BP Agrees to $20 Billion Fund to Compensate Oil Spill Victims
Tom Diemer
Correspondent
Posted:
06/16/10
The Obama administration and BP tentatively agreed Wednesday that the oil company would set aside $20 billion in an independently run fund to compensate victims of the oil spill in the Gulf of Mexico.
President Obama met at the White House with BP CEO Tony Hayward and other company executives to work out details of the escrow fund. But the New York Times said the deal would give BP several years to deposit the full amount so the oil giant could manage its cash flow and keep its financial viability. The fund would be run by Kenneth Feinberg, who administered the 9/11 victims fund, sources told the newspaper.
The talks were complicated because BP's ultimate liability cannot be estimated while the deep-sea well continues spewing oil into Gulf waters -- tens of millions of gallons in the worst spill in U.S. history. The company has already spent more than $1 billion, the Times said, on containment of the oil, cleanup and claims from fisherman, oil workers and the U.S. Coast Guard.
The well, nearly a mile beneath the surface, blew out after an April 20 rig explosion that killed 11 workers. It is still leaking, although some of the oil has been contained.
Following the White House meeting, BP's chairman, Carl-Henric Svanberg, announced the company would not pay any further dividends this year. He also apologized to the American people. "What has been clear today is that this administration and our company are fully aligned in our interest of closing this well, cleaning the beaches, and care for those that are affected," he said.
Svanberg said he heard comments "sometimes that large oil companies are really companies that don't care, but that is not the case (at) BP. We care about the small people," ABC News reported.
President Obama met at the White House with BP CEO Tony Hayward and other company executives to work out details of the escrow fund. But the New York Times said the deal would give BP several years to deposit the full amount so the oil giant could manage its cash flow and keep its financial viability. The fund would be run by Kenneth Feinberg, who administered the 9/11 victims fund, sources told the newspaper.
The talks were complicated because BP's ultimate liability cannot be estimated while the deep-sea well continues spewing oil into Gulf waters -- tens of millions of gallons in the worst spill in U.S. history. The company has already spent more than $1 billion, the Times said, on containment of the oil, cleanup and claims from fisherman, oil workers and the U.S. Coast Guard.The well, nearly a mile beneath the surface, blew out after an April 20 rig explosion that killed 11 workers. It is still leaking, although some of the oil has been contained.
Following the White House meeting, BP's chairman, Carl-Henric Svanberg, announced the company would not pay any further dividends this year. He also apologized to the American people. "What has been clear today is that this administration and our company are fully aligned in our interest of closing this well, cleaning the beaches, and care for those that are affected," he said.
Svanberg said he heard comments "sometimes that large oil companies are really companies that don't care, but that is not the case (at) BP. We care about the small people," ABC News reported.