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BP Agrees to $20 Billion Fund For Spill Victims
Senior administration officials tell The Associated Press that BP has agreed to finance a $20 billion fund to pay the claims of people whose jobs and way of life have been damaged by the devastating Gulf Coast oil spill.
The independent fund will be led by lawyer Kenneth Feinberg, who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks.
The move comes as President Barack Obama confronted BP Wednesday with a demand that it set aside billions of dollars to pay damages from the Gulf of Mexico oil spill, the worst in U.S. history.
BP executives, including Chairman Carl-Henric Svanberg, CEO Tony Hayward and BP U.S. boss Lamar McKay, were seen walking into the West Wing of the White House just before 10 a.m. ET for talks with Obama that were scheduled to last 20 minutes.
Looking serious, they barely glanced at photographers and camera crews recording their arrival. It was their first meeting with Obama since the start of the nearly two-month old crisis.
The meeting came a day after Obama, in a televised address to Americans Tuesday night, accused BP of recklessness and vowed to fight the spill "with everything we've got."
An April 20 explosion on an offshore rig owned by the British energy giant killed 11 workers and ruptured a deep-sea well. The ensuing spill has fouled 120 miles of U.S. coastline, imperiled multibillion-dollar fishing and tourism industries and killed birds, sea turtles and dolphins.
Obama wants BP to establish an independently managed fund to guarantee it would cover the billions of dollars needed to clean up the 58-day-old spill and compensate affected individuals and businesses.
There has been much debate, however, over whether the administration can legally force the company to set up such a fund, and the White House has been in talks with BP to discuss a mutually acceptable framework.
The BP executives were accompanied by the company's legal counsel Rupert Bondy and noted Washington lawyer Jamie Gorelick, a former deputy attorney general in the Clinton administration.
The White House team included: White House counsel Bob Bauer; Larry Summers, one of Obama's top economic advisers; Coast Guard Admiral Thad Allen, the administration's point man for the crisis; and a Department of Justice representative.
Setting the tone for what could be a strong message to BP, Obama said Tuesday he would tell BP to set aside "whatever resources are required" to compensate the workers and business owners harmed by the spill.
"And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party," Obama said.
A Level of Certainty
British Prime Minister David Cameron said BP is eager to face its liabilities from the spill but it should not have to pay claims that were too far removed from the disaster.
AP
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Cameron is under intense domestic pressure to stand up for BP, which many Britons perceive is being treated too harshly by the U.S. administration to the detriment of British pension funds and other investors with big stakes in BP.
"While it's important that they (BP) pay reasonable claims, and BP accept this themselves, they do need a level of certainty, and this is BP's worry, that there won't be claims entertained that are three or four times removed from the oil spill," Cameron said during a BBC radio phone-in program.
BP said in a statement its executives looked forward to a constructive meeting. "We share the president's goal of shutting off the well as quickly as possible, cleaning up the oil and mitigating the impact," the company said.
James Guiang, senior portfolio manager at Millennium Global Natural Resources Fund, said BP needed to cut a deal with Obama. "Whenever you go up against a government, you're not going to win," he said.
BP Stock
Shares in BP [BP-LN 337.00 -5.00 (-1.46%)], which have lost nearly half their value since the spill began, were down 2 percent in trading in London, underperforming a flat European oil sector index. In New York, BP's U.S.-listed shares [BP 31.27 -0.13 (-0.41%)] were down more than 5 percent in early trading.
The cost of insuring BP debt against default rose, with five-year credit default swaps hitting a record wide of 600 basis points, according to Markit.
Rating agency Fitch downgraded BP's rating by six notches on Tuesday. Dutch bank ING said it expected other agencies to follow suit.
A team of U.S. scientists raised their high-end estimate of the amount of crude oil flowing from BP's stricken well by 50 percent to between 35,000 and 60,000 barrels per day, dramatically escalating the potential fines BP faces.
Copyright 2010 Reuters. Click for restrictions.
