Shell Oil Company Sues BP For Loss of Production/Profit due to Oil Spill
The BP oil spill litigation frenzy began today in Boise, Idaho. Lawyers representing clients ranging from fishermen to investors presented their arguments to a panel of U.S. judges. At issue are how the thousands of BP oil spill lawsuits should be combined and where the lawsuits should be adjudicated.
One lawsuit is with Royal Dutch Shell Plc. They are claiming $56 million, which reflects the cost of stopping oil production on seven rigs located in the Gulf of Mexico. Production was halted as a result of the Obama administration’s offshore oil drilling ban put into effect in response to the BP oil spill. Shell claims that they will likely produce 3 million barrels less oil this year because of the oil drilling ban. Shell decided it would be unprofitable to move the rigs to other locations.
Since the oil spill and subsequent offshore oil drilling ban can be laid at BP's door, Shell has determined that BP should bear the cost of reduced production and, therefore, greatly reduced profits.
Although BP has established a $20 billion fund to address claims from various businesses and individuals adversely affected by the oil spill, BP does not consider losses due to the oil drilling ban to be a valid claim.