of the committees on pages • Paul Anderson will retire of risks to the board and search firms when it concludes 77-89. from the board at the 2018 monitoring committees (the that this is an effective way of AGM. audit, SEEA and geopolitical Further information on BP’s finding suitable candidates. In committees) for 2017, and system of risk management is 2017 we appointed Egon Zehnder • Ann Dowling will step down from the remuneration confirmation of the schedule outlined in How we manage risk to assist in the search for committee after the for oversight. on page 55. Information about non-executive directors. 2018 AGM, having served BP’s system of internal control is three years as chair, and on page 113. Paula Reynolds will then assume the role.

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Skills and expertise In order to carry out its duties on behalf of shareholders, the board needs to manage its non-executive membership and continuously maintain its knowledge and expertise to beneﬁt the business. It does this through four activity sets:

Succession planning to Diversity including skills, Training including Evaluation ensure future diversity experience, gender, ethnicity site visits and induction and balance and tenure of new directors

Background and diversity

Non-executive director Background Diversity Corporate governance

Oil & gas/ Engineering/ Financial Safety Brand/ Regulatory/ Female Non Tenure extractives/ technology expertise marketing/ government UK/US (years) energy reputation affairs

Nils Andersen 2 Paul Anderson 8 Alan Boeckmann 4 Frank Bowman 7 Ian Davis 8 Ann Dowling 6 Melody Meyer 1 Brendan Nelson 7 Paula Reynolds 3 John Sawers 3 Carl-Henric Svanberg 9

Diversity Independence BP recognizes the importance of diversity, including gender, at the board Non-executive directors (NEDs) are expected to be independent and all levels of the group. We are committed to increasing diversity in character and judgement and free from any business or other across our operations and have a wide range of activities to support the relationship that could materially interfere with exercising that development and promotion of talented individuals, regardless of gender judgement. It is the board’s view that all NEDs, with the exception and ethnic background. of the chairman, are independent. The board operates a policy that aims to promote diversity in its The board is satisfied that there is no compromise to the independence composition. Under this policy, director appointments are evaluated of, and nothing to give rise to conflicts of interest for, those directors against the existing balance of skills, knowledge and experience on the who serve together as directors on the boards of other entities or who board, with directors asked to be mindful of diversity, inclusiveness and hold other external appointments. The nomination committee keeps meritocracy considerations when examining nominations to the board. the other interests of the NEDs under review to ensure that the Implementation of this policy is monitored through agreed metrics. effectiveness of the board is not compromised. During its annual evaluation, the board considered diversity as part of the review of its performance and effectiveness. Appointment and time commitment The chairman and NEDs have letters of appointment. There is no term At the end of 2017, there were three female directors (2016 3, 2015 3) limit on a director’s service, as BP proposes all directors for annual on our board of 13. Our nomination committee actively considers re-election by shareholders (a practice followed since 2004). diversity in seeking potential candidates for appointment to the board. While the chairman’s letter of appointment sets out the time The board looked at gender and wider diversity across the group as part commitment expected of him, those for NEDs do not set a fixed-time of its annual review of HR, capability and talent management. commitment, but instead set a general guide of between 30-40 days The remuneration committee and the board reviewed and discussed per year. The time required of directors may fluctuate depending on BP’s data and report on the UK gender pay gap prior to its publication in demands of BP business and other events. They are expected to February 2018. Focus was given to the data in the report, and what allocate sufficient time to BP to perform their duties effectively and action BP is taking to address the gap and the broader issue of diversity make themselves available for all regular and ad hoc meetings. within the group.

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Executive directors are permitted to take up one external board Board evaluation appointment, subject to the agreement of the chairman. Fees received BP undertakes an annual review of the board, its committees and for an external appointment may be retained by the executive director individual directors. The chairman’s performance is evaluated by the and are reported in the directors’ remuneration report (see page 90). chairman’s committee and his evaluation is led by the senior Neither the chairman nor the senior independent director are employed independent director. The evaluation operates on a three-year cycle, as an executive of the group. with one externally led evaluation followed by two subsequent years of internal evaluations carried out using a questionnaire prepared by an Training and induction external facilitator. To help develop an understanding of BP’s business, the board continues Activity following prior year evaluation to build its knowledge through briefings and site visits. In 2017 the board Actions arising from the 2016 evaluation and how these were received training on ethics and compliance. addressed included: NEDs are expected to visit at least one business a year as part of their • Focus on implementing the strategy, in particular the opportunities learning programme. In 2017 the board visited the group’s response relating to the transition to a lower carbon economy: reporting on the information centre in Sunbury, operations of Aker in Norway and the implementation of the strategy was further developed and as a result trading business in London. Members of the SEEAC and other directors the board receives updates from management and a strategic also visited the Cherry Point refinery in the US and the Glen Lyon FPSO progress report at each meeting. The board held a number of vessel in the North Sea. discussions on the transition to a lower carbon economy, including a Newly appointed NEDs follow a structured induction process. This session at the strategy away day, with further sessions scheduled for includes one-to-one meetings with management and the external 2018. The group’s quarterly results announcement was amended in auditors and also covers the board committees that they join. 2017 to include narrative on the implementation of strategy. • More detailed examination of the financial performance of the business, in particular capital allocation and returns: the board Director induction programme discusses financial performance at each board meeting and reviews the proposed disclosures and investor presentation for each quarter’s results. A return on average capital employed measure was included in the 2017 remuneration policy and the board reviews this as part of its performance monitoring. A review of the group’s capital allocation BP executives devoted process and investment effectiveness was also held during the year. substantial time to ensure • Obtaining a better understanding of the group’s ability to effectively a high quality induction. deliver the strategy, including technology, digital and big data: this included a deep dive into technology trends and their potential impact on the group’s business model. Melody Meyer Non-executive director • Bringing wider perspectives into the board room and gaining deeper insight into shareholder views: the board considered output from BP’s remuneration engagement programme as well as broader governance Melody Meyer, appointed in 2017, followed a issues from investor meetings held throughout the year. Feedback tailored induction process, which also covered from institutional investors on the group’s performance and strategy the SEEAC and geopolitical committee. The – compiled by an independent third party – was discussed with the programme of topics included: board following the strategy update. • Continued emphasis on improving operational excellence: the board Board and governance • Communications and received data and commentary on BP’s operations through monthly • BP’s board governance model, corporate reporting directors’ duties, interests and • Group audit reports and updates from management; and operational measures potential conflicts. • External audit were included in the annual bonus scorecard as part of the • BP women’s network remuneration assessment for the year. Business introduction • Legal. • BP’s business 2017 evaluation • Upstream (exploration, SEEAC specific The evaluation was undertaken through a questionnaire facilitated by an development, production, • Safety and operational risk external consultant (Lintstock) and individual interviews between the overview of our operations) (S&OR), BP’s operating chairman and each director. The results of the evaluation and feedback management system • Downstream (refining, from the interviews were collectively discussed by the board including: marketing and lubricants) (OMS) and environmental • Alternative Energy performance • Investment decisions: continue focusing on capital allocation and the • Strategy and planning • Operational, safety and way in which investment decisions are taken. • Lower carbon transition environmental reporting • Longer-term vision and strategy: extend the timeframe of strategic • BP’s performance relative • Group security and crisis discussions, including challenges faced by BP’s core business and the to its competitors. management. lower carbon transition. Functional input Geopolitical committee • Geopolitics: consider how to further optimize the output of the work • Human resources, including specific undertaken by the board, geopolitical committee and the international capability and reward • BP’s regional businesses advisory board. • Ethics and compliance • Government affairs. • Research and technology • Improve the board’s understanding of employees’ views: expand • Investor relations the existing ways employee views are disseminated to the • Trading board to include more local and business based feedback.

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Site visits

Non-executive directors are expected to visit at least one business per year, as part of their learning programme. In 2017 the board visited partner operations in Tranby, Norway and BP’s trading business in London. Members of the SEEAC and other directors visited operations in the North Sea and Washington state, and the audit committee visited our global business services ofﬁces in Hungary. The board met local management at each visit, and after each one, the board or appropriate committee was briefed on the impressions gained by the directors during the visit.

Tranby, Norway The board visited Aker’s Tranby technology The board heard about the research being centre near Oslo to see the manufacture undertaken in subsea trees, workover Corporate governance of subsea well heads and the research and systems and subsea pumps and saw new development centre. The Tranby site has digital technologies to integrate engineering been an established centre of excellence for and manufacturing processes being tested. subsea equipment manufacturing for over a decade. Washington state, US Members of the SEEAC and other directors visited the Cherry Point reﬁnery in Blaine, Washington in June. The visit focused on operating procedures and safety and risk mitigation. Investment was discussed, including technology enhancements to produce ultra-low sulphur diesel, increasing logistical optionality and a coker heater project. Other discussions included the cultural and environmental outreach projects in the area. They also took a tour of the reﬁnery, control room, the operator training simulator and dock area.

North Sea, UK In July members of the SEEAC and other directors visited Glen Lyon – the floating, production, storage and offloading vessel for our Quad 204 major project start-up in the North Sea. The committee was the first to visit the vessel following production start-up. Discussions on board the vessel covered project completion and future plans including reviews of production efficiency, operational management, safety, risk mitigation and OMS conformance. They Global business also visited key areas of the vessel services, Hungary including the control room and riser tower. The audit committee visited BP’s global business service (GBS) centre located in Budapest in September, where Integrated supply standardized business services including finance, procurement, HR, trading and trading, London settlement and tax are delivered for Members of the board visited BP’s trading businesses across the BP group. operations in London in December to gain an insight into the group’s approach The committee received presentations on to trading, oil and gas market fundamentals, the GBS strategy, business model and risk profile and strategy. Directors received controls framework. They also met local presentations from traders and originators on staff across a range of job levels, including the trading floor and deepened their those involved in diversity and inclusion understanding of the group’s oil products initiatives such as LGBT and working parent and LNG business models. programmes.

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Institutional investors Private investors The company operates an active investor relations programme. The BP held a further event for private investors in conjunction with the board receives feedback on shareholder views through results of an UK Shareholders’ Association (UKSA) in 2017. The chairman and head anonymous investor audit and reports from management and those of investor relations gave presentations on BP’s annual results, directors who meet with shareholders each year. In 2017 the chair of strategy and the work of the board. Shareholders’ questions were the remuneration committee undertook extensive engagement on focused on BP’s activities and performance. the new remuneration policy prior to the AGM in May (see the remuneration committee report on page 86). The chair of the audit AGM committee and the senior independent director also held one-to-one Voting levels decreased in 2017 to 50.8% (of issued share capital, meetings with institutional investors during the year. including votes cast as withheld), compared to 64.3% in 2016 and Senior management regularly meets with institutional investors 62.3% in 2015. We believe this drop in vote levels was due to the late through roadshows, group and one-to-one meetings, events for return of BP stock on loan, with voting deadlines for some custodians socially responsible investors (SRIs) and oil and gas sector coinciding with the date that BP shares went ‘ex-dividend’. The conferences throughout the year. company is looking at future AGM voting deadlines against its financial calendar to mitigate this event recurring. In April the chairman and all board committee chairs held an annual investor event. This meeting enabled BP’s largest shareholders to All resolutions were passed at the meeting. Each year the board hear about the work of the board and its committees and for NEDs receives a report after the AGM giving a breakdown of the votes to engage with investors. and investor feedback on their voting decisions to inform them on any issues arising. See bp.com/investors for investor and strategy presentations, including the group’s financial results and information on the work of the board and its committees. UK Corporate Governance Code compliance BP complied throughout 2017 with the provisions of the Shareholder engagement cycle 2017 UK Corporate Governance Code except in the following aspects: B.3.2 Letters of appointment do not set out fixed-time commitments Q1 • Fourth quarter results since the schedule of board and committee meetings is subject to change according to the demands of business and other • BP Energy Outlook presentation events. Our letters of appointment set a general guide of a time • Strategy investor roadshows with executive commitment of between 30-40 days per year. All directors are management expected to demonstrate their commitment to the work of the • US SRI meetings on remuneration board on an ongoing basis. This is reviewed by the nomination • Investor meetings on remuneration, continuing committee in recommending candidates for annual re-election. into Q2 D.2.2 The remuneration of the chairman is not set by the remuneration • SRI roadshow following the launch of the BP committee. Instead, the chairman’s remuneration is reviewed by Sustainability Report 2016, continuing into Q2 the remuneration committee which makes a recommendation to the board as a whole for final approval, within the limits set by shareholders. This wider process enables all board members Q2 • Chairman and board committee chairs to discuss and approve the chairman’s remuneration, rather meetings than solely the members of the remuneration committee. • UKSA private shareholders’ meeting • First quarter results • Meetings with members of the Church Investors Group and Charities Responsible International advisory board Network BP’s international advisory board (IAB) advises the chairman, group • Institutional Investors Group on Climate chief executive and the board on geopolitical and strategic issues Change (IIGCC) meeting relating to the company. This group meets once or twice a year and • Annual general meeting between meetings IAB members remain available to provide advice • BP Statistical Review of World Energy launch and counsel when needed. • Downstream investor day, Pangbourne The IAB was chaired by BP’s previous chairman, the late Peter Sutherland. Its membership in 2017 comprised Lord Patten of Barnes, Josh Bolten, President Romano Prodi, Dr Ernesto Zedillo and Dr Javier Q3 • Second quarter results Solana. The chairman, chief executive and Sir John Sawers attend • Investor roadshows with the group meetings of the IAB. Issues discussed in 2017 included the global chief executive and chief financial officer economy, developments in the Middle East, political events in Latin America and the political and economic outlook in the US. The IAB discussed the UK’s potential exit from the European Union at both of Q4 • Third quarter results its meetings during 2017. • IIGCC meeting

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Audit committee Role of the committee The committee monitors the effectiveness of the group’s ﬁnancial reporting, systems of internal control and risk management and the integrity of the group’s external and internal audit processes.

Key responsibilities • Monitoring and obtaining assurance that the management or mitigation of ﬁnancial risks is appropriately addressed by the group chief executive and that the system of internal control is designed and implemented effectively in support of the limits imposed by the board (‘executive limitations’), as set out in the BP board governance principles.

• Reviewing financial statements and other financial disclosures and Corporate governance monitoring compliance with relevant legal and listing requirements. • Reviewing the effectiveness of the group audit function, BP’s internal financial controls and systems of internal control and risk management. • Overseeing the appointment, remuneration, independence and The committee continued to review the performance of the external auditor and the integrity of the audit integrity of the group’s disclosures by process as a whole, including the engagement of the external auditor challenging and debating the to supply non-audit services to BP. judgements made by management. • Reviewing the systems in place to enable those who work for BP to raise concerns about possible improprieties in financial reporting or other issues and for those matters to be investigated.

Members

Chairman’s introduction Brendan Nelson Member since November 2010 Last year’s report highlighted our monitoring of the group’s financial and chair since April 2011 performance in light of the demanding external environment. While this Nils Andersen Member since October 2016 focus remains, the committee has continued to review the integrity of Paula Reynolds Member since May 2015 the group’s financial reporting by challenging and debating the judgements made by management, including the estimates which are Andrew Shilston Member since February 2012; made. We receive reports from management and the external auditor retired May 2017 each quarter highlighting significant accounting issues and judgements and have used these to inform our debate on whether BP’s financial Brendan Nelson is chair of the audit committee. He was formerly reporting is ‘fair, balanced and understandable’. vice chairman of KPMG and president of the Institute of Chartered Accountants of Scotland. Currently he is chairman of the group audit In 2017 the committee focused on the effectiveness of the group audit committee of The Royal Bank of Scotland Group plc and a member of function. We reviewed its longer-term vision and capability and oversaw the Financial Reporting Review Panel. The board is satisfied that he is an externally facilitated review of its performance, the results of which the audit committee member with recent and relevant financial we discussed in a joint session with colleagues from the SEEAC. We experience as outlined in the UK Corporate Governance Code and will continue to focus on the actions arising from the review in 2018. competence in accounting and auditing as required by the FCA’s Following the 2016 tender process for the statutory audit, the Corporate Governance Rules in DTR7. It considers that the committee committee has overseen the transition to Deloitte from EY in time for as a whole has an appropriate and experienced blend of commercial, 2018. We met with both EY and Deloitte during 2017 and monitored financial and audit expertise to assess the issues it is required to Deloitte’s progress towards independence in time for their ‘shadowing’ address, as well as competence in the oil and gas sector. The board also of the 2017 year-end audit. determined that the audit committee meets the independence criteria provisions of Rule 10A-3 of the US Securities Exchange Act of 1934 and The committee visited one of the group’s global business service that Brendan may be regarded as an audit committee financial expert as centres, located in Budapest, enabling us to see first hand the work defined in Item 16A of Form 20-F. undertaken by this growing part of BP’s operations and to meet local staff. We found this direct contact added an important additional dimension to our review and understanding, and intend to hold further Meetings and attendance site visits in 2018. There were 13 committee meetings in 2017, of which six were by teleconference. All directors attended every meeting during the period Andrew Shilston retired from the committee in May 2017. I would like in which they were committee members. to thank Andrew for his service to the committee, and for the challenge and perspective he provided as a member. Regular attendees at the meetings include the chief financial officer, group controller, chief accounting officer, group head of audit and Brendan Nelson external auditor. Committee chair

