BP has promised a £13.5 billion compensation fund for victims of the Gulf oil spill disaster, to cover personal injury, clean up expenses for Gulf Coast agencies and other related claims but pressure is still mounting on the huge multinational oil company to do more to face up to its responsibilities along the Gulf Coast.
The BP compensation fund announcement follows a meeting with US President Barack Obama, the BP Board quickly revealing its enormous compensation package of measures which follow the Deepwater Horizon oil spill which has devastated the Gulf Coast of the United States.
The Gulf Coast, the Southern US coastlines on the Gulf of Mexico including the states of Texas, Louisiana, Mississippi, Alabama and Florida, is still facing ongoing pollution from the oil disaster with no idea when the leak will be stopped.
The agreement reached to create a £13.5 billion ($20 billion) claims fund over the next three and a half years comes as pressure mounts on BP in the US, BP’s CEO Tony Hayward receiving a seven hours grilling by the US congress committee on the disaster.
The congressional grilling saw the committee chairman Henry Waxman accusing BP of “complacency” and Mr Hayward personally of “stonewalling” the congressional enquiry.
BP will initially make compensation payments from the compensation fund of $3 billion in 2010 and then $2 billion in 2010. These will be followed by a payment of $1.25 billion per quarter until a total of $20bn has been paid.
While BP’s compensation fund is building, BP’s commitments will be assured by the setting aside of US assets with a value of $20 billion.
The idea is that the level of assets will decline as cash contributions are made to the compensation fund.
The BP compensation fund will be available to satisfy legitimate claims, including personal injury claims, and include natural resource damages and US state and local response costs. Fines and penalties will be excluded from the BP compensation fund and paid separately. Payments from the compensation fund will be made as they are adjudicated whether by the Independent Claims Facility (ICF) or by a relevant court or as agreed by BP.
The ICF will adjudicate on all Oil Pollution Act, tort claims excluding all US federal and state claims.
Any money left in the fund once all legitimate compensation claims have been resolved and paid will revert to BP.
BP CEO Tony Hayward said: “From the outset we have said that we fully accepted our obligations as a responsible party. This agreement reaffirms our commitment to do the right thing.
“The President made it clear and we agree that our top priority is to contain the spill, clean up the oil and mitigate the damage to the Gulf coast community. We will not rest until the job is done.”
BP says the fund does not represent a cap on its liabilities but will be available to satisfy any legitimate claims.
BP is set to announce more details on the compensation fund for personal injury and associated expenses in due course.
The oil spill in the Gulf of Mexico followed an explosion and fire aboard Transocean’s Deepwater Horizon drilling rig on April 20 this year.
The rig was drilling 130 miles South East of New Orleans when 11 died in the immediate aftermath of the disaster.
The angry backlash and disastrous PR impact of the Louisiana oil spill has combined with the huge financial losses incurred by BP to turn the affair into a commercial nightmare for BP, the fourth largest company in the world.
The disaster has led to a plummeting of BP shares and massive pressure on BP’s CEO Tony Hayward to stand down.
The pressure on the multinational BP and its leader now continues with congressional committee members accusing BP of cutting corners in order to get the well into operation.
A recurring theme of BP CEO Mr Hayward’s personal testimony at the congressional hearing was that he was not personally involved in decisions relating to the construction of the Louisiana well.
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