BP May be Close to Reaching Settlement With Spill Victims

February 27th, 2012 by Trefis Team
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British oil major BP (NYSE:BP) is said to be pursuing talks with plaintiffs seeking claims over the U.S. Gulf of Mexico disaster. According to sources cited by Bloomberg, the company may agree to transfer the $14 billion left in its trust fund to plaintiffs in an out of court settlement. [1] The $14 billion will be paid out from the $20 billion trust fund BP set up in 2010 to compensate spill victims. The energy major claims to have already disbursed $6 billion to individuals and businesses affected by the disaster. The court proceedings scheduled to begin liability proceedings were delayed by a few days as the company and the plaintiffs asked for more time to pursue settlement talks. Anadarko Corp. (NYSE:APC) – an equity partner in the Macondo well agreed to pay BP $4 billion in return for indemnification from third party claims.

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Out of court settlement

BP has been pursuing talks with spill victims and reiterated its stand to compensate all fair claims because of damage resulting from the Gulf of Mexico spill. The April 2010 incident resulted in over 4 million barrels of crude spilling into the ocean (BP claims that around 3 million barrels of oil leaked). Hundreds of individuals and businesses sued BP and other companies involved after the incident claiming that their operations were hampered by the accident. Fishermen, coastal property owners and food processors among others. BP has had to shoulder a majority of the burden of these claims because of its role as the operator of the facility and its third party subcontracts which indemnified contractors from claims resulting from any accident.

If the proposed settlement is reached, a great deal of uncertainty related to the company’s spill liabilities will be reduced. However BP will still have to face pollution charges from federal authorities under the Clean Water Protection Act and other related laws.

See also Anadarko May Face Fines From Federal Agencies Over Gulf of Mexico Spill

    Notes:
    1. BP Said to Consider $14B Spill Settlement, Bloomberg [↩]