At December 31, 2021, we were liable for
certain contingent obligations
under various contractual arrangements
as described below.
We recognize a liability,
at inception, for the fair value
of our obligation as a guarantor
for
newly issued or modified guarantees.
Unless the carrying amount of the liability is noted below,
we have not
recognized a liability because the
fair value of the obligation
is immaterial.
In addition, unless otherwise stated, we
are not currently performing with any
significance under the guarantee and expect
future performance to be
either immaterial or have only a remote
chance of occurrence.
APLNG Guarantees
At December 31, 2021, we had outstanding
multiple guarantees in connection with our
37.5
interest in APLNG.
The following is a description of the guarantees
with values calculated utilizing December 2021
exchange rates:
During the third quarter of 2016, we issued a guarantee
to facilitate the withdrawal
of our pro-rata
portion of the funds in a project finance reserve account.
We estimate the remaining
term of this
guarantee to be
9
years.
Our maximum exposure under this guarantee
is approximately $
170
may become payable if an enforcement
action is commenced by the project finance lenders
against
APLNG.
At December 31, 2021, the carrying value of this
guarantee is approximately
$
14
In conjunction with our original purchase of an ownership
interest in APLNG from Origin Energy
in
October 2008, we agreed to reimburse
Origin Energy for our share of the existing
contingent liability
arising under guarantees of an existing
obligation of APLNG to deliver natural
gas under several sales
agreements.
The final guarantee expires
in the fourth quarter of 2041.
Our maximum potential liability
for future payments, or cost
of volume delivery, under
these guarantees is estimated
to be $
660
($
1.2
billion in the event of intentional
or reckless breach) and would become payable
if APLNG fails to
meet its obligations under these agreements
and the obligations cannot otherwise be mitigated.
Future
payments are considered unlikely,
as the payments, or cost of volume delivery,
would only be triggered if
APLNG does not have enough natural
gas to meet these sales commitments and
if the co-ventures do not
make necessary equity contributions
into APLNG.
We have guaranteed
the performance of APLNG with regard
to certain other contracts
executed in
connection with the project’s continued
development.
The guarantees have
remaining terms of
15 to 24
years
or the life of the venture.
Our maximum potential amount of future payments
related to these
guarantees is approximately
$
180
million and would become payable
if APLNG does not perform.
At
December 31, 2021, the carrying value of these guarantees
was approximately $
11
Other Guarantees
We have other guarantees
with maximum future potential payment
amounts totaling approximately
$
720
which consist primarily of guarantees
of the residual value of leased office buildings, guarantees
of the residual
value of corporate aircraft,
and a guarantee for our portion
of a joint venture’s
project finance reserve accounts.
These guarantees have remaining
terms of
one to five years
and would become payable if certain asset
values are
lower than guaranteed amounts
at the end of the lease or contract term, business
conditions decline at
guaranteed entities, or as a result
of nonperformance of contractual
terms by guaranteed parties.
At
December 31, 2021, the carrying value of these guarantees
was approximately $
8
Indemnifications
Over the years, we have entered
into agreements to sell ownership
interests in certain legal
entities, joint ventures
and assets that gave rise to
qualifying indemnifications.
These agreements include indemnifications for
taxes and
environmental liabilities.
The carrying amount recorded for
these indemnifications at December 31, 2021, was
approximately $
20
million.
Those related to environmental
issues have terms that are generally
indefinite and the
maximum amounts
of future payments are generally
unlimited.
Although it is reasonably possible future
payments may exceed
amounts recorded, due to
the nature of the indemnifications, it is not possible to
make a
reasonable estimate of the maximum potential
amount of future payments.
for additional
information about environmental
liabilities.