BP Not Covered for Spill by Transocean’s Insurance

In its second setback in less than a week, BP Plc learned this morning that it is not entitled to insurance claims reimbursement from Transocean’s insurance carriers as a result of the 2010 Gulf of Mexico oil spill.

Earlier this week, U.S. District Judge Carl Barbier, who is presiding over several suits related to the incident, ruled that Alabama and Louisiana can seek punitive damages from BP and other companies for spill damages, though he dismissed some of the states’ other claims.

Transocean owned the Deepwater Horizon oil rig involved in the 2010 Gulf of Mexico incident, and BP owned a majority of the Macondo well whose blowout led to the spill.

Last year, BP filed claims with Transocean’s carriers, requesting access to $750 million in coverage that applied to nine different policies. But opposition to the claims by Lloyd’s of London, other excess underwriters and Ranger Insurance, Transocean’s primary insurer, disputed that coverage. The insurance disputes by Lloyd’s and Ranger are combined with other spill-related lawsuits in “In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179,” U.S. District Court, Eastern District of Louisiana (New Orleans).

The carriers owe no duty to pay claims or defense costs to BP, Judge Barbier said in New Orleans court.

“The court finds that BP, under the drilling contract, assumed responsibility for Macondo well oil release pollution liabilities,” Barbier said in a 42-page ruling. “Because Transocean did not assume these liabilities, there is no additional insurance obligation in favor of BP for these liabilities.”

The Macondo incident, which killed 11 workers and set off the worst ever offshore oil spill in U.S., was the worst on record. London-based BP, its partners and contractors have been under fire ever since, with hundreds of lawsuits pending against them. Judge Barbier is hearing the cases, Reuters reports. The lawsuits also name as defendants Transocean, the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded and sank; Houston-based Halliburton Co., which provided cementing services to the well; and Cameron International, which provided blowout-prevention equipment, according to Bloomberg.

BP’s minority partners in the well, Anadarko Petroleum Corp. and Mitsui & Co.’s Moex Offshore LLC unit, were also named in lawsuits. Anadarko and Moex had joined BP in seeking coverage from Transocean’s insurance.

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