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Activities during the year

Financial disclosure The committee reviewed key Financial resilience: including areas of BP’s ethics and the risk associated with external The committee reviewed the operational events, and considered compliance programme, including market conditions, supply and quarterly, half-year and annual whether the period covered by the the integration of the business demand and prices achieved for financial statements with company’s viability statement was integrity and ethics and BP’s products which could impact management, focusing on the: appropriate. compliance functions, financial performance. • Integrity of the group’s development of the anti-bribery The committee considered the BP The committee reviewed the key financial reporting process. and corruption elements of the Annual Report and Form 20-F price assumptions used by the • Clarity of disclosure. programme, enhanced policies, 2017 and assessed whether the group for investment appraisal and • Compliance with relevant legal tools and training and report was fair, balanced and the judgements underlying those and financial reporting strengthening of counterparty risk understandable and provided the proposals, the cost of capital and standards. measures, including due diligence. information necessary for its application as a discount rate to • Application of accounting shareholders to assess the policies and judgements. Security threats against BP’s evaluate long-term BP business group’s position and performance, digital infrastructure: including projects, liquidity (including credit As part of its review, the business model and strategy. In inappropriate access to or misuse rating, hedging, long-term committee received quarterly making this assessment, the of information and systems and commercial commitments and updates from management and committee examined disclosures disruption of business activity. credit risk) and the effectiveness the external auditor in relation to during the year, discussed the and efficiency of the capital accounting judgements and requirement with senior The committee reviewed changes investment into major projects . estimates including those relating management, confirmed that in the cyber security landscape, to the Gulf of Mexico oil spill, representations to the external including events in the oil and gas BP’s principal risks are listed on recoverability of asset carrying auditors had been evidenced and industry and within BP itself. page 57. The review focused on the values and other matters. reviewed reports relating to For 2018, the board has agreed improvements made in managing internal controls. The committee that the committee will continue The committee keeps under cyber risk, including the application made a recommendation to the to monitor the same four group review the frequency of reporting of the three lines of defence board, who in turn reviewed the risks as for 2017. The group risk during the year. model and examining the report as a whole, confirmed the financial resilience has been indicators associated with risk The committee reviewed the assessment and approved the renamed ‘financial liquidity’ for management and barrier assessment and reporting of report’s publication. 2018. longer-term viability, risk performance. Other disclosures reviewed management and the system included: of internal control, including the reporting and categorization of • Oil and gas reserves. Other reviews risk across the group and the • Pensions and post-retirement examination of what might benefits assumptions. Other reviews undertaken in 2017 recommendations, see constitute a significant failing or • Risk factors. by the committee included: page 50. • Legal liabilities. • Non-operating items (NOIs): weakness in the system of internal • Downstream: including • Tax strategy. BP’s policy for identifying and control. It also examined the strategy and strategic • Going concern. categorizing NOIs and an group’s modelling for stress progress, financial analysis of those NOIs testing different financial and performance, risk impacting BP’s reported results. management and controls, • Blockchain: introduction to audit findings, key litigation and blockchain technology, its ethics and compliance findings. potential impacts on the oil and • Upstream: including vision gas industry and an overview of Risk reviews and priorities, structure and BP’s participation and approach portfolio, financial controls and to date. The principal risks allocated to the The committee further the balance sheet, an overview • Capability and succession audit committee for monitoring in considered updates in the trading of intangible assets and a in BP’s finance function, 2017 included those associated function’s risk management review of the segment’s including the group’s finance finance organization. with: programme, including modernization programme. • Shipping: including an overview compliance with regulatory • Assessment of financial metrics Trading activities: including risks of BP shipping’s role and developments and activities in for executive remuneration: arising from shortcomings or operating model, financial response to cyber threats. consideration of financial failures in systems, risk performance, strategy, risk performance for the group’s management methodology, Compliance with applicable management and controls and 2017 annual cash bonus internal control processes or laws and regulations: including the impact of IFRS 16 (lease scorecard and performance employees. ethical misconduct or breaches of accounting standard). share plan, including applicable laws or regulations that • Financial Stability Board's Task In reviewing this risk, the adjustments to plan conditions could damage BP’s reputation, Force on Climate-related committee focused on external and NOIs. adversely affect operational results Financial Disclosures (TCFD): market developments and how and/or shareholder value and the origin, purpose and work of BP’s trading function had potentially affect BP’s licence to the TCFD along with its key responded – including new areas operate. recommendations and how of activity and impacts on the BP’s existing reporting control environment. compares to these

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Training In ternal control and risk management The committee held a deep dive on reserves, covering resource The committee received The review concluded that the definition and estimation, the group’s governance processes, areas of quarterly reports on the findings group audit function: focus for the regulator and how BP compared with its competitors in terms of approach. It received technical updates from the chief of group audit in 2017. It reviewed • Performed strongly across accounting officer on developments in financial reporting and group audit’s vision for 2020, Deloitte’s assessment accounting policy, including IFRS 9 ‘Financial Instruments’, IFRS 15 including the roadmap for 2017 framework. Revenues from Contracts with Customers and IFRS 16 ‘Leases’. and beyond. The committee met • Demonstrated a high level of privately with the group head of maturity when assessed audit and key members of his against internal audit functions Site visits leadership team. within large FTSE (non- In September, the committee visited BP’s global business services financial services) companies. Corporate governance The committee oversaw an (GBS) centre in Hungary. During the visit the committee reviewed the • Had a remit covering all risk external review of the function’s strategy, context, and how it has grown in scope and scale. categories (financial and effectiveness of the group audit It looked at its risk management and controls processes, including operational) – a breadth seen function, which was awarded to understanding the risks around transition of activity from the business as leading practice. and the standardization of global processes. It also reviewed capability Deloitte in July 2017 following a • Had areas where continuous and human resources issues, including talent attraction and retention, competitive tender process. improvement activity and met a range of staff and heard about the various GBS diversity Fieldwork and interviews with continued dialogue with the programmes including LGBT, working parents and disability awareness. management and board business could result in an members was completed by even stronger performance. In December, members of the committee and wider board visited BP’s September 2017 and the results Implementation of the agreed integrated supply and trading (IST) business in London for a day that of the assessment were actions arising from the review covered oil and gas market fundamentals, finance and risk, IST’s reviewed at a joint meeting of will be tracked during 2018. strategy, and presentations on oil products and LNG trading. the audit and safety, ethics and environment assurance The audit committee also held committees in December. private meetings with the group ethics and compliance officer during the year.

Accounting judgements and estimates Areas of signiﬁcant judgement considered by the committee in 2017 and how these were addressed included:

Key judgements and estimates Audit committee activity Conclusions/Outcomes in ﬁnancial reporting

Gulf of Mexico oil spill

BP uses judgement in relation to the A review of the provisioning for and Following signiﬁcantly higher average claims recognition of provisions relating to the disclosure of uncertainties relating to the determinations issued by the Court Gulf of Mexico oil spill. The timing and Gulf of Mexico oil spill was undertaken each Supervised Settlement Program (CSSP) in amounts of the remaining cash ﬂows are quarter as part of the review of the stock the fourth quarter 2017 and the continuing subject to uncertainty and estimation is exchange announcement. effect arising from the Fifth Circuit May 2017 required to determine the amounts opinion, BP recognized a post-tax charge of Particular focus was given to updates to the provided for. $1.7 billion for BEL and other claims provision related to business economic loss associated with the CSSP. (BEL) and other claims related to the Gulf of Mexico oil spill, including the continuing Disclosure includes information on effect of the Fifth Circuit May 2017 opinion remaining uncertainties. on the matching of revenues with expenses when evaluating BEL claims.

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Key judgements and estimates Audit committee activity Conclusions/Outcomes in ﬁnancial reporting

Oil and natural gas accounting, including reserves BP uses technical and commercial judgements Held an in-depth review of BP’s policy and Exploration write-offs totalling $1.6 billion when accounting for oil and gas exploration, guidelines for compliance with oil and gas were recognized during the year. appraisal and development expenditure and in reserves disclosure regulation, including the Exploration intangibles totalled $17.0 billion determining the group’s estimated oil and gas group’s reserves governance framework at 31 December 2017. reserves. and controls. Reserves estimates based on management’s Reviewed exploration write-offs as part of assumptions for future commodity prices have the group’s quarterly due diligence process. a direct impact on the assessment of the Received briefings on the status of recoverability of asset carrying values reported upstream intangible assets, including the in the financial statements. status of items on the intangibles assets Judgement is required to determine whether it ‘watch-list’. is appropriate to continue to carry intangible Received the output of management’s assets related to exploration costs on the annual intangible asset certification process balance sheet. used to ensure accounting criteria to continue to carry the exploration intangible balance are met.

Recoverability of asset carrying values Determination as to whether and how much Reviewed the group’s oil and gas price The group’s long-term price assumptions for an asset, cash generating unit (CGU) or group assumptions. Brent oil, and Henry Hub gas were of CGUs containing goodwill is impaired unchanged from 2016. Reviewed the group’s discount rates for involves management judgement and impairment testing purposes. The group’s discount rates used for estimates on uncertain matters such as future impairment testing were also unchanged. commodity pricing, discount rates, production Upstream impairment charges, reversals proﬁles, reserves and the impact of inﬂation on and ‘watch-list’ items were reviewed as Impairments of $1.0 billion were recorded in operating expenses. part of the quarterly due diligence process. the year, net of impairment reversals. Judgement is required in assessing the Reviewed the group’s credit risk The group had $1.5 billion of receivables recoverability of overdue receivables, and management and reporting framework, which were not impaired but past due deciding whether a provision is required. including actual credit losses observed, at 31 December 2017. expected loss delegations and utilization and changes in the credit portfolio quality.

Investment in Rosneft Judgement is required in assessing the level of Reviewed the judgement on whether the BP has retained significant influence over control or influence over another entity in group continues to have significant Rosneft throughout 2017 as defined by which the group holds an interest. influence over Rosneft. IFRS. BP uses the equity method of accounting for Considered IFRS guidance on evidence its investment in Rosneft and BP’s share of of significant influence, including Rosneft’s oil and natural gas reserves is representation on the board and included in the group’s estimated net proved participation in policy-making processes. reserves of equity-accounted entities. Received reports from management and The equity-accounting treatment of BP’s the external auditor which assessed the 19.75% interest in Rosneft continues to be extent of significant influence, including dependent on the judgement that BP has BP’s participation in decision making significant influence over Rosneft. through the continued service on the Rosneft board and key board committees of two BP-nominated directors and work on significant transactions and projects. This assessment considered the appointment of two additional non-BP directors to the Rosneft board but concluded that the assessment of significant influence remained unchanged.

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Key judgements and estimates Audit committee activity Conclusions/Outcomes in ﬁnancial reporting

Derivative contracts In some instances, BP estimates the fair value Received a briefing on the group’s trading BP has assets and liabilities of $7.1 billion and of derivative contracts using internal models risks and reviewed the system of risk $6.6 billion respectively recognized on the due to the absence of quoted market pricing or management and controls in place, balance sheet for derivative contracts at other observable, market-corroborated data. including those covering the valuation of 31 December 2017, mainly relating to the Judgement may also be required to determine derivative instruments, using models where activities of the integrated supply and trading whether contracts to buy or sell commodities observable market pricing is not available. function (IST). meet the definition of a derivative. The committee annually reviews the control BP’s use of internal models to value certain process and risks relating to the trading of these contracts has been disclosed in business. Note 28 in the financial statements. Corporate governance

Provisions BP’s most significant provisions relate to Received briefings on decommissioning, Decommissioning provisions of $16.1 billion decommissioning, the Gulf of Mexico oil spill environmental, asbestos and litigation were recognized on the balance sheet at 31 (see above), environmental remediation provisions, including the requirements, December 2017. litigation. governance and controls for the The discount rate used by BP to determine development and approval of cost The group holds provisions for the future the balance sheet obligation at the end of estimates and provisions in the decommissioning of oil and natural gas 2017 was a real rate of 0.5% – based on financial statements. production facilities and pipelines at the end long-dated US government bonds. of their economic lives. Most of these Reviewed the group’s discount rates for decommissioning events are many years in calculating provisions. the future and the exact requirements that will have to be met when a removal event occurs are uncertain. Assumptions are made by BP in relation to settlement dates, technology, legal requirements and discount rates. The timing and amounts of future cash flows are subject to significant uncertainty and estimation is required in determining the amounts of provisions to be recognized.

Pensions and other post-retirement benefits Accounting for pensions and other post- Reviewed the group’s assumptions used to The method for determining the group’s retirement benefits involves making estimates determine the projected benefit obligation assumptions remained largely unchanged from when measuring the group’s pension plan at the year end, including the discount rate, 2016. The values of these assumptions and a surpluses and deficits. These estimates rate of inflation, salary growth and mortality sensitivity analysis of the impact of possible require assumptions to be made about levels. changes on the benefit expense and obligation uncertain events, including discount rates, are provided in Note 22. inflation and life expectancy. At 31 December 2017, surpluses of $4.2 billion and deficits of $9.1 billion were recognized on the balance sheet in relation to pensions and other post-retirement benefits.

Income taxes Computation of the group’s income tax Received regular updates on the group’s tax Deferred tax assets amounting to $4.5 billion expense and liability, the provisioning for exposures and deferred tax asset were recognized on the balance sheet at 31 potential tax liabilities and the level of deferred recognition. December 2017. tax asset recognition are underpinned by Reviewed the judgement exercised on tax As a result of changes in the ﬁscal terms of management judgement and estimation of the provisioning, including any material changes the Abu Dhabi onshore concession following amounts which could be payable. to deferred tax asset recognition. its renewal, the group’s taxes payable relating to the concession are now principally Reviewed the accounting treatment of reported as income taxes rather than as taxes relating to renewal of the Abu Dhabi production taxes. onshore concession. Changes to the US corporate tax system Reviewed the estimated impact of tax resulted in a one-off deferred tax charge of reforms arising from the US Tax Cuts and $0.9 billion in the fourth quarter 2017 arising Jobs Act. from a revaluation of BP’s US deferred tax assets and liabilities.

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External audit A key area of focus from 2016 related to audit team turnover, particularly Audit risk for junior members of the teams. Actions taken over the year resulted in The external auditor set out its audit strategy for 2017, identifying key an improvement in the related score for continuity and retention of key risks to be monitored during the year. These included: members of the audit team in 2017. • Determining the liabilities, contingent liabilities and disclosures arising The committee held private meetings with the external auditor during from the Gulf of Mexico oil spill. the year and the committee chair met separately with the external auditor and group head of audit before each meeting. • Estimating oil and gas reserves and resources which has significant impact on the financial statements, particularly impairment testing and Audit transition the calculation of depreciation, depletion and amortization. Deloitte was appointed for the statutory audit, with effect from 2018 • Monitoring for unauthorized trading activity in the trading function and following a tender process in 2016. The committee monitored the its potential impact on revenue. transition of BP’s statutory auditor from EY to Deloitte, including activity to enable Deloitte to achieve independence by October 2017. This The committee received updates during the year on the audit process, included: including how the auditor had challenged the group’s assumptions on • Receiving reports from the audit transition team, including an overview these issues. of operational activities and the termination of non-audit services being Audit fees provided by Deloitte to BP – which would be prohibited when Deloitte The audit committee reviews the fee structure, resourcing and terms of becomes the group’s statutory auditor. This included Deloitte stepping engagement for the external auditor annually; in addition it reviews the down as independent adviser to BP’s remuneration committee. non-audit services that the auditor provides to the group on a quarterly • Requiring management to report to the committee on any services basis. undertaken by the statutory auditor in line with the group’s policies Fees paid to the external auditor for the year were $47 million (2016 relating to non-audit services. $47 million), of which 6% was for non-audit assurance work (see • Requiring confirmation of Deloitte’s compliance with BP’s Financial statements – Note 34). The audit committee is satisfied that independence and ethics and compliance rules. this level of fee is appropriate in respect of the audit services provided and that an effective audit can be conducted for this fee. Non-audit or • Inviting Deloitte to attend meetings of the audit committee, joint audit non-audit related assurance fees were $3 million (2016 $2 million). The and SEEA committees and the board from October 2017 as part of its ‘shadowing’ of the audit of the third and fourth quarters 2017. $1 million increase in non-audit fees primarily relates to non-audit related assurance services, offset by a reduction in tax compliance services. Deloitte confirmed its independence to the committee in October 2017. Non-audit or non-audit related services consisted of other assurance EY resigned on 29 March 2018 following completion of the 2017 audit. services. There were no new services contracted for tax compliance Deloitte will audit the 2018 financial year subject to shareholder approval and advisory services for 2017. at the 2018 AGM. Audit effectiveness Changes in Registrant’s Certifying Accountant The effectiveness, performance and integrity of the external audit Following a competitive tender process and on the audit committee’s process was evaluated through separate surveys for committee recommendation, in November 2016 the board selected Deloitte as members and those BP personnel impacted by the audit, including chief BP’s independent external auditor for the financial year ending financial officers, controllers, finance managers and individuals 31 December 2018. This change in external auditor is being made in responsible for accounting policy and internal controls over financial accordance with UK and EU law requirements – in particular, the UK reporting. Corporate Governance Code and the reforms of the audit market by the The survey sent to management comprised questions across five main Competition and Markets Authority and the European Union – which criteria to measure the auditors’ performance: require that companies put their external audit out to tender at least every ten years. EY has served as BP’s external auditor since 1909. EY • Robustness of the audit process. continued to serve as BP’s external auditor throughout the financial year • Independence and objectivity. ended 31 December 2017. • Quality of delivery. The audit committee supervised the transition period of Deloitte, as new external auditor, to ensure the monitoring of Deloitte’s independence • Quality of people and service. and extended the audit committee’s policy on non-audit services to • Value added advice. Deloitte during the financial year ended 31 December 2017. The board appointed Deloitte as the company's new external auditor with effect Further questions were included on BP’s attitude to the audit and the from 29 March 2018 to fill the vacancy arising from EY’s resignation progress of the audit transition. following completion of their audit of BP’s 2017 financial statements. At The 2017 evaluation concluded that the external auditor’s performance the 2018 AGM, EY will not stand for re-election and the board will seek had remained largely constant in key areas compared with the previous shareholder approval for the appointment of Deloitte as the company's year. Areas with high scores and favourable comments included quality external auditor until the conclusion of the next AGM at which the of accounting and auditing judgement, the working relationship with company's accounts are laid before shareholders. management and the insight brought through EY’s audit work. Areas In respect of the financial years ended 31 December 2016 and 2017, EY of focus included the need for innovation in the audit and consistency did not issue any report on the consolidated financial statements of the of audit practices in locations further away from the UK and US. A BP group that contained an adverse opinion or a disclaimer of opinion, further focus was BP’s assessment of its own performance in relation nor were the auditor’s report qualified or modified as to uncertainty, to the audit. audit scope or accounting principles. There has not been any Results of the annual assessment were discussed with the external disagreement as defined in Item 16F(a)(1)(iv) of Form 20-F with EY over auditor who considered these themes for the 2017 audit service any matter of accounting principle or practice, financial statement approach. disclosure, or auditing scope or procedure, which disagreement, if not resolved to EY’s satisfaction, would have caused EY to make reference to the subject matter of the disagreement in connection with its

