Belfast Telegraph

Wednesday 1 October 2014

BP sets aside more oil payout cash

BP's total estimated bill following the Deepwater Horizon disaster now stands at 27.7 billion pounds

BP has set aside an extra 1.4 billion US dollars (£913 million) in compensation for the Deepwater Horizon disaster as it struggles to stem a tide of allegedly spurious claims which it says are inflating its payout bill.

The amount estimated by the company that it needs to compensate individuals and businesses has been increased from 8.2 billion US dollars (£5.3 billion) to 9.6 billion US dollars (£6.3 billion). It was previously 7.8 US billion dollars (£5.1 billion).

It means that just 300 million US dollars (£196 million) is left of a 20 billion US dollar (£13 billion) trust fund set up by the company to settle its legal obligations following the disaster.

BP said it continued to dispute a court interpretation of the US settlement agreement it signed following the 2010 disaster in the Gulf of Mexico - which it has argued allows businesses to claim for non-existent losses.

Its total estimated bill following the disaster now stands at 42.4 billion US dollars (£27.7 billion), which also includes clean-up costs and fines.

Costs are being paid out of the 20 billion US dollars trust fund set up following the catastrophe, but the latest figures show 19.7 billion US dollars (£12.8 billion) of this have now been used up.

It means BP is likely to face questions over where it will find any more cash should the compensation bill continue to rise.

The company disclosed the new figure as it published financial results for the second quarter of the year, which showed profits down sharply to 2.7 billion US dollars (£1.8 billion). The 25% decline compared with the same period last year was blamed on lower oil prices and a higher tax bill.

BP said the increase in the Deepwater Horizon settlement comprised 900 million US dollars (£590 million) to reflect additional notices for claims received and 500 million US dollars (£330 million) for extra claims administration costs.

It has taken its dispute over the the way the settlement is being handled - by a court-appointed claims administrator and judge - to the US appeals court, arguing that it is the victim of "fictitious and inflated" compensation claims which threaten its future. BP is awaiting the court's decision. The oil giant alleges that the handling of the settlement has sparked a "feeding frenzy" and is allowing businesses from the Gulf coast to claim for "non-existent, artificially calculated losses".

Latest News

Latest Sport

Latest Showbiz