BP faces escalating spill penalities
08 March 2013
A US court ruled yesterday that BP would need to keep paying certain types of oil spill compensation on a much higher scale to more parties than it expected, reports Reuters. According to analysts this could add billions to its final bill.
The 5 March ruling, of the New Orleans court where BP was engaged in a damage control exercise to limit further fines and penalties, had been outlined in the company's annual report, according to Reuters.
The decision pertained to payments made as part of a settlement stemming from the Deepwater Horizon oil spill in the Gulf of Mexico in 2010 that had been agreed to by BP, but where the actual amount was not capped.
BP had set aside $8.5 billion for payments which included claims for "Economic and Property Damages". The energy major said it would appeal the ruling, which upheld the interpretation of the payout regulator's statement, resulting in larger than expected payouts by.
BP said it strongly disagreed with the ruling of 5 March 2013 and the current implementation of the agreement by the claims administrator. It added, BP intended to pursue all available legal options including rights of appeal to challenge the ruling.
BP also cut $800 million from its $8.5 billion estimate for compensation claims under this part of its $42.2 billion of total spill provisions so far.