BP puts total pre-tax Deepwater oil spill cost at $80 billion

Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon on April 21, 2010.
Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon on April 21, 2010.PHOTO: AFP

LONDON (AFP) - Six years after the Deepwater Horizon oil spill, BP on Thursday (July 14) estimated the total pre-tax cost of the disaster at US$61.6 billion (S$82.7 billion).

In a statement, the oil giant identified "significant progress in resolving outstanding claims" arising from the 2010 Gulf of Mexico accident and oil spill.

An explosion on the Deepwater Horizon oil rig killed 11 men off the coast of Louisiana and caused 507 million litres of oil to spew into Gulf waters.

It took 87 days to cap the out of control well some 1,500m below sea level, and the oil slick stretched across an area the size of Virgina, blackening beaches across five US states and hitting tourism and fishing.

Massive resources were mobilised to clean up the mess, and BP paid out a record US$20.8 billion to settle a swathe of government claims for damages after one of the worst environmental disasters to strike the United States.

BP said it expected to take an after-tax non-operating charge of around US$2.5 billion in its second quarter 2016 results, including a pre-tax non-operating charge associated with the oil spill of around US$5.2 billion.

"This would bring the total cumulative pre-tax charge relating to the Deepwater Horizon incident to US$61.6 billion or US$44 billion after tax," the company indicated.

BP chief financial officer Brian Gilvary said: "Over the past few months, we've made significant progress resolving outstanding Deepwater Horizon claims and today we can estimate all the material liabilities remaining from the incident. Importantly, we have a clear plan for managing these costs and it provides our investors with certainty going forward."

BP added that it had a year ago "reached agreements to settle outstanding federal, state and local government claims arising from Deepwater Horizon. In the months since, BP has made much further progress in resolving outstanding claims arising from the incident."