Three Years after Oil Spill, BP Battles ‘Fictitious Losses’
Billions of dollars on line; court ruling expected soon
HOUSTON -- Three years after its disastrous oil rig accident in the Gulf of Mexico, BP has managed to strengthen its finances by divesting itself of less profitable operations, ramping up new oil production overseas and reducing its exposure to volatile investments.
But one wild card continues to menace the company: BP’s bill to compensate thousands of Gulf spill claimants is spiraling beyond what it expected and could take billions of dollars out of its future earnings, reports the New York Times.
In an effort to limit its exposure, BP has told a federal appeals court that a claims administrator misinterpreted the terms of a multibillion-dollar settlement reached last year arising out of the 2010 Deepwater Horizon rig explosion and oil spill that took 11 lives and soiled Gulf beaches. A decision by the Court of Appeals for the Fifth Circuit in New Orleans is expected within the next few weeks, the newspaper reported.
According to BP, many businesses are securing settlements for exaggerated or even fictitious losses.
“Irreparable injustices are taking place,” Theodore B. Olson, the former solicitor general, who is representing BP, told the appeals court this past Monday. He warned of a “hemorrhaging of possibly billions of dollars” because of the administrator’s miscalculation of business losses following the spill.
The plaintiffs’ lawyers dispute the claim, saying that BP is trying to back away from a settlement it negotiated, co-wrote and agreed to, the newspaper reports.
BP has taken a charge of $42.2 billion for cleanup costs, fines and other compensation. It initially estimated that it would pay $7.8 billion to Gulf coast businesses and residents, a total it has increased to $8.2 billion excluding future business loss claims that the company says it cannot yet estimate.
Click here to read the complete New York Times report.