New Gulf claims may add $50bn to BP bill

The scale of BP's potential legal bill for the Gulf of Mexico oil spill has soared after the company disclosed $34bn (£22bn) of new claims by four southern US states.

The latest claims, presented to BP last month, mean the total cost of the spill to the company could be close to $50bn more than it has budgeted for.

BP is understood to have set aside a few billion dollars, at most, to cover the southern states claim and just $3.5bn for the Clean Water Act, which could result in a penalty of $21bn.

Analysts expect the eventual shortfall to be far lower than this worst-case scenario, but say the latest claims inject a significant further uncertainty into the legal proceedings.

BP revealed the claims as it announced that charges and divestments relating to the oil spill continued to take their toll on its bottom line last year, forcing profits down by 19 per cent to $17.6bn.

BP also said it was in discussions with Rosneft about working together inside and outside Russia following the $28bn sale of its 50 per cent stake in TNK-BP to the Russian state-owned oil giant in a cash-and-shares deal that left it with about a fifth of Rosneft's shares.

Bob Dudley, BP's chief executive, is talking to Rosneft about the Russian Arctic and pledged to proceed in the environmentally sensitive region "with great sensitivity and care". Outside Russia, analysts suggested Venezuela would be high on the agenda, where Rosneft already has a strong presence.

The claims which BP disclosed have been lodged by the states of Alabama, Mississippi, Florida and Louisiana. They seek to recover alleged losses including economic and property damage as a result of the explosion on the Horizon rig in April 2010 that resulted in 11 deaths and spilled an estimated 5 million barrels of oil into the Gulf.

The latest so-called economic restoration claims are separate from the $11.7bn BP has already spent on individual, business and government entity claims and other payments.

Instead, they have been made by states and mainly relate to tax revenues that have been lost as a result of companies that were forced to suspend or close down their operations and associated job losses. BP estimated that the total cost of the oil spill to BP would be $42.2bn, including legal, clean-up and other expenses.

A BP spokesman said of the latest claims: "The amounts claimed...are very substantial. However, BP considers the methodologies used to calculate these claims to be seriously flawed, not supported by the legislation and to substantially overstate the claims. Should these claims proceed to trial, we will defend vigorously against them."

Although BP has settled many of the cases against it, the biggest of all is still set for February 25 in New Orleans. BP said it continued to work towards a settlement over the civil case "but only on reasonable terms" and that it "continues to prepare for the civil trial".

If the case goes ahead, it will cover the state economic restoration claims, damage to natural resources and the Clean Water Act. If BP is found to have been negligent, it could be liable for a maximum penalty of $4.5bn from the Clean Water act alone. If grossly negligent, that number could soar to $21bn. BP is insisting that it was not grossly negligent.

Off-target: BG sends a production alert

BG Group, the former exploration arm of British Gas, has warned it would not hit its production target of more than one million barrels of oil equivalent a day by 2015.

It said production could actually fall this year as shutdowns and maintenance on key oil and gas fields threaten to drag on. It blamed missing the target on the sale of a stake in an Australian liquefied natural gas project to China's Cnooc.

Suggested Topics
peoplePaper attempts to defend itself
voicesWe desperately need men to be feminists too
Life and Style
food + drink
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
ebooksAn unforgettable anthology of contemporary reportage
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

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits