A divided US Supreme Court has slashed the amount of damages oil major Exxon Mobil will have to pay for the 1989 Valdez disaster to $507.5 million, ending a 19-year legal saga over the worst oil spill in US history.

The court cut the punitive damage award to US$2.5 billion, a drop in the ocean for the oil firm and half what it had set aside and reserved under a letter of credit (L/C).

Award excessive

The judges voted 5-3 for the reduced damage award, concluding that the original award was excessive under federal maritime law.

The court found that the spill was caused by recklessness, rather than intentional wrongdoing, and was not part of a company effort to augment profit.

No financial burden

The world's largest oil company had obtained a L/C and set aside US$5.4 billion to cover its payments in the case.

The award does not represent a financial burden for Exxon Mobil, which had US$40.9 billion in cash and cash equivalents at the end of the first quarter this year.

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