US Court Rules Against BP on Oil Spill Settlement Payments Dispute

A federal judge denied BP PLC's plea to halt payments from a settlement fund set up to reimburse businesses and individuals for losses from the 2010 Deepwater Horizon accident.

During a hearing in New Orleans Friday morning, U.S. District Judge Carl Barbier rejected BP's arguments that the fund administrator, Patrick Juneau, was misinterpreting how claims should be assessed and payments calculated, according to lawyers who attended the hearing. BP claims the fund has made millions of dollars in payments for "fictitious" claims.

Lawyers representing the claimants argued the claims formulas were approved by BP. "The court's ruling speaks for itself," said Steve Herman, one of the lead lawyers representing thousands of businesses and individuals.

BP said in a statement that it has already appealed an earlier decision on the fund's payments to the U.S. Court of Appeals for the Fifth Circuit.

BP said it still believes that Mr. Juneau's interpretation of payment formulas is wrong, resulting in "unjustified windfall payments to numerous business claimants for non-existent, artificially calculated losses."

The ruling wasn't a surprise given Judge Barbier's previous rejection of BP's arguments, said Tom Claps, an analyst and legal expert with Susquehanna Capital, who has closely followed the case. It will be very difficult for the oil giant to score a victory at the appeals court because the settlement was "extensively negotiated, drafted and approved by BP and its legal team," Mr. Claps said.

The hearing took place during a break in the ongoing civil trial aimed at determining the degree of culpability that BP and other companies have for the accident. Judge Barbier has heard six weeks of testimony from employees of BP, drilling rig owner Transocean Ltd., cement contractor Halliburton Co. and expert witnesses.

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Brazil's QGEP: Oil Royalties Dispute Unlikely to Delay Concession Auctions

RIO DE JANEIRO - Brazilian oil-and-natural gas company QGEP Participacoes said Thursday that an ongoing dispute over the distribution of oil royalties was unlikely to delay a much-anticipated auction of oil and natural-gas-exploration concessions.

The threat of lawsuits by major oil-producing states Rio de Janeiro, Espirito Santo and Sao Paulo to fight the equal distribution of royalties from existing and future oil production between Brazil's 27 states does "raise the risk" of a delay, QGEP Chief Executive Lincoln Guardado said Thursday during a conference call with analysts. The risk, however, has been diminished by recent signs that nonproducing states are willing to negotiate a deal to avoid a protracted fight in the courts.

The deal would reverse changes implemented last week when Brazil's Congress voted to overturn a presidential veto of key portions of new oil-royalties legislation, equally distributing royalties from existing and future oil production between the country's 27 states. Rio, Espirito Santo and Sao Paulo, however, plan to fight the changes by filing lawsuits with Brazil's Supreme Court.

Oil companies are eagerly awaiting Brazil's 11th-round auction of oil and natural-gas-exploration concessions, which is set for May 14-15. The last auction in Brazil was held in December 2008, and oil companies have said they are running out of areas to explore. Given the government's desire to promote the bidding round, even if there is a delay because of a legal tussle the auction, "should still be held in the first half of 2013," Mr. Guardado said.

QGEP has nearly one billion Brazilian reais ($510 million) in cash, giving the company "significant financial flexibility to participate in the auction," Mr. Guardado added.

Not only is QGEP looking toward the auction to improve its portfolio, but the company is also interested in seeing what assets state-run energy giant Petroleo Brasileiro, or Petrobras, makes available in its divestment plan. Petrobras previously said that it would sell off about $15 billion in assets, including some holdings in Brazil.

QGEP, the oil-and-natural-gas exploration arm of local industrial conglomerate Queiroz Galvao, also said it was interested in selling down its 100% stake in the BM-J-2 exploration block. While reducing the company's level of risk "makes business sense," Mr. Guardado said that the Brazilian market is "oversupplied" with opportunities to buy into offshore exploration blocks.

QGEP still doesn't have a timeline for when the company and its partners in the BM-S-8 block will release a volume estimate for the much-anticipated Carcara subsalt discovery, Mr. Guardado said. "We need more data to make an announcement on a range of volumes," he said. The executive, however, said that some estimates of recoverable reserves at about one billion barrels of crude oil and in-place oil volumes of about five billion barrels may be in the range of possibilities.

