BP announced Friday a tentative settlement with victims of the 2010 oil spill in the Gulf of Mexico. After nearly two years of investigation and negotiations following the worst environmental disaster in United States history, the energy giant has agreed to pay $7.8 billion to claimants affected by the spill. Pending court approval, over 100,000 claimants comprised of both individuals and businesses will be recouped for losses related to the ecological damage widespread in and beyond the gulf.
The Deepwater Horizon offshore drilling rig owned and operated by Transocean, for the use of BP exploded on April 20, 2009, killing 11 employees and injuring 16 others. The explosion opened a floor gusher that spewed millions of barrels of oil into the ocean before it was successfully capped on July 15, almost three months later. The slick, which was visible from space, wreaked havoc not only the marine ecosystem, but also on the economies that rely on its physical and aesthetic resources. According to the US government’s official investigation report released in September 2011, BP, Halliburton and Transocean were all in different ways responsible for the spill.
The $7.8 billion is significantly less than the $14 billion figure expected or rumored by analysts and commentators, but has been called fair by experts. The money will come from a $20 billion contingency pool that was established by BP to cover the costs of settlements, trials and fines. Analysts predict that shares of BP stock will rise as much as 5% when trading resumes Monday morning in London.
While BP is far from done dealing with the consequences of the spill, this initial settlement is a large first step in righting wrongs and moving forward for the company mired in uncertainty. However, BP still faces federal fines for ecological and environmental damages which could amount to over $20 billion. In addition to federal fines and trials, all the companies involved have filed billion dollar suits against each other — BP has issued $40 billion worth of charges against Transocean.
The settlement will not prohibit individuals from refusing the offer and taking up separate lawsuits, although experts predict this to have an insignificant effect on the total payout.