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Lawsuits fly in BP’s Gulf spill blame game

By Tom Bergin and Moira Herbst

LONDON/NEW YORK | Thu Apr 21, 2011 5:12pm EDT

(Reuters) – A barrage of court claims pitting BP Plc against its partners in the Gulf of Mexico oil spill could lay the groundwork for billions of dollars in settlements to spread the costs of the disaster.

BP has sued Transocean Ltd, Halliburton Co and Cameron International Corp, in one of the biggest legal moves since last year’s blowout. It is seeking up to the full cost of the disaster — estimated at $42 billion — plus costs, interest and punitive damages from each of the companies that helped it drill the doomed well.

So far, BP has met the cost of the clean-up effort alone and is paying compensatory damages to fishermen, property owners and others in the Gulf area affected by the spill.

“To my knowledge, Transocean, Cameron and Halliburton haven’t paid a nickel to victims or for the cleanup,” David A. Logan, dean of Roger Williams University School of Law in Bristol, Rhode Island, said on Thursday.

“These suits are intended to spread liability, but they’re also part of a larger public relations effort for BP,” he said. “BP wants to remind the world they weren’t the only corporation that was a key player in this cascade of bad events that led to a remarkably bad outcome.”

The lawsuits, filed Wednesday in U.S. District Court in New Orleans, come one year after the Deepwater Horizon rig blast killed 11 workers and created an environmental disaster. Wednesday was the deadline for companies connected to the spill to file claims against each other.

Transocean owned and operated the rig. Cameron was the maker of the blowout preventer, the so-called fail-safe device that neglected to automatically shut down the well. Halliburton handled the cementing work on the well.

Legal experts say they had anticipated BP filing the cases but predicted they would not ultimately go to trial.

“I expected that before this was over, they would all be suing one another,” said Edward F. Sherman, a professor at Tulane University Law School. “Ultimately the parties will probably divide up responsibility and reach a settlement.”

A settlement reached among several companies could allow BP to recoup some or all of the money it is spending to compensate victims, run cleanup efforts and provide support to Gulf state governments.

James Roy, a lead attorney for plaintiffs suing BP, said he thinks BP will ultimately shoulder most of the disaster’s cost.

“I don’t think these suits change the economy of who pays for the damages,” he said. “BP, in our opinion, is the primary target defendant.”

Meanwhile, BP has been sued by its partners in the well, Anadarko Petroleum Corp and Japan’s Mitsui. That lawsuit challenged BP’s demands that they contribute to the cost of the clean-up effort.

Transocean shares in Switzerland closed down 2.2 percent, while in New York BP shares gained 0.3 percent. Halliburton shares were up 1.6 percent and Cameron slipped 0.6 percent.


In court papers, BP said Halliburton concealed critical information that could have prevented the disaster.

“Halliburton’s improper conduct, errors and omissions, including fraud and concealment, caused and/or contributed to the Deepwater Horizon incident,” BP said in the lawsuit.

Halliburton, which said it would “vigorously defend” itself against the claims, sued BP in Texas state court Tuesday accusing BP of failing to accept responsibility for the disaster, as called for in its contract.

“The plain and unequivocal language of the contract requires BP to defend and indemnify (Halliburton) from virtually all claims arising out of the blowout,” Halliburton said in its lawsuit.

Service providers’ contracts with operators usually provide indemnities against any environmental damage that may result from their work. This could limit BP’s opportunities to recoup cash from Transocean or Halliburton.

In January, Halliburton disputed a U.S. presidential commission’s characterization of its cementing work on the blown-out well, saying that the report omitted key facts.

Since the outset of the disaster, BP has sought to blame its contractors, namely Transocean. The presidential investigation into the report did criticize these companies, but directed most of its criticism at BP.

BP was widely criticized for trying to shift blame onto Transocean during the crisis. President Barack Obama called the mudslinging among the companies a “ridiculous spectacle.”

The latest legal claims were filed as part of the multi-district litigation in New Orleans that includes hundreds of oil spill-related lawsuits against BP. A federal judge has set February 2012 as a trial date.

Separately, BP set up a $20 billion victims’ compensation claims fund called the Gulf Coast Claims Facility run by attorney and mediator Kenneth Feinberg.

The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon”, U.S. District Court, Eastern District of Louisiana, No. 2:10-md-02179.

(Additional reporting by Sakthi Prasad in Bangalore and Matt Daily in New York; Editing by Mike Nesbit, Maureen Bavdek, Tim Dobbyn and Bernard Orr)

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