The estimates were "potential" numbers, but that other estimates also existed and needed to be further evaluated via a well-stem test that is set for the second half of 2013.

Carcara contains an oil column of more than 400 meters, one of the largest discovered in the subsalt region off Brazil's coast where billions of barrels of oil have been discovered under a layer of salt.

Late Wednesday, QGEP said that it recorded a net profit of BRL47.3 million in the fourth quarter of 2012, nearly doubling net profits in the same period the year before. Net profit jumped on higher natural-gas production from the company's Manati field and strong demand for the fuel in Brazil, QGEP said.

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Brazil's QGEP: Oil Royalties Dispute Unlikely to Delay Concession Auctions

RIO DE JANEIRO - Brazilian oil-and-natural gas company QGEP Participacoes said Thursday that an ongoing dispute over the distribution of oil royalties was unlikely to delay a much-anticipated auction of oil and natural-gas-exploration concessions.

The threat of lawsuits by major oil-producing states Rio de Janeiro, Espirito Santo and Sao Paulo to fight the equal distribution of royalties from existing and future oil production between Brazil's 27 states does "raise the risk" of a delay, QGEP Chief Executive Lincoln Guardado said Thursday during a conference call with analysts. The risk, however, has been diminished by recent signs that nonproducing states are willing to negotiate a deal to avoid a protracted fight in the courts.

The deal would reverse changes implemented last week when Brazil's Congress voted to overturn a presidential veto of key portions of new oil-royalties legislation, equally distributing royalties from existing and future oil production between the country's 27 states. Rio, Espirito Santo and Sao Paulo, however, plan to fight the changes by filing lawsuits with Brazil's Supreme Court.

Oil companies are eagerly awaiting Brazil's 11th-round auction of oil and natural-gas-exploration concessions, which is set for May 14-15. The last auction in Brazil was held in December 2008, and oil companies have said they are running out of areas to explore. Given the government's desire to promote the bidding round, even if there is a delay because of a legal tussle the auction, "should still be held in the first half of 2013," Mr. Guardado said.

QGEP has nearly one billion Brazilian reais ($510 million) in cash, giving the company "significant financial flexibility to participate in the auction," Mr. Guardado added.

Not only is QGEP looking toward the auction to improve its portfolio, but the company is also interested in seeing what assets state-run energy giant Petroleo Brasileiro, or Petrobras, makes available in its divestment plan. Petrobras previously said that it would sell off about $15 billion in assets, including some holdings in Brazil.

QGEP, the oil-and-natural-gas exploration arm of local industrial conglomerate Queiroz Galvao, also said it was interested in selling down its 100% stake in the BM-J-2 exploration block. While reducing the company's level of risk "makes business sense," Mr. Guardado said that the Brazilian market is "oversupplied" with opportunities to buy into offshore exploration blocks.

QGEP still doesn't have a timeline for when the company and its partners in the BM-S-8 block will release a volume estimate for the much-anticipated Carcara subsalt discovery, Mr. Guardado said. "We need more data to make an announcement on a range of volumes," he said. The executive, however, said that some estimates of recoverable reserves at about one billion barrels of crude oil and in-place oil volumes of about five billion barrels may be in the range of possibilities.

The estimates were "potential" numbers, but that other estimates also existed and needed to be further evaluated via a well-stem test that is set for the second half of 2013.

Carcara contains an oil column of more than 400 meters, one of the largest discovered in the subsalt region off Brazil's coast where billions of barrels of oil have been discovered under a layer of salt.

Late Wednesday, QGEP said that it recorded a net profit of BRL47.3 million in the fourth quarter of 2012, nearly doubling net profits in the same period the year before. Net profit jumped on higher natural-gas production from the company's Manati field and strong demand for the fuel in Brazil, QGEP said.

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Iraqi Budget Deepens Oil Dispute with Kurds

AMMAN, Jordan - The Iraqi parliament Thursday passed a budget for 2013 that allocated to Kurdistan just a fraction of the oil revenue requested by the semi-autonomous region, a move that deepens a dispute that has disrupted oil exports from the north of the country.

The parliament agreed that the Iraqi central government should make $650 million in payments to the Kurdish government, which would be used to pay companies operating in the region for oil exports, said Ibrahim al-Mutlaq, a member of the parliamentary finance committee. The Kurdish government had asked for $3.5 billion, he said.

