An out-of-court settlement, totaling an uncapped $7.8 billion, was reached late Friday U.S. time between lawyers representing BP and thousands of individuals and businesses affected by the 2010 Gulf of Mexico oil spill.
The settlement was agreed two days before the consolidated trial was set to begin in a Louisiana courtroom. The trial was originally set to start on March 5, but was delayed one week to give more time for both parties to reach a settlement.
BP confirmed Saturday the previous evening's media reports that the cost of the proposed settlement is expected to be paid from the $20 billion trust it established to compensate Gulf Coast residents and businesses affected by the spill. In a press release, BP also confirmed that the settlement includes $2.3 billion specifically for seafood industry claimants.
Other costs to be paid from the trust include state and local government claims, state and local response costs, natural resource damages and related claims, as well as final judgments and settlements. BP said that it is not yet possible to determine whether the $20 billion trust will be sufficient to satisfy all of these claims as well as those under the proposed settlement, but that it would meet payments under the proposed settlement directly should the trust not prove adequate.
According to the Wall Street Journal, BP has paid some $6.1 billion through the Gulf Coast Claims Facility. An additional $400 million in payments have been offered by the fund but have not yet been completed.
BP added that the proposed settlement does not include claims against the company made by the United States Department of Justice or other federal agencies (including under the Clean Water Act and for Natural Resource Damages under the Oil Pollution Act) or by the states and local governments.
"From the beginning, BP stepped up to meet our obligations to the communities in the Gulf Coast region, and we've worked hard to deliver on that commitment for nearly two years,” said BP CEO Bob Dudley.
"The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast."
Due to the settlement, Louisiana District Court Judge Carl Barbier issued an order to suspend the trial until he has had time to approve the terms of the proposed settlement. Barbier told The Times Picayune the settlement would require substantial changes to the current trial plan.
The April 20, 2010, explosion of Transocean's Deepwater Horizon rig, operated by BP, killed 11 workers and led to the biggest offshore oil spill in U.S. history. Close to 5 million barrels of oil spilled into the Gulf of Mexico for nearly three months before crews successfully capped the well after several failed attempts.
BP, Transocean, Hallburton and Cameron International are the main targets of the trial. Transocean owned the rig, while BP operated it and had majority ownership of the well. Halliburton was the cement contract, while Cameron made the well's failed blowout preventer.
Rigzone Editor Jon Mainwaring contributed to this article from London. Web Content Director Andrea Mooney reported from Houston.
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