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Rig Firm’s $270M Profit From Deadly Spill

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May 9, 2010
Danny Fortson

The owner of the oil rig that exploded in the Gulf of Mexico, killing 11 people and causing a giant slick, has made a $270m (£182m) profit from insurance payouts for the disaster.

The revelation by Transocean, the world’s biggest offshore driller, will add to the political storm over the disaster. The company was hired by BP to drill the well.

The “accounting gain” arose because the $560m insurance policy Transocean took out on its Deepwater Horizon rig was greater than the value of the rig itself. Transocean has already received a cash payment of $401m with the rest due in the next few weeks.

The windfall, revealed in a conference call with analysts, will more than cover the $200m that Transocean expects to pay to survivors and their families and for higher insurance costs.

Congressional hearings begin this week. Lamar McKay, chairman of BP’s American arm, Steve Newman, Transocean’s chief executive, and managers of several other companies involved in the drilling will testify.

The total cost of the clean-up and compensation could reach $30 billion, according to some estimates. Transocean said that virtually all of that must be covered by BP and two smaller partners, Anadarko Petroleum and Mitsui of Japan.

In a stock exchange filing, Transocean said that BP was contractually obliged to take “full responsibility for and defend, release and indemnify us from any loss, expense, claim, fine, penalty or liability for pollution or contamination”. Newman added: “Our industry has a long history of contract sanctity and we expect BP to honour that.”

BP said the leaking well in the Gulf of Mexico could be contained this week. The giant box lowered over it this weekend must first be connected to an oil-treatment barge by a 5,000ft pipe.

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