BP disaster fund almost drained

Faces ever higher legal payouts.

BP has today announced that the $20 bn fund it set up to pay compensation claims in the wake of the 2010 Deepwater Horizon disaster is down to its last $300m, with the deadline for business to claim loss of earnings not arriving until April 2014.

This leaves future profits exposed as the company has made clear that once the fund has run dry, further claims will come directly from the balance sheet; “We expect that, in the third quarter, the remaining amount for items covered by the trust will be fully utilised and additional amounts will be charged to the income statement."

This exposure, coupled with a stronger US dollar and the lagging effect of export duty on Russian oil are likely to further damage profits at the multinational, resulting in shares falling by more than 4 per cent in London trading.

The news that BP has nearly spent $20 billion on claims and more than $40 billion in total when clean up costs are considered, must be particularly galling given last week’s news that Halliburton has gotten away with little more than a slapped wrist for its part in the disaster.

BP has long claimed that it is not solely responsible for the disaster, in which 11 people lost their lives and saw the Macondo well release nearly 5 million barrels of oil into the Gulf of Mexico until it was capped in July 2010 after 87 days. Contractors Transocean, Cameron and Halliburton must also shoulder some of the blame for the catastrophic well blowout, according to BP.

But Halliburton has so far avoided much of the fallout which BP has been paying for, making just one voluntary payment of $55m to the National Fish and Wildlife Foundation. Last week, the company finally admitted its part in the disaster; pleading guilty to the charge it had destroyed evidence relating to its role in the cementing of the Macondo well prior to the blowout.

In a statement, the company said: “A Halliburton subsidiary has agreed to plead guilty to one misdemeanour violation associated with the deletion of records created after the Macondo well incident, to pay the statutory maximum fine of $200,000 and to accept a term of three years probation”.

This $200,000 pales in comparison to BP’s exposure, but could yet weaken their position in trying to negotiate a settlement in the civil trail which is still ongoing in the US.

Photograph: Getty Images

Mark Brierley is a group editor at Global Trade Media

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Brexit has transformed Nicola Sturgeon into a defender of the status quo

First Minister Nicola Sturgeon is saying the right things, but she may not be able to deliver.

Since 2014, Scotland has been split between "neverenders" who constantly agitate for another vote on independence, and those who complain of referendum fatigue.

This latter emotion appeared to be in the ascendancy during the EU referendum last week, when Scottish voters failed to turn out in large enough numbers to push the Remain vote over the 50% threshold. 

And First Minister Nicola Sturgeon has framed her arguments accordingly. 

Speaking on the Andrew Marr Show, the Scottish National Party leader portrayed herself as battling for the status quo and declared "independence is not my starting point". 

Describing the process of leaving the European Union as "deeply damaging", she said: "The status quo we voted for doesn't exist."

Sturgeon said there was "no vacuum of leadership in Scotland" and added: "My priority is to seek to protect Scotland's interests in uncharted territory."

As well as redefining Scottish independence, Sturgeon is attempting to redefine the rules of the debate. Quizzed on whether she could actually take a unilateral approach to negotiations, she claimed: "The reality is there are no rules, there is no precedent. What will happen from here on in is a matter of negotiation."

Batting away reports that Brussels would not want to sit down with her, she again outlined plans to meet with EU institutions over the coming weeks. 

There is no doubt the First Minister has captured the zeitgeist in Scotland, the most Europhile part of the UK. A full 62 per cent of voters opted to remain in the EU, compared to the UK average of 48.1 per cent. 

But even as she vows to protect the status quo, Sturgeon may find the practical details of "protecting Scotland's interests" are a stumbling block. 

She was unable to say much more about the currency question apart from suggesting it was a "moral issue", and that the borders question would affect Northern Ireland as well. 

During the Scottish referendum, Sturgeon and her colleagues tried to play down the prospect of land borders and an adoption of the euro. Whether Scottish voters' attachment to the EU could include such impositions remains to be seen.