"Owner of Gulf Oil Drilling Rig Tries To Limit Liability for Spill"

"Transocean, owner of the drilling rig that caught fire and sank in the Gulf of Mexico three weeks ago, has asked a Houston federal court to limit its liability for the resulting oil spill to $26.8 million, a small fraction of the anticipated damages from the accident.

The petition, made under a law more than a century old, marked a key step for big oil companies seeking to establish jurisdiction in Houston for what promises to be years upon years of litigation.

Transocean said its insurers demanded that the company file the petition in order to keep intact the insurance coverage on the rest of its fleet of 139 offshore drilling rigs. The amount represents the company's interest in the rig and its cargo, after taking into account the roughly $560 million in insurance it had taken out on the rig. "

Steven Mufson reports for the Washington Post May 13, 2010.