The petroleum giant now faces a tremendous setback as the decision was not made in its favor.
A federal appeals court has now reversed an oil insurance ruling that had previously been made in favor of BP in a multimillion dollar dispute, which has now provided the petroleum giant with a massive setback, at least temporarily.
BP will now be forced to have to look elsewhere in its attempts to defray some of its tremendous disaster expenses.
The energy giant is still trying to deal with the ongoing and astronomical costs of the 2010 Gulf explosion and spill. BP has been arguing that it is entitled to some of the oil insurance policy payouts from its drilling contractor, which currently total $750 million. It is seeking to obtain some of those funds in order to help to pay the costs relating to pollution following the fire, explosion, and spill that its rig experienced in the Gulf of Mexico.
The ruling, however, was not in favor of awarding the oil insurance payouts to BP.
The issue of the oil insurance is surrounding the drilling rig from Transocean Ltd. that exploded, burst into flames, and then spilled into the Gulf of Mexico. BP had leased the rig from Transocean and the contract required that the drilling company maintain a certain minimum level of coverage for the benefit of BP.
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While the Ranger Insurance Ltd. policy that Transocean held for that purpose provided coverage of at least $50 million, its other policies with a number of “excess liability” insurers provided it with at least an additional $700 million in protection.
According to BP, it should be entitled to some of the coverage that had been purchased under the oil insurance policies held by Transocean, as it considers itself to be an “additional insured” party. However, the ruling that was in favor of BP’s contention, which had been made in November 2010, was then overturned by U.S. District Judge Carl Barbier.
On March 1, 2013, Barbier’s ruling on the oil insurance was reversed, yet again, in favor of BP, by the 5th U.S. Circuit Court of Appeals in New Orleans. However, a three judge panel in the same appeals court has now said that the outcome of that dispute is considered to be unclear and has upheld Barbier’s ruling against BP until additional answers can be sought from the Texas Supreme Court for two questions that would be able to assist the federal court of appeals in making the ultimate decision for the case.