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BP reaches agreement over Gulf oil spill
Specific terms of $7.8bn settlement between oil firm and committee representing plaintiffs yet to be released.
Last Modified: 03 Mar 2012 06:44
The Deepwater Horizon oil well released between four and five million barrels of crude oil into the Gulf of Mexico [EPA]

Oil giant BP and a committee representing plaintiffs suing the company over the 2010 Gulf of Mexico oil spill have reached an agreement, a federal judge has said.

As a result of the agreement, which will be filed with the court for approval, the trial that was scheduled to begin on Monday has been postponed for a second time, Judge Carl Barbier said.

No new date was immediately set. There also was no mention in his order of anything about the status of BP's talks and the federal government, involved states or individual plaintiffs not represented by the committee.

The proposed settlement "represents significant progress towards resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast," Bob Dudley, BP's chief executive officer, said in a statement.

Judge Barbier issued the order to adjourn the case indefinitely "because such a settlement would likely result in a realignment of the parties in this litigation and require substantial changes to the current Phase I trial plan, and in order to allow the parties to reassess their respective positions".

Spill trust fund

BP said that the $7.8bn settlement - which must still be approved by the federal judge - will be paid out of a $20bn trust fund set up in response to the spill.

"This proposed settlement is not expected to result in any increase in the $37.2 billion charge [which included the $20bn charge taken in respect of the Trust] previously recorded in BP's financial statements," BP said.

The oil company has already paid more than $6bn to over 220,000 claimants who chose to settle with the firm using a special fund that was set up to provide emergency payments and faster routes to reimbursement.

Al Jazeera's John Terrett, reporting from New Orleans, Louisiana, said: "The feeling is that this 'settlement' between BP and the 38,000 plaintiffs is another delaying tactic on behalf of the oil company and the other firms, who are running scared of any punitive damages the judge may add to the $20bn compensation already agreed, or any other compensation that might emerge during trial."

The massive clean-up and containment effort after the spill cost BP $13.6bn, and it has pledged a further $1bn towards the economic rehabilitation of the area, after the Gulf's tourism and fishing industries were crippled by the environmental damage.

BP has been able to recover more than $5bn from its well partners and subcontractors, but warned in its quarterly report that the final tally for the spill is "subject to significant uncertainty".

The shifting of some costs to the subcontractors has been a central part of BP's strategy, but the issue poses complex legal issues, and will likely end up taking years and multiple appeals to resolve.

BP said the proposed settlement was not an admission of liability by the company.

Environmental damage

The Deepwater Horizon rig exploded in the Gulf of Mexico off Louisiana in April 2010, killing 11 workers and spewing more than 200 million gallons [more than 4.7 million barrels] of oil from an undersea well owned by BP.

The rig, owned by Transocean Ltd, sank two days later.

The spill soiled sensitive tidal estuaries and beaches, killing wildlife and shutting vast areas of the Gulf to commercial fishing. It took 87 days for the well to be capped 1,500m below the surface.

Barbier - an expert in maritime law charged with consolidating hundreds of spill-related lawsuits into the single blockbuster trial - has left the door open for some liability to be shared in key pre-trial rulings.

Several government probes have also already castigated BP, rig operator Transocean and Halliburton - which was responsible for the well's faulty cement job - for cutting corners and missing warning signs that could have prevented the disaster.

Barbier is tasked with determining whether the mistakes that led to the spill constitute gross negligence, who is responsible for said alleged negligence and whether punitive damages should apply. If that is found to be the case, one set of federal fines could reach $18 billion.

The case will likely still go to court even if a deal is reached with the federal government.

Source:
Al Jazeera and agencies
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