BP agrees to $20B fund; chairman apologizes

[Bucktail]

By BEN FELLER, Associated Press 6/16/10

WASHINGTON – After intense negotiations, BP on Thursday bowed to President Barack Obama's demand for a $20 billion fund to compensate victims of the disastrous oil spill in the Gulf of Mexico. The humbled chairman of the giant British company apologized to the American people for the horrendous accident.

BP is suspending its dividends to shareholders for the rest of this year to help pay for the costs, said chairman Carl-Henric Svanberg.

Obama announced the agreement after a four-hour meeting between White House and BP officials, with the president participating for various portions.

He also announced the company had agreed to set up a separate $100 million fund to compensate oil rig workers laid off as a result of his six-month moratorium on deepwater drilling.

"The structure we are establishing today is an important step toward making the people of the Gulf Coast whole again, but it will not turn things around overnight," Obama said. He said the vulnerable fishermen, restaurant workers and other people of the Gulf "are uppermost in the minds of all concerned. That's who we're doing this work for."

Likewise, Svanberg, speaking for a company that has been assailed from every corner for the past two months, said, "I hear comments sometimes that large oil companies are — are greedy companies or don't care, but that is not the case in BP. We care about the small people."

After an initial 20-minute session at the beginning of the meeting, Obama and Svanberg met privately in the Oval Office for about 25 minutes, said White House spokesman Robert Gibbs. The president did not meet separately with Tony Hayward, BP's outspoken CEO whom the president has suggested he would fire if he could.

White House energy adviser Carol Browner said the meeting began with "an apology" from Svanberg. "It was not something we asked for." She said during the long meeting "there were sticking points. We had to take breaks at times. There were times when each side wanted to just talk among themselves."

The claims system sets up a formal process to be run by lawyer Kenneth Feinberg, who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks. Instead of vague promises by BP, there will be a White House-blessed structure with substantial money and the pledge that more will be provided if needed.

"This is about accountability. At the end of the day, that's what every American wants and expects," Obama said.

The news was applauded in the Gulf — a rare positive development in a terrible two-month period since the April 20 explosion that killed 11 workers and unleashed a flood of oil that has yet to be stemmed.

Company officials spoke outside the White House after the meeting.

Svanberg announced suspension of the next quarterly dividend — totaling about $2.6 billion and scheduled for June 21 — and said the company would not declare any dividend for the rest of the year.

And he expressed sorrow for victims of the spill. "This tragic accident ... should have never happened," he said, and he also used the occasion to "apologize to the American people."

BP is to pay $5 billion a year over the next four years to set up the $20 billion fund.

Obama emphasized that the $20 billion was "not a cap" and that BP would pay more if necessary.

BP's total potential liabilities, including cleanup costs, victims' compensation and civil fines, are breathtaking to consider and could stretch into tens of billions of dollars above the $20 billion fund.

Also, civil penalties can be levied against the company under a variety of environmental protection laws, including fines of up to $1,100 under the Clean Water Act for each barrel of oil spilled.

The $20 billion amounts to somewhere between $169 and $313 per gallon of oil spilled so far, based on calculations that the federal government has made. So far, the oil spill has dumped between 63.8 million and 118.4 million gallons into the Gulf.

The eight-week disaster in the Gulf, with oil still pouring from the broken well, is jeopardizing the environment as well as the livelihoods of tens of thousands of people across the coastal areas of Louisiana, Mississippi, Alabama and Florida.

BP has taken the brunt of criticism because it was the owner of the well and was leasing the Deepwater Horizon rig that sunk. But when the day of reckoning finally comes, BP may not be the only one having to pay up. That's because Swiss-based Transocean Ltd. owned a majority interest in the rig. Anadarko Petroleum, based in The Woodlands, Texas, has a 25 percent non-operating interest in the well.

Word of the fund was well received on the Gulf Coast. Applause broke out during a community meeting in Orange Beach, Ala., when Mayor Tony Kennon announced the agreement.

