US government sues BP over Gulf of Mexico oil disaster

The firm is amongst eight companies named by the Justice Department in a lawsuit filed in a New Orleans court yesterday.

On April 20, an explosion at BP's Deepwater Horizon rig killed 11 workers and led to the worst environmental disaster the region has ever seen.

The US administration is calling for the eight named firms to be held liable without limitation for all costs and damages under the Oil Pollution Act and for the companies – which includes drilling rig operator Transocean and its insurer QBE Underwriting – to be held accountable under the Clean Water Act.

The US administration alleges safety regulations were violated prior to the blast and claims the defendants failed to use the best available drill and neglected to adequately monitor conditions at the well.

Hundreds of millions of gallons of oil gushed into the Gulf of Mexico following the accident in April and, in the process, it killed wildlife, polluted waters and shattered fishing communities along the coasts of Texas, Alabama, Louisiana, Mississippi and Florida.

The overall cost to BP for the clean-up operation so far is just shy of 40 billion dollars (25bn) and the civil action could see the total bill increased significantly.

As it battled to control the spill, BP announced in July a 11bn loss and launched a sale programme of assets in a bid to raise $30 billion (19.3bn) to meet the escalating costs of the crisis. It revealed it has returned to profit after announcing its third quarter results last month.

The company's handling of the crisis led in the summer to the resignation of chief executive Tony Hayward who was strongly criticised by the US of his handling over the situation. And concerns over the company's rising financial burden, which led to a massive slump in its share price, ignited fears over UK pension funds.

Business Secretary Vince Cable said last night that BP was big enough to absorb the litigation costs.

"BP knew there would be litigation. But it is a very strong company. It has coped with this crisis, it did eventually deal with the leak problem. It is financially a very strong company.

"And I don't think today's news fundamentally changes that."

The full list of those named in the lawsuit includes three subsidiaries of Transocean, two of oil and gas producer Anadarko, exploration firm MOEX Offshore and Triton Asset Leasing.