BP oil spill unlikely to trigger payout claims beyond US

1st August 2010, Comments 0 comments

The Gulf of Mexico oil spill triggered huge compensation claims against BP in the United States but energy groups are likely to escape hefty payouts for leaks in developing nations, analysts said.

"The BP oil spill will have a lasting impact on the sector" in terms of toughening regulation of deepwater production, said David Hart, an analyst at broker Westhouse Securities.

But he stressed that it would be difficult to make oil companies compensate communities in developing countries such as Nigeria that have been blighted by spillages.

"It's difficult to go back and retroactively seek to extract payments," Hart told AFP.

"You have to have policies, institutions, and regulatory framework in place to access this."

Nigeria, the eighth largest oil exporting nation, recorded at least 3,000 oil spills between 2006 and June, its environment minister said last week.

Energy companies in Nigeria often blame the spills on armed militants operating in the Niger Delta who campaign for a fairer allocation of revenue to locals in the oil-rich region.

The worst environmental catastrophe in US history will cost BP a massive 32.2 billion dollars (24.7 billion euros) in clean-up and compensation costs, the embattled British company has revealed.

BP, whose chief executive Tony Hayward is to step down over the fallout, has set up a 20-billion-dollar compensation fund to help locals affected by the unleashing of millions of gallons of crude into the Gulf of Mexico.

Johannes Benigni, an analyst at research group JBC Energy, said the "crucial factor" for BP was not the oil leak itself -- but its location.

"Had it happened in Nigeria or some other less developed country, its media coverage would have been considerably smaller."

As well as triggering massive compensation claims, the Deepwater Horizon rig explosion on April 20 that killed 11 workers led to tens of billions of dollars being wiped off BP's stock market value.

"How Hayward must wish, if such an incident had to happen, that it could have occurred elsewhere," noted David Hufton, an analyst for broker PVM Oil Associates.

A recent oil spill in northeastern China may have been about 60 times bigger than the government reported, making it among the world's worst known oil disasters, an environmental group said on Friday.

Greenpeace said 60,000-90,000 tonnes of crude, or between 430,000 and 650,000 barrels, may have poured into the Yellow Sea after two pipelines exploded at an oil storage depot in the port of Dalian on July 16.

That figure dwarfs official estimates of 1,500 tonnes spilled by pipelines owned by China National Petroleum Corp -- the country's largest oil company.

In response to the Gulf disaster, US President Barack Obama imposed a moratorium on deepwater drilling until the end of November.

And BP last week admitted that the deepwater energy exploration would face stricter tests that would ramp up costs.

BP's fierce rival, Anglo-Dutch energy group Shell, expressed shock and sympathy over the tragedy, but argued that deepwater drilling was "important" to meet the world's energy needs.

Analyst Benigni said countries other than the US would likely raise fresh objections to oil exploration projects in the wake of the Deepwater Horizon disaster.

"Governments might try to profit from the spill by demanding greater influence on projects, arguing that this would be necessary to ensure their country's environmental integrity," he said.

"Argentina could argue that drilling off the Falklands is an unacceptable risk to its coastlines, while Russia could announce that the risks from offshore drilling is only acceptable if it is carried out by state-controlled operators."

© 2010 AFP

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