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
Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test