British oil giant BP Plc said it had reached a $7.8 billion (£4.9 billion) deal to settle thousands of claims from fishermen and others affected by the Gulf of Mexico oil spill, ahead of a blockbuster US trial.
The settlement announced on Friday does not affect what is anticipated to be tens of billions of dollars in fines and claims from the US government and the coastal states and local governments impacted by the spill. Nor does it resolve suits filed by shareholders or those seeking compensation because of a drilling moratorium imposed in the wake of the worst environmental disaster in US history.
But it does resolve a big piece of a very complicated legal battle. “The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast,” Bob Dudley, BP’s chief executive officer, said in a statement.
The last-minute deal means the highly anticipated trial will be delayed once again after a week-long postponement was ordered last Sunday in order to allow the settlement talks to continue.
Judge Carl Barbier issued an order late on Friday adjourning the case indefinitely “because such a settlement would likely result in a realignment of the parties in this litigation… and in order to allow the parties to reassess their respective positions.”
The case will likely still go to court even if a deal is reached with the federal government.
That’s because the British energy giant is hoping to shift some of the cost to its subcontractors, a complex legal question which will likely end up taking years and multiple appeals to resolve. Several government probes have already castigated BP, rig operator Transocean and Halliburton which was responsible for the well’s faulty cement job for cutting corners and missing crucial warning signs.
The April 20, 2010 explosion on the BP-leased Deepwater Horizon drilling rig killed 11 workers, and in following days blackened beaches in five US states and devastated the Gulf Coast’s tourism and fishing industries. It took 87 days to cap BP’s runaway well 5,000 feet below the surface which spewed some 4.9 million barrels of oil into the Gulf of Mexico.
Barbier is tasked with determining whether the deadly mistakes constitute gross negligence, how much of the blame rests with each party and whether punitive damages should be imposed.
Just one set of federal fines could reach $18 billion if gross negligence is found. BP said the $7.8 billion settlement which must still be approved by Barbier will be paid from its $20 billion trust fund.
