Transocean admits Deepwater Horizon guilt

Transocean, the owner of the Deepwater Horizon oil rig, has agreed a 1.6bn dollar settlement with the US government.

Transocean, the owner of the Deepwater Horizon oil rig, has agreed a 1.6bn dollar settlement with the US government.

The Swiss-based company will pay $400m in criminal penalties and a $1bn civil fine after pleading guilty to violating the Clean Water Act.

The rig, which was leased by BP, exploded on 20th April 2010, killing 11 workers and leading to one of the worst environmental disasters in US history.

"Transocean's rig crew accepted the direction of BP well site leaders to proceed in the face of clear danger signs at a tragic cost to many of them," said Lanny A. Breuer, Assistant Attorney General at the US Justice Department.

The two firms has previously blamed each other for the disaster, which happened when methane gas escaped from the well into the rig, causing a series of explosions.

Two days later the rig sank, leaving oil gushing from the well into the sea for three months.

The companies argued over who was responsible for mis-interpreting a negative pressure test that could have warned of the danger from the well.

In July 2012, US Chemical Safety Board released a report blaming both firms for having inadequate safety rules.

The Justice Department said Transocean had admitted that members of its crew onboard the Deepwater Horizon, acting at the direction of BP staff, were negligent in failing fully to investigate clear indications that the Macondo well was not secure and that oil and gas were flowing into the well.

A statement from Transocean said: "These important agreements, which the company believes to be in the best interest of its shareholders and employees, remove much of the uncertainty associated with the accident".

The company said it would pay the fines over the next five years.

Transocean now has to take steps to improve the operational safety and emergency response capabilities at all their drilling rigs working in waters of the United States.

These requirements include certifications of maintenance and repair of blowout preventers before each new drilling job, consideration of process safety risks, and personnel training related to oil spills and responses to other emergencies.

The Department of Justice said these measures would be in place for at least five years.

The payout follows a deal BP struck with the US government in November In November, which will see it pay $4.5bn, including a $1.26bn criminal fine.

The oil giant has already spent $14bn on cleaning up the oil spill and compensation to local people and businesses.

Halliburton is now the only one of the contractors involved yet to settle with the Department of Justice.

Transocean's shares rose strongly on the news as analysts noted the fine was not as big they had expected and the uncertainty hanging over the firm was removed.

It's shares closed up 6.4% on the day in New York.

Recommended

HubSpot: a tech stock set to tumble
Trading

HubSpot: a tech stock set to tumble

US tech stocks have had a fantastic couple of years. But this year is unlikely to be so bullish for high-fliers that can’t turn big profits.
18 Jan 2022
How to be better at selling stocks
Investment strategy

How to be better at selling stocks

There is plenty of advice around about buying stocks, but not so much about when you should sell. John Stepek explains the two key things to know abou…
14 Jan 2022
Share tips of the week – 14 January
Share tips

Share tips of the week – 14 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
14 Jan 2022
Fintech: how to profit as technology transforms banking around the world
Share tips

Fintech: how to profit as technology transforms banking around the world

Financial technology – from apps to APIs to the cloud – is rapidly transforming financial services. This will spell doom for some incumbent firms, whi…
14 Jan 2022

Most Popular

Five unexpected events that could shock the markets in 2022
Stockmarkets

Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities
31 Dec 2021
US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022
Tech stocks teeter as US Treasury bond yields rise
Tech stocks

Tech stocks teeter as US Treasury bond yields rise

The realisation that central banks are about to tighten their monetary policies caused a sell-off in the tech-heavy Nasdaq stock index and the biggest…
14 Jan 2022