The oil that exploded in the Lac-Mégantic disaster will be covered by insurance, but the company that owns the crude said many other questions about who must pay for the catastrophe still need to be worked out.
World Fuel Services Corp. told analysts on its quarterly financial conference call Wednesday that its insurance covers the 50,000 barrels of oil and the dozens of rail cars that were destroyed when a train operated by Montreal, Maine & Atlantic Railway derailed in Lac-Mégantic, Que. The accident killed 47 people and ravaged the downtown.
However, the company, which was shipping the crude from North Dakota to a refinery in New Brunswick, said it was too early to know what liabilities it faces. World Fuel executives believe the company should not be held responsible for the MM&A derailment.
“With respect to the crude oil lost and the tanker cars which were damaged or destroyed in the incident, we believe any related losses will be fully covered by insurance,” Ira Birns, executive vice-president of World Fuels told analysts. “Although we maintain insurance coverage covering risks associated with incidents such as this, it is too early to know the extent of the liabilities or to what extent such coverage will apply, and therefore what, if any, exposure we may have beyond what is covered in our insurance policies.”
Last week, the Quebec government ordered MM&A and Miami-based World Fuels to pay costs for the continuing cleanup of Lac-Mégantic after cash-strapped MM&A stopped making payments. That left local authorities footing the multimillion-dollar bill.
World Fuels disputes the province’s order. The company said it contracted Canadian Pacific Railway to ship the oil. CPR picked up the crude then handed off the cars to MM&A, where they later derailed. Under Canadian law, rail carriers are responsible for cleanup costs, but shippers can also be held responsible in emergencies.
World Fuels reported a $51-million (U.S.) second-quarter profit, and told analysts it expects to incur legal defence costs in the wake of the disaster. “It’s all pretty complicated and will be sorted out over time,” World Fuels chief executive officer Michael Kasbar said.
Mr. Kasbar led off the financial call with a statement about the disaster. “We realize this has been a great tragedy for the local community and we want to again express our deepest sympathies and condolences to the victims, the families, and all of those who have been affected by this tragic accident,” he said.Report Typo/Error