Transocean: Contract shields it from spill costs

[November 02, 2011]  NEW ORLEANS (AP) -- Transocean, the company that owned the drilling rig that exploded in the Gulf of Mexico last year, argued in court documents filed Tuesday that its contract with BP shields it from having to pay for the largest offshore spill in the nation's history.

In court documents filed in federal court in New Orleans, Transocean said it was operating under a contract with BP that contained "standard industry reciprocal indemnity language" and that BP promised to exempt Transocean from "fines and penalties."

A rig owned by Transocean, the Deepwater Horizon, exploded on April 20, 2010, as it was drilling off the Louisiana coast, killing 11 workers. More than 200 million gallons of oil subsequently spewed from a well a mile beneath the sea.

A trial designed to assign shares of fault to the companies is scheduled to start Feb. 27. The trial also is to determine whether rig owner Transocean can limit what it pays claimants under maritime law.

In a statement, Transocean Ltd., said BP PLC., had broken its contractual promises by suing Transocean.

"BP's posture in this matter is not only offensive to the thousands of men and women who work together at Transocean, but it constitutes a direct threat to the sanctity of contracts," said Nick Deeming, senior vice president and general counsel of Transocean. "If BP truly intends to make things right, it must either voluntarily or by the order of the court honor all of its contracts -- not just the ones that serve its convenience or financial purposes."

In a statement, BP countered that Transocean's court filing showed it was "putting its own interests ahead of the people and communities of the Gulf and seeking to obscure its role in the Deepwater Horizon accident."

BP said the offshore drilling company was trying to avoid paying its "share of any damages or governmental fines and penalties stemming from its failure to monitor and control the Macondo well."

Federal regulators said BP, Transocean and Halliburton -- three companies working on digging the well -- were at fault for alleged safety and environmental violations.

A report issued in March by the panel of government investigators said BP bears ultimate responsibility for the disaster because it ignored crucial warnings and made bad decisions during the cementing of the well. But the report also said Transocean and Halliburton shared some of the blame.

[Associated Press; By CAIN BURDEAU]

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