The budget decision adds to existing tensions between the Kurdish region and Baghdad over oil exploration rights, trade with Turkey and the redevelopment of oil fields in a disputed territory. The dispute over the payment of oil revenues has already led to the suspension of crude oil exports from the Kurdish region since December.

Kurdish lawmakers boycotted the session which led to the passing of the budget, Mr. al-Mutlaq said. Kurdish officials weren't immediately available to comment.

The Kurdish government says the $3.5 billion it requested includes outstanding payments covering all exports between 2010 and 2013. The Baghdad government collects the oil revenues because it controls the export pipeline.

The central government in Baghdad made one payment of around $550 million in October for the companies operating in Kurdistan, but Iraqi officials later said that they wouldn't pay a second portion of around $300 million because the Kurdistan Regional Government failed to reach an oil production level of 250,000 barrels a day agreed in September.

Iraqi Prime Minister Nouri al-Maliki's bloc in parliament, the State of the Law, is arguing that the Kurds should pay Baghdad for their failure to produce the promised amount since November, Mr. al-Mutlaq said.

The allocation of oil revenues has been a significant sticking point in the Iraqi parliament's vote on the 2013 budget, which is $118.6 billion in total. The vote was delayed many times because lawmakers differed on whether Baghdad should allocate money to companies working in Kurdistan.

The Kurdish government further annoyed Baghdad when it started unilateral exports of more than 15,000 barrels a day of oil and natural gas condensate in trucks to Turkey at the beginning of January. It has pledged to increase these exports gradually and even plans to set up its own pipeline, bypassing the Baghdad-controlled export route.

The two sides are also locked in a dispute over who has the right to award oil exploration licenses in the region. Baghdad considers scores of oil deals signed with companies, including Exxon Mobil Corp., Total SA and Gazprom Neft as null and void because they haven't been approved by the central government. The Kurds argue that they are legal according to the new constitution.

Another war of words broke out in January, when the oil ministry in Baghdad said it was considering signing a contract with BP PLC to redevelop the Kirkuk oil field, which is in a disputed territory bordering the Kurdish region. 

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Iraq Postpones Budget on Account of Kurdistan Dispute

The Iraqi parliament has postponed a vote on the country's 2013 budget, running at $117.5 billion, as lawmakers differ on whether Baghdad should allocate money for companies working in the country's Kurdistan region in the north, lawmakers said Tuesday.

The Kurds have suspended crude oil exports via the Baghdad-controlled export pipeline since December last year, protesting delays in payment to producing companies in the region. Even in November, the Kurds didn't reach the level of 250,000 barrels a day in exports as agreed upon with Baghdad.

"There is no agreement and the vote on the budget has been postponed to an indefinite time," Mahmoud Othman, a leading parliamentarian from the Kurdistan alliance in the federal parliament, told Dow Jones Newswires. The main reason is that the budget hasn't allocated enough money for paying companies exploring for oil and gas in Kurdistan, Mr. Othman added.

The Kurds want the budget to include some 4.2 trillion Iraqi dinars ($3.5 billion) as payments due to oil companies working in the Kurdish region. The Kurds said that this amount would cover retroactive payments from 2010 up to 2013.

Meanwhile the Iraqi Prime Minister Nouri al-Maliki's bloc in the parliament, the State of the Law, is arguing that the Kurds should first pay for the 250,000 barrels a day they have failed to export from November up to now, said Ibrahim al-Mutlaq, a member of the parliament's finance committee.

The central government in Baghdad has made one payment to companies, but Iraqi officials said last year that they wouldn't pay oil firms a second portion because the Kurdistan Regional Government has failed to reach agreed production under an agreement reached in September.

The KRG further annoyed Baghdad when it started unilateral exports of more than 15,000 barrels a day of oil and condensate via trucks to Turkey at the beggining of January and pledged to increase them gradually. The Kurds also plan to set up their own export pipeline away from the Baghdad-controlled one.

Baghdad paid some IQD650 billion last year to companies but decided to suspend payment of another portion of IQD350 billion because the Kurds suspended exports.

Mr. Othman also said there is disagreement over what percentage of the budget should be allocated to Kurdistan spending. Over the last few years, the national budget has allocated some 17% of spending to Kurdistan assuming that the population in the region makes up some 17% of Iraq's total population.

