Response crews battle the blazing remnants of the off-shore
oil rig Deepwater Horizon, off Louisiana, in April 2010.
REUTERS/US Coast Guard/Handout/Files
Transocean Ltd agreed to pay $1.4 billion ($NZ1.7b) to
settle US government charges over BP Plc's massive Gulf of
Mexico oil spill in 2010 and the rig contractor admitted that
its crew on the Deepwater Horizon was partly responsible.
Transocean, which employed nine of the 11 workers killed in
the accident, had set aside $1.5 billion for the US
Department of Justice out of a $1.95 billion Macondo loss
provision. The settlement, unveiled on Thursday by the DoJ,
includes $1 billion in civil penalties and $400 million in
Still looming is a settlement with the plaintiffs committee
that represents more than 100,000 individuals and business
owners claiming economic and medical damages. So the ultimate
cost of Macondo to Transocean could end up being more than $4
billion, UBS analyst Angie Sedita said. Last year, BP reached
a $7.8 billion plaintiffs liability settlement.
The shares of Switzerland-based Transocean rose 6.4 percent
to close at $49.21 in New York on the lower-than-expected DoJ
payout, with Barclays having expected a settlement of $2.5
billion. The cost of insuring Transocean debt fell sharply.
"The bottom line to me is they now can put away the big black
cloud that has been hanging over them," said Phil Weiss, an
oil analyst at Argus Research.
BP and its contractors have sought to push blame on to each
other since the 2010 well explosion caused the largest-ever
US offshore oil spill. Lawyers and analysts see the federal
settlements with BP, and now Transocean, as a solid legal
framework to start putting the disaster behind them.
Halliburton Co, which performed cementing work on the Macondo
well, remains the only one not to have settled. Daniel
Becnel, a Louisiana lawyer representing spill-related
claimants, believes that settlement is merely a matter of
time because none of the three really wants to fight it out
The BP-contracted Deepwater Horizon was drilling the
mile-deep well on April 20, 2010, when a surge of methane gas
caused a blowout. The accident led to a months-long US
deepwater ban and intense scrutiny of the offshore drilling
industry, which is now booming worldwide despite lingering
Of the $400 million in Transocean criminal fines, $150
million will help protect the Gulf of Mexico, while another
$150 million will fund spill prevention and response efforts
there, the DoJ said. Transocean must also implement
court-enforceable measures to improve safety and emergency
response on US rigs.
"From what I have read, they (Transocean) played a part, but
BP is the lion's share and ought to pay $15 billion dollars."
said Tony Kennon, mayor of Orange Beach, Alabama.
The US Chemical Safety Board found that BP and Transocean
both had "safety management system deficiencies that
contributed to the Macondo incident," and neither had
adequate safety rules.
The DoJ said that in agreeing to plead guilty to violating
the Clean Water Act, Transocean admitted that members of its
crew, acting at BP's direction, were negligent in failing
fully to investigate indications that the Macondo well was
"Unfortunately, Halliburton continues to deny its significant
role in the accident, including its failure to adequately
cement and monitor the well," BP said in a statement.
Halliburton said it had substantial legal arguments against
any liability, including an indemnity in its contract with
BP. Halliburton shares closed 1.7 percent higher at $36.31.
BP agreed in November to a DoJ settlement of its own worth
$4.5 billion, including the largest criminal fine ever at
$1.256 billion. The London-based oil company also agreed to
plead guilty to obstruction of Congress, a felony.
New York-traded shares of BP closed 2 percent higher on
Attention now turns to any possible settlements ahead of a
Macondo-related trial due to start on Feb. 25 in New Orleans,
including for Clean Water Act (CWA) violations that may cost
BP $21 billion if it is found grossly negligent.
"That's where fairness will be found - or lost," National
Audubon Society CEO David Yarnold said of BP's CWA case,
since most of the fines would go toward restoring the Gulf of