Wednesday - Aug 23, 2017

BP prepares themselves for the eventuality of ‘staggering’ compensation costs


BP prepares themselves for the eventuality of ‘staggering’ compensation costs

One of the blackest days in global oil giant BP’s history has to be April 21st, 2010 when their Deepwater Horizon oil rig situated just off the coast of the Gulf of Mexico, close to New Orleans, Louisiana exploded and eventually sunk.

The Deepwater Horizon oil rig disaster now ranks as largest marine oil spill in the history of the petroleum industry, with crude oil gushing from the sea-floor oil without respite for a total of 87 days, until it was eventually capped on 15 July 2010, after a series of unsuccessful attempts.

The US Government placed a final estimate of oil that flowed into the Gulf at just short of five million barrels until the well was finally declared sealed on 19 September 2010, although there are still some unofficial reports that the well still continues to leak.

Now almost four years later the issue of compensation to be paid by BP has yet to be finally settled, with the company requesting the intervention of the US Supreme Court after federal courts in New Orleans agreed to lift a recently imposed injunction which blocked the payment of business claims for economic losses, according to a settlement agreed by the UK-based oil company in favor of victims of the spill in 2012.

Concerned at the level of the compensation costs, lawyers acting for BP have now requested that the US Supreme Court intervened to block disputed compensation awards related to the disaster, whilst warning that the company was facing “staggering” costs which in their opinion far exceeds any actual damage all injury caused by the spill.

According to the injunction, BP claimed that they stand to pay out “hundreds of millions” of dollars that would be “irretrievably scattered to claimants that suffered no injury traceable to BP’s conduct”. In any statement issued by BP to the Supreme Court, company officials explained that they had already paid out $2 billion in composition to companies in the region of the spill, with, in their estimation, around $75 million going to “entities whose losses had nothing to do with the spill”, and more than $500 million going to claimants whose business operations were “located far from the spill as well as being engaged in businesses whose revenues and profits bear no logical connection to the spill”.

Until the appeal is heard, BP remain legally obliged to resume making compensation payments, with Justice Antonin Scalia, regarded as being one of the Supreme Court’s most conservative members, holding the fate of BP’s request in his hands, due to the fact that he has responsibility for handling such emergency applications relating to the Fifth Circuit.

Reportedly the lawyers for BP have put up a fairly strong argument in its filing, whilst requesting that the US Supreme Court should take the case because of the “enormous” potential liability the company faces.

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