By Andrew Callus
LONDON, March 7 BP must keep paying
certain types of oil spill compensation in much larger amounts
and to more parties than it was expecting, according to a court
ruling which could add billions to its final bill.
The March 5 ruling, made by the New Orleans court where BP
is battling to keep a lid on other fines and penalties, was
outlined in the company's annual report.
The decision applies to payments made as part of a
settlement stemming from the Deepwater Horizon oil spill in the
Gulf of Mexico in 2010 which BP has already agreed, but where
the actual amount is uncapped.
BP had earmarked $8.5 billion for payments which included
claims for "Economic and Property Damages".
BP said it would appeal the ruling, which upheld the payout
administrator's interpretation of the settlement, and which has
resulted in more and larger payouts than BP had expected.
"BP strongly disagrees with the ruling of 5 March 2013 and
the current implementation of the agreement by the claims
administrator," it said.
"BP intends to pursue all available legal options, including
rights of appeal, to challenge this ruling."
BP also removed about $800 million from its $8.5 billion
estimate for compensation claims under this part of its $42.2
billion of total spill provisions so far.
Far from signalling a lower potential final bill, however,
BP said the reduction reflects "the inherent uncertainty that
exists... (over) the higher number of claims received and higher
average claims payments than previously assumed".
BP said even if it wins its appeal, its final bill for this
type of compensation will be much higher, because claims not yet
received or processed are not reflected in its current estimate,
and because the average payments per claim determined so far are
higher than anticipated.
"If BP is not successful in its challenge to the court's
ruling, a further significant increase to the total estimated
cost of the Settlements will be required," it said.
The higher rate of payments were earlier flagged by BP in
its fourth quarter results, and it has raised its estimate of
payouts in each of the past two quarters, taking it to $8.5
billion from an initial $7.8 billion.
BP believes the way in which the claims administrator is
implementing the settlement agreement with respect to business
economic loss claims is contrary to the agreement.