BP starts court fight over Gulf of Mexico oil spill


BP will start one of the biggest fights in its 104-year history next week as the US Government sues the oil giant for the devastation caused by the Gulf of Mexico disaster.

The group will be in the dock alongside contractors Halliburton and Transocean as a single judge decides who was to blame for what happened when the Deepwater Horizon rig exploded, claiming the lives of 11 men and triggering the biggest oil spill in US history.

The British company will face the wrath of the US Federal Government, several states, various local government authorities and hundreds of independent plaintiffs before Federal Judge Carl Barbier at a court in New Orleans, Louisiana, on Monday.

On top of millions of pounds of legal fees, BP and the contractors could face a penalty of up to $17.6bn (£11.1bn) for water pollution alone if the court finds gross negligence was at play.

The company's balance sheet could be severely bruised by the court case, which is set to continue well into next year, as it has only made a provision of $3.5bn (£2.2bn) for penalties.

BP will battle to apportion blame on the contractors, in particularly US oil services firm Halliburton, which it accuses of providing the wrong type of concrete to seal the offshore well that for months gushed millions of barrels of oil into the sea.

The court case starts amid increased speculation that BP is close to securing an out-of-court settlement - reflected in a recent lift to its share price.

Chief executive Bob Dudley recently hinted that the company was open to talking to plaintiffs. Announcing the company's annual results, the American boss said: "As I have said before, we are prepared to settle if we can do so on fair and reasonable terms, but equally, if this is not possible, we are preparing vigorously for trial."

There are reportedly 535 individual lawsuits to be heard, covering 120,000 plaintiffs and 72 million documents. Independent plaintiffs are represented by the plaintiffs' steering committee.

The explosion on April 20 2010 saw between four and five million barrels of crude oil leak into the Gulf.

BP has set aside $40bn (£25bn) to cover the cost of the disaster, however, within this, the only provision for penalties is $3.5bn for water pollution damages.

The US government is entitled to demand compensation amounting to $1,100 for each barrel spilled, and if gross negligence is shown in court, BP and associated companies could be liable for up to $4,300 a barrel.

The company has since paid $7.5bn (£4.7bn) in clean-up costs and compensation, with more than 200,000 individuals and businesses claiming compensation from the $20bn (£12.6bn) fund set aside for victims.

The supermajor reported annual replacement cost profits of $23.9bn (£15.1bn) in 2011, compared with a loss of $4.6bn (£3.1bn) the previous year.

The company has already reached settlements with a number of partners in the well, in which BP owned a 65% stake, including Anadarko, which had a 25% stake, and Moex, which had a 10% share.

And US-based Moex last week settled with federal and state governments, paying $90m (£56.9bn), fuelling speculation that BP could do the same.


Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent