*$1.1 billion deal excludes fines, any punitive damages
* Other settlements could be larger, say legal experts
* Anadarko views BP-MOEX deal as "positive step"
* BP, Anadarko shares rise
(Adds comments, updates stock moves)
By Tom Bergin
LONDON, May 20 BP (BP.L) (BP.N) struck a key
victory in its battle to share the cost of the Gulf of Mexico
oil spill when partner Mitsui & Co agreed on Friday to pay $1.1
billion toward the clean-up bill and possibly billions more in
Japanese trading house Mitsui's (8031.T) exploration unit
MOEX owned 10 percent of the Macondo well but had sought to
avoid paying its share of the costs, claiming BP was negligent
and MOEX should be exempted from this obligation.
The settlement is likely the first of a series of
settlements between BP and its partners before the February
2012 trial date set for hundreds of spill-related lawsuits,
said David A. Logan, dean of Roger Williams University School
of Law in Bristol, Rhode Island.
"It's a signal that the parties are very unlikely to let
this play out all the way to trial," said Williams, who has
been closely following the BP litigation. "Corporate leaders
want predictability, and litigation is uncontrollable and
Byron Stier, a professor of mass tort litigation at
Southwestern Law School in Los Angeles, said the MOEX deal
could be a precursor to a settlement with Anadarko Petroleum
Corp (APC.N), also a part owner in the ruptured well, but not
necessarily with other defendants.
"BP is still blaming Transocean, and taking a stance
against them," Stier said. "That suggests BP may be more
litigation-oriented (with Transocean), rather than see them as
part of one big happy family."
Shares of BP closed 2.7 percent higher in London, against a
rise of 0.5 percent in the STOXX Europe 600 Oil and Gas index
Shares of Anadarko finished up 4.1 percent at $74.58 on the
New York Stock Exchange. Analysts said the Mitsui settlement
had removed some uncertainty over Anadarko's liability.
Societe Generale analyst Irene Himona said that the Mitsui
settlement shows that a BP partner has agreed to share both the
blame and the costs of the April 2010 oil rig explosion.
"It is very significant because clearly now it means that
BP can try and ensure that everybody else who is involved will
also meet their obligations," she said.
BP has estimated the cost of capping the well, cleaning up
the damage from America's largest-ever offshore oil spill and
compensating those affected will be more than $41 billion,
including what analysts estimate will be around $4 billion to
$5 billion in fines. (For a related column, see:
Breakingviews-BP no longer alone [ID:nLDE74J0H0] )
Mitsui's payment covers its contribution toward the cost of
capping the well, cleaning up the oil and compensating those
affected. Hence, the Japanese company is paying less than a
third of its potential liability for these elements.
On this basis, Anadarko could be liable for almost $2.7
billion, toward these elements of the total cost, based on its
25 percent share of the well. That is less than some investors
"Anadarko has been more vocal recently about the potential
for a settlement and we believe today's BP-Mitsui news further
increases the likelihood of that outcome," analysts at
Houston-based investment bank Simmons & Co said in a note to
Anadarko Chief Executive Jim Hackett said earlier this
month he would be prepared to come to the table and settle
"under the right circumstances." [ID:nN0385082]
Anadarko spokesman John Christiansen said on Friday: "We
view BP's willingness to reach settlement with MOEX as a
BP said in an e-mailed statement that Anadarko, like MOEX,
signed on as a "responsible party" under the Oil Pollution
"In contrast to MOEX, however, Anadarko continues to avoid
its responsibilities, refusing to pay for any damages, clean-up
The statement added that BP had billed Anadarko more than
$5 billion to date. "We expect Anadarko to pay its share of the
costs of the accident and spill," it said.
MOEX remains on the hook for its share of any fines,
penalties or punitive damages levied on the project. In a worst
case scenario, these could double BP's $41 billion estimate and
MOEX would likely have to pay 10 percent of these.
MOEX has now joined BP in blaming the accident principally
on Transocean RIGN.VX (RIG.N), the company that BP hired to
drill the well, under BP's instruction. BP has sought to
extract the full cost of the disaster from the
Transocean's contract with BP indemnifies it against
environmental damage but if BP can prove gross negligence or
that the Deepwater Horizon drilling rig was unseaworthy, it
could overrule this indemnity.
Transocean said the Deepwater Horizon rig was in sound
working condition, and had passed multiple government
inspections before operating in the Gulf.
"As the owner and operator of the Macondo well, BP has
clear financial incentives to assign blame to other parties,
but its public posturing is not supported by the body of
evidence," Transocean said in an e-mailed statement.
"Government investigations have rightly concluded that the
Macondo incident was caused by a failure of the cement in the
A commission appointed by President Barack Obama to
investigate the rig blast found that BP and its contractors,
Transocean, and cement specialist Halliburton (HAL.N), had all
made mistakes but added that BP was responsible for more
mistakes than the others.
Mitsui said it had no plan to change its forecast net
profit or dividend in 2011/2012 after the settlement.
On Thursday, lawyers for shareholders suing BP for
spill-related losses proposed that the first trial is possible
by mid-2012 in a Houston federal court. These lawsuits are
distinct from economic loss, wrongful death and personal injury
cases pending in federal court in New Orleans.
(Additional reporting by Moira Herbst in New York, Anna Driver
in Houston and Sarah Young in London; Editing by Sophie Walker
and Matthew Lewis)