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Thursday 8 December 2016

US government suing BP over oil spill

Published 16/12/2010 | 11:11

The US government is to sue BP for costs and damages in a bid to recoup billions of dollars after the Gulf of Mexico oil spill.

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The British oil firm was among eight companies named by the Justice Department in a lawsuit filed in a New Orleans court yesterday.

On April 20, an explosion at BP's Deepwater Horizon rig killed 11 workers and caused the largest offshore spill in US history with hundreds of millions of gallons of oil gushing into the Gulf.

The US administration is calling for the eight named firms to be held liable without limitation for all costs and damages under the Oil Pollution Act.

The lawsuit is also calling for the companies - which include drilling rig operator Transocean and its insurer QBE Underwriting - to be held accountable under the Clean Water Act.

Announcing the action, US Attorney General Eric Holder said: "We intend to prove that these defendants are responsible for government removal costs, economic losses, and environmental damages without limitation.

"Even though the spill has been contained, the Department of Justice's focus on investigating this disaster and preventing future devastation has not wavered.

"Both our civil and criminal investigations continue, and our work to ensure that the American taxpayers are not forced to bear the costs of restoring the Gulf area and its economy is moving forward."

The US administration alleges that safety regulations were violated prior to the blast. It claims that the defendants failed to use the best available drill and neglected to adequately monitor conditions at the well.

The overall cost to BP for the clean-up operation so far is just shy of $40bn (€30.2bn), but the civil action could see the total bill increased significantly.

The oil giant has also seen shares plummet and been forced to offload billions of dollars of assets to help pay compensation for the disaster.

If found liable for negligence under the Clean Waters Act, the defendants could be fined a maximum $4,300 per barrel of oil spilt.

As an estimated 4.9 million barrels leaked into the Gulf, it could leave the firms facing a total bill of around $21bn (€15.8bn).

The Oil Pollution Act allows for the claimant to sue for the total cost of damages to the natural resources in the area and the overall clean-up bill.

UK Business Secretary Vince Cable yesterday said that BP was big enough to absorb the costs.

He told Sky News: "BP knew there would be litigation. But it is a very strong company. It has coped with this crisis, it did eventually deal with the leak problem. It is financially a very strong company.

"And I don't think that today's news fundamentally changes that."

The full list of those named in the lawsuit includes three subsidiaries of Transocean, two of oil and gas producer Anadarko, exploration firm MOEX Offshore and Triton Asset Leasing.

Alongside claims that they neglected to take necessary precautions at the Deepwater Horizon rig, the defendants are accused of safety failings relating to the protection of personnel, equipment, natural resources and the environment.

The massive oil spill killed large populations of wildlife, polluted waters and shattered fishing communities along the coasts of Texas, Alabama, Louisiana, Mississippi and Florida.

BP permanently plugged the well in September, although it had stopped oil flowing from the leaking well in mid-July.

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