BP Vows to Pay All Gulf Coast Oil Spill Damage Claims

April 30, 2010

BP Plc will compensate all those affected by an oil spill from one of its wells in the Gulf of Mexico, its chief executive said, accepting the disaster could hit plans to open new areas off the U.S. coast to drilling.

“We are taking full responsibility for the spill and we will clean it up and where people can present legitimate claims for damages we will honour them. We are going to be very, very aggressive in all of that,” Tony Hayward told Reuters in an interview on Friday.

The massive spill, which started when an oil rig caught fire and sank last week, washed up to wildlife refuges and seafood grounds on the Louisiana coast on Friday.

The cost to the fishing industry in Louisiana could be $2.5 billion while the impact on tourism along Florida’s Paradise coast could be $3 billion, Neil McMahon, analyst at investment firm Bernstein, said in a research note on Friday.

The spill could also hit President Barack Obama’s plans to open some offshore areas of the U.S. where oil exploration is currently barred, to drilling, Hayward said.

“There may be an industry issue around what may or may not be opened,” he said.

However the CEO hopes an effective response to the spill, including a flotilla of around 80 vessels and several aircraft, would reassure people about the risks from drilling.

“It would be bizarre to say it shouldn’t influence the debate. How the debate will come out, I think ultimately will be judged by the success we have in dealing with this incident”.

Regulations on drilling safety will also come under scrutiny, Hayward predicted.

“Rightly, there will be a reaction. Whenever you have something of this significance, it’s right that regulators should look very hard at what they can do to further ensure that something like this never happens again,” he said.

He said possible changes could relate to testing of equipment like the blow-out preventer on the ocean floor which failed to operate correctly and shut off the flow of oil, although he added it would be impossible to say how testing could be improved until the cause of the accident was known.

Failures of blow-out preventers are extremely rare and the equipment is regularly tested.

The scale of the disaster could also lead to changes in the rules on who is allowed to operate licences in the deeper waters of the Gulf of Mexico, analysts said.

The government could limit operating licences to larger companies, like BP, which have the deep pockets and operational capability to mount large cleanup operations.

(Reporting by Tom Bergin; Editing by Andrew Callus)

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