"We asked for that two weeks ago and they laughed at us," Kennon said. "Thank you, President Obama, for taking a bunch of rednecks' suggestion and making it happen." Obama visited Orange Beach on Monday.

In Washington, Senate Majority Leader Harry Reid, D-Nev., also sought to take some credit. "While this fund will in no way limit BP's liability, it is a good first step toward compensating victims," he said. Reid and other Senate Democrats proposed a $20 billion BP-financed fund earlier in the week.

Feinberg, the official who will direct the effort, is currently known as Obama's "pay czar," setting salary limits for companies getting the most aid from a $700 billion government bailout fund. He also ran the $7 billion government compensation program after the 2001 terrorist attacks. It was a job that lasted nearly three years as he decided how much families should get, largely based on how much income victims would have earned in a lifetime.

As pay czar, Feinberg has capped cash salaries at $500,000 this year for the vast majority of the top executives at the five major companies that received bailout funding: American International Group, GMAC Financial Services, Chrysler Financial, Chrysler and General Motors.

The president met at midday with the top BP leaders to press the London-based oil giant to pay giant claims.

Wednesday's White House meeting came the morning after Obama vowed in a TV address that "we will make BP pay for the damage their company has caused."

Obama said that during his private conversation with the BP chairman, he stressed that "for the families that I met with down in the Gulf, for the small business owners, for the fishermen, for the shrimpers, this is not just a matter of dollars and cents, that a lot of these folks don't have a cushion."

When the chairman is talking to shareholders or is in meetings in the BP boardroom, Obama said he told Svanberg, the BP leader should "keep in mind those individuals, that they are desperate, that some of them, if they don't get relief quickly, may lose businesses that have been in their families for two or three generations. And the chairman assured me that he would keep them in mind."

An Associated Press-GfK poll released Tuesday showed 52 percent now disapprove of Obama's handling of the oil spill, up significantly from last month and about the same as President George W. Bush's rating after Hurricane Katrina. Most people — 56 percent — think the government's actions in response to the oil disaster really haven't had any impact on the situation.

[Hotrod]

This is good news.  Good job Oboma in stepping up

[Capt. Carl]

yeah thats great...now how about getting someone in there to shut the damn thing off and worry about a "fund" down the road?

[Hotrod]

Looks lime in 3 weeks the relief well will be done.  then they fill it with mud and that's suppose to stop it..

[Hunter 2]

This spill is a disgrace.

[DT]

I Think you all are missing some vital points here. BP was NOT in control of the oil rig when it blew...AMERICANS WERE. BP was not drilling at the time of the disaster...AMERICANS were...BP was NOT in attendance when a AMERICAN engineer ordered the flooding of the drill pipe with SALT WATER during the operation of drilling dispite  being told it would counter act operational safety. When and if BP end up in court and the report and actions of the AMERICAN drill engineer both show that AMERICAN mistakes are to blame, then things will go up in smoke PDQ. But we all know this won't happen, and why not?.

WEll you see both Transocean and Halliburton have out standing contracts in IRAQ and world wide. While transocean are dreading the fact that if they are seen to be at fault( and The US goverment are doing their best to protect both companies) they stand to lose some 20B in exploration and  operational contracts and would most likely suffer a total failure of the company. Halliburton are the ones who would lose out big time, with contracts in IRAQ, Kuwait, to name but two going to EUROPEAN COMPANIES instead. This along with the fact  grtnHalliburton have some 7 to 14B in arms deals linked to the afore mentioned Countries it isn't hard to see why Mr Obama is keen to blame BP. Keep the blame on BP, let American Companies pick up the pieces and score points against EUROPEAN  buisnesses and leave one of the biggest Oil producers open to an AMERICAN take over....SIMPLE really


.....Now we have four members of the senate playing the Lockerbie card. This dispite the fact the US Goverment was notified of the SCOTTISH law courts order to set the man free.Why have they reopened questioning the order, well seems Obama is on a mission to punish the UK, UK buissnes for the Colonial years of British rule in Kenya. Wide an  speculative?? Not really when  ntsObama himself said not to long ago that his family suffered as a result and he wished he could have done something about it.... and now he has the chance. We hear alot about the UK doing Buissness in Libya after the Lockerbie disaster, Perhaps the US goverment can explain to it's people why, if Libya is on their black list AMERICAN COMPANIES are doing deals in ARMS, OIL, and EXPERTISE in Manufacturing and heavy Industry? AND STILL DO TODAY....And I'll leave you to work out which AMERICAN Company is involved there the most....Ohh for those who can't work it out there is a clue just above.