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auditor’s reports, or any reportable event as defined in Item 16F(a)(1)(v) For all other services which fall under the ‘permitted services’ of Form 20-F. categories, approval above a certain financial amount must be sought on a case-by-case basis. Any proposed service not included in the BP has provided EY with a copy of the foregoing disclosure and has permitted services categories must be approved in advance either by requested that they furnish BP with a letter addressed to the US the audit committee chairman or the audit committee before Securities and Exchange Commission (SEC) stating whether or not they engagement commences. The audit committee, chief financial officer agree with such disclosure and, if not, stating the respects in which they and group controller monitor overall compliance with BP’s policy on do not agree. A copy of EY’s letter dated 29 March 2018, in which they audit-related and non-audit services, including whether the necessary stated that they agree with such disclosure, is filed as Exhibit 15.6. pre-approvals have been obtained. The categories of permitted and During the financial years ended 31 December 2016 and 2017 BP did not pre-approved services are outlined in Principal accountants’ fees and consult with Deloitte regarding: (i) the application of accounting services on page 276. The committee’s policies were updated in 2017 to principles to any specified transaction, either completed or proposed, reflect the revised regulatory guidelines of the FRC, including: or the type of audit opinion that might be rendered on the consolidated • Adoption of the FRC’s prohibited non-audit services list.

financial statements of the BP group; or (ii) any matter that was either Corporate governance the subject of a disagreement as defined in Item 16F(a)(1)(iv) of Form • Prohibition of non-audit tax services by the audit firm. 20-F or reportable event as defined in Item 16F(a)(1)(v) of Form 20-F. • Reduction of the pre-approval requirements for non-audit services Auditor appointment and independence in line with FRC guidance on ‘non-trivial’ engagements with the audit The committee considers the reappointment of the external auditor firm. each year before making a recommendation to the board. The committee assesses the independence of the external auditor on an Committee evaluation ongoing basis and the external auditor is required to rotate the lead audit The audit committee undertakes an annual evaluation of its performance partner every five years and other senior audit staff every seven years. and effectiveness. The current lead partner has been in place since the start of 2013. 2017 evaluation No partners or senior staff associated with the BP audit may transfer For 2017 an internal questionnaire was used to evaluate the work of the to the group. committee. The review concluded that it had performed effectively. Non-audit services Areas of focus for 2018 include succession planning for membership The audit committee is responsible for BP’s policy on non-audit of the committee and a further review of capital spending. services and the approval of non-audit services. Audit objectivity and Actions from the 2016 evaluation independence is safeguarded through the prohibition of non-audit tax Priorities arising from the 2016 evaluation included a review of and visit services and the limitation of audit-related work which falls within to one of BP’s global business service (GBS) centres, a focus on defined categories. BP’s policy on non-audit services states that the streamlining committee materials and further scrutiny on risk auditors may not perform non-audit services that are prohibited by the management when undertaking business or functional reviews. The SEC, Public Company Accounting Oversight Board (PCAOB), UK committee visited GBS in Budapest in 2017, undertaking a review of Auditing Practices Board (APB) and the UK Financial Reporting Council the organization’s activities and strategy. It also focused on improving (FRC). committee pre-read materials, which received improved evaluation The audit committee approves the terms of all audit services as well as scores for the 2017 review. And an overview of risk management and permitted audit-related and non-audit services in advance. The external controls was included in all segment and functional reviews. auditor is only considered for permitted non-audit services when its expertise and experience of the company is important.

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Safety, ethics and environment Role of the committee The role of the SEEAC is to look at the processes adopted by BP’s assurance committee (SEEAC) executive management to identify and mitigate significant non-financial risk. This includes monitoring the management of personal and process safety and receiving assurance that processes to identify and mitigate such non-financial risks are appropriate in their design and effective in implementation.

Key responsibilities The committee receives speciﬁc reports from the business segments as well as cross-business information from the functions. These include, but are not limited to, the safety and operational risk function, group audit, group ethics and compliance, business integrity and group security. The SEEAC can access any other independent advice and counsel it requires on an unrestricted basis. The SEEAC and audit committee worked together, through their chairs and secretaries, to ensure that agendas did not overlap or omit coverage of any key risks during the year.

On site visits we look for Members ourselves and ask questions, and then we engage with Alan Boeckmann Member since September 2014 and chair since May 2016 management. Paul Anderson Member since February 2010 Frank Bowman Member since November 2010 Cynthia Carroll Member since June 2007; retired May 2017 Chairman’s introduction Ann Dowling Member since February 2012 The committee continued its work with executive management to Melody Meyer Member since May 2017 drive safe, ethical and reliable operations. It has reviewed the company’s management of the highest priority non-financial group risks and John Sawers Member since July 2015 continues to provide constructive challenge to the risk management process. The risks under their remit remained the same as for 2016: Meetings and attendance marine, wells, pipelines, explosion or release at facilities and major There were six committee meetings in 2017. All directors attended security incidents and cyber security in process control network. The every meeting for which they were eligible, apart from Cynthia Carroll committee receives reports on each of these risks and monitors their who missed one meeting due to a conflicting meeting. management and mitigation. In addition to the committee members, all SEEAC meetings were Following publication of the company’s Modern Slavery Act (MSA) attended by the group chief executive, the executive vice president statement in 2017, the committee reviewed related work practices for safety and operational risk (S&OR) and the head of group audit or in BP and will continue to review progress in developing his delegate. The external auditor attended some of the meetings and embedding those practices. In 2017 it also reviewed the and was briefed on the other meetings by the chair and secretary BP Sustainability Report 2017 and will review the annual update to the committee. The group general counsel and group ethics and MSA statement to be published in 2018. compliance officer also attended some of the meetings. At the The committee made two site visits in the year (see page 75). In conclusion of each meeting the committee scheduled private sessions June, members of the committee visited the Cherry Point refinery in for the committee members only, without the presence of executive Washington, and in July members were among the first to visit the management, to discuss any issues arising and the quality of the newly operating Glen Lyon floating production, storage and offloading meeting. The group chief executive was invited to join the private vessel in the UK North Sea. Our level of access into the operational side meetings on an ad hoc basis. is extensive and gives the committee unique insight. On site visits, we look for ourselves and ask questions, and then we engage with management on what this means for the objectives we set. The committee also continued its schedule of regular meetings with executive management. In May, Cynthia Carroll retired from the board and the committee and in the same month Melody Meyer joined the committee. Melody brings with her valuable insight through many years of industry experience, and within a few weeks of joining, participated in her first committee site visit. Alan Boeckmann Committee chair

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Activities during the year Committee evaluation For its 2017 evaluation, the committee examined its performance System of internal control and risk management and effectiveness through an internal questionnaire. Topics covered included the balance of skills and experience among its members, the The review of operational risk and In addition, the group ethics and quality and timeliness of information the committee receives, the performance forms a large part of compliance officer and the group level of challenge between committee members and management the committee’s agenda. auditor met in private with the and how well the committee communicates its activities and findings chairman and other members Group audit provided quarterly to the board. of the committee over the course reports on their assurance work on of the year. The evaluation results continued to be generally positive. Committee the system to inform the review. members considered that they continued to possess the right mix of During the year the committee The committee also received skills and background, had an appropriate level of support and received separate reports on the regular reports from the group received open and transparent briefings from management. company’s management of risks chief executive on operational risk, Corporate governance relating to: All members emphasized that site visits remained an important and from the system of internal element of the committee’s work, particularly because they gave control and risk management • Marine members the opportunity to examine how risk management is being function, including quarterly • Wells embedded in businesses and facilities, including in the management • Pipelines reports prepared for executive culture. management on the group’s • Explosion or release health, safety and environmental at our facilities Joint meetings between the SEEAC and the audit committee were performance and operational • Major security incidents considered important in reviewing and gaining assurance around integrity. These included • Cyber security (process financial and operational risks where there was overlap between control networks). quarter-by-quarter measures of the committees, particularly in relation to ethics and compliance (see below). personal and process safety, The committee reviewed these environmental and regulatory risks and their management and compliance and audit findings, mitigation in depth with relevant as well as quarterly reports from executive management. group audit.

Site visits

In June members of the committee’s visit was the first committee, and other directors, formal visit following its start-up. visited the Cherry Point refinery in During visits committee members Blaine, Washington. The site visit and other directors received included a tour of the dock, briefings on operations, the status training simulator and control of conformance with BP’s room. Meetings with senior operating management system , leadership and representatives key business and operational from across the site, including a risks and risk management and local safety committee, were held. mitigation. Committee members In July committee members, and then reported back in detail about other directors, visited the newly each visit to the committee and operational floating production, subsequently to the board. See Joint meetings of the audit and safety, ethics and storage and offloading vessel, page 75 for further details. environment assurance committees Glen Lyon, at our Quad 204 project The audit committee and SEEAC hold joint meetings on a quarterly in the UK North Sea. This was one basis to simplify reporting of key issues that are within the remit of of the seven major projects both committees and to make more effective use of the delivered during 2017 and the committees’ time. Each committee retains full discretion to require a full presentation and discussion on any joint meeting topic at their respective meeting if deemed appropriate. Corporate reporting The committees jointly met four times in 2017, with the The committee is responsible and the revised presentation, and chairmanship of the meetings alternating between the chairman of for the overview of the BP worked with the external auditor the audit committee and chairman of the SEEAC. Sustainability Report 2017. with respect to their assurance of Topics discussed at the joint meetings were the quarterly ethics The committee reviewed content the report. and compliance reports (including significant investigations and allegations) and the 2018 forward programmes for the group audit and ethics and compliance functions. The committees reviewed the approach and disclosure statement under the UK Modern Slavery Act and the results of an externally facilitated review of the effectiveness and performance of group audit.

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Remuneration committee Key responsibilities The committee undertakes its tasks in accordance with applicable regulations, including those made from time to time under the Companies Act 2006, the UK Corporate Governance Code and the UK Listing Authority’s Listing Rules in relation to the remuneration of directors of quoted companies. • Determine the remuneration policy for the chairman and the executive directors. • Review and determine the terms of engagement, remuneration and termination of employment for the chairman and the executive directors as appropriate and in accordance with the policy, and be responsible for compliance with all remuneration issues applicable to them. • Prepare the annual remuneration report to shareholders to show how the policy has been implemented. • Approve the principles of any equity plan that requires shareholder approval. After extensive shareholder • Approve the terms of the remuneration of the executive team engagement, we were pleased to (including pension and termination arrangements) as proposed receive strong support for our new by the group chief executive. remuneration policy at the 2017 AGM. • Approve changes to the design of remuneration, for BP group leaders as proposed by the group chief executive. • Monitor implementation of remuneration for group leaders to ensure alignment and proportionality. • Engage independent consultants or other advisers as the committee Chair’s introduction may from time to time deem necessary, at the expense of the company. I am pleased to report on the work of the committee in 2017. Following substantial engagement with our shareholders in 2016 and early 2017, we were pleased to receive their support at the 2017 AGM. We applied Members our new remuneration policy from the start of 2017 and during the year have been addressing some transitional arrangements from old to the Ann Dowling Member since July 2012 and new policies. We also reviewed BP pay below the executive team by chair since May 2015 region, job level and sector to give additional context to our decisions on Alan Boeckmann Member since May 2015 executive pay. Ian Davis Member since July 2010 Having served on this committee for six years, and as chair for the last three, I am stepping down from the committee after the 2018 AGM. Brendan Nelson Member since May 2017 Paula Reynolds, who joined the committee in September 2017, will take Paula Reynolds Member since September 2017 the chair. She is currently chair of the remuneration committee at BAE Systems plc and has served on that committee since 2015. Andrew Shilston Member since May 2015; retired from the committee During the year, Deloitte LLP had to stand down as our independent May 2017 adviser following their forthcoming appointment as auditor. Following a competitive tender process, we appointed PwC LLP in their place. Meetings and attendance Professor Dame Ann Dowling Carl-Henric Svanberg and Bob Dudley attend meetings of the Committee chair committee except for matters relating to their own remuneration. Bob Dudley is consulted on the remuneration of other executive directors, the executive team and more broadly on remuneration across the wider Role of the committee employee population. Both the group chief executive and chief ﬁnancial ofﬁcer are consulted on matters relating to the group’s performance. The role of the committee is to determine and recommend to the board the remuneration policy for the chairman and executive directors. In The group human resources director attends meetings and other determining the policy, the committee takes into account various executives may attend where necessary. The committee consults other factors, including structuring the policy to promote the long-term board committees on the group’s performance and on issues relating to success of the company and linking reward to business performance. the exercise of judgement or discretion.

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The committee met eight times during the year. All directors attended Geopolitical committee each meeting that they were eligible to attend, either in person or by telephone, except that Alan Boeckman was not able to attend a telephone meeting on 27 February in 2017.

Activities during the year In the period before the 2017 AGM, the committee focused on ﬁnalizing the proposed new remuneration policy and outcomes for 2016. This involved reviewing directors’ salaries and the group’s performance outcome which in turn determined the annual bonus and the performance share plan. From the 2017 AGM, the committee focused on implementing the new

policy, in particular looking more broadly at remuneration of employees Corporate governance below the executive team and the measures that could be used to reflect the transition to a lower carbon world. It also considered the implications of the transition from the 2014 to the 2017 policies, in particular aspects relating to share grants, and reviewed potential outcomes for 2017 at the end of the year. Chairman’s introduction Following the appointment of Deloitte as the group’s statutory auditor from 2018 (subject to shareholder approval) and the need for the firm I am pleased to report on the work of the geopolitical committee to be independent prior to the transition of the audit, the committee in 2017, which continued to develop and evolve during the year. In appointed PwC as its independent adviser effective September 2017. addition to our regular meetings, we visited the group’s response The committee continued to monitor developments in potential information centre in Sunbury, where we were briefed on the group’s regulation and legislation and held early discussions on the possible practices and procedures. During 2017 I also joined discussions of the implications for its work. It also considered the company’s disclosure international advisory board. on the UK gender pay gap. Cynthia Carroll and Andrew Shilston stood down from the board at In each of its meetings, the committee focused on the overall quantum the 2017 AGM, and Melody Meyer joined the committee in May. of executive director remuneration and its alignment to the broader Other board members joined our meetings from time to time. group of employees in BP. It has sought to reflect the views of Sir John Sawers shareholders and the broader societal context in its decisions. Committee chair

Shareholder engagement There was substantial engagement with shareholders and proxy voting Role of the committee agencies ahead of the 2017 AGM, primarily carried out by the chair of the committee, supported by the chairman and company secretary. The The committee monitors the company’s identification and management committee chair tested proposals and sought support for the new policy of geopolitical risk. put to shareholders at the 2017 AGM. In order to understand evolving issues – particularly around climate change – engagement continued Key responsibilities throughout the year, primarily with larger shareholders and • Monitor the company’s identification and management of major and representative bodies. correlated geopolitical risk and consider reputational as well as financial consequences: Committee evaluation – Major geopolitical risks are those brought about by social, We undertook an internally facilitated evaluation to examine the economic or political events that occur in countries where BP has committee’s performance in 2017. The evaluation concluded that material investments. the committee had worked well and continued to evolve after its – Correlated geopolitical risks are those brought about by social, intense work leading up to the 2017 AGM. economic or political events that occur in countries where BP may Focus areas for 2018 included improving oversight of stakeholders’ or may not have a presence but that can lead to global political views on remuneration and in particular, deepening the committee’s instability. understanding of remuneration below the executive level. In • Review BP’s activities in the context of political and economic addition, we focussed on staying up to date with external developments on a regional basis and advise the board on these developments and emerging ‘best practice’ and improving elements in its consideration of BP’s strategy and the annual plan. remuneration reporting.

See page 90 for the Directors’ remuneration report.

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Members Chairman’s and nomination committees

John Sawers Member since September 2015 and chair since April 2016 Paul Anderson Member since September 2015 Frank Bowman Member since September 2015 Ian Davis Member since September 2016 Melody Meyer Member since May 2017 Cynthia Carroll Member from September 2016 to May 2017 Andrew Shilston Member from September 2015; retired May 2017

Meetings and attendance Carl-Henric Svanberg and Bob Dudley attend all committee meetings. Chairman’s introduction The executive vice president, regions and the vice president, The chairman’s and the nomination committees were actively involved government and political affairs attend meetings as required. in the evolution of the board in 2017. In October, I announced that I would be standing down as chairman at an appropriate time after the The committee met three times during the year. All directors attended 2018 AGM in May. As a result, the board has started the search for my each meeting that they were eligible to attend except that Cynthia successor. This is being carried out by the chairman’s committee led Carroll was unable to attend the meeting on 1 February 2017. by Ian Davis, the senior independent director. Activities during the year The nomination committee continues to focus on board renewal and diversity. The committee developed and broadened its work over the year. It discussed BP’s involvement in the key countries where it has Carl-Henric Svanberg investment or is considering investment in detail. These included Chair of the committees Angola, the US, Russia, Mexico, Brazil, India, Mauritania and Senegal. It considered broader policy issues such as the US domestic and foreign policy under the new administration and the political and economic Chairman’s committee impact of a low price on producing countries. Role of the committee We reviewed the geopolitical background to BP’s global investments To provide a forum for matters to be discussed by the non-executive and the politics around climate change. directors. Committee evaluation Key responsibilities The committee reviewed its performance by means of an internally • Evaluate the performance and the effectiveness of the group chief facilitated questionnaire, and discussed the outcome of that evaluation executive. at its meeting in January 2018. • Review the structure and effectiveness of the business organization. The evaluation concluded that the committee was working well and • Review the systems for senior executive development and determine considering the right issues, but stressed the importance of considering succession plans for the group chief executive, executive directors and the geopolitics in a country before an investment is made. The other senior members of executive management. committee currently meets three times a year and is considering additional meetings. • Determine any other matter that is appropriate to be considered by non-executive directors. The committee and board felt that there should be greater integration • Opine on any matter referred to it by the chairman of any committees between the work of the board, the committee and the international comprised solely of non-executive directors. advisory board. Members The committee comprises all non-executive directors. Directors join the committee immediately on their appointment to the board. The group chief executive attends meetings of the committee when requested.

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Meetings and attendance Nomination committee The committee met 10 times in 2017. All directors attended all the Role of the committee meetings for which they were eligible, except that Cynthia Carroll was The committee ensures an orderly succession of candidates for unable to attend the meeting on 1 February, as was Paula Reynolds for directors and the company secretary. the 19 May 2017 meeting. Nils Andersen did not attend the meetings where succession was discussed. The chairman did not attend the Key responsibilities meeting on 2 February when the committee, led by Andrew Shilston, the then senior independent director, carried out an evaluation of the • Identify, evaluate and recommend candidates for appointment or chairman. reappointment as directors. Bob Dudley and Brian Gilvary joined meetings where the chairman’s • Identify, evaluate and recommend candidates for appointment as succession was discussed. Matters relating to the business of the company secretary. nomination committee were also discussed at some meetings. • Keep the mix of knowledge, skills and experience of the board under

review to ensure the orderly succession of directors. Corporate governance Activities during the year • Review the outside directorship/commitments of non-executive • Evaluated the performance of the chairman and the group chief directors. executive.

