BP recovers Gulf oil spill costs from Japan's Mitsui

20th May 2011, Comments 0 comments

BP said on Friday that it had recovered more than $1.0 billion in costs linked to last year's devastating Gulf of Mexico oil spill from a US subsidiary of Japanese trading house Mitsui & Co.

The announcement was welcome news for the British energy giant at the end of a week in which BP saw its hopes of exploiting Russian Arctic oil shattered.

In a statement on Friday, BP said MOEX USA Corporation had agreed to pay BP $1.065 billion (744 million euros) in compensation.

MOEX USA Corporation has a 10-percent stake in the Macondo well project, where a leak in 2010 sparked an environmental catastrophe on the Gulf coast.

The leak was triggered by an explosion on the BP-leased Deepwater Horizon rig in the US Gulf of Mexico on April 20, 2010. The blast killed 11 workers, caused millions of barrels of oil to spew into the sea and left the British company scrambling to meet huge compensation costs.

BP said on Friday that the payment from Mitsui would immediately be applied to BP's $20-billion trust set up to meet US claims.

"This settlement is an important step forward for BP and the Gulf communities," BP group chief executive Bob Dudley said in the statement.

"MOEX is the first company to join BP in helping to meet our shared responsibilities in the Gulf, and Mitsui, through MOEX USA Corporation, is showing great corporate citizenship in standing behind its affiliate and making a contribution to meet the costs of this tragic accident.

"We call on the other parties involved in the Macondo well to follow the lead of the MOEX and Mitsui parties," Dudley added.

BP called upon a trio of companies -- Transocean, Halliburton and Anadarko -- to "contribute appropriately."

It noted that Swiss group Transocean owned and operated the Deepwater Horizon rig and that US oil services group Halliburton had designed and pumped the well's cement that has been found to be a key factor of the accident.

It said US energy producer Anadarko had a 25-percent stake in the Macondo project.

BP shares jumped 4.0 percent to 466 pence in reaction to Friday's announcement, strongly outperforming London's benchmark FTSE 100 index, which was up 0.52 percent overall approaching midday.

"In addition to the cash (from Mitsui), the positive of this news is that it marks a useful precedent for BP on two levels," said Peter Hutton, an analyst at Canadian investment bank RBC Capital Markets.

"One, it is likely to help BP's negotiations/claims with other interest holders, notably Anadarko, and two, it is consistent with a view that charges of 'gross negligence' will be difficult to prove against BP.

"The BP statement highlights that MOEX has recognised the conclusions of the US Coast Guard report which indicated numerous causes by several parties," Hutton added.

In order to meet its own compensation costs and raise $30 billion by the end of 2011, BP is selling assets. On Tuesday, it announced a deal to sell a series of onshore oil fields in southern England to Anglo-French exploration company Perenco for up to $610 million.

Including this deal, BP has earned more than $25 billion from asset sales since July last year.

But in a major blow to BP this week, Russian state-controlled oil giant Rosneft pulled out of a planned joint venture with the company after losing patience with protracted negotiations.

The $16 billion share-swap agreement fell through after Rosneft and BP were unable to buy out the local partners in the British firm's Russian joint venture TNK-BP.

© 2011 AFP

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