Environmental

Judge: BP must indemnify Halliburton from oil spill damage claims

U.S. District Judge Carl Barbier in New Orleans said on Tuesday that BP must honor it contract with Halliburton and indemnify the company for third-party compensatory claims.

BP contracted with Houston-based Halliburton to provide cementing services for the Macondo well, which failed to prevent explosive gas from blasting out of the oil reservoir in the Gulf of Mexico. The resulting disaster destroyed the Deepwater Horizon rig, killed 11 workers, and set off the worst oil spill in U.S. history.

The ruling means BP will now have to bear the full brunt of lawsuits seeking oil-spill damages. Halliburton, however, still faces paying punitive damages as well as civil fines under the federal Clean Water Act.

BP has been fiercely trying to share expenses from the Gulf of Mexico oil spill with its partners and contractors by playing the blame game, but its efforts have been largely unsuccessful. Although the oil giant did reach pre-trial agreements with some of its other partners, Halliburton and Switzerland-based Transocean, which owned the Deepwater Horizon rig, resisted settling. Both companies had indemnity clauses in their contracts with BP releasing them from the liabilities that the oil giant has been trying to pin on others.

Halliburton’s contract required BP to indemnify it from all damage claims, even in the event that Halliburton employees were found to be partly responsible for a disaster resulting in litigation.

In January, Judge Barbier said BP was bound to its contract with Transocean, which indemnified the company from compensatory damage claims. BP sought to have the court shift $15 billion in oil-spill related costs to Transocean.

BP also rang in the New Year by suing Halliburton for all of its oil-spill costs, which have amounted to more than $21 billion.

Sources:

Reuters
Businessweek