BP may have said its last sorry for the Deepwater oil spill. Five years after a BP rig leaked millions of gallons of oil into the Gulf in America’s worst environmental disaster, the company has settled with federal, state and local authorities. And all it cost was $18.7bn (£12bn).
This princely sum will be paid over a 15-18 year period. Most of it will be to compensate the states of Louisiana, Texas, Florida, Alabama and Mississippi, as well as local and federal governments, for economic and natural resource damage, though a fine of $5.5bn has also been imposed under the Clean Water Act.
Though receiving a £12bn bill isn't normally considered good news, the settlement will come as welcome relief for BP. It's had little luck so far in the courts, after all, having already paid a whopping $43bn in ongoing litigation and clean-up costs since 2010.
‘With this agreement, we provide a path to closure for BP and the Gulf,’ said BP chairman Carl-Henric Svanberg. ‘It resolves the company’s largest remaining legal exposures, provides clarity on costs and creates certainty of payment for all parties involved.’
BP can’t put the matter behind it completely, however. The settlement is subject to court approval and, even if it that does happen, the oil giant will still be paying for the disaster 20 years after it happened.
This isn’t even to mention the thousands of outstanding civil claims against BP that are not covered by the settlement. The company has said it will contest these ‘vigorously’.
Though BP may not want to take its lawyers off the Christmas card list just yet then, the fact is that this settlement does largely free it from its Damoclean predicament. Fines it can handle – it’s uncertainty that causes sleepless nights. The removal of that uncertainty is no doubt why BP shares rose 5% in US trading after the announcement (though they’ve been flat in London).
It might also help to remove the oily stain on BP's reputation. Every time there's a court case in the news and every time the company makes a financial statement that includes provisions for fines, images of the filthy slick killing wildlife and destroying livlihoods get pasted in the public consciousness.
This is perhaps the beginning of the end for BP's public relations catastrophe, but the ongoing, smaller court cases mean this problem won't just go away with the settlement. Memories are far too long for that, and BP may well find it's still paying a reputational price long after the financial costs have passed.