BP gets UK government support over US contracts ban

The Deepwater Horizon oil platform exploded in April 2010 resulting in the worst oil spill in US history

The UK government has intervened in support of BP over a US ban on the oil major seeking federal contracts.

In a court filing lodged as part of BP's appeal against the ban, the document says the move could be "excessive" and "destabilising".

The US Environmental Protection Agency (EPA) barred BP from new contracts last year, after the 2010 Gulf of Mexico oil rig disaster in which 11 workers died.

The government said that what happened to BP affected UK jobs and pensions.

"It is the view of Her Majesty's government that the EPA's disqualification and suspension of multiple BP entities may have been excessive," the document says.

It continues: "The government is concerned that such a broad sanction can and will have serious and unjustified economic consequences."

Although BP has reportedly been seeking UK government support for months, this is the first time that it has intervened publicly on behalf of the energy giant.

The oil rig disaster spilled an estimated four million barrels of crude into the Gulf of Mexico and led to BP putting aside billions of dollars for fines and compensation.

Standards 'not met'

The government submission says it fully recognises the grave consequences of the explosion on the Deepwater Horizon platform.

But, it says, in taking action against BP, "regulators should apply the law fairly and predictably, lest their actions erode global public trust in the institutions and individuals involved.

"In this case, Her Majesty's government is concerned that these reasonable standards have not been met."

News of the government's support came after BP received a boost in its fight to suspend what it sees as unjustified claims for compensation.

Although BP has agreed the terms of a compensation settlement, it believes the process is being abused by spurious claims.

Now a US appeals court has voted for an injunction to suspend any further payments to firms that have not suffered losses as a result of the disaster.

BP had argued that the settlement deal agreed last year was being misinterpreted, allowing firms that had not suffered harm to claim losses.

In its submission, it said that "the district court erred" by not properly taking into account the question of whether losses were caused by the spill.

The ruling means that payments to any business that cannot directly trace its losses back to the spill will now be suspended temporarily.