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Trading Lessons

Is Deepwater Horizon the New Ecuador?

Politics / Crude Oil Jan 31, 2012 - 12:30 PM GMT

By: OilPrice_Com

Politics

Nearly two years after the worst accidental offshore oil spill in the history of the energy industry, some of the biggest companies in the world are busy pointing their legal fingers at one another in court over who has to pay what in claims, damages and fines over the deadly Deepwater Horizon oil spill. A federal judge this week ruled that BP is still obligated to a clause in its contract with Transocean that would protect the rig owner from damages related to the spill. That means BP still has to shell out money to settle claims filed by those along the southern U.S. coast impacted by the spill. BP, meanwhile, is suing Halliburton, something Halliburton said was ridiculous. If the legal mess over Chevron's case involving Ecuador is any indication, former BP boss Tony Hayward will be pushing 80 before this gets settled.


Oil gushed from the Macondo well thousands of feet below the surface for most of the summer of 2010 before crews were finally able to control the spill. Fishing lanes were closed and the coastal tourism sector, still recovering from Hurricane Katrina, suffered dearly. Eleven rig workers were killed.

A federal report determined a faulty cement barrier was at least one of the underlying causes of the accident. In October, the government outlined seven different violations for operator BP, four for rig-owner Transocean and four for Halliburton, which worked on the cement barrier. BP sued Halliburton, which said it was looking forward to court.

Ecuadorian and U.S. courts were involved in a case that more or less started in the 1970s, depending on which part you examine, when Chevron was accused of dumping billions of gallons of untreated wastewater into the rainforest. They even made a movie out of it! Both sides are locked in a legal mess that is still in some lower court somewhere hung up on who knows what. While that's the first time an indigenous group managed to sue a giant corporation like Chevron, some legal aspects of the case that began some 40 years ago are still locked in court somewhere and there's no end in sight.

During federal investigations into the 2010 oil spill, all three companies collectively blamed each other for the disaster that prompted Hayward to complain he wanted his life back. BP is unlikely to abandon trying to spread the financial liability anytime soon. If 30,000 Ecuadorians backed by the slick and oh-so persistent Amazon Watch can keep Chevron tied up in court for this long, one can only imagine how long the Deepwater Horizon mess will linger in the courts.

And where's BP now? Why it's busy planning to drill in the Gulf of Mexico, that's where.

Source: http://www.safehaven.com/article/24207/is-deepwater-horizon-the-new-ecuador

This article was written by Dr. John CK Daly for Oilprice.com who offer detailed analysis on Crude Oil, Geopolitics, Gold and most other commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

© 2012 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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