BP agrees to pay $4.5 billion for Gulf oil spill

Friday, November 16th, 2012 By

Deepwater Horizon

In 2010, BP’s Deepwater Horizon drilling rig caught fire and sank, leading to a disaster in the Gulf of Mexico. Image: ideum/Flickr/CC BY-SA

Oil giant BP has agreed to pay the federal government $4.5 billion in penalties for the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. It is the largest such settlement in history. BP still faces civil suits, but don’t worry. It is still making enormous profits.

BP pleads guilty to 12 felonies

The London-based petroleum titan has agreed to plead guilty to 11 felony charges of misconduct or neglect that led to the oil spill and to the deaths of 11 drilling rig workers. A 12th felony count was added for obstruction of Congress, due to a misrepresentation of the rate of oil leaking from BP’s operations.

The company also will plead guilty to two misdemeanor charges, one under the Clean Water Act and the other under the Migratory Bird Treaty.

BP said that it was sorry for the oil rig fire and subsequent massive spill, but simultaneously took a moment to pat itself on the back.

Bob Dudley, the CEO of BP, issued a statement:

“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region. From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today’s resolution with the U.S. government further reflects, we have accepted responsibility for our actions.”

The criminal settlement

The company has agreed to pay the U.S. Department of Justice $4 billion over five years in criminal penalties. Another $525 million will be paid to the Securities and Exchange Commission over a three year period.

The settlement remains dependent upon federal review.

Civil cases to come

Those criminal penalties are in addition to the $20 billion BP has already placed in trust, pending future damage claims. It says it will add another $860 million to those coffers before the end of the year.

The criminal charges may be over, but BP continues to face civil challenges. BP estimates that will cost it another $7.8 billion in legal settlements. Still defiant, however, BP says it is “prepared to vigorously defend itself against remaining civil claims.”

BP is doing fine

But don’t cry for BP. While it lost $17.2 billion in the quarter that the spill occurred two years ago, today it is more than profitable. In the ensuing 9 quarters it has earned $43 billion in revenue.


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