BP shares jump as Transocean nears Gulf of Mexico settlement

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Transocean (NYSE: RIG - news) , the world’s largest oil rig company, has agreed to pay $1.4bn (£870m) to US authorities over its role in the Gulf of Mexico oil spill.

The company, which owned the Deepwater Horizon rig and lost 11 workers in the explosion in 2010, will pay $1bn in civil fines and a futher $400m in criminal penalties in a settlement announced on Thursday.

As part of the agreement, the Department of Justice (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”.

Shares in the company, which is headquartered in Switzerland but has vast operations in the Gulf of Mexico, jumped more than 5pc in early afternoon trading in New York following the agreement.

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.

In London, BP (LSE: BP.L - news) shares climbed 2.4pc to 441.7p in the final hour of trading on hope that Transocean’s settlement increases the chances that BP will also reach a civil settlement with US authorities.

The FTSE-listed oil and gas explorer agreed in November (Xetra: A0Z24E - news) to pay a record $4.5bn in a criminal settlement with the DoJ. However, BP 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.

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.

The Transocean agreement removes “much of the uncertainty associated with the accident”, said the oil rig 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.