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Thu Oct 23 05:05:02 SAST 2014

US to put BP on trial

Sapa-dpa | 25 February, 2013 00:37
Smoke billows from a controlled burn of spilled oil from the Deepwater Horizon platform in the Gulf of Mexico in this file photo taken June 13, 2010.
Image by: SEAN GARDNER / REUTERS

The bill for the Deepwater Horizon oil rig explosion and spill has reached at least $38-billion and BP still faces the possibility of more costs associated with the largest oil spill in US history.

A portion of those costs will be determined in a trial set to open today in New Orleans to determine liability for the spill in the Gulf of Mexico nearly three years ago.

BP and thousands of private plaintiffs settled on a compensation package nearly a year ago. This time, BP faces the US government, which is seeking billions in fines.

Eleven workers were killed when the oil rig exploded and uncorked a well that leaked hundreds of thousands of barrels of oil into the gulf. BP management is prepared to pay $5-billion for violating the Clean Water Act, far below what the US is seeking.

BP has responded bluntly to what it views as "excessive demands" made by the Justice Department.

Rupert Bondy, BP's lead lawyer, said: "Faced with demands that are excessive and not based on reality or the merits of the case, we are going to trial."

What is expected to become months of legal haggling will deal with one term: gross negligence.

If it can be determined that BP acted with gross negligence, then it will be required by law to pay as much as $4300 per barrel of crude oil leaked.

If gross negligence cannot be proved, the fine would be less than $2000 per barrel.

There is also a dispute over the amount of oil that leaked from the well during the 87 days before it was capped. The government put the amount at about 4.9million barrels - each barrel holding 159 litres. BP says that amount is exaggerated by at least 20%.

According to BP, it has pledged to pay $38-billion in compensation for the spill, with $23-billion already paid out. The criminal liability portion is $4.5-billion after BP pleaded guilty to manslaughter. Private plaintiffs and business people will receive $7.8-billion for losses. The largest portion goes to fisheries.

The rig's owner, Transocean, has settled with the government on pollution claims and will pay $1.4- billion, including $400-million in criminal penalties. In November, BP reached a settlement with the Justice Department on all criminal charges.

BP has calculated that its costs for the spill thus far are $42-billion. The company has also suffered massive economic consequences since the accident. BP shares have slowly slipped into losing territory. Last year alone it had to write off $5-billion.

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