• Considered the composition of and the succession plans for the Members executive team. • Determined the process for the search for a new chair and appointed Carl-Henric Svanberg Member since September advisers to support the committee. 2009 and chair since January 2010 • Commenced the search for the new chair. Alan Boeckmann Member since April 2016 • Discussed the strategy options for the company, including the lower carbon transition. Ann Dowling Member since May 2015 John Sawers Member since April 2016 Ian Davis Member since August 2010 Andrew Shilston Member between May 2015; retired May 2017

Andrew Shilston left the committee when he stood down from the board in May 2017.

Meetings and attendance The committee met three times in 2017. During the second half of the year, matters relating to the appointment of new directors were considered jointly with the chairman’s committee. All directors attended each meeting that they were eligible to attend.

Activities during the year The committee monitored the composition and skills of the board. Paul Anderson will be retiring from the board at the 2018 AGM. The committee focused on ensuring that the board’s composition is strong and diverse. As a result, the board is proposing Dame Alison Carnwath for election as a director at the 2018 AGM.

Committee evaluation The committee generally continues to work well. Its balance of skills and experience needs to be maintained so that it is able to govern the company as it implements its strategy in the transition to the lower carbon world. It expressed a need to ensure that the board maintains strong former executive membership and this will be a focus in forthcoming appointments.

BP Annual Report and Form 20-F 2017 89 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 93 of 371 Directors’ remuneration report

We have made our decisions in a considered way, applying discretion where necessary, as we transition to the new policy.

Professor Dame Ann Dowling Chair of the remuneration committee

measure have more than doubled over the last two years, Contents Dear shareholder, there is room for further improvement and the company Last year, we introduced a new remuneration policy. This has continued to incur costs from the Gulf of Mexico oil 93 Summary of pay and followed extensive consultation with major shareholders performance spill payments. Taking these factors into account, the and with their representative bodies. They were clear committee chose to reduce the level of payment for these 94 Summary of policy that they wanted our policy to be simple and transparent, long-term performance shares by 26%. In applying this approach with a strong link between pay and performance, and reduction, the committee acted in accordance with the deliver reduced levels of reward. We listened and 95 Single figure table messages we received from shareholders and the responded to those concerns. We were pleased to principles that govern our new policy. 96 Alignment with receive strong support for this policy at the 2017 AGM. strategy It is clear to us that you, our shareholders, expect us to In 2015 Bob Dudley received a maximum performance 98 Pay and performance implement this policy in a considered way and to be award of 550% of salary for the period 2015-17. In the for 2017 ready to apply discretion when necessary. spirit of applying the new policy early, he requested a reduction in his maximum award to 500% in line with 102 Implementation of 2017 has been a transitional year as we have moved from the 2017 policy. The committee appreciates this request policy for 2018 the old policy to the new. We applied the new policy from which, together with the committee’s discretion, has the start of 2017 (see panel opposite). Therefore salary, the 105 Stewardship reduced his payment by $4.2 million (24%) from the 2017 annual bonus and long-term awards made in 2017, formulaic outcome. 107 Non-executive based on performance over the three-year period 2017-19, directors are all made under the new policy. However, the long-term We believe that the outcome for executive directors, 108 Executive directors’ awards granted under the 2015-17 plan were under our old representing an increase on 2016 but moderated by interests policy and are based on measures in that policy. The discretion, fairly reflects management’s performance and committee scored the safety, operational and financial the experience of shareholders over this longer period, 110 Policy summary performance against targets set in 2015, before reviewing and is consistent with the aims of the policy approved by tables the result to see if discretion should be applied. Business shareholders last year. performance over the period, and in particular for 2017, has been strong, reflected in the company’s first place ranking Business performance for TSR among our peer group of major oil and gas 2017 has been one of the strongest years of operational companies. However, while returns, which have been delivery for BP. This has been reflected in our financial explicitly included in the new policy through a ROACE results, with a doubling of our underlying replacement

Key outcomes for 2017 Bob Dudley (GCE) – total pay

Seven major First among projects delivered peers for total $19.4m in the year. shareholder $17.6m -$3.4m return.

-$0.8m $13.4m $11.9m

Discretion used to Total pay reduced reduce outcome by $4.2 million (24%) for performance. due to GCE request and committee discretion. More information

Key performance indicators For an overview of the group’s 2015 2016 2017 Impact of GCE request 2017 KPIs, with those featuring in Formulaic committee for 2017 single the current and previous outcome discretion policy vesting ﬁgure remuneration policies, see (550% to 500%) outcome page 18.

90 BP Annual Report and Form 20-F 2017 Directors’ Caseremuneration 3:17-cv-06011-WHA report Document 231-2 Filed 05/03/18 Page 94 of 371

cost profit over the year to $6.2 billion and an underlying operating cash A summary of the 2017 policy is set out on page 110, including flow of $24.1 billion, excluding post-tax oil spill related payments. Over the following changes to the 2014 policy: the year BP distributed $7.9 billion in dividends. Following consistent Simplification strong progress and the board’s confidence in the growing organic free • Reduction to two incentive plans – a short-term annual bonus and a cash flow, we recommenced a share buyback programme in the fourth long-term performance share plan – deferred shares no longer quarter to offset dilution from the scrip dividend paid to shareholders matched with additional shares. electing to receive shares rather than cash. • Maximum bonus only earned where stretch performance is Our TSR for the period 2015-17 was first among our peer group of major delivered on every measure. oil and gas companies. TSR on the UK shares has been 44% over the three-year period, significantly out-performing the UK market. Seventeen • Fewer measures. Eliminated duplication of measures between bonus and long-term incentives. major projects have been delivered over the three-year period. This has contributed to a 10% increase in BP’s reported production since 2016 Transparency and places us in a strong position for further growth. We have had our • Total shareholder return (TSR) and return on average capital most successful year of exploration since 2004. The downstream employed (ROACE) targets disclosed at the start of the three-year Corporate governance business had an excellent year in terms of replacement cost profit, driven performance period. For awards granted in 2017 and 2018, these by strong earnings growth in our marketing and manufacturing determine 80% of the available performance shares. businesses. Our Alternative Energy business grew and BP re-entered • The group’s quarterly results announcements now include updates solar but in a new way, partnering with Lightsource to combine our scale, on all of the KPIs on which remuneration is based other than TSR, relationships and expertise in major projects with Lightsource’s expertise with commentary on progress on our strategic priorities which, for in developing solar projects. awards granted in 2017 and 2018, determine 20% of the available performance shares. Overall this has been a year of disciplined execution and growth across the business and BP has made a good start in delivering the company’s Reduced package five-year strategy out to 2021. • The level of bonus paid for an ‘on-target’ score reduced by 25%, and the mandatory bonus deferral increased to 50% of bonus with Committee process for 2017 no matching shares. Bonus scale for executive directors now aligned with the wider managerial population. In order to gain a comprehensive perspective on performance, the remuneration committee sought the views of the board, audit committee • The maximum longer-term incentives for the group chief executive (GCE) reduced from seven times salary (previously made up of and safety, ethics and environment assurance committee (SEEAC) to matching shares on the deferred annual bonus and performance evaluate the group’s performance against financial, operational and shares) to a maximum of five times salary. strategic measures for the purposes of executive remuneration. Link to strategy and shareholder outcome Incentive outcomes in 2017 • Straightforward use of TSR and ROACE as measures of longer- term performance. 2017 was a year of strong performance and achievements, where all targets were met or exceeded for the annual bonus, leading to a • Performance shares vest based in part on strategic priorities which formulaic result of 1.54 out of 2. The audit committee and the SEEAC include BP’s progress towards a lower carbon future. recommended an exercise of downward discretion. This resulted in the Stewardship remuneration committee reducing the final bonus score to 1.43 out of 2. • No change to the six-year period for performance shares (three-year This results in a bonus of 71.5% of the maximum, half of which will be holding period after three-year performance period), nor to the delivered as shares and held for three years. minimum shareholding requirement of 5x base salary. There is a new post-retirement holding expectation of 2.5x base salary. For the performance share award made in 2015, the measures are relative TSR, and various financial, safety and operational measures • Safety and the environment remain important considerations assessed over the three years from 2015 to 2017. The formulaic results through bonus measures and the underpin on long-term incentives. led to an outcome of 96% of maximum, reflecting the fact that BP came • Remuneration committee has the responsibility of balancing the in first place against the peer group on relative TSR and performed outcomes from quantitative results with discretion to adjust final strongly against the other targets set. results based on the broader environment and performance.

This outcome was considered by the committee and reviewed with the For the full policy see bp.com/remuneration executive directors in the context of the overall levels of pay, the wider performance of the company, and the experience of shareholders over

How did we determine 2017 outcomes?

1 2 3 4

Assess Review outcomes Alignment with Apply discretion performance with committees employees

Performance assessed against Sought input from the SEEAC The remuneration committee The committee used judgement safety, operational and financial and audit committee to ensure a considered outcomes in the to reflect the broader market measures. holistic review of performance. context of BP’s group leaders and environment and outcomes for the broader comparator group shareholders. Determined outcomes Annual bonus scores reduced of US and UK employees in against targets set. following the committees’ review. Downward discretion exercised professional and managerial roles. for final outcomes.

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the three-year period of the plan. In addition, the committee decided to We also introduced an underpin for performance shares which includes incorporate early application of some of the principles of the new 2017 absolute TSR, safety performance and consideration of issues around policy, for example the more stringent vesting scales. In light of these carbon and climate change. This framework will allow the committee to factors and an overall assessment of pay relative to performance, the monitor progress against the broader approach we outlined in February committee applied its discretion to reduce the 2015 performance share 2018 – reducing our emissions, improving our products and creating low award vesting from 96% to 70% of maximum. carbon businesses. See ‘Advancing the energy transition’ on page 96. The exercise of committee discretion on annual bonus and performance share outcomes reduced the amount of variable pay by $3.4 million for Wider workforce pay Bob Dudley and £1.2 million for Brian Gilvary. During the year the committee reviewed the group’s approach to reward below board level across job levels and geographies. This wider Consistent with the approach of applying certain aspects of the new environment provided important context for the committee’s decisions policy early, Bob Dudley has requested that his performance share on executive directors’ remuneration. vesting should be based on an award level of 500% of salary (from the 2017 policy), rather than the 550% of salary that applied for the 2014 Last year, we voluntarily disclosed the GCE-to-employee pay ratio, using policy. the employee comparator group of the professional/managerial grade employees based in the UK and US (representing some 30% of the Furthermore, demonstrating their commitment to delivering long-term global employee population). We are aware that regulations will be sustainable value for BP shareholders, the executive directors have also introduced to require companies to calculate and disclose a ratio. voluntarily agreed to the extension of vesting periods for certain share As the regulatory methodology is not yet final, we have continued the awards under a discontinued plan as a transitional approach to the new practice we adopted in 2017. policy. These share awards remain subject to continued application of a safety underpin. Work undertaken by the group in preparation for UK regulatory requirements on gender pay gap reporting was reviewed with the Following these decisions, the total reported single figure of pay for committee, who considered the distribution of employees by grade and Bob Dudley and Brian Gilvary was $13.4 and £6.5 million. These are gender. In that context the committee received assurance that there substantially below formulaic outcomes for 2017 but, because the was equal pay for equal or like work. business performance is much improved, are higher than the single figure outcomes for 2016. The committee believes that these outcomes appropriately reflect the strong operational and financial performance of Committee changes BP this year and over the past three years whilst demonstrating a There have been changes to the membership of the committee during commitment to a considered approach. This year’s single figure for Brian the year: Andrew Shilston retired from the board at the AGM in May Gilvary is substantially affected by the inclusion of deferred bonus 2017, with Brendan Nelson and Paula Reynolds joining the committee shares from 2014 which have now vested, and the 2017 bonus shares during 2017. The chairs of both audit committee and SEEAC are now that are being deferred but we now report in the year the shares are members of the remuneration committee which strengthens the granted. committee’s ability to take a wider perspective on the group’s performance when discussing reward. I believe that we have a broad Implementation of the policy for 2018 range of skills and experience amongst the membership upon which to draw on when looking at issues around remuneration. We plan to make two changes to the performance measures in 2018. For the annual bonus, the upstream measure for ‘reliable operations’ will Following six years on this committee, the last three as chair, I have be changed from ‘upstream operating efficiency’ to ‘BP-operated decided to step down from the committee following the AGM in May upstream plant reliability’, creating comparability between our upstream 2018. Paula Reynolds will take the chair. I want to take the opportunity to and downstream measures. For performance shares granted in 2017, thank my fellow committee members for their support and welcome the ROACE target was based on the final year of the performance Paula to the role of chair. I would also like to thank the executive directors period. In response to investor feedback, we are moving progressively for their positive engagement in the policy changes and exercise of towards a three-year evaluation period to encourage steady and discretion over the last two years. sustainable growth. For the 2018 awards, we will average ROACE over the final two years (2019 and 2020) and then use a three-year average Conclusion for 2019 awards onwards. The board continues to place a high priority on building confidence in We reviewed base salaries for the Bob Dudley and Brian Gilvary, noting the operation of our remuneration policy. This requires the remuneration the salary increases for UK and US-based employees across the group. committee to exercise discretion to align pay outcomes to performance, The committee has decided there should be no increase in annual salary particularly as we navigate the transition from the pre-2017 policy to our for Bob Dudley. Brian Gilvary’s salary will be increased by 2%, which was new policy for the future. We have sought to do this in a considered way below the general increases for the UK and US based employees across that reflects shareholder expectations, the performance of BP, and the the group. commitments made to executives. In putting this report forward for an advisory vote at the AGM, we seek your support for the balance we Alignment with strategy and the low carbon transition have struck. In 2017 BP announced details of our five-year strategy to 2021, focusing on strategic and investment choices that are resilient to a range of future outcomes whilst considering the dual challenge of meeting society’s need for more energy while working to reduce carbon emissions. To reinforce the importance of the strategy for the group’s long-term Professor Dame Ann Dowling success, the 2017 policy introduced a balanced but stretching set of Chair of the remuneration committee measures into the incentives to reflect BP’s strategy. During the year we 29 March 2018 have included updates on our strategic progress in our quarterly results announcements.

92 BP Annual Report and Form 20-F 2017 Directors’ Caseremuneration 3:17-cv-06011-WHA report Document 231-2 Filed 05/03/18 Page 96 of 371 Summary of our pay and performance for 2017

2017

Business performance We have made good progress, with strong cash ﬂow and share price growth and the announcement of a number of major investments, all aimed at contributing to returns over the medium and long term. Key strategic highlights 1st $24.1bn $7.9bn • Underlying replacement cost profit up 139%. Among peers for total Operating cash ﬂow, Dividends paid, • Organic cash flows back in balance. shareholder return for excluding Gulf of including scrip. • Seven new major projects delivered. 2015-17. Mexico payments.

Performance outcomes Corporate governance Annual bonus Performance shares 77% -5.5% 71.5% 96% -26% 70% Formulaic outcome Committee discretion Final outcome after Formulaic outcome Committee discretion Expected outcome after (% of maximum) to reduce award committee discretion (% of maximum) to reduce award committee discretiona (% of maximum) (% of maximum)

Performance measures Nil Maximum Performance measures Nil Maximum (% weighting) (% weighting)

Safety Financial Tier 1 process safety events (10%) Relative TSR (33.3%) Recordable injury frequency (10%) Cumulative operating cash ﬂow (33.3%)

Reliability Strategic imperatives Reﬁning availability (15%) Reserves replacement ratioa (11.1%)

Upstream operating efficiency (15%) Major project delivery (11.1%) Financial Safety and operational risk Operating cash flow (excluding Gulf – Tier 1 process safety events (11.1%) of Mexico oil spill payments) (20%) – Recordable injury frequency Underlying replacement cost profit (20%) a The final outcome for part of this award is based on the company’s relative RRR ranking, Upstream unit production costs (10%) presently forecast to be second amongst its peers: this will not be known until after the publication of our peers’ reports and will therefore be reported in the directors’ remuneration report for 2018.

Remuneration outcomes

Bob Dudley, group chief executive Brian Gilvary, chief financial officer Total remuneration Total remuneration 2017 $13.4m 2017 £6.5m 2016 $11.9m 2016 £4.2m 2015 $19.4m 2015 £5.1m 2014 $16.4m 2014 £3.6m Salary and benefits Retirement benefits Annual bonus Performance shares Discontinued plans

Reduction in total remuneration $3.4 million $0.8 million £1.2 million Reduction due to Bob Dudley’s Reduction due to committee discretion voluntary performance committee discretion share reduction

Shareholding is a key means by which the interests of executive directors are aligned with those of shareholders. As at 14 March 2018 both Share ownership directors had holdings in BP which signiﬁcantly exceeded their shareholding requirement. Further details are set out on page 105.

Policy requirement: minimum of ﬁve times salary

Bob Dudley, group chief executive Brian Gilvary, chief ﬁnancial ofﬁcer

3,065,694 sharesb 10.71 times salary 1,825,299 shares 11.17 times salary bHeld as ADSs.

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2018

BP’s policy approach Simpliﬁcation. Reduced package Link to strategy. Stewardship. versus previous policy.

Elements of package

Salary and benefits Competitive salary and benefits to reflect role Retirement benefits and home country norms

Annual bonus Bonus aligned with annual objectives

Performance shares Share award for meeting three-year targets

Share ownership Long-term shareholding

Approach

Salary and benefits Fixed pay policy is unchanged. Salary and benefits are set at a level which reflects the scale and complexity of the role while recognizing competitive practice in the relevant market. • The salary for the group chief executive will remain at • The increase to Brian Gilvary’s salary continues to reflect the $1,854,000 for 2018. Bob Dudley has not received a salary changes to his role when he took on additional responsibilities increase since July 2014. for BP’s trading and shipping functions. This increase of 2% is within the range used by the company for other UK and US • With effect from the AGM, the salary for the chief financial officer employees. will be £775,000. • Benefits will remain unchanged – these include car-related benefits, security assistance, insurance and medical benefits.

