BP To Contest $34B Gulf Suits From State, Local Governments
LONDON - BP PLC plans to "vigorously contest" legal claims for tens of billions of dollars in damages stemming from the 2010 Gulf of Mexico disaster, describing the lawsuits as "seriously flawed."
Demands from U.S. state and local governments for $34 billion risk ballooning BP's overall bill for the Deepwater Horizon rig explosion and oil spill to more than $90 billion, more than double the amount the U.K oil giant has already provisioned for and underscores how after almost three years the Deepwater Horizon disaster still weighs on BP.
BP Chief Executive Bob Dudley said the firm intends to contest the state economic claims "vigorously in court."
Alabama, Mississippi, Florida and Louisiana are seeking the money in compensation for economic losses and property damage caused by the incident, the company disclosed in an earnings filing Tuesday. BP is already facing spill costs of around $58 billion, which includes penalties, damages and cleanup costs the U.K.-based energy giant has already paid out, committed to spend or could yet be fined when the matter goes before a New Orleans judge in a civil trial due to start Feb. 25.
However, BP said such a scenario was unlikely and sought to play down the validity of the claims, saying it considered the methodologies used to calculate the state government claims to be "seriously flawed, not supported by the legislation" and substantially overstated.
Chief Financial Officer Brian Gilvary said the bulk of the state claims are based around losses in potential tax revenues and as such will be hard to prove as BP has put a lot of stimulus money into the Gulf states to deal with the spill.
"That will be an interesting thing to try to prove given that we have provided one of the biggest fiscal stimuli that the Gulf has ever seen; we hired up over 40,000 people to deal with it and paid taxes as a consequence," Mr Gilvary said.
BP has already provided for what it believes is a "fair and reasonable" assessment of the state economic losses in its $42.2 billion provision, Mr. Gilvary said. But he declined to say how much had been allocated.
In January, Alabama, Mississippi and Florida presented their claims to BP for alleged losses including economic losses and property damages as a result of the Gulf of Mexico oil spill, BP said in its fourth-quarter statement.
Louisiana had also asserted similar claims as had various local governments. These claims total over $34 billion and more claims are expected to be presented, the company said.
BP has already spent or committed to spend $37 billion in cleanup costs, criminal fines and settlements with individuals and businesses harmed by the spill. Around $24 billion of that has already been paid out with the remaining sum of about $13 billion to be paid out over a number of years.
Copyright (c) 2012 Dow Jones & Company, Inc.
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