"Many lawmakers argue that some 17% of budget to Kurdistan is too much and should be made less," Mr. Othman said, adding that the Kurds would accept a fresh population census to determine the percentage but not now as it would delay the budget further.

The KRG and Baghdad are locked on dispute over who should control oil in the Kurdistan region. Baghdad considers scores of oil deals signed with companies such as Exxon Mobil Corp., Total SA, Gazprom Neft, DNO International ASA and Genel Energy PLC as null and void because they haven't been approved by the central government, while the Kurds argue that they are legal according to the new constitution.

Also there is disagreement over the defense ministry budget, said Mr. al-Mutlaq, a member of the Al-Iraqiya bloc led by former prime minister Ayad Allawi, an opponent of Mr. Maliki.

"The Al-Iraqiya bloc has also asked to deduct some IQD2 trillion from the defense ministry budget and transfer it to families who were affected by recent floods along the river Tigris," Mr. Ibrahim said. "We think that the defense budget is too much," he added.

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Tribunal Finds Ecuador in Breach of Legal Obligations in Chevron Dispute

An arbitration panel in The Hague said Ecuador should have prevented plaintiffs in a $19 billion award against Chevron Corp. from taking their battle to other countries, and needs to justify why its government shouldn't be held responsible for the costs.

In 2012, an Ecuadorian court ruled Chevron was responsible for environmental damages in that country's Amazon region, a decision the oil company is contesting. The international tribunal, which is studying the issue of whether the ruling constitutes a violation of a bilateral investment treaty between the U.S. and Ecuador, had asked the country to keep the plaintiffs from suing Chevron in foreign courts while the appeal was pending. But the plaintiffs filed lawsuits against Chevron assets in Canada, Argentina and other countries--a move the tribunal decided was a breach of Ecuador's obligations and of its previous rulings. Now the tribunal is asking the country's government why it shouldn't be held responsible for the harm done by the lawsuits filed by the plaintiffs outside Ecuador.

The decision, issued Thursday, comes a few days after an Argentine court of appeals upheld an embargo, requested by the Ecuadorian plaintiffs, on Chevron assets in that country. It underscores the high stakes of a multidecade legal battle emmeshing one of the world's largest oil companies, a national government and Amazonian plaintiffs.

The ruling is a boost to Chevron's theory that if it loses the lengthy legal tussle with Amazonian plaintiffs, the Ecuadorian government should end up paying the costs. The company has said the ruling is fraudulent, and accused the Ecuadorian government of exerting pressure in favor of the plaintiffs in local courts.

"From the Chevron viewpoint, this makes sure that, at the end of the day, if they're on the hook, Ecuador is on the hook with them," said Ted Folkman, a litigator with Murphy & King who has followed the case.

Ecuador argues the international tribunal's order violates its constitution, because local courts are independent. A representative of the Ecuadorian government wasn't immediately available to comment. The Ecuadorian plaintiffs view the tribunal's decision as "unenforcebale."

"It arrogantly orders Ecuador's government to violate its own Constitution and quash a private civil litigation that resulted in the judgment against Chevron," said Karen Hinton, spokeswoman for the Ecuadorian communities.

Chevron said the tribunal's decision "confirms that the enforcement actions being pursued against Chevron in Argentina, Brazil, and Canada fly in the face of international law," said Hewitt Pate, Chevron vice president and general counsel. "It is not too late for the Republic to reverse course, declare the Lago Agrio judgment illegitimate, and address the real challenges facing its citizens."

The case stems from a decades-old dispute over environmental contamination in Ecuador allegedly produced by Texaco Inc., a company Chevron bought in 2001. Chevron denies the accusations and says it is the victim of fraud, while the plaintiffs say it is the oil company that committed fraud.

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Friday's mining news: Afferro settles tax dispute

Afferro Mining settled a Liberian tax dispute, while Jubilee Platinum announced a tailings-processing agreement in South Africa.

Afferro settles Liberian tax dispute with $10 million payment

Afferro Mining (AFF) has announced the signature of a compromise and settlement agreement with the Liberian government in relation to outstanding tax claims made by the government. The claim relates to the sale of Afferro's 38.5% minority interest in Severstal Liberia Iron Ore to Lybica, an affiliate of Severstal.

The parties have agreed that a single payment of $9.8 million (

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