Retirement benefits • From September 2016, Bob Dudley has no further service • Brian Gilvary receives a cash supplement on the same accrual under the defined benefit pension arrangements. The terms as other participants in the BP UK defined benefit 401(k) benefits have been partially capped for future years. scheme. He receives no further service accrual under the defined benefit pension arrangements.

Annual bonus The bonus links variable pay to safety, reliable operations and financial performance for the year. • Maximum bonus only payable for outperformance on • The measures for the bonus are set annually to reflect Up to 225% every measure. annual priorities. of salary • Bonus payable for delivery of bonus scorecard of 1.0 out • For 2018, performance judged on three key areas: of 2.0 is half of maximum. – safety (20%) • 50% of any bonus earned will be paid in cash; there will be a – reliable operations (30%) mandatory deferral of 50% into shares for three years. – financial performance (50%). • Overall discretion to review outcomes in the context of annual • Awards will be subject to clawback and malus provisions. performance.

Performance shares Directly linked to long-term performance and represents the largest part of the package. • Three-year performance period, with further three-year • For 2018 awards, performance judged on three key areas: holding period. – TSR relative to oil and gas majors over three years (50%) GCE – 500% – ROACE based on the average of performance over 2019 • Measures aligned to long-term strategy and shareholders’ CFO – 450% and 2020 (30%) interests. of salary – strategic progress assessed over the performance • Awards will be subject to clawback and malus provisions. period (20%). • Additional underpin – broader performance including absolute TSR performance and safety and environmental factors (including consideration of issues around carbon and climate change) to be considered before determining vesting outcomes.

ShareShare ownership Stewardship and alignment with shareholders • Continuing requirement for directors to maintain a holding • In addition the executive directors have voluntarily agreed of ﬁve times salary. to extend the vesting periods of certain discontinued share awards, subject to a continued safety underpin. • It is expected that Bob Dudley and Brian Gilvary will maintain a holding of at least 250% of salary for two years following retirement.

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Remuneration is reported in the currency Bob Dudley Brian Gilvary in which the individual is paid (thousand) (thousand)

2017 2016 2017 2016 Salary and beneﬁts

Salary $1,854 $1,854 £752 £732 Beneﬁts $73 $74 £38 £67 Retirement beneﬁts

Pension and retirement savings – value increasea $746 $2,205 £186 – Corporate governance Cash in lieu of future accrual – – £263 £256

Annual bonus

Cash bonus $1,491 $1,696 £611 £669

Shares – deferred for three years $1,491 – £611 – Performance shares

Performance shares $7,787b $4,024c £2,981b £1,455c Total remuneration (excluding discontinued plans)d $13,443 $9,852 £5,440 £3,179

Discontinued plans Deferred share awards from prior-year bonusese –f $2,052 £1,040 £1,065 Total remunerationd $13,443 $11,904 £6,481 £4,244

a Represents (1) the annual increase net of inflation in accrued pension multiplied by 20 as prescribed by UK regulations, and (2) the aggregate value of the company match and investment gains on the accumulating unfunded BP Excess Compensation (Savings) Plan (ECSP) account under Bob Dudley’s US retirement savings arrangements. Full details are set out on page 101. b Represents the assumed vesting of shares in 2018 following the end of the relevant performance period, based on a preliminary assessment of performance achieved under the rules of the plan and includes reinvested dividends on shares vested. In accordance with UK regulations, the vesting price of the assumed vesting is the average market price for the fourth quarter of 2017 which was £5.01 for ordinary shares and $39.85 for ADSs. The final vesting will be confirmed by the committee in second quarter of 2018 and provided in the 2018 directors’ remuneration report. Bob Dudley has requested that the EDIP performance share vesting in respect of the performance period 2015-17 is based on the 500% maximum annual award level which applies under the 2017 directors’ remuneration policy, rather than the 550% maximum annual award level which applies under the 2014 directors’ remuneration policy. c In accordance with UK regulations, in the 2016 single figure table, the performance outcome value was based on an estimated vesting at an assumed share price of £4.73 for ordinary shares and $35.39 for ADSs. In May 2017, after the external data became available, the committee reviewed the relative reserves replacement ratio position. This resulted in no adjustment to the final vesting of 40%. On 19 May 2017, 108,923 ADSs for Bob Dudley and 308,286 shares for Dr Brian Gilvary vested at prices of $36.94 and £4.72 respectively. This total includes the additional accrual of notional dividends which vested on 2 August 2017. The 2016 values for the total vesting have increased by $310,709 for Bob Dudley and by £67,820 for Dr Brian Gilvary. d Due to rounding, the total does not agree exactly with the sum of its component parts. e Value of vested deferred bonus and matching shares. The amounts reported for 2017 relate to the 2014 annual bonus deferred over three years, which vested on 20 February 2018 at the market price of £4.75 for ordinary shares and include reinvested dividends on shares vested. There was an additional accrual of notional dividends on 29 March 2018 which will vest in 2018 and will be provided in the 2018 directors’ remuneration report. The amounts reported for 2016 relate to the 2013 annual bonus and have been adjusted from the number provided in the 2016 directors’ remuneration report to include the accrual and vesting of notional dividends. f As stated in the 2016 directors' remuneration report, Bob Dudley has voluntarily agreed to defer vesting of these awards until after retirement, therefore the performance period is expected to exceed the minimum term of three years. Key outcomes for 2017 Bob Dudley (GCE) – total pay

Seven major First among projects delivered peers for total $19.4m in the year. shareholder $17.6m -$3.4m return.

-$0.8m $13.4m $11.9m

Discretion used to Total pay reduced reduce outcome by $4.2 million (24%) for performance. due to GCE request and committee discretion.

2015 2016 2017 Impact of GCE request 2017 Formulaic committee for 2017 single outcome discretion policy vesting ﬁgure (550% to 500%) outcome

BP Annual Report and Form 20-F 2017 95 Directors’ remunerationCase report 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 99 of 371 Alignment with strategy

BP set out an update of its strategy in 2017, which was reinforced in the results announcement in February 2018. The foundations for strong performance are safe and reliable operations, a balanced portfolio, and a focus on returns.

How we align Safer Fit for Focused on Growing sustainable our strategy and future returns free cash flow remuneration and distributions to measures Safe, reliable A distinctive Value based, shareholders over the and efficient portfolio fit for a disciplined long term execution changing world investment and cost focus

Element of remuneration Annual bonus

Safety Reliable operations Financial performance

Performance shares

Total shareholder return

Return on average capital employed

Strategic priorities

Underpin: absolute TSR and safety/environmental factors

Strategic priorities Low carbon transition The strategic priorities component of the performance shares BP’s ambition is to provide more energy while advancing the energy covers measurement across a range of objectives including: growing transition. The focus on lower carbon has three main elements: gas and advantaged oil in the upstream; market-led growth in the downstream; venturing and low carbon across multiple fronts; Reducing our Improving Creating and gas, power and renewables trading growth. These priorities emissions in our low carbon are aimed at growing sustainable value for our shareholders and our operations products businesses increasing the proportion of lower carbon activities in our portfolio over time. The seven major project start-ups in 2017 (see page 14) have enabled a signiﬁcant shift in the proportion of gas in our portfolio, laying a strong foundation for our gas business moving forwards. Progress against each of the strategic priorities is being monitored against a balanced set of measures that will be viewed in the round relative to strategy. For example, ‘growing gas and Reducing our Improving our Creating low advantaged oil in the upstream’ will be assessed against a range emissions through products to enable carbon businesses of measures including the proportion of gas in the portfolio operational emission customers to lower to grow value and and the movement of unit production costs per barrel (which reduction activities. their emissions. complement our reﬂect how ‘advantaged’ the barrels are). existing portfolio.

More information

Advancing the energy transition In this report, we examine how the energy world is rapidly changing, set out our low carbon ambitions and the changes we are making across our entire business to help advance the energy transition. Publishes April, see bp.com/energytransition

96 BP Annual Report and Form 20-F 2017 Directors’Case remuneration 3:17-cv-06011-WHA report Document 231-2 Filed 05/03/18 Page 100 of 371

The committee believes that BP’s strategic priorities can help GCE-to-employee pay ratio advance the energy transition. The measures related to our lower The committee commenced reporting on the GCE-to-employee pay ratio carbon activities – gas, venturing, renewables trading and renewable in 2017. The committee notes that regulations will be published during energy – underscore this commitment. These activities should grow 2018, setting out a methodology for the calculation of such a ratio. As over time. the regulatory methodology to be used is not yet final, the committee has continued with the approach we used in 2017 and the comparator Our performance share plan features an underpin which will be group which it believes is the most relevant for BP. applied after the formulaic outcome but before the final vesting outcome has been determined. This underpin takes into account This group is the professional/managerial grade employees based in the absolute TSR, safety and environmental factors (including UK and US which represent some 30% of the global employee consideration of issues around carbon and climate change). In this population and is used elsewhere in this report. The GCE-to-median regard, the committee will consider progress on matters such as worker pay ratio for this group was 92 to 1 in 2017 (71 to 1 in 2016). The reducing emissions, improving our products and creating low carbon ratio is based on a comparison of total compensation (base salary, actual businesses. annual bonus and vested equity awards) in the year. Corporate governance Percentage change in GCE remuneration Remuneration in the wider group Comparing 2017 to 2016 Salary Benefits Bonus During the year the committee has received detailed information % change in GCE remuneration 0% -0.6% 75.8% on pay below the board by region and job level, including the cascade % change in comparator group 4.3% 0% 22.9% of pay mix and incentive structures, typical salary budgets, and remuneration approaches across different sectors of the group’s business. This context has informed decision making on executive director pay, for The comparator group used here is the same as that used in the pay ratio example in relation to bonus outcomes, which are largely aligned calculation above, and comprises some 30% of BP’s global employee across the group, and salary increases. population being professional/managerial grades of employees based in the UK and US and employed on more readily comparable terms. UK gender pay gap The committee reviewed the data and methodology for the group’s reporting against the UK gender pay gap regulations. These require Relative importance of spend on pay ($ million) the company to publish the difference in mean and median pay, mean and median bonus pay, proportion of male and female employees Distributions to Remuneration paid to Capital investmentb who received bonus pay and the number of male and female shareholders all employeesa employees in quartile pay bands. 16,501 16,675 The committee also looked at factors such as: • The uneven gender distribution of employees within BP job grades. 11,233 • How certain roles with specific pay practices such as allowances 10,204 (e.g. offshore/rotator allowances) and bonus structures (e.g. trading 7,867 7,469 bonuses) have a disproportionally higher number of men and contribute to the pay and bonus gap. • How the gender pay gap analysis does not take grades and roles into consideration (as when analysing by internal grade, BP’s pay gap falls significantly). 2017 2016 2017 2016 2017 2016

The committee was assured that the group provides equal pay for equal a Total remuneration reﬂects the reduction in number of employees and the total overall or like work. employee costs. See Financial statements – Note 33 for further information. b Capital investment is illustrated to reﬂect the overall scale of BP investment decisions. Finally the committee and the board considered BP’s initiatives to BP changed its reporting of organic capital expenditure to a cash basis in 2017; the 2016 support long-term growth in female talent, including developing the number has been restated to be reported on a cash basis. technical talent pool, hiring, retention and progression. BP’s gender pay gap in 2017 report was published on 21 February 2018 and can be found at bp.com/ukgenderpaygap.

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Salary and benefits Base salary Benefits No salary increase was awarded to Bob Dudley for 2017 and his salary Executive directors received car-related benefits, security assistance, remained at $1,854,000. Bob Dudley has not received a salary increase insurance and medical benefits. since 2014. As was disclosed in the 2017 report to shareholders, Brian Gilvary’s salary was increased with effect from May 2017 to £759,000 reflecting his additional responsibilities for BP’s trading and shipping functions.

Annual bonus The targets for the 2017 annual bonus were set at the start of the year Overall, the committee believes that the bonuses for 2017 fairly reflect based on a combination of safety, reliability and financial performance. performance over the period. Targets were set in the context of the group’s strategy and the Outcome annual plan. Adjusted outcome Deferred During 2017 BP’s share price performed strongly. The group distributed after committee Paid into BP $7.9 billion to shareholders in cash and scrip dividends. In the fourth discretion in cash shares quarter, the group commenced a share buyback programme to mitigate Name (thousand) (thousand) (thousand) Bob Dudley $2,983a $1,491 $1,491 the dilutive effects of issuing shares under the scrip dividend a programme. Brian Gilvary £1,221 £611 £611 a Due to rounding, the total does not agree exactly with the sum of its component parts. Overall it was one of the strongest years in BP’s recent history. There was delivery of the group’s strategy, particularly the delivery of seven Under the terms of the 2017 policy, half of the bonus earned is deferred major projects within the year and below the total budget. There were into shares that will vest after three years. Deferred bonus shares are strong earnings in the downstream and a 10% year-on-year increase in now reported in the single figure for the bonus year to which they relate. production for the BP group as a whole. This is different from the 2014 policy, when the shares were only reported on vesting at the end of the three-year period. For Brian Gilvary, The group’s operating cash flow was strong and well above plan. the 2017 single figure includes both the 2017 bonus deferred to future Underlying replacement cost profit was $6.2 billion, an increase of years, and the deferred shares from the 2014 bonus vesting in the 139% on 2016. Goals for reduction in controllable costs were delivered, current period. together with good discipline on capital expenditure. Operational reliability was high and safety outcomes were above target. When reviewing performance over the period, the committee sought input from the chairs of the audit committee and the SEEAC to ensure a comprehensive review of performance. Following input from the audit committee on the treatment of certain accounting items for which it would not be appropriate for participants to benefit, for example a gain from a legal settlement, the formulaic score under the bonus was reduced from 1.54 to 1.49. In addition, the SEEAC recommended an exercise of downward discretion to the safety element for executive directors after taking a longer term view of safety performance to date. Following SEEAC’s recommendation on the safety component of the scorecard, the remuneration committee exercised its discretion to reduce the score by 0.06, resulting in a final annual bonus scorecard outcome of 1.43 out of 2, a payout of 71.5% of maximum.

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Annual bonus – continued

Scorecard

2017 annual bonus More information

REM Measures used for the 2017 remuneration policy. Key performance indicators page 18

1 Safety 2 Reliable 3 Financial 4 Formulaic score operations performance 1.54 out of 2.0 0.25 0.45 0.84

Performance and Corporate governance Measures Weighting Threshold (0) Target (1) Maximum (2) outcome 1 Safety (20% weight) Tier 1 process safety event 10% 24 events 20 events 14 events 18 events (defined by API) 0 0.1 0.2 0.13 Recordable injury frequency 10% 0.249/200k hrs 0.228/200k hrs 0.188/200k hrs 0.218/200k hrs 0 0.1 0.2 0.12 Safety outcome 0.25 2 Reliable operations (30% weight) Downstream refining availability 15% 94.6% 95.1% 95.6% 95.3% (Solomon Associates’ 0 0.15 0.3 0.21 operational availability) Upstream operating efficiency 15% 77.3% 79.3% 81.3% 80.5% 0 0.15 0.3 0.24 Reliable operations outcome 0.45 3 Financial performance (50% weight) Operating cash flow 20% $19.9bn $21.4bn $22.9bn $24.1bn (excluding Gulf of Mexico 0 0.2 0.4 0.4 oil spill payments) Underlying replacement 20% $5.0bn $5.8bn $6.6bn $6.2bn cost profit 0 0.2 0.4 0.29 Upstream unit production costs 10% $7.7/bbl $7.3/bbl $6.9/bbl $7.11/bbl 0 0.1 0.2 0.15 Financial performance outcome 0.84

4 Formulaic score 1.54 out of 2.0

Formulaic Audit committee SEEAC Final scorecard 71.5% scorecard Discretion Discretion outcome outcome of outcome maximum bonus 1.54 out of 2 - 0.05 - 0.06 1.43 out of 2

Performance shares For performance shares awarded in 2015, vesting was determined adjusted target, this element of the performance shares achieved under the terms of the 2014 policy, by a combination of relative TSR, maximum score of 33.3%. Without adjustment, the score safety, financial and operational performance assessed over the three would reduce from 33.3% to 32.4%, a reduction of 0.9%. years from 2015 to 2017. The results are summarized in the table on Safety and operational risk – assessed through a look-back over tier 1 page 100. process safety events and recordable injury frequency (RIF) over the TSR – the company’s TSR over the three-year period was in first place. three-year period. The committee sought input from the SEEAC in The TSR element is measured on a relative basis in common currency making this subjective assessment. The SEEAC noted the reduction in against the oil majors: Chevron, ExxonMobil, Shell and Total. tier 1 events, the trend in RIF and the high annual scores for both safety measures throughout the three-year period and recommended a score Cumulative operating cash flow – under the 2014 policy, the of 85% of maximum for this element of the performance shares. outcome was measured by taking the cumulative operating cash flow for the three years. This measure was assessed by adjusting the target to the actual oil price as has been the case in previous years. Against this

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Performance shares – continued Project delivery – the vesting outcome reflects the strong progress incur costs associated with Gulf of Mexico oil spill payments. The over the three-year period with 17 projects delivered, seven within 2017. committee also sought where appropriate to apply principles of the Further details of these projects are set out on page 14. new policy early to awards vesting in respect of 2017 performance. This included, for example, consideration of the more stringent vesting scales Relative reserves replacement ratio – preliminary assessment adopted in the 2017 policy. In light of these factors and an overall indicates vesting for this measure. For the purpose of this report, a assessment of pay relative to performance, the committee determined forecast of second place has been used. The final outcome for this that it would be appropriate to exercise downward discretion on this part of measure will be confirmed later in the year, once competitor data is the award. It also determined that the vesting for the 2017 award should be published in full. reduced from the formulaic outcome of 96% of maximum to 70% of Contextual review maximum. In addition, consistent with the approach of applying the The committee undertook a wider review of performance over the principles of the 2017 policy to awards vesting in the year, Bob Dudley three-year performance period, in the context of the overall levels asked the committee to base his performance shares award on 500% of of pay, the wider performance of the company, and the experience of salary that applies under the terms of the 2017 policy, rather than the shareholders over the three-year period of the plan. While performance 550% of salary that was actually granted in 2015. The committee’s over the period, and in particular in 2017, has been strong, we also discretion and Bob Dudley’s request together reduced his performance recognize that although returns have doubled over the past year, there is shares by $4.0 million (34%). still room for further improvement and that the company has continued to

Scorecard

2015-17 performance shares MoreMore information information

REM These measures were used under the terms of our previous policy. Key performance indicators page XX18

1 Financial 2 Strategic imperatives 3 Formulaic vesting 66.6% 29.4% 96.0%

Measures Weighting Threshold Maximum Performance at maximum performance performance and outcome 1 Financial Relative total shareholder return 33.3% Third First First 33.3% Cumulative operating cash ﬂow 33.3% $45.6bn $61.6bn $61.9bn 33.3% 66.6% 2 Strategic imperatives Relative reserves replacement ratio 11.1% Third First Second 8.9% Major project delivery 11.1% 10 14 17 11.1% Safety and operational risk: – Process safety tier 1 events – Recordable injury frequency 11.1% Continuous improvement look back 85% of maximum 9.4% 29.4% 3 Total formulaic vesting 96.0%

70% Formulaic ﬁnal vesting vesting: Committee review of context and shareholder after committee 96% experience over three-year period of plan discretion

The committee’s discretion and Bob Dudley’s request together reduced the vesting value of his performance shares by $4.0 million

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Performance shares – continued Preliminary outcome – 2015-17 performance shares 2014-16 performance shares – ﬁnal outcome Shares vesting Value of Last year the committee made a preliminary assessment of third place Name Shares awarded including dividends vested shares for the relative RRR in the 2014-16 performance shares element. Bob Dudley 1,501,770 1,172,484 $7,787,248 In April 2017 the committee reviewed the results for all comparator Brian Gilvary 685,246 594,932 £2,980,609 companies as published in their annual reports and assessed that These values are based on estimated vesting levels. As noted above, BP was in third place relative to other oil majors and that no further ﬁnal vesting will be determined once competitor data is published in adjustment was required. respect of relative reserves replacement (RRR).

