On Monday, BP agreed to receive $4 billion from Anadarko Petroleum Co., its partner in the well that gushed oil into the Gulf of Mexico last year. As The New York Times reported:
The settlement ends a long dispute between BP, which operated the well in the gulf, and Anadarko, which owned a 25 percent stake, about accepting responsibility for compensating those affected by one of the worst oil spills ever in the United States.
Anadarko had been arguing that it shouldn't have to pay for the spill since BP had been negligent. But as Reuters explains, pursuing this argument could have made the total costs of the spill far more expensive for BP, and eventually for them:
As a 25 percent partner in the Macondo well, Anadarko is on the hook for 25 percent of the costs of cleaning up the spill, compensating those affected, and paying government fines. It could only avoid this responsibility if it proved BP had been grossly negligent -- something which could, potentially, have added around $18 billion to the total amount of fines BP faced.
Fines for leaking oil into U.S. waters are leveled at a level of $1,100 per barrel, or $4,300 if gross negligence is proven. The government has said the Macondo well leaked almost 5 million barrels into the sea. BP has said the total bill for the oil spill, including government fines, for which it has taken charges of $3.5 billion and research grants of $500 million, will be $42 billion. This suggests Anadarko could have faced a total bill of up to $9.5 billion.
On Friday, the AFP cited BP executive Ray Dempsey saying that $7 Billion in compensation claims have been paid out by the oil company to victims of the April 2010 oil spill. The $4 billion dollar settlement payment will be added to $20 billion trust that will be used to compensate victims, The Times reports.
This article is from the archive of our partner The Wire.