BP Looking to Raise $50 Billion to Cover Gulf Oil Disaster Costs

June 21, 2010

British energy giant BP Plc is planning to raise $50 billion to cover the cost of the Gulf of Mexico oil spill, while the head of a $20 billion fund to compensate victims of the accident vowed Sunday that eligible claims will be paid quickly.

London’s Sunday Times reported that BP plans to raise $10 billion from a bond sale, $20 billion from banks and $20 billion from asset sales over the next two years to cover the costs of the largest oil spill in U.S. history. The newspaper did not cite its sources.

BP said last week that it would suspend dividend payments to its shareholders and increase the pace of asset sales to $10 billion this year.

The spill, which began after an April 20 explosion on an offshore rig that killed 11 workers, has caused an environmental and economic disaster along the U.S. Gulf Coast, harming the fishing and tourism industries while soiling seashores and marshes.

BP said Sunday that 21,040 barrels of oil (883,680 gallons/) leaking into the Gulf of Mexico was collected by its siphoning systems Saturday. One of the two systems was restarted on Saturday after a 10-hour shutdown to fix a problem on a piece of fire-prevention equipment, according to BP.

A large amount of oil continues to leak into the sea from the ruptured well a mile below the ocean surface despite the BP containment systems.

Kenneth Feinberg, the independent administrator appointed to run the $20 billion fund set up by BP to compensate victims for financial losses due to the oil spill, said he would make sure that “every eligible, legitimate claim is paid and paid quickly.”

Appearing on NBC’s “Meet the Press” program, Feinberg also rejected the complaint of a senior Republican congressman, Joe Barton, who said last week that the fund set up by BP under pressure from President Barack Obama amounted to a government “shakedown” of the company.

“I don’t think it helps to politicize this program,” Feinberg said.

Feinberg, an arbitration lawyer, dispensed hundreds of millions of dollars to victims of the Sept. 11, 2001 attacks on the United States, and was named last week to administer the BP compensation fund.

“This a voluntary program. No one is compelled to come into this fund,” Feinberg said.

But, Feinberg added, “I would urge everyone to come into this fund,” explaining the program would seek to provide relief within weeks while going to court could take years.


Feinberg said victims do not need a lawyer to file a claim with the fund and would retain the right to later sue the company.

“These emergency payments are without conditions,” Feinberg said, adding that he aims to “treat everybody fairly.”

The largest spill in U.S. history threatens the coastal economies of four states including hard-hit Louisiana. It has also severely dented the British energy giant’s finances and reputation and eroded Obama’s popularity.

So far, Louisiana’s wetlands and its fishing industry have suffered the worst damage from the spill and downcast fishermen say times are harder than in the aftermath of Hurricane Katrina, which battered the Gulf Coast in 2005.

After falling 6.8 percent last week, BP’s shares are down 26 percent so far in June, their worst month since the October 1987 market crash.

At Panama City, a popular Florida tourist destination, beaches remained open after clean-up crews removed tar balls from shore, authorities said. Even so, the sight is a worry for a state with an annual tourism industry worth $60 billion.

“The vast majority (of tar balls) disappeared with the tide. Our beaches are open and clean,” said Valerie Lovett, spokeswoman for Florida’s Bay County.

The White House criticized BP CEO Tony Hayward for taking time off from dealing with the leak’s consequences to watch a yacht race Saturday off the south coast of Britain.

Hayward spent time with his teenage son watching the yacht race around the Isle of Wight after almost two months away from home and family, BP spokeswoman Sheila Williams said.

(Additional reporting by Thomas Ferraro in Washington, Bruce Nichols in Houston and Victoria Bryan in London; Editing by Will Dunham and Paul Simao)

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