Discontinued plans: deferred bonus and matching shares Corporate governance Both Bob Dudley and Brian Gilvary deferred two thirds of their 2014 the vesting of some of the awards under discontinued plans. In light of annual bonus in accordance with the prevailing terms of the deferred this request, the committee has approved the deferral of Bob Dudley’s bonus plan. 2014 deferred and matching awards until after his retirement from the group. The vesting of Brian Gilvary’s 2014 matching award will also be The original three-year performance period for this deferred award deferred for a period of two years. The committee will extend the ended on 31 December 2017. original safety and environmental sustainability performance condition As required by the terms of the discontinued plan, the committee for the same period. reviewed safety and environmental sustainability performance over Following the committee’s review, full vesting of Brian Gilvary’s this period and sought the input of the safety, ethics and environment deferred shares in respect of the 2014 deferred bonus was approved. assurance committee. This included an assessment of both actual outcomes under safety and sustainability measures and consideration No further matching awards will be granted under the deferred bonus of the long-term performance trend. plan following approval of the 2017 remuneration policy by shareholders at the 2017 AGM. Over the three-year period 2015-17 safety performance continued to demonstrate progress and improvement overall. The committee also 2014 deferred bonus vesting – outcome noted the extent to which safety performance had become embedded Total shares into the culture of the organization and the degree to which this has Shares Vesting including Total value at supported stronger operational and ﬁnancial performance. Name deferred agreed dividends vesting Bob Dudleya 588,216 – – – As a sign of their commitment to the long-term interests of the Brian Gilvary 353,152 100% 219,004 £1,040,269 company, and to further align with the shareholder experience, both a Bob Dudley has voluntarily agreed to defer vesting of these awards until after retirement, Bob Dudley and Brian Gilvary have requested that the committee delay therefore the performance period is expected to exceed the minimum term of three years.

Conclusions of the safety and sustainability assessment

No systemic No major incidents Safety culture and values Strong safety performance issues identified embedded within the supports efficiency and financial global organization results across the group

Retirement benefits 2017 outcomes He has exceeded the lifetime allowance under UK pensions legislation Bob Dudley participates in the US pension and retirement savings plans and, in accordance with the policy, receives a cash supplement of 35% described on page 104. In 2017, Bob Dudley’s accrued defined benefit of base salary, which has been separately identified in the single figure pension did not increase. In accordance with the requirements of the UK table on page 95. regulations, the value attributed to this accrued pension in the single The committee continues to keep under review the increase in the value figure table on page 95 is therefore zero. In relation to the retirement of pension benefits for individual directors and its alignment to the savings plans, Bob Dudley made contributions in 2017 to the ESP broader workforce. totalling $27,000. For 2017 the total value of BP matching contributions in respect of Bob Dudley to the ESP and notional matching contributions • The BP defined benefit (DB) plan remains open for employees in the to the ECSP was $129,800, 7% of eligible pay. After adding the UK who were employed before 2010 (or before 2014 in the North Sea). investment gains within his accumulating unfunded ECSP account The plan provides an inflation linked pension of 1/60th of final salary for (aggregating the unfunded arrangements relating to his overall service each year of service. As of October 2017 over 4,500 active employees were members of the plan. with BP and TNK-BP), the amount included in the single figure table on page 95 is $746,200. • Currently over 800 employees have, like Brian Gilvary, elected to stop future service accrual under the DB plan and instead receive a cash Brian Gilvary participates in the UK pension arrangements described allowance of 35% of base pay, reducing to 15% by April 2024. Brian on page 104 in common with over 4,500 UK employees employed prior Gilvary receives the same cash allowance as those 800 other to 2010. In 2017 as a result of his salary increase Brian Gilvary’s accrued employees. pension increased, net of inflation, by £9,280. This increase has been reflected in the single figure table on page 95 by multiplying it by a factor of 20 in accordance with the requirements of the UK regulations (giving £185,600).

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Salary and benefits The committee noted that salary increases for UK and US based Salary increases over the last five years employees across the group were generally around 3%. The committee Bob Dudley Brian Gilvary has considered the salaries for Bob Dudley and Brian Gilvary and has decided that there will be no increase for 2018 for Bob Dudley. 2018 Nil 2018 2.0% Brian Gilvary’s salary will be increased by 2% to £775,000. 2017 Nil 2017 3.75% Benefits for 2018 will remain broadly unchanged from prior years. 2016 Nil 2016 Nil 2015 Nil 2015 Nil 2014 3.0% 2014 3.0%

Salary with effect from AGM Increase Bob Dudley $1,854,000 Nil Brian Gilvary £775,000 2%

Annual bonus For 2018, the bonus measures will again focus on three areas: safety One of the challenges faced in a commodity industry is to provide a and operational risk, reliable operations and financial performance. fair assessment of underlying performance, and therefore changes in plan conditions (including oil and gas prices and refining margins) are This approach is intended to provide a balanced assessment of how considered when reviewing financial outcomes. The committee retains the business has performed over the course of the year against stated discretion to review outcomes in the context of overall performance. objectives. Targets are aligned with the annual plan and strategic and operational priorities for the year. Awards will be subject to malus and clawback provisions as described in the 2017 policy. The safety element continues to focus on measures that are robust and externally comparable. In addition, the measures linked to reliable The maximum bonus opportunity is 225% of salary for a maximum operations also require execution of good safety practices. bonus score of 2.0. In accordance with the 2017 policy, the bonus payable for performance which meets the annual plan (i.e. a bonus The committee has agreed that the upstream measure for ‘reliable scorecard of 1.0 out of a maximum of 2.0) is half of maximum. operations’ be amended from ‘upstream operating efficiency’ to ‘BP-operated upstream plant reliability’. This latter measure is more For any bonus earned, 50% will be delivered in cash and 50% must be comparable with the equivalent metric disclosed for the downstream. deferred into shares that will vest after three years. Although the detail of the targets is currently commercially sensitive, the committee intends to continue to provide retrospective disclosure following the year end. The targets have been agreed by the committee after consultation on the safety targets with the SEEAC and on the financial targets with the audit committee.

Measures for 2018 annual bonus

Element

1 Safety 2 Reliable operations 3 Financial performance 20% 30% 50%

Measures Weighting Measures Weighting Measures Weighting include for 2018 include for 2018 include for 2018

Recordable injury 10% BP-operated upstream 15% Operating cash flow (excluding 20% frequency plant reliability Gulf of Mexico oil spill payments) Tier 1 process safety events 10% Downstream refining 15% Underlying replacement 20% availability (Solomon Associates’ cost profit operational availability) Upstream unit production costs 10%

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Performance shares Under the 2017 policy the measures for the performance shares calculation of ROACE will be averaged over the last two years and focus on shareholder value, capital discipline and future growth. for 2019-21 performance shares, the intention is that it will be averaged over the full three-year period. Shareholder value The TSR element is measured on a relative basis in common currency Targets for TSR and ROACE measures for 2018 – determining 80% against the oil majors: Chevron, ExxonMobil, Shell and Total. The of the performance shares available – are set out below at the start committee continues to believe that the current comparator group of the assessment period. remains appropriate as it is used for benchmarking across a range of Future growth activities in other parts of the group. There will be no vesting of this Measures for the strategic element are directly focused on delivery of element if BP’s TSR is positioned below third place in the group. the company’s long-term strategy, positioning the portfolio for resilience Capital discipline and future growth. We will be following the implementation of our

ROACE is calculated by dividing the underlying replacement cost profit strategy through the four measures relating to the strategic priorities Corporate governance (after adding back net interest) by average capital employed excluding set out below. The committee has also sought input from the board cash and goodwill (for full definition, see the Glossary on page 289). regarding the specific measures. ROACE is measured based on the actual price environment for each of Details of the strategic priorities targets – determining 20% of the the years in question; there will be no adjustments for changes to plan performance shares available – are commercially sensitive and are not conditions. included in this report. However, the committee intends to provide For the 2017-19 performance shares, this assessment will be based detailed retrospective disclosure after the end of the performance on the final year of the three-year period. The committee has reviewed period so that shareholders can understand the basis of payment. The this methodology in the light of engagement with shareholders and board regularly reviews progress on the strategic priorities throughout broader FTSE practice and has decided to move progressively to a the year and BP’s quarterly results announcement includes updates on determination of ROACE on a three-year average rather than being the group’s strategic progress. based on the final year. For the 2018-20 performance shares, the

Measures for 2018 performance shares

Element

1 Relative TSR versus oil majorsa 2 Return on average capital employedb 3 Strategic progress 50% 30% 20%

Threshold 25% of element 0% of element • Growing gas and advantaged oil in vesting Third out of ﬁve 6% return on average capital employed the upstream • Market led growth in the Maximum 100% of element 100% of element downstream vesting First place 11.5% return on average capital employed • Venturing and low carbon across multiple fronts • Gas, power and renewables trading and marketing growth

a Nil vesting for fourth and ﬁfth place. Vesting of 80% for second place. b Based on the average of performance over 2019 and 2020. There will be straight-line vesting for performance between the threshold and maximum vesting level. Adjustments may be required in certain circumstances (e.g. to reﬂect changes in accounting standards).

Operation of the performance share plan and the underpin In line with our new policy, share awards will be made at the level of Prior to approving vesting outcomes, the committee will additionally 500% of salary for Bob Dudley and 450% of salary for Brian Gilvary. consider the broader performance of the business including absolute Performance will be measured over three years, with any vested shares TSR performance, together with safety and environmental factors being subject to a mandatory holding period for a further three years. (including consideration of issues around carbon and climate change) over the three-year period as part of an underpin. The underpin will be Awards will be subject to malus and clawback provisions as set out applied after the formulaic outcome for the performance shares but in the policy. before the ﬁnal vesting outcome has been determined. In looking at environmental factors, the committee will consider the group’s progress on issues such as reducing emissions, improving our products and creating low carbon businesses.

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Retirement benefits Bob Dudley Brian Gilvary Bob Dudley is provided with pension benefits and retirement savings Brian Gilvary participates in a UK final salary pension plan, the BP through a combination of tax-qualified and non-qualified benefit plans, Pension Scheme (BPPS), along with over 4,500 other employees in consistent with applicable US tax regulations. service prior to 1 April 2011. The BPPS is closed to new hires but for The BP supplemental executive retirement benefit plan (SERB) is a existing participants the plan continues to provide a pension of one non-qualified pension plan which provides a pension of 1.3% of final sixtieth of final base salary for each year of service, up to a maximum of average earnings (as defined in plan rules) for each year of service, less two thirds of final base salary, and a dependant’s benefit of two thirds of benefits paid under all other BP (US) tax-qualified and non-qualified the member’s pension. pension plans. Final average earnings include base salary and annual BPPS participants can elect to stop future service pension accrual and bonus. Service, including service with TNK-BP, is limited to 37 years. instead receive a cash allowance. On 1 April 2011 Brian Gilvary elected Bob Dudley completed 37 years of service in September 2016 and to stop future service pension accrual and receive the cash allowance of therefore will not receive any further service accrual under these 35% of base salary. It has been agreed for all participants who have arrangements. There will be no additional payment in lieu of any elected to receive the cash allowance, including Brian Gilvary, that a further service accrual. transition will take effect from April 2021 when the level of cash The benefit payable under the SERB is unreduced at age 60 or above. allowance will progressively reduce to 15% of base salary by 2024. Bob Dudley is also a member of other tax-qualified and non-qualified Pension benefits in excess of the individual lifetime allowance set by pension plans. However, the benefits from those plans are offset legislation are provided to Brian Gilvary via an unapproved, unfunded against the SERB benefit and so his benefit entitlement is determined pension arrangement provided directly by the company. by his participation in the SERB. The rules of the BPPS were amended in 2006 to introduce a normal The BP Employee Savings Plan (ESP) is a US tax-qualified section retirement age of 65, but in common with other BPPS participants in 401(k) plan to which both Bob Dudley and BP contribute. BP matches service on 30 November 2006, Brian Gilvary has a normal retirement contributions by Bob Dudley 1:1 up to 7% of eligible pay up to an IRS age of 60. limit. The BP Excess Compensation (Savings) Plan (ECSP) is a non- If Brian Gilvary were to retire between age 55 and 60, then subject to qualified retirement savings plan under which BP provides a notional the consent of the committee, he would be entitled to an immediate match in respect of eligible pay that exceeds the IRS limit. In common pension, with a reduction (currently 3%) for each year before normal with other participants, Bob Dudley does not contribute to the ESCP. retirement age in respect of the benefit that relates to service since From 2017 onwards, for the purposes of both plans, eligible pay for Bob 1 December 2006 and no reduction in respect of the remainder of his Dudley is base salary only. benefit. Under both tax-qualified and non-qualified savings plans, Bob Dudley Irrespective of this, on leaving in circumstances of total incapacity, is entitled to make investment elections, involving an investment in the an immediate unreduced pension would be payable as from his relevant fund in the case of the ESP and a notional investment (the leaving date. return on which would be delivered by BP under its unfunded commitment) in the case of the ECSP. Although investment returns on the ECSP relate to contributions made in previous years, UK disclosure rules for the single figure require these returns to be included in the single figure for the year. As Bob Dudley has a significant proportion of his notional ECSP investment in BP shares, an increase in the BP share price results in a contribution to the single figure through this component. Benefits payable under the ECSP are unfunded and therefore paid from corporate assets. Benefits are generally paid as a lump sum, with any pension benefit being converted to a lump sum equivalent.

Shareholding requirements Both executive directors exceed the share ownership requirements of ﬁve times salary. It is expected that Bob Dudley and Brian Gilvary will maintain a shareholding of at least 250% of salary for two years following retirement.

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Stewardship The following table shows both the performance shares and the deferred bonus element awarded under the executive directors’ The committee places significant emphasis on executive directors incentive plan (EDIP) and yet to vest. These figures represent the having material interests in the shares of the company. Such maximum possible vesting levels. The actual number of shares/ADSs shareholding not only provides direct alignment with the experience that vest will depend on the extent to which applicable performance of shareholders, but also encourages a longer-term focus when conditions have been satisfied. considering the performance of BP. Executive directors are required to build a personal shareholding of five times salary within five years of Ordinary Ordinary Ordinary shares their appointment. shares or shares or Changes from or equivalents Both executive directors significantly exceed the minimum holding equivalents at equivalents at 31 Dec 2017 to total at Current directors 1 Jan 2017 31 Dec 2017 14 Mar 2018 14 Mar 2018 required. This ensures they are subject to any fluctuation in the share Bob Dudleya 6,607,314 6,870,048 0 6,870,048 price and the wider shareholder experience. Brian Gilvary 3,259,891 3,329,274 (176,576) 3,152,698

Post-retirement share ownership interests a Held as ADSs. Given the long-term nature of the group’s operations, the committee Corporate governance sees the merits of ensuring that executives have performance alignment At 14 March 2018, the following directors held options under the beyond the timeframe of existing incentive plans. The executive BP group share plan schemes over ordinary shares or their calculated directors have taken a number of steps in this respect. equivalent set out below. None of these are subject to performance conditions. Additional details regarding these plans can be found As reported last year, the current executive directors have indicated to on page 109. the committee that they expect to maintain a shareholding of at least 250% of salary for two years following retirement. Current director Share options As a sign of their commitment to the long-term interests of the Brian Gilvary 503,103 company, and to further align with the shareholder experience, both No director has any interest in the preference shares or debentures of executive directors have requested that the committee delay the vesting the company or in the shares or loan stock of any subsidiary company. of some of the awards under discontinued plans. Bob Dudley has voluntarily opted to delay the vesting of all outstanding deferred bonus There are no directors or other members of senior management who and matching shares in respect of his 2014 and 2015 bonus own more than 1% of the ordinary shares in issue. At 14 March 2018, (representing a total interest over 1,691,784 ordinary shares), which all directors and other members of senior management as a group held were originally due to vest in 2018 and 2019 respectively, so that vesting interests of 15,896,179 ordinary shares or their calculated equivalents, is delayed until after retirement. In a similar way, the vesting of Brian 6,757,019 restricted share units (with or without conditions) or their Gilvary’s 2014 matching award will also be deferred for a period of two calculated equivalents, 10,022,746 performance shares or their years. As per the original terms, the committee will extend the safety calculated equivalents and 5,012,307 options over ordinary shares or and environmental sustainability performance condition for the same their calculated equivalents under the BP group share option schemes. period. Senior management comprises members of the executive team. See page 66 for further information. These factors significantly extend the time horizons for both executive directors. The committee fully endorses the steps taken by both executive directors as they clearly demonstrate a continued History of CEO remuneration commitment to the long-term stewardship of the group. Total Annual bonus Performance remuneration % of shares vesting Directors’ shareholdings Year CEO thousanda maximum % of maximum The table below shows the status of each of the executive directors in 2009 Hayward £6,753 89b 17.5 developing the required level of share ownership. These figures include 2010c Hayward £3,890 0 0 the value as at 14 March 2018 of the directors’ interests shown below Dudley $8,057 0 0 excluding the assumed vesting of the 2015-17 performance shares. 2011 Dudley $8,439 67 16.7 Value of current % of policy 2012 Dudley $9,609 65 0 Current directors Appointment date shareholding achieved 2013 Dudley $15,086 88 45.5 Bob Dudley October 2010 $19,860,588 214 2014 Dudley $16,390 73 63.8 Brian Gilvary January 2012 £8,483,077 223 2015 Dudley $19,376 100 74.3 The figures below indicate and include all beneficial and non-beneficial 2016 Dudley $11,904 61 40 interests of each executive director of the company in shares of BP (or 2017 Dudley $13,443 71.5 70 calculated equivalents) that have been disclosed to the company. a Total remuneration figures include pension. The total figure is also affected by share vesting outcomes and these amounts represent the actual outcome for the periods up to 2011 or the Ordinary Ordinary shares adjusted outcome in subsequent years where a preliminary assessment of the performance Ordinary shares shares or Changes from or equivalents for EDIP was made. For 2017, the preliminary assessment has been reflected. b or equivalents equivalents at 31 Dec 2017 to total at 2009 annual bonus did not have an absolute maximum and so is shown as a percentage of Current directors at 1 Jan 2017 31 Dec 2017 14 Mar 2018 14 Mar 2018 the maximum established in 2010. c 2010 figures show full year total remuneration for both Tony Hayward and Bob Dudley, a Bob Dudley 2,509,500 3,065,520 174 3,065,694 although Bob Dudley did not become CEO until October 2010. Brian Gilvary 1,419,263 1,709,243 116,056 1,825,299 a Held as ADSs.

