Cameron to pay BP $250 million

By Steve Korris | Dec 20, 2011


Deepwater Horizon blowout prevention contractor Cameron International will pay BP $250 million to settle a dispute over liability for last year's explosion and oil spill.

Cameron lawyer David Beck of Houston reported the agreement to U.S. District Judge Carl Barbier at a status conference on Dec. 16.

BP group chief executive Bob Dudley issued a press release the same day, announcing BP would deposit the payment in its $20 billion trust fund for claim payments.

Dudley wrote that BP and Cameron agreed to release potential claims against each other.

He wrote that neither BP nor Cameron admitted liability.

He wrote that BP would indemnify Cameron for compensatory claims relating to pollution damage from the accident and damage to natural resources.

He wrote that BP's indemnity excludes civil, criminal or administrative fines and penalties, claims for punitive damages, and certain other claims.

"Cameron is the fourth company to settle with BP and contribute to economic and environmental restoration efforts in the Gulf," he wrote.

"Unfortunately, other companies persist in refusing to accept responsibility for their roles in the accident and for contributing to restoration efforts."

BP previously settled with Mitsui Oil Exploration and Anadarko Petroleum, partners in the well operation, and with float collar maker Weatherford.

The settlements simplify BP's position at a fault allocation trial Barbier plans to start in February.

Disputes persist between BP and two other defendants, rig owner Transocean and cement contractor Halliburton Energy Services Inc.

Transocean lawyers moved for summary judgment against BP on Nov. 3, claiming their drilling contract obligated each to indemnify the other.

They wrote that Transocean promised to pay for deaths and injuries of its employees, pollution emanating from above the surface of the water, and damage to third parties.

They wrote that Transocean chose to insure its risks in the public insurance market and BP chose not to insure its risks.

"BP sacrificed quality and failed to implement risk management and mitigation processes to ensure overall safety and success of the operations at Macondo just to save costs on a project that was well above budget," they wrote.

They wrote that BP breached an obligation to defend Transocean.

"It has joined in, rather than defending Transocean against, the plaintiffs' efforts to attempt to prove that Transocean was negligent or grossly negligent," they wrote.

They wrote that Transocean's defense costs would run to hundreds of millions.

Cameron lawyers endorsed Transocean's position against BP on Nov. 22.

"Even if BP honors its full indemnity commitment, Transocean remains responsible for injuries and death suffered by its own employees and invitees, for surface pollution, and for damage and loss of its own property," they wrote.

"These costs are the more significant costs incurred in most offshore drilling casualties," they wrote.

They wrote that BP and Transocean know better than any court how to allocate risks.

"Any alteration of that risk allocation deprives Transocean of
important consideration under the drilling contract," they wrote.

They wrote that BP would receive a windfall if it were relieved of its contractual commitment.

Halliburton lawyers moved for summary judgment on Nov. 30, claiming BP agreed to indemnify it from pollution claims regardless of the cause of the claims.

"BP and HESI, as sophisticated businesses, entered into a contractual agreement that includes specific indemnity provisions," they wrote.

"BP's attempt to avoid its own clear and undeniable contractual obligations represents nothing more than a situationally specific attempt to apply the terms of the contract in a way that only benefits BP and has nothing to do with the allocation of risks agreed to by the parties."

On Dec. 7, BP answered that it had no duty to indemnify Transocean for pollution arising from gross negligence or strict liability.

BP lawyers wrote that Transocean increased the risk of blowout by numerous acts that must be determined at trial.

On the same day, they challenged Cameron's claim of indirect indemnification.

"If Cameron is found to have been grossly negligent, then regardless of any contractual language Transocean cannot have any obligation to indemnify Cameron," they wrote.

Cameron changed its position on Dec. 12, still seeking indemnification from Transocean but dropping its bid to pass indemnification through to BP.

Cameron and BP settled four days later.

Barbier set a Dec. 21 deadline for BP to reply to Halliburton.

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