December 1, 2023

Contractor on Oil Spill Has Settled With BP

Cameron, based in Houston, designed and manufactured the so-called blowout preventer on the drilling rig, which failed to stop the oil from spilling. The settlement, which is BP’s fourth so far with companies that worked on some parts of the well, was not an admission of liability by either party, BP said.

The “settlement allows BP and Cameron to put our legal issues behind us and move forward to improve safety in the drilling industry,” Robert W. Dudley, the BP chief executive, said in the company’s statement. “Unfortunately, other companies persist in refusing to accept responsibility for their roles in the accident and for contributing to restoration efforts.”

BP had already agreed to similar settlements with Anadarko Petroleum; a unit of Mitsui Oil Exploration, MOEX, which had stakes in the well; and Weatherford International, which made a part of the well. Those settlements totaled about $5.1 billion.

Legal fights over claims worth tens of billions of dollars continue with Transocean, which owned and operated the rig, the Deepwater Horizon, and with Halliburton, which was responsible for cement work.

BP plans to use the cash payment from Cameron to help settle individual and government claims and pay for costs related to the oil spill.

The company had set aside about $41 billion to cover all costs related to the spill, including a $20 billion compensation fund. It said Friday it had already paid out about $7.5 billion to local businesses and individuals.

BP said Cameron agreed that the well failure and the explosion of the drilling rig was the result of several complex and interlinked issues and not the fault of one single company. BP said it agreed to indemnify Cameron for compensation claims resulting from the accident as part of the settlement.

Cameron said Friday that the settlement was “the right action as it removes uncertainty facing Cameron in the litigation associated with the Deepwater Horizon event.”

“Though this agreement does not provide indemnification against fines and penalties, punitive damages or certain other potential noncompensatory claims, we do not consider these items to represent a significant risk to Cameron,” Jack Moore, the chief executive, said in a statement. Cameron said its insurance would cover at least $170 million of the settlement and that the company would have to take a charge in the fourth quarter for the remaining amount.

The explosion in the Gulf of Mexico on April 20, 2010, killed 11 workers and caused a spill of nearly five million barrels of oil.

BP has continued to invest in exploration in the United States and the Gulf of Mexico, and in October received its first permit from United States regulators since the oil spill to drill a new well in the region.

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Japan Offers Help to Pay Plant Victims

The move would save the plant’s operator, Tokyo Electric Power, from financial collapse. But the plan would require the company to repay in full all payments due to victims of the accident. The company had hoped that payouts might be capped.

About 200,000 residents as well as factories, farmers and fishermen in the area, are expected to file compensation claims totaling billions of dollars.

“We must makes sure that the compensation is adequate, but we must also keep the financial burden on the public to a minimum,” Finance Minister Yoshihiko Noda told reporters.

Executives at Tokyo Electric Power and government officials have been wrangling for weeks over who should pay for the accident at Fukushima. The government, in particular, has wanted to prevent the company from raising electricity rates to pay for compensation claims, in effect passing on the accident’s costs to its customers.

But Prime Minister Naoto Kan also said this week that the state, which has long promoted nuclear energy, should assume some responsibility. The plan needs to be approved by the nation’s divided parliament to go into effect.

The plan calls for the government to issue special-purpose bonds to help finance a plan that would pay out compensation, according to a statement issued by the Trade Ministry. Other utilities in Japan would be required to contribute to the fund, which would also act as an insurance body to cover any future nuclear accidents, the statement said.

Tokyo Electric Power, known as Tepco, would be required to pay back the fund over time. But the fund would ensure that the utility is able to make sufficient investments to provide electricity for the Japanese capital and surrounding regions, where it holds a near monopoly.

At the same time, Tepco would be required to make aggressive cost cuts, like selling real estate and other assets, the ministry statement said.

The company said this week that eight top executives, including its president, Masataka Shimizu, would indefinitely receive no pay, and other directors would have their salaries slashed by 60 percent. The utility has pledged to sell 500 billion yen ($6.17 billion) worth of assets.

A supervisory body would effectively take control of all major management decisions, and make sure that profits, excluding vital investment in infrastructure, be set aside for victims, the Nikkei newspaper reported. The plan asks that Tepco make no dividend payments to shareholders until compensation payments are complete, the Nikkei said.

Still, by rescuing the company from what could have been crippling claims, the plan provides a degree of protection to holders of Tepco shares and bonds, circumventing chaos in financial markets. The company’s shares have lost three-quarters of their value since the crisis began.

Tepco raised about 2 trillion yen from financial institutions in March, but much of that will go toward decommissioning the damaged reactors.

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