July 10, 2010 in Business

Anadarko rejects BP’s bill for oil spill

Part-owner of failed well blames oil giant’s ‘reckless decisions’
Chris Kahn Associated Press
 
Associated Press photo

Oil cleanup workers outnumber tourists on the beach in Pensacola Beach, Fla., on Wednesday after oil washed ashore overnight, leaving an ugly stain.
(Full-size photo)

NEW YORK – Anadarko Petroleum Corp. says it won’t help BP pay for the worst oil spill in U.S. history.

The Houston company, which owns 25 percent of BP’s blown-out well in the Gulf of Mexico, said Friday it has refused to send the $272 million contribution that BP requested in June.

As part-owner, Anadarko was on the hook to help pay to corral and clean up the spill. The company believes it should be excused from payments because of BP’s reckless handling of the failed deepwater operation.

“Multiple proceedings and independent investigations are under way into BP’s actions and decisions on the rig,” spokesman John Christiansen said in a statement. “Although we have notified BP that we are withholding reimbursement to BP at this time, we remain committed to working with BP in good faith.”

BP said it is disappointed by the announcement and will evaluate its options about what to do next.

“They have failed to live up to their obligations,” BP spokesman Mark Salt said in a statement. He said BP was notified of Anadarko’s decision on Wednesday.

Another minority owner, Mitsui Oil Exploration Co., also hasn’t responded to BP’s request to help pay for the spill. Mitsui has until Monday to pay, Salt said. Calls to Mitsui’s office in Houston weren’t answered on Friday.

In June, Anadarko CEO Jim Hackett put the two companies on course for what could be a high stakes battle over how much each should pay. Hackett issued a statement blaming BP for “reckless decisions and actions” in its handling of the well, particularly its failure to “react to several critical warning signs” as it drilled below the sea floor.

Legal experts said it could take years to decide if Anadarko and Mitsui should be excused from the payments. Their joint operating agreement puts the decision in the hands of an out-of-court arbitrator.

Analysts have put the cost of the gusher anywhere between $17 billion and $60 billion. However, Goldman Sachs said last month that costs could rise as high as $40,000 a barrel, more than $163 billion if the spill ended today.

As more crude washes ashore, cleanup costs, fines and legal claims could eventually force Anadarko to sell precious assets to stay afloat.

“Both are going to be hurt, but it will be much more severe for Anadarko,” Oppenheimer & Co. analyst Fadel Gheit said.

Anadarko shares have plunged about 45 percent, a loss of roughly $14 billion on the open market, since the April 20 blowout off the Louisiana coast. To get off the hook, Anadarko would need to show that BP acted with extreme recklessness – the legal term is “gross negligence” – in its handling of the well.

So far, BP has paid more than $3 billion for the spill, and its June bill may be only the beginning. Damage claims will continue to pour in from around the Gulf Coast as the oil slick spreads.

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