BP agrees to 20-billion-dollar oil spill fund
WASHINGTON (AFP) Ã¢â‚¬â€œ BP on Wednesday agreed to pay 20 billion dollars into an independently run fund to meet the spiralling costs of the Gulf of Mexico oil disaster, bowing to tough demands from President Barack Obama.
The deal was revealed as top executives from the British energy giant met at the White House with Obama to discuss the crisis, which has triggered the nation’s worst environmental disaster.
Both sides were armed with legal teams, after Obama vowed to make BP pay for its “recklessness” which triggered the massive spill.
A source with knowledge of the deal confirmed to AFP that BP had bowed to Obama’s demands to set the money aside in the fund, adding it would be overseen by prominent lawyer Kenneth Feinberg.
Feinberg managed the compensation fund for victims of the September 11, 2001 terror attacks.
“We’re going to use every device, legal device, at our disposal if necessary,” senior White House advisor David Axelrod said earlier on CNN.
BP initially declined to confirm whether it would agree to set up an escrow fund to meet the thousands of compensation claims pouring in from the stricken southern states.
The New York Times reported BP would pay in the 20 billion over several years, after Obama warned Americans that the country was fighting an “epidemic” which could take years to control.
US experts now estimate between 35,000 and 60,000 barrels a day is spewing into the waters off the Louisiana coast, after an explosion in April sank an exploratory deepwater drilling rig operated by BP.
The massive slick is threatening the coastlines of four southern US states, and has crippled the fishing and tourist industries — vital economic lifelines for the region.
Obama said in a national address Tuesday that he would tell BP chairman Carl-Henric Svanberg “to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company?s recklessness.”
Svanberg attended Wednesday’s talks with BP chief executive Tony Hayward, along with a battery of lawyers from both the British company and the US Justice Department and US administration.
Just hours before, British Prime Minister David Cameron said while BP was not “running away” from its responsibilities, it had to be assured it would not be landed with claims which were nothing to do with the spill.
“While it is important that they pay reasonable claims — BP accept this themselves — they do need a level of certainty,” Cameron told BBC radio.
“This is BP’s worry, the (need for a) level of certainty that there won’t be claims entertained that are three, four times removed from the oil spill,” he added.
He sought to offer reassurances that the crisis facing the United States would not damage ties between London and Washington.
“The important thing is this should not become an issue between the US and the UK. President Obama doesn’t want that, I don’t want that,” he said.
BP is currently containing an average of 15,000 barrels a day of oil, which is being siphoned up to a processing ship on the surface via a mile-long pipe.
The company announced Wednesday that a second ship, the Q4000, had now been attached to the Deepwater Horizon’s failed blow-out preventer valve, so oil and gas can be carried up to the surface where it will be burned off.
US officials hope the two containment systems will allow BP to capture between 20,000 to 28,000 barrels of oil a day. And Obama said he hoped by the end of the month some 90 percent of the spill would be contained.
But the leak is not expected to be permanently capped until August, when one of two relief wells being drilled is complete.
Obamas’s speech, delivered from the Oval Office which is normally reserved for the most somber moments in national life such as the announcement of war, followed a three-state tour of the disaster zone.
Obama stressed the disaster highlighted the need for a new energy policy based on renewable sources of power.
“We cannot consign our children to this future. The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now.”
The House of Representatives has already passed an energy reform bill, but the legislation faces stiff Senate opposition after a bipartisan effort to pilot it through the chamber before mid-term elections in November collapsed.