US judge rules that BP spill smaller than feared

[HOUSTON] BP will face a maximum fine of US$13.7 billion under the Clean Water Act for its Gulf of Mexico oil spill, several billion less than feared, after a judge found on Thursday the size of the spill was smaller than thought.

The ruling by US District Court Judge Carl Barbier put the spill's size well below the 4.09 million barrel estimate of the government and the 3.26 million estimated by BP.

All these totals exclude some 810,000 barrels that were collected during clean-up of the worst offshore disaster in US history.

Under a "gross negligence" ruling Mr Barbier issued in September, BP could be fined a statutory limit of up to US$4,300 for each barrel spilled, though he has authority to assign lower per barrel penalties.

Fines will be assigned after the third and final phase of the company's trial is held later this month.

A simple "negligence" ruling, which BP sought, has a cap on the fine at US$1,100 per barrel.

In his ruling on Thursday, Barber said BP's response to the disaster was not grossly negligent, but stuck to his earlier opinion that it was grossly negligent leading up to the Macondo well blowout.

The ruling came as a relief to investors who have worried about the size of the fine. US-listed shares of BP rose about one per cent to US$36.20 in after-hours trading.

The Clean Water Act penalties would come on top of more than US$42 billion the oil major has set aside or spent for clean-up, compensation and fines. BP has sold at least US$39 billion in assets since the spill, eroding about a fifth of its earnings power.

Even after the Clean Water Act fines are set, BP may face other bills from a lengthy Natural Resources Damage Assessment - which could require BP to carry out or fund environmental restoration work in the Gulf - as well as other claims.

REUTERS