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BP to Receive $4 Billion from Anadarko for Gulf Spill

Source: NY Times - Julia Werdigier

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Posted on 17 Oct 2011

The British oil company, BP, said Monday that a partner in a well that exploded in the Gulf of Mexico, Anadarko Petroleum, had agreed to pay $4 billion to settle claims relating to last year’s oil spill.

The settlement ends a long dispute between BP, which operated the well in the gulf, and Anadarko, which owned a 25 percent stake, about accepting responsibility for compensating those affected by one of the worst oil spills ever in the United States.

The settlement was not an admission of liability, said BP, whose investigation concluded that the accident was the result of multiple miscues involving several companies. BP continues to quarrel with its contractors, Transocean, which operated the rig, and Halliburton, which was responsible for cement work, about participating in the compensation payments. BP said Monday that the Anadarko settlement should set an example for the two contractors.

“There is clear progress with parties stepping forward to meet their obligations and help fund the economic and environmental restoration of the Gulf,”  the chief executive of BP, Robert Dudley, said. “It’s time for the contractors, including Transocean and Halliburton, to do the same.”

As part of the settlement, Anadarko, which is based in Houston, will no longer pursue its claims of gross negligence with respect to BP. In addition, Anadarko will transfer its stake in the well back to BP. In turn, BP said in a statemenr that it had agreed to indemnify Anadarko for certain claims excluding civil, criminal or administrative fines and claims for punitive damages.

In a statement, the chief executive of Anadarko, James T. Hackett, called the settlement the right move for company shareholders. The deal “removes significant uncertainty regarding future liabilities and associated risks,” Mr. Hackett said.

BP plans to put the money into the $20 billion trust fund that it is using to compensate claims by individuals and businesses affected by the spill. Anadarko would pay the sum in a single cash payment, BP said. BP has paid more than $7 billion in compensation for the spill.

The settlement came about five months after BP had reached a similar agreement with Moex Offshore, which had a 10 percent stake in the well. Moex had agreed to pay about half of the $2.1 billion that BP had sought from the company.

The explosion of the Deepwater Horizon rig in the Gulf of Mexico on April 20, 2010, killed 11 workers and resulted in a spill that poured nearly five million barrels of oil into the sea. Since the accident, the companies involved in the well — BP, Transocean and Halliburton — have engaged in recriminations and lawsuits, with each accusing the others of negligence. BP has filed claims worth tens of billions of dollars against Transocean and other companies.

BP set aside a total of $41 billion to cover costs related to the oil spill, including the $20 billion trust fund. The provision also includes BP’s estimate of the spill response, legal costs and penalties under the Clean Water Act. The sum does not include possible fines or penalty payments and is based on the assumption that BP is not be eventually found to have acted with gross negligence.

The settlement with Anadarko could help BP ahead of a trial in New Orleans in February, which is expected to determine liability for the oil spill, some analysts said. BP’s shares rose 2 percent in London on Monday.

Transocean reacted angrily Monday to BP’s pressure to also reach a settlement. “BP can’t have it both ways,” the company said in an e-mailed statement. “It is time for BP to step up and make good on its contractual responsibility to defend and indemnify its subcontractors."


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