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BP sued by the US government over Gulf oil spill

By Hugo Duncan
Last updated at 10:36 PM on 15th December 2010

The US government last night sued BP in an effort to recoup billions of dollars in the wake of the Gulf of Mexico oil spill.

The Obama administration is seeking unlimited damages from BP and other firms linked with the disaster. It is also suing BP’s insurer Lloyd’s of London.

The move could put pressure on BP’s share price when the stockmarket opens today, potentially making the firm more attractive to a bidder. Rival Royal Dutch Shell is tipped as a predator.

Damaging times: The Obama administration wants recompense for the Deepwater Horizon disaster

A lawsuit was filed in New Orleans against the British oil giant over its role in the worst environmental catastrophe in American history. It is the first lawsuit filed by the US government over the disaster and will trigger a lengthy and costly legal battle.

‘We intend to prove that these defendants are responsible for government removal costs, economic losses and environmental damages without limitation,’ said US attorney general Eric Holder.

Among the companies named on the lawsuit with BP was rig operator Transocean and Lloyd’s of London. But it did not include Halliburton, the US firm that poured the cement into the well, or Cameron International, which provided equipment for the well.

The explosion on the Deepwater Horizon rig last April killed 11 workers and sent nearly 5million barrels of oil spewing into the ocean from the Macondo well over several months.

The US is seeking unlimited damages that could run into tens of billions of dollars under the US Clean Water Act and Oil Pollution Act. An official US report published in October said that BP and Halliburton were both aware the cement used in the well was unstable.

The US Justice Department said the investigation was ongoing and more defendants and charges could be added later. ‘Both our civil and criminal investigations continue,’ said Holder. ‘As investigations continue, we will not hesitate to take whatever steps necessary to hold accountable those responsible for this spill.’

For every barrel of oil spilled into the Gulf of Mexico, there could be a fine of up to $4,300 if gross negligence is found. That would equal a final total of at least $21billion (£13.5billion).

BP has set aside $40billion to pay for the clean-up operation and cover any legal costs and damages. Shares in BP were worth more than 600p before the explosion but fell to around 300p at their lowest point – wiping £65billion off the value of the company. They were up 3.45p to 476.55p yesterday.

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