BP to pay record $4.5B fine over US oil spill

Posted at 11/16/2012 11:25 AM | Updated as of 11/16/2012 5:23 PM

WASHINGTON - BP agreed Thursday to pay a record $4.5 billion in US fines for the 2010 Gulf of Mexico oil spill and will plead guilty to criminal negligence in the deaths of 11 workers and obstruction of justice.

Two of the British energy giant's on-board supervisors face involuntary manslaughter charges for failing to prevent the April 20, 2010 explosion on the BP-leased Deepwater Horizon rig.

A former BP executive was also charged with obstruction of justice for lying about how much oil was gushing out of the runaway well.

It took 87 days to cap BP's runaway Macondo well 5,000 feet (1,500 meters) below the water surface as it spewed some 4.9 million barrels (206 million gallons) of oil into the Gulf of Mexico and blackened beaches in five states.

The blast -- which shattered the company's reputation -- unleashed the biggest marine oil spill in the industry's history and the worst environmental disaster to strike the United States to date.

Attorney General Eric Holder cautioned that more people may yet face criminal charges and that the government's legal battle with BP is far from over.

"Our criminal investigation remains ongoing -- and we'll continue to follow all credible leads and pursue any charges that are warranted," Holder told reporters.

He noted that the justice department had "failed to resolve" a civil case to determine how much BP should pay in environmental fines, which could amount to as much as $18 billion if gross negligence is found.

"We're looking forward to the trial -- which is scheduled to begin in February of next year -- in which we intend to prove that BP was grossly negligent in causing the oil spill," Holder said.

BP vowed to "continue to vigorously defend itself against all remaining civil claims and to contest allegations of gross negligence in those cases."

It remains on the hook for economic damages, including the cost of environmental rehabilitation.

The massive criminal fines -- which will be paid over six years -- will be relatively easy for BP to absorb. It has a market value of $127 billion and last month hiked its shareholder dividend after posting a bumper third quarter profit of $5.43 billion.

Environmental group Greenpeace was quick to slam the settlement as inadequate.

"This fine amounts to a rounding error for a corporation the size of BP," Greenpeace senior investigator Mark Floegel said.

"Nothing in this proposed settlement gives any oil company incentive to be more careful in future operations. Cutting corners and skimping on safety will still be the rule of the day."

BP signaled it will continue to aggressively pursue damages from rig operator Transocean and subcontractor Halliburton, which was responsible for the well's faulty cement job.

"Today's agreement is consistent with BP's position in the ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations," the oil giant said in a statement.

Thursday's settlement includes an agreement to plead guilty to 14 criminal charges, 13 of which are "based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon," BP said.

The obstruction of Congress charge stems from two false statements BP made about flow rate estimates from the runaway well.

The fines include a record $4 billion to settle the criminal charges and $525 million to settle claims with the US Securities and Exchange Commission.

Group chairman Carl-Henric Svanberg said the "resolution is in the best interest of BP and its shareholders."

BP shares rose slightly on the news even as it said it would increase the amount it intends to set aside to cover all compensation costs to almost $42 billion from $38.1 billion. Much of that charge has already been absorbed on its balance sheets.

BP chief executive Bob Dudley issued a statement expressing the company's deep regret for the loss of life during the accident and for the spill's impact on the Gulf coastal region.

"From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf," Dudley said.

"We apologize for our role in the accident, and as today's resolution with the US government further reflects, we have accepted responsibility for our actions."

Earlier this year, BP reached an agreement to settle claims from fishermen and others affected by the disaster for $7.8 billion, but it must be approved by a federal judge.

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