Senior administration officials tell The Associated Press that BP has agreed to finance a $20 billion fund to pay the claims of people whose jobs and way of life have been damaged by the devastating Gulf Coast oil spill.
The independent fund will be led by lawyer Kenneth Feinberg, who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks.
The move comes as President Barack Obama confronted BP Wednesday with a demand that it set aside billions of dollars to pay damages from the Gulf of Mexico oil spill, the worst in U.S. history.
BP executives, including Chairman Carl-Henric Svanberg, CEO Tony Hayward and BP U.S. boss Lamar McKay, were seen walking into the West Wing of the White House just before 10 a.m. ET for talks with Obama that were scheduled to last 20 minutes.
Looking serious, they barely glanced at photographers and camera crews recording their arrival. It was their first meeting with Obama since the start of the nearly two-month old crisis.
The meeting came a day after Obama, in a televised address to Americans Tuesday night, accused BP of recklessness and vowed to fight the spill "with everything we've got."
An April 20 explosion on an offshore rig owned by the British energy giant killed 11 workers and ruptured a deep-sea well. The ensuing spill has fouled 120 miles of U.S. coastline, imperiled multibillion-dollar fishing and tourism industries and killed birds, sea turtles and dolphins.
Obama wants BP to establish an independently managed fund to guarantee it would cover the billions of dollars needed to clean up the 58-day-old spill and compensate affected individuals and businesses.
There has been much debate, however, over whether the administration can legally force the company to set up such a fund, and the White House has been in talks with BP to discuss a mutually acceptable framework.
The BP executives were accompanied by the company's legal counsel Rupert Bondy and noted Washington lawyer Jamie Gorelick, a former deputy attorney general in the Clinton administration.
The White House team included: White House counsel Bob Bauer; Larry Summers, one of Obama's top economic advisers; Coast Guard Admiral Thad Allen, the administration's point man for the crisis; and a Department of Justice representative.
Setting the tone for what could be a strong message to BP, Obama said Tuesday he would tell BP to set aside "whatever resources are required" to compensate the workers and business owners harmed by the spill.
"And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party," Obama said.
A Level of Certainty
British Prime Minister David Cameron said BP is eager to face its liabilities from the spill but it should not have to pay claims that were too far removed from the disaster.
AP
--------------------------------------------------------------------------------
Cameron is under intense domestic pressure to stand up for BP, which many Britons perceive is being treated too harshly by the U.S. administration to the detriment of British pension funds and other investors with big stakes in BP.
"While it's important that they (BP) pay reasonable claims, and BP accept this themselves, they do need a level of certainty, and this is BP's worry, that there won't be claims entertained that are three or four times removed from the oil spill," Cameron said during a BBC radio phone-in program.
BP said in a statement its executives looked forward to a constructive meeting. "We share the president's goal of shutting off the well as quickly as possible, cleaning up the oil and mitigating the impact," the company said.
James Guiang, senior portfolio manager at Millennium Global Natural Resources Fund, said BP needed to cut a deal with Obama. "Whenever you go up against a government, you're not going to win," he said.
BP Stock
Shares in BP [BP-LN 337.00 -5.00 (-1.46%)], which have lost nearly half their value since the spill began, were down 2 percent in trading in London, underperforming a flat European oil sector index. In New York, BP's U.S.-listed shares [BP 31.27 -0.13 (-0.41%)] were down more than 5 percent in early trading.
The cost of insuring BP debt against default rose, with five-year credit default swaps hitting a record wide of 600 basis points, according to Markit.
Rating agency Fitch downgraded BP's rating by six notches on Tuesday. Dutch bank ING said it expected other agencies to follow suit.
A team of U.S. scientists raised their high-end estimate of the amount of crude oil flowing from BP's stricken well by 50 percent to between 35,000 and 60,000 barrels per day, dramatically escalating the potential fines BP faces.
Copyright 2010 Reuters. Click for restrictions.
