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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Helen and Stephen discuss what was left out, watered down and generally squished around in the Queen's Speech - from prison reform to fox hunting - and what kind of stage it sets for the coming parliamentary term. Will Labour's stance on immigration have to change? And what Brexit deal could secure a parliamentary majority? Clue: it's a royal mess.

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Stephen on Conservative strategy: "If you look at the back end of the Conservative government in the 90s: when your parliamentary situation is rocky, the best way of dealing with that is just for parliamentary not to sit all that much. Don't bring the pain."

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