BP Looks to Move On From Gulf Accident

By Ilya Rzhevskiy, Epoch Times
May 23, 2011 Updated: October 1, 2015

NEWS ANALYSIS

A BP sign stands outside a BP Amoco gas station in Chicago, Illinois. (Tim Boyle/Getty Images)
A BP sign stands outside a BP Amoco gas station in Chicago, Illinois. (Tim Boyle/Getty Images)
British oil and gas giant BP Plc finally got some good news recently. Its partner, Japan-based financing firm Mitsui, which owned 10 percent of the Macondo oil well in the Gulf of Mexico that exploded last April, agreed to pay $1.1 billion to settle liabilities.

Mitsui, liable for 10 percent of the spill costs, must pay $2.1 billion out of the $40 billion in total liabilities. However it didn’t pay the whole liable sum at once. The U.K. Telegraph said, “It appears that Mitsui thought it would be better to pay up a part of the amount rather than be found liable by a court for 10 percent of BP's total costs.”

Another BP partner, Anadarko Petroleum Corp., which owned 25 percent of the well, has yet to admit its guilt and pay its portion toward liable spill costs. Anadarko could be on the hook for a maximum of $10 billion, which is also owed to BP.

"We expect that BP will reach a settlement with Anadarko on similar terms, removing a massive overhang on [Anadarko’s] shares," said Citigroup equity research analyst Robert Morris in a note.

The Deepwater Horizon accident, which occurred in April 2010, was the worst oil-related environmental disaster in history. BP received negative publicity due to the incident, and its CEO, Tony Hayward, resigned in its aftermath.

Whether both Mitsui and Anadarko pay their portions or not, BP has to look forward and not dwell on Macondo’s accident.

Last week, BP’s long-awaited deal with Russian state-owned oil giant Rosneft fell through, as the Russian counterpart refused to swap shares and do joint Arctic exploration drilling in Russia. The deal that was supposed to take place in January 2011 was first blocked by BP’s partner company TNK-BP that had veto power to any of the BP’s strategic decisions, as it also wanted to take part in Arctic exploration. TNK-BP is owned 50 percent by AAR Group, which is run by four Russian oil billionaires that are adamant on forging their own Arctic exploration pact with Rosneft.

After BP agreed to also involve TNK-BP in the Arctic exploration with Rosneft, the deal became complicated—a share swap between BP and Rosneft, accompanied with inclusion of TNK-BP in Arctic exploration—a clause which Rosneft didn’t like because TNK-BP had virtually no expertise and no value in partnering with Rosneft. All that TNK-BP had was 25 percent of BP shares and veto power, something which was not valuable at all for Rosneft regarding the Arctic exploration; as such, Rosneft canceled the deal.

“Those who prepared the deal should have paid closer attention to the nuances of the shareholder agreement,” said Russian President Dmitry Medvedev. “It would have been necessary to conduct more careful due diligence inside the government.”

BP has tried to buy out the TNK-BP part from the Russian billionaires by offering them $27 billion. A deal was refused by TNK-BP, saying that its worth is around $35 billion.

Maxim Blant, one of the leading Russian opinion influencers, writes on newsru.com: ”Needless to say, for private companies to do any kind of oil business in Russia in the last few years, softly said, is uneasy according to Vagit Alekperov, CEO of Lukoil. On top of that, if you mess up relations with the government, then after a couple of years AAR may seriously regret that they turned down $27 billion offer from BP.”

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