Deepwater Rig Explosion Settlement Reached

RELATED QUOTES

SymbolPriceChange
RIG43.13+1.71
BP.L491.50+2.15

The US Justice Department has reached a $1.4bn settlement with the owner of the drilling rig that sank after an explosion killed 11 workers and spawned the massive 2010 oil spill in the Gulf of Mexico.

The proposed settlement resolves the department's civil and criminal probes of Transocean (NYSE: RIG - news) 's role in the Deepwater Horizon rig disaster.

It requires the Switzerland-based company to pay $1bn (£615m) in civil penalties and $400m (£246m) in criminal penalties and plead guilty to a misdemeanour charge of violating the Clean Water Act, according to a court filing.

The deal, which is subject to a federal judge's approval, also calls for Transocean to implement a series of operational safety and emergency response improvements on its rigs.

"This resolution of criminal allegations and civil claims against Transocean brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster," Attorney General Eric Holder said in a statement.

Transocean said it believes the settlement is in the best interest of its shareholders and employees and eliminates "much of the uncertainty associated with the accident".

"This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon," the company said in a statement. "Their families continue to be in the thoughts and prayers of all of us at Transocean."

Much of the $1.4bn will fund environmental restoration projects and spill-prevention research and training.

The company has two years to pay the $1bn civil penalty. Congress approved legislation that dedicates 80% of the civil penalty for environmental and economic recovery projects in the Gulf states.

British oil giant BP (LSE: BP.L - news) , which leased the rig from Transocean, already has agreed to pay a record $4.5bn in penalties and plead guilty to manslaughter and other criminal charges related to the spill.

The deal with BP does not resolve the federal government's civil claims against the London-based oil company.

Transocean previously announced it had reserved $2bn for paying claims related to the Deepwater Horizon disaster.

The Justice Department says Transocean crew members on the rig, acting at the direction of BP supervisors, failed to fully investigate clear signs that the well was not secure and that oil and gas were flowing into the well.

The rig burned for about 36 hours before sinking.

As engineers made repeated attempts to halt the flow of oil from BP's burst well, millions of gallons (litres) of crude flowed out. Marshes, beaches and fishing grounds across the northern Gulf were fouled by the oil.

More From Sky News