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Transocean settles with US Department of Justice over Deepwater Horizon

04 January 2013

The company that owned the Deepwater Horizon rig and lost 11 workers in the explosion on 20 April, 2010, will pay $1bn in civil fines and a further $400m in criminal penalties in a settlement announced on January 3. Transocean's agreement with the Department of Justice (DoJ) still has to be approved by a federal judge.

Transocean owned and operated the Deepwater Horizon rig, which was destroyed in the 2010 explosion and fire
Transocean owned and operated the Deepwater Horizon rig, which was destroyed in the 2010 explosion and fire

As part of the agreement, the DoJ said that Transocean admitted some of its crew on the rig “were negligent in failing to fully investigate clear indications that the Macondo well was not secure”.

"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 assistant attorney general Lanny Breuer.

A report from the US Chemical Safety Board in July 2012 criticised both BP and Transocean for having inadequate safety practices in place. The two companies disagreed about who was in charge of interpreting a negative pressure test that could have warned workers of the problems.

As part of the settlement, the company has to make a series of improvements to the safety and emergency responses on its rigs.

The settlement “brings us one step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster,” Eric Holder, the US Attorney, said in Washington.

The Transocean agreement removes “much of the uncertainty associated with the accident”, said the Swiss-based company. Under the settlement, Transocean pleaded guilty to one violation of the Clean Water Act. The company will pay the fine over the next five years. 

This is a lighter punishment than many industry observers had been expecting. 

In London, BP shares climbed on the hope that Transocean’s settlement increases the chances that the UK-domiciled group will also reach a civil settlement with the US authorities.

BP agreed in November to pay a record $4.5bn in a criminal settlement with the DoJ. However, the oil major has yet to resolve payment of civil fines that could top $20bn if the company is found guilty of gross negligence over what was America’s worst offshore oil spill.

It has also spent $14bn on cleaning up the oil spill and compensating local people.

BP denies gross negligence and a trial is scheduled to start next month in New Orleans to determine the blame for the spill and the scale of the fines.

Halliburton is now the only company involved in the disaster not to have settled yet with the DoJ.

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