BP agrees to pay a record $4.5 bn to US authorities to settle criminal charges relating to the 2010 Deepwater Horizon disaster.
“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region,” said Bob Dudley, BP’s Group CEO said in a press release. “From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today’s resolution with the U.S. government further reflects, we have accepted responsibility for our actions.”
BP also agreed to implement better safety measures at its drilling operations in the Gulf of Mexico. “Since the spill, we have worked hard to rebuild confidence in the company,” said Mr. Dudley. “We take seriously not only our commitment to safety and operational excellence but also our communications with stakeholders, including the public, the government and our investors.”
The cost of BP’s spill far surpassed the Exxon Valdez spill in 1989. Exxon ultimately settled with the US government for $1 billion, which would be about $1.8 billion today.
Transocean Ltd., the rig’s owner, and cement contractor Halliburton were also sued. But US District Judge Carl Barbier in New Orleans said Transocean and Halliburton weren’t obligated to pay for many pollution claims because of contracts they signed with BP.
The companies also sued each other, although some of those cases were settled last year. BP has sued Transocean for at least $40 billion in damages.
The 2010 Deepwater Horizon disaster killed 11 workers, released millions of barrels of crude into the Gulf of Mexico over 87 days and caused catastrophic environmental damage. The Deepwater Horizon rig, 50 miles off the Louisiana coast, sank after an explosion in April 2010. About 206 million gallons of crude oil spewed from the well into the sea, which soiled sensitive tidal estuaries and beaches, as well as killed wildlife and shut vast areas of the Gulf to commercial fishing.
The spill exposed lax government oversight and led to a temporary banon deepwater drilling while officials and the oil industry studied the risks, worked to make it safer and developed better disaster plans.
The oil spill almost killed BP’s reputation of an environmentally-friendly company. Independent gas station owners who fly the BP flag claimed they lost business from customers who were upset over the spill.
A Presidential Commission in 2011 found the disaster came as a result of cost – cutting by BP, Halliburton and Transocean, The panel didn’t point blame at any one individual, concluding the mistakes were caused by systemic problems.
A later report by a team of Coast Guard officials and federal regulators said in September 2011 that BP bore ultimate responsibility for the spill. The report blamed the British oil giant for violating federal regulations, ignored crucial warnings and bad decision making during the cementing of the well a mile beneath the surface of the Gulf of Mexico.
BP has repeatedly said it accepts some responsibility for the spill and will pay what it owes, while urging other companies to pay their share.
BP waived a $75 million cap on its liability for certain economic damage claims under the 1990 Oil Pollution Act, though it denied any gross negligence.
Shares in BP PLC were down 0.8 % at 422 pence in early trading in London.