BP bids to block gulf spill payments

BP has sued to block what could be billions of dollars in settlement payouts to businesses over the deadly Gulf of Mexico oil spill.

The London-based oil giant accused the court-appointed administrator for the settlement, Patrick Juneau, of trying to rewrite the terms of the deal.

BP said Mr Juneau violated the settlement in the way he used a complex formula to determine the payments to businesses over the worst offshore oil spill in US history.

Last week BP warned investors that the settlement’s price tag would be “significantly higher” than initially estimated.

The company estimated a year ago that it would spend about $7.8bn (€6bn) to resolve tens of thousands of claims covered by the settlement.

It revised its estimate earlier this year, saying it expected to pay $8.5bn (€6.5bn), but now says it cannot give a reliable estimate.

“Although the ultimate exposure is at this time inestimable, it grows daily and could cost BP billions,” BP’s lawyers wrote yesterday.

US District Judge Carl Barbier appointed Mr Juneau and has upheld his decisions for calculating payments.

Judge Barbier is also presiding over a trial designed to determine the causes of BP’s April 2010 well blowout and assign percentages of fault to the companies involved in the disaster, which killed 11 workers and spawned the spill.

Mr Juneau’s spokesman declined to comment on BP’s lawsuit.

Lawyers who worked on the class-action settlement with BP said the payments to businesses were spelled out in the agreement.

“Simply put, BP undervalued the settlement and underestimated the number of people and businesses that qualify under the objective formulas that BP agreed to,” lawyers Steve Herman and Jim Roy said in a statement.

BP said Mr Juneau made decisions in January that exposed the company to fictitious losses that were never contemplated in the settlement.

Yesterday’s court filing asked Judge Barbier to block payments to any businesses whose awards are part of the January decisions. As an alternative, BP asked to block payments to businesses in certain industries, including agriculture, construction, professional services, property, manufacturing and retail.

Before Judge Barbier ruled last week, BP had argued that Mr Juneau’s interpretation of the settlement would lead to “absurd results” and “false positives”. The judge said the settlement anticipated that “such results would sometimes occur”.

“Objective formulas, the possibility of ’false positives’ and giving claimants flexibility to choose the most favourable time periods are all consequences BP accepted when it decided to buy peace through a global, class-wide resolution,” the judge wrote.