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Deepwater Horizon legal battle begins

The legal battle has been launched to establish who should pay what for the blowout that destroyed Transocean’s Deepwater Horizon rig last April, killing 11 workers and triggering a massive oil spill

BP has filed in US courts for damages of up to the total cost of the spill apiece from contractors Halliburton and Transocean – a total of more than $80bn.

BP has estimated that the disaster will cost more than $40bn – plus millions more in costs and fines. It is also asking the court, in New Orleans, to declare that Cameron International, which provided the blowout preventer for the failed Macondo well, should also be found responsible.

Improper conduct, errors and omissions

In its court filing against Halliburton, BP said the firm’s “improper conduct, errors and omissions, including fraud and concealment, caused and/or contributed to the Deepwater Horizon incident”.

BP is unlikely to win anything like $40bn from the companies – and probably doesn’t expect to either. One big obstacle is likely to be the contracts signed between the supermajor and the oilfield services companies, as these generally provide the contractors with indemnity from financial responsibility for environmental damage stemming from their work.

In fact, BP may well not be expecting the cases to reach court at all, hoping instead for out-of-court settlements from companies eager to limit potential damage to their reputations and save time and money spent on a drawn-out court case.

That does not mean the oilfield services companies are likely to settle anytime soon. Cameron has launched a counter-claim aimed at establishing the integrity of its products. Transocean, which owned and operated the rig, has already requested court judgements against BP, Cameron and other firms.

A report issued in late April by the US Coast Guard said significant safety lapses by Transocean contributed to the oil spill.

Whatever happens in the legal arena, oilfield services companies can expect their work to come under much greater scrutiny as a result of the Deepwater Horizon disaster. Indeed, the US government has said the country’s offshore drilling regulator may be able to expand oversight of rig contractors without the need for new laws to be passed by Congress. Previously the Bureau of Ocean Energy Management had said congressional action may be needed.

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