Mitsui Oil Exploration President: Impact From BP Oil Spill Limited

The financial impact on Mitsui Oil Exploration Co. from the oil spill at BP PLC's (BP) well in the U.S. Gulf of Mexico will be limited, even if the group company that owns a 10% stake in the project is required to pay an amount that exceeds its financial capacity, company president Yoshiyuki Kagawa said.

Mitsui Oil Exploration, also known as Moeco, owns a 10% stake in the project through MOEX Offshore 2007 LLC, a fully-owned unit of MOEX USA Corp., which is fully-owned unit of Moeco.

Moeco said earlier that it had received as of Nov. 2 invoices in connection with the oil spill for reimbursement of a total amount of $1.898 billion from the BP unit that was the operator of the well.

Kagawa said late Wednesday that MOEX Offshore 2007 is a limited liability company, which means all investors in it can be held responsible only for amounts up to what they have invested. Therefore, if the amount MOEX Offshore 2007 has to pay surpasses its ability, Moeco can let it go bankrupt.

It also hasn't been determined whether MOEX Offshore 2007 will have to pay part of the costs, and if so how much, he said.

A Moeco official Thursday declined to say how much has been invested in the project, citing a confidentiality agreement.

Mitsui & Co. (8031.TO), which owns 70% of Moeco, last week reported that group net profit in the July-September quarter more than doubled from a year earlier due to surging commodity and energy prices.

The Japanese trading house said in its financial statement that it didn't book any reserves or financial liabilities related to the oil spill, saying there is uncertainty about "how to calculate the total claimed amount," and Moeco's liability "would be zero as of Sept. 30, 2010 at the minimum level" if certain conditions are met in the joint operating agreement.

The Gulf of Mexico oil spill began April 20 when BP's Deepwater Horizon drilling platform exploded. It took BP roughly five months to stop the leak and seal the well. BP booked $32.2 billion in costs related to the leak in the April-June quarter.

Other companies, including oil rig operator Transocean Ltd. (RIG) and oil services company Halliburton Co. (HAL), which performed cementing work on the well, might be held responsible.

Moeco is 20%-owned by the Japanese government. Fourteen Japanese companies separately hold the remainder.

Along with Moeco's 10% stake, U.S. oil company Anadarko Petroleum Corp. (APC) has 25%, while BP owns the remainder of the project. Anadarko has said it won't pay bills related to the spill while a federal investigation is ongoing.

-By Mari Iwata, Dow Jones Newswires; 813-6269-2798; mari.iwata@dowjones.com

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