Unocal to Pay Oil Royalties Claims

Unocal Corp. has agreed to pay $21.5 million to resolve claims that it underpaid royalties for oil taken under federal leases, the Justice Department announced Monday.

The settlement was the latest in a string of agreements involving alleged underpayments being heard in the U.S. District Court in Lufkin, Texas. So far, nearly $440 million in claims has been settled involving 16 oil firms.

Unocal said the claims, involving royalties over an 18-year period, stem from the complexities involved in determining the market value of the oil under Interior Department regulations.

“We settled the suit for practical reasons, and we’re pleased to have it behind us,” said Unocal spokeswoman Christine LeLaurin. “We believe we complied with the regulations.”

The agreement “is an example of the Justice Department’s continued efforts to ensure that the government is compensated for underpayments of oil royalties on federal and Indian leases,” said Assistant Atty. Gen. Robert D. McCallum Jr.

The case being heard in Texas stems from claims originally brought by private citizens under the “whistle-blowers” provision of the False Claims Act. The Justice Department later joined in the action.

El Segundo-based Unocal was accused of underpaying royalties owed to the government for oil taken from 1980 through 1998 under both federal and Native American leases.

Shares of Unocal closed up $1.12 to $34.01 on Monday on the New York Stock Exchange.