Friday, May 20, 2011

news BP nets $1.1bn with first Gulf of Mexico settlement

news BP nets $1.1bn with first Gulf of Mexico settlement : BP secured a significant victory yesterday when one of its partners in the Macondo oil well at the centre of the Gulf of Mexico spill agreed to pay $1.1bn (£678m) to settle legal claims between the two companies, putting pressure on the British oil giant's other partners to make similar moves.

The settlement with Mitsui Oil Exploration (Moex) Offshore, a subsidiary of the Japanese company Mitsui, which owned 10 per cent of the damaged well, will go towards the clean-up bill. "BP will immediately apply the payment to the $20bn trust it established to meet individual, business and government claims, as well as the cost of the natural resource damages," BP said, adding that the deal did not constitute an admission of liability on the part of any party.

In all, BP has set aside $41bn to cover the cost of the disaster, including potential fines under US laws and other costs.

The chief executive, Bob Dudley, used the occasion to pile pressure on other firms linked to the spill, saying: "We call on the other parties involved in the Macondo well to follow the lead of the Moex and Mitsui parties."

The first anniversary of the spill last month was marked by a flurry of lawsuits as companies rushed to meet a statuary deadline for claims. BP filed suits against Halliburton, which cemented the well, Cameron, which manufactured the blowout preventer safety device that it said had failed to secure the well, and Transocean, the owner and operator of the Deepwater Horizon rig. The oil giant, which itself was the subject of a number of suits, also sued Anadarko Petroleum, which owned 25 per cent of the well.

Given BP's provision of $41bn, Moex, as 10 per cent owner of the well, is effectively paying less than a third of its potential liability, prompting some analysts to speculate that Anadarko may also end up paying less.

But sources close to BP warned against making that assumption, indicating that the oil giant was likely to press for a fuller settlement.

Anadarko's chief executive, Jim Hackett, has indicated a willingness to settle. He said earlier this month: "We feel very strongly about our position but we are prepared to come to the table under the right circumstances."

Analysts said the fact that the Moex settlement excluded civil and criminal penalties, including fines under the US Clean Water Act, was significant.

"The agreement suggests that BP is now getting closer to settling the entire legal process and all eyes will now be on Anadarko," explained Ian Reid, an analyst at Jefferies.

He added: "If this settlement is swiftly followed by an agreement with Anadarko, BP should be able to begin to put the whole Macondo saga behind it, especially if it is followed by an agreement with the US Department of Justice.

"This should free up the company to fully re-enter the Gulf of Mexico, where about 40 per cent of its global growth prospects lie."
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