BP warned today it is digging in for a long legal battle after revealing the fund set aside to deal with compensation claims over the 2010 Gulf of Mexico disaster now has less than £200million remaining.
The oil supermajor said it will set aside almost £1billion extra in compensation after seeing the £13billion trust fund’s reserves dwindle to less than £200m – a sum the company warned would be exhausted by the end of the next quarter.
BP has launched a high profile attack on supposedly fraudulent claims, including newspaper adverts and a hotline, as it continues to protest against the compensation process. Last week it lost a bid to suspend payments over the Macondo incident, pending an investigation into misconduct over the compensation process.
But BP chief executive Bob Dudley has vowed the company is prepared for a lengthy legal fight that could go to the US Supreme Court.
“We are fighting this aggressively because we have a duty to our shareholders, but also because it’s simply the right and principled thing to do,” he said.
“No company would agree to a settlement that pays businesses that suffered no losses.
“As we continue to fight these absurd outcomes, we want everyone to know that we are digging in and are well-prepared for the long haul on legal matters.”
The blow-out of the Deepwater Horizon well off the Louisiana coast in 2010 claimed 11 lives and damaged fishing and tourism industries as well as marine and wildlife habitats, forcing BP to agree a multi-billion compensation deal in April 2012.
The oil giant alleges that the handling of the settlement has sparked a “feeding frenzy” and is allowing businesses from the Gulf coast to claim for “non-existent, artificially calculated losses”.
The second phase of the trial is due to start on September 30, with BP having appealed against the claims administrator and district court interpretation of the settlement terms.
Mr Dudley said it was the biggest example of a class-action industry that was “out of control” and in need of reform.
But he declined to express regret over making the agreement, saying the company “did the right thing”.
It has taken its dispute over the claims to the US appeals court and expects a ruling in the next few months. BP made clear it was determined to recover major pay-outs found to have been wrongly made to those who did not suffer losses.
Mr Dudley said: “I don’t think BP has any intention of going after the little guy – small businesses who might have received claims. It will go after, very vigorously, the large claims.”
The news came as BP revealed profits for the second quarter of 2013 of £1.8billion, down a quarter on the same period last year.
Lower oil prices, and a higher rate of tax contributed to the drop in profits, said Dudley, along with a lower post-tax income from Russia.
“We are seeing growth in production from new high-margin projects and are making good progress in exploration and project deliver,” he said.
“Completion of our operational milestones confirms our confidence in delivering our commitment to materially increase operating cash flow in 2014.”
BP warned that upstream production in the next three months was due to be lower, with seasonal turnaround and the ongoing $38billion asset programme, which included the sale of the Carson refinery in the USA.
The company said it planned to make final decision on investing in five new projects later this year, following the launch of the Angola liquified natural gas plant and the expansion of the Atlantis North project in the Gulf of Mexico.
It was looking to drill 11 exploration wells, with four already completed, in its new licences.
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