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Further information Shareholder engagement As set out in last year’s report, during 2017 we had extensive dialogue Historical TSR performance FTSE 100 BP with many of our largest shareholders as well as representative bodies on remuneration matters, particularly in the run-up to the AGM. £250 The table below shows the votes on the report for the last three years.

£200 AGM directors’ remuneration report vote results Year % vote ‘for’ % vote ‘against’ Votes withheld 2017 97.05% 2.95% 63,453,383 £150 2016 40.7% 59.3% 464,259,340 2015 88.8% 11.2% 305,297,190

£100 The remuneration policy was approved by shareholders at the 2017 AGM on 17 May 2017. The votes on the policy are shown below.

Value of hypothetical £100 holding £100 hypothetical of Value £50 2017 AGM directors’ remuneration policy vote results Year % vote ‘for’ % vote ‘against’ Votes withheld 2017 97.28% 2.72% 36,563,886 20082009 2010 2011 2012 2013 2014 2015 2016 2017

This graph shows the growth in value of a hypothetical £100 holding in External appointments BP p.l.c. ordinary shares over nine years, relative to a hypothetical £100 holding in the FTSE 100 Index of which the company is a constituent. The board supports executive directors taking up appointments outside the company to broaden their knowledge and experience. Each executive director is permitted to accept one non-executive appointment, from Independence and advice which they may retain any fee. External appointments are subject to The board considers all committee members to be independent agreement by the chairman and reported to the board. Any external with no personal financial interest, other than as shareholders, in the appointment must not conflict with a director’s duties and commitments committee’s decisions. Further detail on the activities of the committee, to BP. Details of appointments as non-executive directors during 2017 are including activities during the year, advice received and shareholder shown below. engagement is set out in the remuneration committee report on Appointee Additional position page 86. Director company held at appointee company Total fees a During 2017 David Jackson, the company secretary, who is employed Bob Dudley Rosneft Director 0 by the company and reports to the chairman of the board, acted as Brian Gilvary L’Air Liquide Director Euros 64,310 secretary to the remuneration committee. a Bob Dudley holds this appointment as a result of the company’s shareholding in Rosneft. Deloitte LLP acted as independent adviser to the committee during the year until September 2017, when it stepped down as part of the transition process for its role as BP’s statutory auditor for the financial year 2018. Following a competitive tender process, the committee appointed PwC as its independent adviser from September 2017. PwC is a member of the Remuneration Consulting Group and, as such, operates under the code of conduct in relation to executive remuneration consulting in the UK. The committee is satisfied that the advice received is objective and independent. Freshfields Bruckhaus Deringer LLP provided legal advice on specific compliance matters to the committee. Deloitte, PwC and Freshfields provide other advice in their respective areas to the group. During the year, Deloitte also provided BP with services including consulting on HR and upstream matters and PwC provided BP with services including subsidiary company secretarial support. Total fees or other charges (based on an hourly rate) for the provision of remuneration advice to the committee in 2017 (save in respect of legal advice) are as follows: Deloitte £164,280 PwC £62,213

106 BP Annual Report and Form 20-F 2017 DirectorsCase’ remunerat 3:17-cv-06011-WHAion report Document 231-2 Filed 05/03/18 Page 110 of 371 Non-executive directors

This section of the directors’ remuneration report completes the Non-executive directors directors’ annual report on remuneration with details for the chairman Fee structure and non-executive directors (NEDs). The board’s remuneration policy for The table below shows the fee structure for non-executive directors: the NEDs was approved at the 2017 AGM. This policy was implemented during 2017. There has been no variance of the fees or allowances for Fees the chairman and the NEDs during 2017. £ thousand Senior independent directora 120 Chairman Board member 90 Audit, geopolitical, remuneration and The fee structure for the chairman, which has been in place since SEEA committees chairmanship feesb 30 1 May 2013, is £785,000 per year. He is not eligible for committee Committee membership feec 20 chairmanship and membership fees or intercontinental travel allowance. He has the use of a fully maintained office for company business, a car Intercontinental travel allowance 5 and driver, and security advice in London. He receives a contribution to a The senior independent director is eligible for committee chairmanship fees and intercontinental travel allowance plus any committee membership fees. Corporate governance an office and secretarial support as appropriate to his needs in Sweden. b Committee chairmen do not receive an additional membership fee for the committee they chair. The table below shows the fees paid for the chairman for the year ended c For members of the audit, geopolitical, SEEA and remuneration committees. 31 December 2017. 2017 remuneration (audited) 2017 remuneration (audited) £ thousand Fees Benefitsa Total £ thousand Fees Benefitsa Total 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Carl-Henric Svanberg 785 785 35 58 820 843 Nils Andersen 115 23 17 6 132 29 a Benefits include travel and other expenses relating to attendance at board and other Paul Anderson 155 165 27 32 182 197 meetings. Amounts disclosed have been grossed up using a tax rate of 45%, where relevant, as an estimation of tax due. Alan Boeckmann 165 168 11 17 176 185 Admiral Frank Bowman 155 162 15 14 170 176 Chairman’s interests Cynthia Carrollb 54 140 36 28 90 168 The figures below include all the beneficial and non-beneficial interests Ian Davis 154 136 2 2 156 138 of the chairman in shares of BP (or calculated equivalents) that have Professor Dame Ann been disclosed under the DTRs as at the applicable dates. The Dowlingc 145 150 5 2 150 152 chairman’s holdings represented as a percentage against policy d achieved are 1,229%. Melody Meyer 86 – 23 – 109 – Brendan Nelson 138 130 14 30 152 160 Ordinary Paula Rosput Reynolds 140 140 8 17 148 157 Ordinary Ordinary Change from shares or shares or shares or 31 Dec 2017 equivalents Sir John Sawers 145 148 5 19 150 167 equivalents at equivalents at to total at Andrew Shilstonb 75 190 1 5 76 195 Chairman 1 Jan 2017 31 Dec 2017 14 Mar 2018 14 Mar 2018 a Benefits include travel and other expenses relating to the attendance at board and other Carl-Henric meetings. Amounts disclosed have been grossed up using a tax rate of 45%, where relevant, Svanberg 2,076,695 2,076,695 – 2,076,695 as an estimation of tax due. b Resigned on 17 May 2017. c In addition, Professor Dame Ann Dowling received £25,000 for chairing and being a member of the BP technology advisory council. d Appointed on 17 May 2017.

Non-executive director interests The figures below indicate and include all the beneficial and non-beneficial interests of each non-executive director of the company in shares of BP (or calculated equivalents) that have been disclosed to the company under the DTRs as at the applicable dates.

Ordinary shares Ordinary shares Ordinary shares Change from or equivalents Value of or equivalents at or equivalents at 31 Dec 2017 to total at current % of policy 1 Jan 2017 31 Dec 2017 14 Mar 2018 14 Mar 2018 shareholding achieved Nils Andersen 47,855 125,000 – 125,000 £580,938 645 Paul Anderson 30,000b 30,000b – 30,000b $194,350 168 Alan Boeckmann 44,772b 44,772b –44,772b $290,048 250 Admiral Frank Bowman 24,864b 24,864b –24,864b $161,077 139 Cynthia Carrolla 10,500b ––––– Ian Davis 25,735 47,500 – 47,500 £220,756 184 Professor Dame Ann Dowling 22,320 22,320 – 22,320 £103,732 115 Melody Meyerc –20,646b –20,646b $133,752 115 Brendan Nelson 11,040 11,040 – 11,040 £51,308 57 Paula Rosput Reynolds 52,200b 58,200b 15,000 73,200b $474,214 409 Sir John Sawers 13,528 14,198 – 14,198 £65,985 73 Andrew Shilstona 15,000––––– a Resigned on 17 May 2017. b Held as ADSs. c Appointed on 17 May 2017. Past directors Sir Ian Prosser (who retired as a non-executive director of BP in April 2010) was appointed as a director and non-executive chairman of BP Pension Trustees Limited on 1 October 2010. During 2017, he received £100,000 for this role.

BP Annual Report and Form 20-F 2017 107 Directors’ remunerationCase report3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 111 of 371 Executive directors interests

Deferred shares (audited)a Deferred share element interests Interests vested in 2017 and 2018 Potential maximum deferred shares Number of £ Bonus Performance Date of award of At 1 Jan Awarded At 31 Dec ordinary shares Face value year Type period deferred shares 2017 2017 2017 vested Vesting date of the award Bob Dudleyb 2013 Comp 2014-2016 12 Feb 2014 149,628 – – 183,732c 24 Feb 2017 – Mat 2014-2016 12 Feb 2014 149,628 – – 183,732c 24 Feb 2017 – 2014 Comp 2015-2017d 11 Feb 2015 147,054 – 147,054 – – 655,861 Vol 2015-2017d 11 Feb 2015 147,054 – 147,054 – – 655,861 Mat 2015-2017d 11 Feb 2015 294,108 – 294,108 – – 1,311,722 2015f Comp 2016-2018d 4 Mar 2016 275,892 – 275,892 – – 1,015,283 Vol 2016-2018d 4 Mar 2016 275,892 – 275,892 – – 1,015,283 Mat 2016-2018d 4 Mar 2016 551,784 – 551,784 – – 2,030,565 2016g Comp 2017-2019 19 May 2017 – 147,642 147,642 – – 697,092 Mat 2017-2019d 19 May 2017 – 147,642 147,642 – – 697,092 Brian Gilvary 2013 Comp 2014-2016 12 Feb 2014 96,653 – – 119,157c 24 Feb 2017 – Mat 2014-2016 12 Feb 2014 96,653 – – 119,157c 24 Feb 2017 – 2014 Comp 2015-2017 11 Feb 2015 88,288 – 88,288 109,502c 20 Feb 2018 – Vol 2015-2017 11 Feb 2015 88,288 – 88,288 109,502c 20 Feb 2018 – Mat 2015-2017e 11 Feb 2015 176,576 – 176,576 – – 787,529 2015f Comp 2016-2018 4 Mar 2016 159,021 – 159,021 – – 585,197 Vol 2016-2018 4 Mar 2016 159,021 – 159,021 – – 585,197 Mat 2016-2018 4 Mar 2016 318,042 – 318,042 – – 1,170,395 2016g Comp 2017-2019 19 May 2017 – 73,070 73,070 – – 345,000 Mat 2017-2019h 19 May 2017 – 73,070 73,070 – – 345,000 Former executive directors Iain Conn 2013 Comp 2014-2016 12 Feb 2014 100,563 – – 123,977c 24 Feb 2017 – Mat 2014-2016 12 Feb 2014 33,521i ––41,325c 24 Feb 2017 –

Comp = Compulsory. Vol = Voluntary. Mat = Matching. a Since 2010, vesting of the deferred shares has been subject to a safety and environmental sustainability hurdle, and this will continue. If the committee assesses that there has been a material deterioration in safety and environmental performance, or there have been major incidents, either of which reveal underlying weaknesses in safety and environmental management, then it may conclude that shares should vest only in part, or not at all. In reaching its conclusion, the committee will obtain advice from the SEEAC. There is no identified minimum vesting threshold level. b Bob Dudley received awards in the form of ADSs. The above numbers reflect calculated equivalents in ordinary shares. One ADS is equivalent to six ordinary shares. c Represents vestings of shares made at the end of the relevant performance period based on performance achieved under rules of the plan and includes reinvested dividends on the shares vested. The market price of each share used to determine the total value at vesting on the vesting dates of 24 February 2017 and 20 February 2018 were £4.47 and £4.75 respectively and for ADSs on 24 February 2017 was $33.50. These totals include the additional accrual of dividends which vested on 19 May 2017 and 2 August 2017. d Bob Dudley has voluntarily agreed to defer vesting of these awards until after retirement, therefore the performance period is expected to exceed the minimum term of three years. The market price of ordinary shares used to determine the total value at vesting on 11 February 2015 was £4.46. e Brian Gilvary has voluntarily agreed to defer vesting of these awards for five years with a further one year retention period. f The face value has been calculated using the market price of ordinary shares on 4 March 2016 of £3.68. g The market price at closing of ordinary shares on 19 May 2017 was £4.72 and for ADSs was $36.94. The sterling value has been used to calculate the face value. h Brian Gilvary has voluntarily agreed to defer vesting of these awards until the later of three years post award or one year post retirement, therefore the performance period is expected to exceed the minimum term of three years. i All matching shares have been pro-rated to reflect actual service during the performance period and these figures have been used to calculate the face value.

108 BP Annual Report and Form 20-F 2017 DirectorsCase’ remunerat 3:17-cv-06011-WHAion report Document 231-2 Filed 05/03/18 Page 112 of 371

Performance shares (audited) Share element interests Interests vested in 2017 and 2018 Potential maximum performance sharesa Number of Date of award ordinary £ of performance At 1 Jan Awarded At 31 Dec shares Face value Performance period shares 2017 2017 2017 vested Vesting date of the award Bob Dudleyb 2014-2016 12 Feb 2014 1,304,922 – – 653,538c 19 May 2017d – 2015-2017 11 Feb 2015 1,501,770 – 1,365,240e 1,172,484 May 2018 – 2016-2018f 4 Mar 2016 1,809,582 – 1,645,074e ––6,053,872 2017-2019f 19 May 2017 – 1,571,628 1,428,750e ––6,743,700 Brian Gilvary 2014-2016 12 Feb 2014 605,544 – – 308,286c 19 May 2017d – 2015-2017 11 Feb 2015 685,246 – 685,246 594,932 May 2018 – 2016-2018f 4 Mar 2016 786,559 – 786,559 – – 2,894,537

2017-2019f 19 May 2017 – 722,093 722,093 – – 3,409,362 Corporate governance Former executive directors Iain Conn 2014-2016 12 Feb 2014 220,043 – – 112,025c g 19 May 2017d – a For awards under the 2014-2016, 2015-2017 and 2016-2018 plans, performance conditions are measured one third on TSR relative to ExxonMobil, Shell, Total and Chevron; one third on operating cash flow; and one third on a balanced scorecard of strategic imperatives. There is no identified overall minimum vesting threshold level but to comply with UK regulations a value of 44.4%, which is conditional on the TSR, operating cash flow, each of the strategic imperatives and strategic progress reaching the minimum threshold, has been calculated. For awards under the 2017-2019 plan, performance conditions are measured 50% on TSR relative to ExxonMobil, Shell, Total and Chevron over three years; 30% on ROACE based on performance in 2019 and 20% on strategic progress assessed over the performance period. Each performance period ends on 31 December of the third year. b Bob Dudley received awards in the form of ADSs. The above numbers reflect calculated equivalents in ordinary shares. One ADS is equivalent to six ordinary shares. c Represents vestings of shares made at the end of the relevant performance period based on performance achieved under rules of the plan and includes reinvested dividends on the shares vested. The market price of each share at the vesting date of 19 May 2017 was £4.72 and for ADSs was $36.94. For the assumed vestings dated May 2018 a price of £5.01 per ordinary share and $39.85 per ADS has been used. These are the average prices from the fourth quarter of 2017. These totals include the additional accrual of dividends which vested on 2 August 2017. d The 2014-2016 award vested on 19 May 2017, which resulted in an increase in value at vesting of £24,644 for Iain Conn. Details for Bob Dudley and Brian Gilvary can be found in the single figure table on page 95. e Bob Dudley has requested that the EDIP performance shares vestings in respect of the performance periods 2015-2017 and 2016-2018 are based on the 500% maximum annual award level which applies under the 2017 directors’ remuneration policy, rather than the 550% maximum annual award level which applies under the 2014 directors’ remuneration policy. f The market price at closing of ordinary shares on 4 March 2016 was £3.68 and for ADSs was $31.15 and on 19 May 2017 was £4.72 and for ADSs was $36.94. g Potential maximum of performance shares element has been pro-rated to reflect actual service during the performance period.

Share interests in share options plans (audited)

At 31 Dec Market price at Date from which Option type At 1 Jan 2017 Granted Exercised 2017 Option price date of exercise ﬁrst exercisable Expiry date Brian Gilvary BP 2011 500,000 – – 500,000 £3.72 – 07 Sep 2014 07 Sep 2021 SAYE 3,103 – – 3,103 £2.90 – 01 Sep 2019 28 Feb 2020

The closing market prices of an ordinary share and of an ADS on 29 December 2017 were £5.227 and $42.03 respectively. During 2017 the highest market prices were £5.247 and $42.03 respectively and the lowest market prices were £4.3975 and $33.31 respectively. BP 2011 = BP 2011 plan. These options were granted to Brian Gilvary prior to his appointment as a director and are not subject to performance conditions.

BP Annual Report and Form 20-F 2017 109 Directors’ remunerationCase report3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 113 of 371 Remuneration policy table – executive directors

A summary of the remuneration policy approved by shareholders at the 2017 AGM is set out below. For the full remuneration policy, please refer to the 2016 Directors' remuneration report at bp.com/remuneration. Salary and beneﬁts

Purpose To provide ﬁxed remuneration to reﬂect the scale and complexity of both the business and the role, and to be competitive with the external market.

