Macondo partners parry payment claims from BP for oil spill

Anadarko Petroleum Corp. and Mitsui Oil Exploration (Moeco), co-owners with BP PLC in the Macondo oil well, have not changed their views on payment of costs for the Deepwater Horizon oil spill that occurred in the Gulf of Mexico earlier this year.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Nov. 15 -- Anadarko Petroleum Corp. and Mitsui Oil Exploration (Moeco), co-owners with BP PLC in the Macondo oil well, have not changed their views on payment of costs for the Deepwater Horizon oil spill that occurred in the Gulf of Mexico earlier this year.

So far, BP has paid all the expenses from the spill, but is seeking payment from all companies involved in the joint venture. Houston-based Anadarko has a 25% stake in the Macondo well while Japan's Mitsui & Co. holds a 10% stake.

Anadarko Chief Executive Officer Jim Hackett, in a webcast conference call, this week told analysts that his company maintains its long-standing position that the oil spill was preventable and due to BP's reckless decision and actions.

Referring to a statement made in June, Hackett said Anadarko’s position “stands despite what has come out of whatever source you can think of, we don't find any of that is at all determinant with regard to our position changing.”

Anadarko had said in June that BP was responsible for paying all claims related to the spill, since BP had agreed to take responsibility for damages caused by gross negligence or willful misconduct.

Hackett’s remarks echoed those made earlier by Mitsui & Co. Vice-Pres. Junichi Matsumoto stating that his firm would not make a payment requested by BP to help cover the cost of the spill until the cause of the incident is identified.

“We are withholding the payment,” Matsumoto said, citing the ongoing investigation into the disaster. Mitsui & Co. apparently believes the cause will not be determined before next June. Until then, Matsumoto said, “We will not make the payment.”

Hackett’s statement followed public remarks by a lead investigator for a presidential commission on the spill that BP did not deliberately cut corners on safety in the Macondo well.

The panel's chief investigator, Fred H. Bartlit Jr., announced 13 principal findings, many of which seemed to track with investigations of the blowout, including BP's. In fact, Bartlit said he agreed with "about 90%" of BP’s own conclusions.

Some analysts saw Bartlit’s comments as an indication that the chances are low that BP will be found grossly negligent and responsible for 100% of the costs. That would hurt Anadarko and Mitsui as their contracts with BP contain a clause limiting their liability if gross negligence is demonstrated.

The day after Bartlit’s remarks, Anadarko shares dropped. One observer said, “Investors may be worried that Anadarko could have to pay a portion of the compensation costs related to the gulf oil spill.”

Following Bartlit’s remarks, Moeco Pres. Yoshiyuki Kagawa claimed the financial impact on his firm would be limited, even if the group company that owns a 10% stake in the BP-led project is required to pay an amount that exceeds its financial capacity.

Moeco owns a 10% stake in the project through MOEX Offshore 2007 LLC, a fully owned unit of MOEX USA Corp., which is fully-owned unit of Moeco.

Kagawa said MOEX Offshore 2007 is a limited liability company, meaning that investors in it can be held responsible for no more than the amounts that they have invested.

If the amount MOEX Offshore 2007 has to pay surpasses its ability, Moeco can let it go bankrupt, said Kagawa, who added that it has yet to be determined whether MOEX Offshore 2007 will have to pay part of the costs, and if so how much.

The spill began Apr. 20 when Transocean Ltd.'s Deepwater Horizon semisubmersible exploded and caught fire. It took BP roughly 5 months to stop the leak and seal the well.

Earlier this month, BP PLC said its pretax charges related to the spill have reached $39.9 billion through the end of the third quarter (OGJ Online, Nov. 8, 2010).

BP recently said it will charge interest on the $4.3 billion it claims it is owed by Anadarko and Mitsui.

Contact Eric Watkins at hippalus@yahoo.com.

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