Washington (AFP) June 16, 2010
BP agreed Wednesday to pay 20 billion dollars into a fund to meet mounting oil spill claims, as US President Barack Obama won key concessions from company bosses in high-stakes talks.
Flanked by somber looking BP executives on the White House steps, chairman Carl-Henric Svanberg said no more shareholder dividends would be paid this year as the company tries to meet the bill from the Gulf of Mexico disaster.
The Swede insisted BP did care about the "small people" most affected by America's worst environmental disaster and in a surprise move announced a 100-million-dollar foundation to help unemployed rig workers.
"We have made clear from the first moment of this tragedy that we will live up to all our legitimate responsibilities," a conciliatory Svanberg said, adding that compensation claims would be handled "swiftly and fairly."
"We will look after the people affected, and we will repair the damage to this region, the environmental damage to this region and to the economy."
The special escrow account will be run by prominent lawyer Kenneth Feinberg, who managed compensation claims by victims of the September 11, 2001 terror attacks, and will be overseen by a panel of three judges who can hear appeals.
"BP has agreed to contribute 20 billion dollars over a four-year period at a rate of five billion dollars per year, including five billion dollars within 2010," a White House statement said.
"This account is neither a floor nor a ceiling on liability," the statement said, adding BP would not seek to take advantage of the 75-million-dollar federal liability cap for oil companies.
The announcements represented a major victory for Obama, who has been under fire over his handling of a disaster that has raised questions about his leadership and threatened damage to his presidency.
"It is probably the best news I've gotten since this thing started. It gives us some security for the future," Brent Roy, whose fishing charter business in Venice, Louisiana has been shut down for a month due to the spill, told AFP.
Reading a statement moments before BP bosses exited the White House, the president was quick to try to reassure twitchy investors by dismissing speculation about the firm's financial health.
"I'm absolutely confident BP will be able to meet its obligation to the Gulf Coast and to the American people. BP is a strong and viable company and it is in all of our interests that it remain so."
But the scale of the company's difficulties was hinted at Wednesday when chief financial officer Byron Grote announced that it planned to offload 10 billion dollars of assets.
Analysts said BP, which has already spent some 1.6 billion dollars battling the spill and made a profit of around 14 billion dollars in 2009, should be strong enough to weather the storm even if it has to borrow more.
"Regardless how the payments mechanically happen, BP has the financial strength to fund it," said Jason Gammel of Macquarie Research. "They have enough cash flow and quality assets that will allow it to fund that type of liability."
US experts estimate between 35,000 and 60,000 barrels of oil a day are still spewing into the waters off the Louisiana coast, after an April explosion sank an exploratory deepwater drilling rig operated by BP.
A massive slick is now threatening the coastlines of four southern US states, and has crippled the fishing and tourist industries -- vital economic lifelines for the region.
BP is containing an average of 15,000 barrels a day of oil, which is being siphoned up to two processing ships on the surface. It hopes to increase that amount significantly in the coming weeks.
The leak is not expected to be permanently capped until August, when one of two relief wells being drilled is complete.
Svanberg attended Wednesday's talks with BP chief executive Tony Hayward, along with a battery of company and government lawyers. White House officials said there was no mention of a Justice Department investigation into the spill.
In testimony prepared for delivery in his first appearance Thursday before angry US lawmakers, Hayward blamed an unprecedented series of failures for the spill and said he was "personally devastated" by the catastrophe.
Obama used an Oval Office address on Wednesday to try to persuade Americans to embark on a "national mission" on clean energy and end a century-long addiction to fossil fuels.
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