Operation and Salary Benefits opportunity • Salary levels take into account the nature of the role, • The committee expects to maintain benefits at the performance of the business and the individual, current level. market positioning and pay conditions in the wider • Executive directors are entitled to receive those BP group. When setting salaries, the committee benefits available to all BP employees generally, such considers practice in other oil and gas majors as well as participation in all-employee share plans, sickness as European and US companies of a similar size, pay, relocation assistance and maternity pay. geographic spread and business dynamic to BP. Benefits are not pensionable. • Salaries are normally set in the home currency of the • Executive directors may receive other benefits that are executive director and are reviewed annually. They judged to be cost effective and appropriate in terms of may be reviewed at other times where appropriate, the individual’s role, time and/or security. These include for example following a major role change. car-related benefits or cash in lieu, driver, security, • Salary levels are specific to the role and individual and assistance with tax return preparation, insurance and therefore there is no maximum salary under the policy. medical benefits. The company may meet any tax However, when reviewing salaries for executive charges arising on business-related benefits provided directors, the committee will consider salary increases to directors, for example security. for the most senior management and for employees in • The taxable value of benefits provided may fluctuate relevant countries. Percentage increases for executive during the period of this policy, depending on the cost directors will not exceed that of the broader employee of provision and a director’s personal circumstances. population, other than in specific circumstances identified by the committee (e.g. in response to a substantial change in responsibilities). • Following the 2018 AGM, the annual salaries for the executive directors will be: – Group chief executive – Bob Dudley: $1,854,000. – Chief financial officer – Brian Gilvary: £775,000.

Performance • Not applicable framework

Annual bonus

Purpose To provide variable remuneration dependent on performance against annual ﬁnancial, operational and safety measures. 50% of the bonus is paid in cash and 50% is mandatorily deferred and held in BP shares for three years to reinforce the long-term nature of the business and the importance of sustainability.

Operation and • The bonus is based on performance against annual • 50% of the bonus earned is required to be deferred opportunity measures and targets set at the start of the year, into BP shares for three years. Dividends (or evaluated over the ﬁnancial year and assessed equivalents, including the value of any reinvestment) following the year end. may accrue in respect of any deferred shares. • Typically the annual bonus earned would be 50% of • Awards are subject to malus and clawback provisions the maximum available for delivery of performance as described in policy, see bp.com/remuneration. in line with the annual plan. The level of bonus payable may vary depending on the nature of the performance measure and level of target set. • Executive directors may earn a maximum annual bonus (including any deferral) of up to 225% of salary for stretching performance against the objectives set for the year. The committee intends to set demanding requirements for maximum payment.

Performance • The committee determines specific measures, • Measures will typically include a balance of financial, framework weightings and targets each year to reflect the operational and safety measures. Details of the priorities in the annual plan, which is designed measures will be reported in advance each year in the to deliver the group’s strategy and is approved annual report on remuneration. The committee intends by the board. to disclose targets for the annual bonus retrospectively.

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Performance shares

Purpose To link the largest part of remuneration opportunity with the long-term performance of the business. The outcome varies with performance against measures linked directly to strategic priorities.

Operation and • Annual awards of shares will vest based on not be expected to exceed 25% of the maximum opportunity performance relative to measures and targets that opportunity for the relevant element. reflect the delivery of BP’s strategy. Performance • Once performance has been measured, a proportion will normally be measured over a period of at least of the shares that will vest are subject to a holding three years. period. The combined length of the performance and • The maximum annual award level for the group chief holding periods will be normally six years. executive will be 500% of salary and 450% of salary • Dividends (or equivalents, including the value of Corporate governance for the chief financial officer. reinvestment) may accrue in respect of vested shares. • Performance shares will only vest to the extent that • Awards are subject to malus and clawback provisions, performance targets are met. The level of vesting See bp.com/remuneration. for performance will depend on the stretch of the objective set, but the threshold level would normally

Performance • Performance shares may vest based on a • Prior to granting each award the committee will review framework combination of total shareholder return, ﬁnancial the measures, weightings and targets to ensure they and strategic measures. remain focused on delivering the strategy and are in • For 2018 awards, the measures and weightings will be: the interests of shareholders. – total shareholder return relative to oil and gas • At least 40% of any award will be subject to measures majors (50%) linked to shareholder returns and the proportion linked – return on average capital employed (30%) to strategic progress will not exceed 30%. The – strategic progress (20%) committee would consult appropriately with major shareholders regarding any material changes to the • Details of 2018 targets relating to the total shareholder measures. return and return on average capital employed measures are outlined in the remuneration report. Details relating to strategic progress will be disclosed retrospectively.

Shareholding requirements

Purpose To provide alignment between the interests of executive directors and our other shareholders.

Operation and • An executive director is expected to build up and opportunity maintain a minimum shareholding of ﬁve times their base salary within ﬁve years of their appointment.

Performance • Not applicable. framework

Retirement beneﬁts

Purpose To recognize competitive practice in home country.

Operation and • Executive directors normally participate in the company The level of this allowance is expected to reduce in opportunity retirement plans that operate in their home country. future, in line with the proposed reduction for other UK • Senior executives in BP have generally been employees employees who participate in this arrangement. of the group for a number of years. They often remain • US executive directors participate in long-standing plans participants in long-standing arrangements in which of Amoco and Arco and other BP defined benefit and other group employees continue to participate, but retirement savings plans for US employees. which are no longer offered to new employees. The • For future appointments, the committee will carefully maximum opportunity will vary depending on the terms review any retirement benefits to be granted to a new of these arrangements. director. This will take account of retirement policies • UK participants may remain members of the company’s across the wider group, any arrangements currently defined benefit plan. In common with other employees in place, local market practice and individual in this plan, they may choose to receive up to 35% of circumstances. The committee will consider salary in lieu as a cash supplement but do not receive retirement benefits in the context of the overall further service accrual under this plan. approach to remuneration.

Performance • Retirement benefits in the UK are not directly linked to legacy arrangements in the US may reference framework performance. Reflecting local market practice, bonuses when determining the benefit level.

BP Annual Report and Form 20-F 2017 111 Directors’ remunerationCase report3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 115 of 371 Remuneration policy table – non-executive directors

Non-executive chairman Fees

Approach Remuneration is in the form of cash fees, payable monthly. The level and structure of the chairman’s remuneration will primarily be compared against UK best practice.

Operation and The quantum and structure of the non-executive chairman’s remuneration is reviewed annually by the remuneration opportunity committee, which makes a recommendation to the board.

Beneﬁts and expenses

Approach The chairman is provided with support and reasonable travelling expenses.

Operation and The chairman is provided with an ofﬁce and full time secretarial and administrative support in London and a opportunity contribution to an ofﬁce and secretarial support in his home country as appropriate. A car and the use of a driver is provided in London, together with security assistance. All reasonable travelling and other expenses (including any relevant tax) incurred in carrying out his duties is reimbursed.

Non-executive directors Fees

Approach Remuneration is in the form of cash fees, payable monthly. Remuneration practice is consistent with recognized best practice standards for non-executive directors’ remuneration and, as a UK-listed company, the level and structure of non-executive directors’ remuneration will primarily be compared against UK best practice. Additional fees may be payable to reﬂect additional board responsibilities, for example, committee chairmanship and membership and for the role of senior independent director.

Operation and The level and structure of non-executive directors’ remuneration is reviewed by the chairman, the GCE and the opportunity company secretary who make a recommendation to the board. Non-executive directors do not vote on their own remuneration. Remuneration for non-executive directors is reviewed annually.

Other fees and beneﬁts Intercontinental allowance

Approach Non-executive directors receive an allowance to reﬂect the global nature of the company’s business. The intercontinental travel allowance is payable for the purpose of attending board or committee meetings or site visits.

Operation and The allowance is paid in cash following each event of intercontinental travel. opportunity

Beneﬁts and expenses

Approach Non-executive directors are provided with administrative support and reasonable travelling expenses. Professional fees are reimbursed in the form of cash, payable following the provision of advice and assistance.

Operation and Non-executive directors are reimbursed for all reasonable travelling and subsistence expenses (including any relevant opportunity tax) incurred in carrying out their duties. The reimbursement of professional fees incurred by non-executive directors based outside the UK in connection with advice and assistance on UK tax compliance matters.

The maximum fees for non-executive directors are set in accordance with the Articles of Association.

This directors’ remuneration report was approved by the board and signed on its behalf by David J Jackson, company secretary on 29 March 2018.

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Statement of directors’ responsibilities • The parent company financial statements, prepared in accordance with United Kingdom generally accepted accounting practice, give a The directors are responsible for preparing the Annual Report and the true and fair view of the assets, liabilities, financial position, financial statements in accordance with applicable law and regulations. performance and cash flows of the company. The directors are required by the UK Companies Act 2006 to prepare • The management report, which is incorporated in the strategic report financial statements for each financial year that give a true and fair view and directors’ report, includes a fair review of the development and of the financial position of the group and the parent company and the performance of the business and the position of the group, together financial performance and cash flows of the group and parent company with a description of the principal risks and uncertainties that they face. for that period. Under that law they are required to prepare the consolidated financial statements in accordance with International C-H Svanberg Financial Reporting Standards (IFRS) as adopted by the European Union Chairman (EU) and applicable law and have elected to prepare the parent company 29 March 2018 financial statements in accordance with applicable United Kingdom law and United Kingdom accounting standards (United Kingdom generally Risk management and internal control Corporate governance accepted accounting practice). In preparing the consolidated financial Under the UK Corporate Governance Code (Code), the board is statements the directors have also elected to comply with IFRS as responsible for the company’s risk management and internal control issued by the International Accounting Standards Board (IASB). systems. In discharging this responsibility the board, through its In preparing those financial statements, the directors are required to: governance principles, requires the group chief executive to operate the company with a comprehensive system of controls and internal audit to • Select suitable accounting policies and then apply them consistently. identify and manage the risks that are material to BP. In turn, the board, • Make judgements and estimates that are reasonable and prudent. through its monitoring processes, satisfies itself that these material risks • Present information, including accounting policies, in a manner that are identified and understood by management and that systems of risk provides relevant, reliable, comparable and understandable management and internal control are in place to mitigate them. These information. systems are reviewed periodically by the board, have been in place for • Provide additional disclosure when compliance with the specific requirements of IFRS is insufficient to enable users to understand the the year under review and up to the date of this report and are consistent impact of particular transactions, other events and conditions on the with the requirements of principle C.2 of the Code. group’s financial position and financial performance. The board has processes in place to: • State that applicable accounting standards have been followed, subject to any material departures disclosed and explained in the • Assess the principal risks facing the company. parent company financial statements. • Monitor the company’s system of internal control (which includes • Prepare the financial statements on the going concern basis unless it the ongoing process for identifying, evaluating and managing the is inappropriate to presume that the company will continue in business. principal risks). • Review the effectiveness of that system annually. The directors are responsible for keeping proper accounting records that Non-operated joint ventures and associates have not been dealt with as disclose with reasonable accuracy at any time the financial position of part of this board process. the group and company and enable them to ensure that the consolidated financial statements comply with the Companies Act 2006 and Article 4 A description of the principal risks facing the company, including those of the IAS Regulation and the parent company financial statements that could potentially threaten its business model, future performance, comply with the Companies Act 2006. They are also responsible for solvency or liquidity, is set out in Risk factors on page 57. During the safeguarding the assets of the group and company and hence for taking year, the board undertook a robust assessment of the principal risks reasonable steps for the prevention and detection of fraud and other facing the company. The principal means by which these risks are irregularities. managed or mitigated are set out in How we manage risk on page 55. Having made the requisite enquiries, so far as the directors are aware, In assessing the risks faced by the company and monitoring the system there is no relevant audit information (as defined by Section 418(3) of the of internal control, the board and the audit, safety, ethics and Companies Act 2006) of which the company’s auditors are unaware, environment assurance and geopolitical committees requested, and the directors have taken all the steps they ought to have taken to received and reviewed reports from executive management, including make themselves aware of any relevant audit information and to management of the business segments, corporate activities and establish that the company’s auditors are aware of that information. functions, at their regular meetings. A report by each of these committees, including its activities during the year, is set out on The directors confirm that to the best of their knowledge: pages 77-89. • The consolidated financial statements, prepared in accordance with IFRS as issued by the IASB, IFRS as adopted by the EU and in During the year, the committees also met with management, the group accordance with the provisions of the Companies Act 2006, give a true head of audit and other monitoring and assurance functions (including and fair view of the assets, liabilities, financial position and profit or loss group ethics and compliance, safety and operational risk, group control, of the group. group legal and group risk) and the external auditor. Responses by management to incidents that occurred were considered by the appropriate committee or the board.

This page does not form part of BP’s Annual Report on Form 20-F as ﬁled with the SEC.

BP Annual Report and Form 20-F 2017 113 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 117 of 371

An audit committee meeting in February 2018 carried out an annual review of the effectiveness of the system of internal control. In considering this system, the audit committee noted that it is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute, assurance against material misstatement or loss. This review included a report from the group head of audit which summarized group audit’s consideration of the design and operation of elements of BP’s system of internal control over significant risks arising in the categories of strategic and commercial, safety and operational and compliance and control and considered the control environment for the group. The report also highlighted the results of internal audit work conducted during the year and the remedial actions taken by management in response to failings and weaknesses identified. Where failings or weaknesses were identified, the audit committee was satisfied that these were or are being appropriately addressed by the remedial actions proposed by management. At its meeting in March 2018, the board considered the review undertaken by the audit committee and the proposed disclosures outlining the company’s risk management and internal control systems prior to publication of the annual report and accounts. A statement regarding the company’s internal controls over financial reporting is set out on page 275. Longer-term viability In accordance with provision C.2.2 of the Code, the directors have assessed the prospects of the company over a period significantly longer than 12 months. The directors believe that an assessment period of three years is appropriate based on management’s reasonable expectations of the position and performance of the company over this period, taking account of its short-term and longer-range plans. Taking into account the company’s current position and its principal risks on page 57, the directors have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over three years. The directors’ assessment included a review of the financial impact of the most severe but plausible scenarios that could threaten the viability of the company and the likely effectiveness of the potential mitigations that management reasonably believes would be available to the company over this period. In assessing the prospects of the company, the directors noted that such assessment is subject to a degree of uncertainty that can be expected to increase looking out over time and, accordingly, that future outcomes cannot be guaranteed or predicted with certainty.

Going concern In accordance with provision C.1.3 of the Code, the directors consider it appropriate to adopt the going concern basis of accounting in preparing the ﬁnancial statements.

Fair, balanced and understandable The board considers the Annual Report and ﬁnancial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s position and performance, business model and strategy.

This page does not form part of BP’s Annual Report on Form 20-F as ﬁled with the SEC.

114 BP Annual Report and Form 20-F 2017 Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 118 of 371 Financial 116 Consolidated ﬁnancial statements of the BP group Independent auditor’s Group statement of statements reports 116 changes in equity 127 Group income statement 125 Group balance sheet 128 Group statement of Group cash ﬂow statement 129 comprehensive income 126

130 Notes on financial statements 1. Significant accounting 22. Pensions and other post- policies 130 retirement benefits 162 2. Significant event – Gulf of 23. Cash and cash equivalents 168 Mexico oil spill 143 24. Finance debt 168 3. Disposals and impairment 145 25. Capital disclosures and 4. Segmental analysis 147 analysis of changes in 5. Income statement analysis 150 net debt 169 6. Exploration expenditure 150 26. Operating leases 169 7. Taxation 151 27. Financial instruments and 8. Dividends 153 financial risk factors 170 9. Earnings per share 153 28. Derivative financial 10. Property, plant and instruments 173 equipment 155 29. Called-up share capital 177 11. Capital committments 155 30. Capital and reserves 178 12. Goodwill 156 31. Contingent liabilities 181 13. Intangible assets 157 32. Remuneration of senior 14. Investments in joint ventures 158 management and non- 15. Investments in executive directors 182 associates 158 33. Employee costs and 16. Other investments 160 numbers 183 17. Inventories 160 34. Auditor’s remuneration 183

18. Trade and other 35. Subsidiaries, joint Financial statements receivables 161 arrangements and 19. ValuBUJon and qualifying associates 184 accounts 161 36. Condensed consolidating 20. Trade and other payables 161 information on certain US 21. Provisions 162 subsidiaries 185

191 Supplementary information on oil and natural gas (unaudited) Oil and natural gas Standardized measure of exploration and production discounted future net cash activities 192 ﬂows and changes therein Movements in estimated relating to proved oil and net proved reserves 198 gas reserves 213 Operational and statistical information 216

219 Parent company financial statements of BP p.l.c. Company balance sheet 219 6. Taxation 228 Company statement of 7. Called-up share capital 228 changes in equity 220 8. Capital and reserves 229 Notes on financial 9. Financial guarantees 229 statements 221 10. Share-based payments 230 11. Auditor’s remuneration 1. Significant 230 12. Directors’ remuneration 230 accounting policies 221 13. Employee costs and 2. Investments 223 numbers 230 3. Receivables 224 14. Related undertakings 231 4. Pensions 224 5. Payables 227

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7+,63$*(+$6%((1/()7%/$1.,17(17,21$//< Case 3:17-cv-06011-WHA Document 231-2 Filed 05/03/18 Page 250 of 371 Additional 248 Selected ﬁnancial information disclosures 251 Liquidity and capital resources

253 Upstream analysis by region

258 Downstream plant capacity

259 Oil and gas disclosures for the group

265 Environmental expenditure

265 Regulation of the group’s business

270 Legal proceedings

273 International trade sanctions

274 Material contracts

274 Property, plant and equipment

274 Related-party transactions

275 Corporate governance practices

275 Code of ethics

275 Controls and procedures

276 Principal accountants’ fees and services

276 Directors’ report information Additional disclosures 277 Disclosures required under Listing Rule 9.8.4R

277 Cautionary statement

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284 Annual general meeting

284 Memoradum and Articles of Association

286 Purchases of equity securities by the issuer and afﬁliated purchasers

287 Fees and charges payable by ADS holders

287 Fees and payments made by the Depositary to the issuer

287 Documents on display

288 Shareholding administration

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BP’s corporate reporting suite includes information about our ﬁnancial and operating performance, sustainability performance and also on global energy trends and projections.

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