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Mitsui Assumes Some Share of Gulf of Mexico Oil Disaster, Will Pay BP Nearly $1.1B

Source: WSJ - Guy Chazan

Posted on 20 May 2011

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Mitsui & Co. Ltd., which had a 10% interest in the blown-out Macondo well in last year's disastrous Gulf of Mexico oil, agreed to pay the BP PLC nearly $1.1 billion, assuming some share of the costs.

The move has important legal implications for BP because it marks the first time another company has acknowledged that BP isn't exclusively to blame for the disaster, according to a person close to the situation. It could put pressure on other firms implicated in the accident to settle with BP.

BP said it had reached a $1.065 billion settlement with Mitsui, resolving all claims against the Japanese company and its subsidiaries related to the Deepwater Horizon disaster. BP shares rose about 3% in midday trading in London; they remain about 30% below pre-Gulf-disaster levels.

In a statement, BP said the move showed Mitsui had recognized the findings by the Presidential Commission investigating Deepwater Horizon that the accident was the result of "oversights and outright mistakes by multiple parties and a number of causes."

It was also an acknowledgment, BP said, of the conclusions of the U.S. Coast Guard that "the safety management systems of both Transocean and its Deepwater Horizon rig had significant deficiencies that rendered them ineffective in preventing the accident."

The settlement with Mitsui represents an about-face by the Japanese company, which has until now accused BP of negligence and denied liability for any of the oil spill clean-up costs.

Its decision could put pressure on Anadarko Petroleum Corp., which held the remaining 25% interest in Macondo, to settle. Anadarko has so far refused to pay its share of costs. A spokesman for the company said its position "remains consistent with our previous statements," adding that it viewed BP's willingness to reach settlement with Mitsui as "a positive step."

Analysts at Deutsche Bank said Mitsui's move shows it "does not have confidence its claim that BP acted with gross negligence would be upheld." It said it "seems reasonable" to expect that Anadarko, Transocean Ltd and Halliburton Co. which did the cementing job on the Macondo well, will reach similar agreements.