2 March 2023 (Lloyd's List) - Mediterranean Shipping Co says it will enter a settlement agreement with Amplify Energy Corp regarding an oil spill off California in 2021.

“The provisions of the settlement agreement, which have not yet been finalised, will include recognition that MSC and other parties have not admitted to any liability, preserving their rights to defend the case against Amplify’s insurers, and will require all participating parties to withdraw pending appeals, requests and motions before the courts,’’ MSC said in a statement.

MSC is one of the shipping companies that owned, chartered and operated to two containerships — MSC Danit and Cosco Beijing — alleged to have damaged the Amplify-operated San Pedro Bay oil pipeline.

Amplify Energy said the defendants have agreed to a settlement worth $96.5m, while Marine Exchange of Southern California has agreed to non-monetary terms in the settlement as well.

“The parties are working to finalise the settlement agreement documentation,” it said in a statement, adding it will dismiss all legal claims against the parties.

The Texas-based company alleged anchors from MSC Danit and Cosco Beijing hit and damaged the pipeline and contributed to a significant leak of oil in October 2021.

It filed a complaint with the US District Court for the Central District of California in February 2022 for damages and injunctive relief against the ships, their owners, operators and crews.

Court papers said the pipeline spill incident occurred nine months after the 13,200 teu Danit and 9,383 teu Beijing are alleged to have dragged their anchors over it during a severe weather event. The rupture sent about 25,000 gallons of oil into San Pedro Bay, according to the California’s Department of Fish and Wildlife.

The entities named in the lawsuit included Costamare Shipping Co, V.Ships Greece Ltd, Capetanissa Maritime Corp, and the vessel Cosco Beijing, MSC, MSC Shipmanagement Ltd, Dordellas Finance Corp and MSC Danit.

Amplify also accused the Marine Exchange of Southern California of being grossly negligent and reckless by allowing the vessels to remain anchored near the pipeline when the storm was imminent and failing to notify Amplify of the ships’ anchor-dragging.

“The resolution of Amplify’s claims against the vessels and their affiliated entities concludes our involvement in the litigation related to the 2021 pipeline incident, which has demanded considerable focus and allocation of company resources,” said chief executive Martyn Willsher.

“We are eager to move forward and turn the page on this unfortunate and preventable event and to dedicate all of our attention to operations at Beta, our business as a whole and the strategic direction of the company.” 

MSC confirmed it intends to enter into a settlement agreement.

“MSC’s agreement to enter in a settlement with Amplify and the other parties is made without an admission of liability but is intended to move yet another step past the regrettable incident,” it said in a statement.

“As previously stated, maritime experts have thoroughly investigated and reconstructed events that led up to the oil spill. These experts concluded that MSC Danit was not responsible for the oil spill, that the vessel manoeuvred safely and that Amplify simply failed to properly maintain and inspect the pipeline.” 

The shipping companies and Amplify have already agreed payments of $45m and $50m, respectively, to settle with claimants including local businesses and residents of the Huntington Beach area of Orange County, California.