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BP to pay $4.5bn penalty over oil spill

Houston, November 16, 2012

BP will pay $4.5 billion in penalties and plead guilty to felony misconduct in the Deepwater Horizon disaster that caused the worst offshore oil spill in the US history, it said yesterday.

The settlement includes a $1.256 billion criminal fine, the largest in US history. A settlement with the US Securities and Exchange Commission is part of the deal, as are payments to the National Fish & Wildlife Foundation and the National Academy of Sciences.

The April 2010 explosion on the rig in the Gulf of Mexico killed 11 workers. The mile-deep Macondo well spewed 4.9 million barrels of oil over 87 days, fouling shorelines from Texas to Florida, eclipsing in severity the 1989 Exxon Valdez spill in Alaska.

BP said it would plead guilty to 11 felony counts related to the deaths, one related to obstruction of Congress and two misdemeanours.

A grand jury indicted two BP employees on 23 criminal counts related to the oil spill, U.S. Attorney General Eric Holder said.

The two highest-ranking BP supervisors aboard the rig will face a range of manslaughter and other charges, Holder said.

A former senior BP executive was also charged with misleading Congress about the spill

It faces economic, environmental and medical damages sought by four Gulf Coast states and private plaintiffs, including over 100,000 people and businesses, to resolve civil and criminal liability claims and has already announced an uncapped class-action settlement it said will cost $7.8 billion.

Wall Street analysts were encouraged that the deal could resolve a significant share of the liability. But it is not a "global" deal to resolve civil and criminal liability with the government and the states.

"By eliminating the overhang of the criminal litigation, it is a step in clearing up BP's legal framework as it relates to Macondo," said Pavel Molchanov, oil company analyst with Raymond James.

BP has sold over $30 billion worth of assets to fund the costs of the spill, spent $14 billion on clean-up costs and paid out, or agreed to pay out, $16bn on compensation.

In an August filing, the Justice Department said errors made by BP and Swiss-based Transocean, owner of the Deepwater Horizon vessel, in deciphering a pressure test of the well showed gross negligence, reckless management of the well and wilful misconduct it intends to prove at a civil trial in New Orleans in February 2013.-Reuters




Tags: BP | penalty | oil spill |

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