BP says Mitsui will pay $1b in Gulf spill settlement.
Japanese trading house Mitsui's exploration unit MOEX owned 10 per cent of the doomed Macondo well but had sought to avoid paying its share of the costs, claiming BP's negligence exempted it from this obligation.
MOEX has dropped this claim and analysts said this weakened the case of 25 per cent well shareholder Anadarko Petroleum, which has also invoked the same argument.
"This is the first recognition by one of the partners that actually...blame is shared and should be shared and therefore the costs should be shared as well," Societe Generale analyst Irene Himona said.
"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 added.
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 is over $41 billion, including fines, which analysts believe make up about $4 billion of the provision.
This suggests the Japanese company is paying less than a third of its potential liability in respect of the actual damages - that is the cost of the clear-up, capping the leak and paying out to local businesses affected. On this basis, Anadarko could be liable for almost $2.7 billion.
However, one source close to the matter said BP was likely to seek a higher rate of recovery from Anadarko than it received from Mitsui, which did not have a direct liability to pay since it invested through MOEX, which had few assets.
Anadarko on the other hand does have a direct legal liability as it has invested directly in the well.
"Anadarko, BP's other partner in the Macondo licence is likely to come under pressure to settle as well now," said Richard Griffith at Evolution Securities.
In addition to actual damages, fines and punitive damages could double the $41 billion bill, lawyers have said.
Even at the bottom end of the range for fines and with no punitive damages, Moex is now liable for around another $1 billion in payments, while it could be on the hook for much more, potentially reducing BP's worst case scenario by several billion dollars.
Muscat Press and Publishing House SAOC 2011
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|Publication:||Times of Oman (Muscat, Oman)|
|Date:||May 21, 2011|
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