BP gets $1bn from Mitsui towards Gulf of Mexico costs

Oil giant BP's share price rose 2pc after one of its partners in the ill-fated Macondo well in the Gulf of Mexico agreed to pay $1.1bn (£675m) to settle liabilities.

Analysts and investors were cheered by Mitsui's apparent vote of confidence that BP will not be found guilty of negligence.

Mitsui owned 10pc of the well, which was the site of an accident that killed 11 men on April 20 last year. The disaster has forced BP to take a balance sheet hit of $41bn, causing its biggest ever loss last year.

Japanese conglomerate Mitsui said a settlement substantially limits its exposure, but it could still be chased for civil penalties under the Clean Water Act.

The sum paid by Mitsui to BP is only half the $2.1bn the London listed company had demanded from it in bills for the costs so far. It appears that Mitsui thought it would be better to pay up a part of the amount rather than be found liable by a court for 10pc of BP's total costs.

An American company, Anadarko, which owned a further 25pc of the well, is still refusing to pay. It has argued that BP was a negligent party and Anadarko could escape paying altogether if this were to be proven in a court. However, its chief executive, Jim Hackett, has recently hinted Anadarko may be prepared to settle after all.

Analysts and investors were therefore cheered by Mitsui's apparent vote of confidence that BP will not be found guilty of negligence.

"This settlement is an important step forward for BP and the Gulf communities," said Bob Dudley, chief executive of BP. "[Mitsui] is the first company to join BP in helping to meet our shared responsibilities in the Gulf, and Mitsui is showing great corporate citizenship in standing behind its affiliate and making a contribution to meet the costs of this tragic accident. We call on the other parties involved in the Macondo well to follow the lead of the Mitsui parties."
BP's share price may also have been affected by an analyst note arguing the company should be subject to a "radical, full demerger". Stuart Joyner, one of the Investec analysts, argued this should be done along geographical lines, splitting off the US and UK businesses separately, leaving a core of assets focused on emerging markets such as Russia, Brazil and Asia.
He said: "BP has got such great people and assets but they're not capitalising on them. With the Macondo accident coming to an end, people should be looking more at the value in the parts of the company.
"It applies to all the energy majors but not to the same degree. BP is trading at 35pc below its asset value, compared with 10pc at Shell."
Mr Joyner also argues that shareholders would be able to keep the company under better control if it was smaller.
Investors have been angered by BP's failed attempt to do a deal with Russian state oil giant Rosneft, which was frustrated by its four existing oligarch partners.
"One problem with a company of BP's size is that no one shareholder can influence the management," Mr Joyner said. "They just get to do what they want. One of the things the Rosneft business has shown is that if it was smaller, someone would have probably taken out the management."
BP shares closed up 12.7 at 460p.‎