Halliburton stand most to gain from BP's demise along with the Contracts for Arms and support oil exploration and the most to lose......

BP owned the License to drill, but the RIG, the Drilling, The Managment, the Personell, the operation proceedures were ALL AMERICAN, and its the AMERICANS who are running away for the fact THEY Are responsible for the disaster.They along with BP should take up the baton and take responsiblity for the clean up and the blame. But yet again we see a one sided blame game from the US.

 For me I had to tell what I knew about all this, for you who have suffered I can only offer my wishes and thoughts. We need oil to survive, but you all needed your livelyhoods to feed your families, to earn a living, you are all the carers of your shores and the life it contains and that is gone for the most part. I truely hope you all recover and continue in your lives the way you have before, and your well being and family remain safe and at heart to you all.

Blame is a two edged sword often brandished at random by the misinformed and ignorant at those who know no better.

[DT]

Well It would seem I was proved right.....AMERICAN companies are doing more in Libya than BP, well in fact more than any other country in fact. Must hard to take when your own US  Goverment is two faced and untrustworthy. So stop the BP Bashing and sort your own liars and two face money grabbing fat cats in the senat out....

Hypocrisy of U.S. oil firms who deal with Gaddafi

Politicians in Washington have been accused of hypocrisy for their criticism of Britain and BP over links to Libya.

It turns out that American energy companies have been leading the charge when it comes to forging links with Colonel Gaddafi's regime.

Since Libya re-opened for business in 2005, US oil giants such as Exxon Mobil and Chevron have been piling in to stake their claim for Africa's largest oil reserves.

More than 50 American energy companies, compared to just four from the UK, have signed contracts with Tripoli for oil exploration and invested tens of billions of pounds in the country.

Experts said pursuing such an agenda while criticising British companies that do the same thing shows America wants to 'have its cake and eat it'.

Exxon, the world's largest oil company, has set up a special subsidiary, Exxon Mobil Libya Ltd, to keeping business running smoothly.

So keen is the petro-chemical giant to get on the right side of the authorities, it is even funding £18million of initiatives to educate impoverished children as part of a countrywide social responsibility drive.

All Western companies left Libya in the late 1980s after the U.S. and EU imposed trade sanctions on Gaddafi's regime, which they said sponsored terrorism.

The restrictions were lifted in 2005 and American energy companies have not looked back since, not least because Libya has proven crude-oil reserves of 39billion barrels and estimates potential reserves may be triple that amount. 'American companies-have been piling in to Libya with the support of the U.S. government,' said Phil Flynn, an oil analyst with Chicago-based PFG Best.

'The US wants to have its cake and eat it - it wants it both ways.

'Libya has the ninth largest oil reserves in the world right now and could well be a major player in the international oil market in the future.'

Exxon and Chevron have signed exploratory deals with Libya, while ConocoPhillips, Hess, Marathon and Occidental have invested small fortunes in the country and have begun production.

Relations between Washington and Tripoli improved further that year when Gaddafi agreed to pay £1.2billion to settle all the compensation claims related to the Lockerbie bombing.

By 2009, trade between the two nations reached £17billion.

Fadel Gheit, a senior analyst at Oppenheimer & Co, said: 'Since Libya was opened up to foreign investment in 2005, American companies have had the lion's share of contracts and the biggest representation in the country.

'There are 50 energy companies in the U.S. compared to four in the UK and all have been involved in Libya.'

An American oil industry veteran who worked in Libya for 19 years added: 'Surely these senators were not and are not aware of what goes on in the outside world.

'Perhaps they don't know that American oil companies and their associates are still very heavily involved in Libya.'