Anadarko Petroleum Corp., which was a 25% owner of the doomed Macondo well in the deepwater Gulf of Mexico (GOM), has agreed to pay BP plc $4 billion to settle claims relating to last year’s well blowout and oil spill and will no longer pursue claims of gross negligence against the oil major.
The settlement, which BP said was not an admission of liability, ends a dispute with Anadarko about how to divvy up responsibility to compensate those affected by the tragedy, which killed 11 men and decimated the Gulf Coast region. In May a unit of Mitsui Ltd., which owned a 10% stake in the BP-operated well, agreed to pay nearly $1.07 billion for related damages (see Daily GPI, May 23).
BP continues to dispute compensation costs with contractors that include Transocean Ltd., which operated the ill-fated Deepwater Horizon rig, as well as Halliburton Co., which was responsible for the Macondo well cement work. The Anadarko settlement should set an example for the contractors, BP CEO Bob Dudley said Monday.
“There is clear progress with parties stepping forward to meet their obligations and help fund the economic and environmental restoration of the Gulf,” Dudley said. “It’s time for the contractors, including Transocean and Halliburton, to do the same.”
Under terms of the settlement, Anadarko agreed to transfer its stake in the Macondo well back to BP. In turn BP agreed to indemnify Anadarko for some claims, excluding the civil, criminal and administrative fines and potential claims for punitive damages.
The settlement “removes significant uncertainty regarding future liabilities and associated risks,” said Anadarko CEO Jim Hackett. Earlier this year BP had invoiced the company for about $4.7 billion in spill-related costs (see Daily GPI, May 4).
The Anadarko settlement, to be a one-time cash payment, is to be put into the $20 billion trust established by BP to compensate claims by individuals and businesses affected by last year’s spill. To date BP said it has paid more than $7 billion in compensation to victims of the spill.
Analysts called the settlement reasonable and in line with expectations and said it removed some uncertainty.
A $4 billion settlement “isn’t chump change,” said analysts with Tudor, Pickering, Holt & Co. “Elimination of the gross negligence claim on the part of Anadarko against BP is arguably at least as important as the amount of the settlement,” since it equals 3% of BP shares. BP had invoiced Anadarko $6.1 billion to date for the estimated $40 billion for total costs, which means that Anadarko, which was a 25% partner, only had to pay 10% of total estimated costs. The biggest unknown “remains the level of federal fine to be charged for Clean Water Act violations.”
Last week the Department of Interior issued safety citations to BP, Halliburton and Transocean regarding the oil spill, which are expected to result in large penalties, including Clean Water Act violations (see Daily GPI, Oct. 14).
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