Two years after the Deepwater Horizon oil spill in the Gulf of Mexico, which killed 11 workers and released 4.9 million barrels of oil into the ocean, BP has finally agreed an out of court settlement to the value of $7.8 billion with many of the plaintiffs. The damages will be paid from the $20 billion trust fund established after the spill.
BP Chief Executive Bob Dudley released a statement announcing that, "the proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident."
James Roy and Stephen Herman, the lawyers acting on behalf of the thousands of plaintiffs said that the settlement "does the greatest amount of good for the greatest number of people."
BP says that it has already spent more than $22 billion on the Gulf spill; $14 billion during the actual operational response to the spill; and a further $8.1 billion to individuals, businesses, and government entities.
However whilst BP are hoping that this settlement is the first step along the road which leads to the end of the whole Deepwater Horizon fiasco, it is highly likely that it has only opened the doors for many more expensive battles against the US government.
BP recorded $37.2 billion as the maximum spill related costs that they estimate will fall to them, although legal experts are suggesting that criminal environmental penalties pursued by the government could reach between $17 billion and $40 billion. On top of that any civil penalties based upon the amount of oil spilled could add a further $20 billion.
Any out of court settlements will be far lower than these figures, but Attorney General Eric Holder assured congress that his department is prepared to go all the way to trial if it be necessary.
The government is expected to force Transocean Ltd (the rig owner) and Halliburton Co (responsible for the faulty cementing which caused the explosion) to shoulder some of the penalties, but both companies have announced that they will continue to fight against accepting any liability.
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also… More
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