Mitsui & Co Ltd's MOEX Offshore agreed with the U.S. Justice Department to pay at least $90 million to settle some of its liability in the Deepwater Horizon oil spill, the first government settlement involving the BP Plc Macondo well.
MOEX will pay $70 million in civil penalties for violations of the Clean Water Act and spend at least $20 million on conservation projects in the Gulf states, the Justice Department said on Friday.
The settlement comes just 10 days before the civil trial starts in New Orleans to assign blame for the disaster, the largest offshore oil spill in U.S. history. The accident, which led to almost 5 million barrels of oil spilling, killed 11 people aboard the drilling rig.
BP itself has set aside more than $40 billion to cover spill-related costs. The company has been trying to reach its own settlement with the Obama administration, but whether it can succeed by the February 27 trial is still uncertain.
We believe that all parties would like to settle before the trial date. However, we believe it is still not a given that all of the parties can meet and resolve the various issues, said Angie Sedita, a managing director of equity research at UBS.
Separately, BP and Schlumberger-owned drilling fluids specialist M-I Swaco agreed to dismiss Deepwater Horizon-related claims against each other, pending court approval.
In the MOEX settlement, $45 million of the civil penalties will go to the federal government and the remaining $25 million will go to the states affected by the oil that polluted their Gulf waters and washed up onshore: Louisiana, Texas, Mississippi, Alabama and Florida.
The Justice Department said it was the largest civil penalty under the Clean Water Act and emphasized the MOEX settlement did not affect others involved in the Deepwater Horizon spill.
This landmark settlement is an important step - but only a first step - toward achieving accountability and protecting the future of the Gulf ecosystem by funding critical habitat preservation projects, Attorney General Eric Holder said in a statement.
The company, which previously owned a 10 percent stake in the Macondo well, settled with BP last year and agreed to pay $1.1 billion toward the cleanup costs.
MOEX held only a small share of the Macondo well and had no role in the Deepwater Horizon tragedy, said David Uhlmann, a professor at Michigan University Law School and former chief of the Justice Department's environmental crimes section.
It makes sense that MOEX is not paying billions in penalties, but the settlement amount is extremely small given the enormous economic losses and natural resource damages caused by the Gulf oil spill, he said.
The proposed settlement was filed in federal court in Louisiana and is subject to approval by a judge.
The case is In re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.
(Additional reporting by Braden Reddall in San Francisco and Jonathan Stempel in New York; editing by Gerald E. McCormick, Phil Berlowitz, Andre Grenon and Richard Chang)