VietNam Business: spill

Wednesday, October 6, 2010

BP says oil spill costs hit $8 bln

LONDON – British oil giant BP said Friday that the devastating Gulf of Mexico oil spill disaster has cost about US$8 billion so far.

"The cost of the response to date amounts to approximately eight billion, including the cost of the spill response, containment, relief well drilling, static kill and cementing, grants to the Gulf states, claims paid and federal costs," BP said in a statement.

The April 20 spill was triggered when an explosion ripped through the Deepwater Horizon rig in the Gulf of Mexico, killing 11 workers and sinking the huge offshore platform two days later. The flow of oil into the sea was not fully stemmed until July 15.

BP has forecast that the worst environmental catastrophe in US history will cost the group a total of about 32.2 billion dollars, after pushing the group into a record 16.9-billion-dollar loss in the second quarter.

The company repeated on Friday that it had agreed in June to set up a 20-billion-dollar compensation fund for residents affected by the spill.

BP added that operations were underway to replace the Deepwater Horizon's damaged blowout preventer (BOP) -- a large piece of equipment that failed to stop the disaster.

On Thursday, the group had removed the massive cap which had stemmed the flow of oil from its ruptured well deep in the Gulf of Mexico in a key step toward killing the well once and for all, officials said.

The damaged BOP will be raised to the surface to be examined and held as evidence in an official investigation, following the removal of the cap.

The ruptured Macondo well was plugged with heavy drilling fluid and then sealed it with cement last month, but the so-called "bottom kill" operation to permanently seal the well was delayed until the blowout preventer is replaced.

The "bottom kill" involves intercepting the crippled well with a relief well, which then pumps heavy drilling oil and cement into the oil well to permanently plug it.

BP said Friday that the replacement of the blowout preventer will "allow operations to complete the relief well to resume".

The company hopes that the relief well will reach the damaged well by around mid-September, depending on weather conditions.

In early morning trade on Friday, the company's shares rose 0.51 percent to 394.60 pence.

However, BP's share price has collapsed as a result of the disaster, shedding about 40 percent in value since the explosion on April 20.

The catastrophe also sparked the resignation of BP chief executive Tony Hayward in July

Hayward was forced out following a string of gaffes as the public face of the firm in its battle to stop oil leaking into the Gulf of Mexico.

Friday, September 3, 2010

Compensation czar takes charge of $20 bln BP fund

Kenneth Feinberg, administrator of the BP Deepwater Horizon Disaster Victim Compensation Fund, testifies before the House Commerce, Trade, and Consumer Protection Subcommittee hearing on ''The BP Oil Spill And Gulf Coast Tourism'' on Capitol Hill in Washington in this July 27, 2010

Photo: Reuters

A $20 billion compensation fund for economic victims of the BP Gulf oil spill opens for business on Monday amid accusations that the rules established by its administrator are unfair.

Kenneth Feinberg who will run the fund said those who sustained financial loss because of the spill could claim for damages and he promised claimants more generous treatment than they would get if they sued the energy giant for damages.

"The goal here is to try and explain to eligible claimants: 'It is not in your interest to tie up yourself and the courts in years of uncertain protracted litigation when ... there is a more efficient quick alternative'" Feinberg told a news conference on Sunday.

"The goal will be to pay any individual claim within 48 hours of the claim being finalized and seven days for any business claim," he said.

BP set up the fund in June under pressure from the White House to come up with a remedy for the losses sustained in the fishing, tourism and other industries on the Gulf of Mexico coast because of the leak that began in April and was capped in July.

Feinberg was named its administrator because of the reputation for fairness he acquired administering the 9/11 fund and determining executive pay for companies bailed out by the government during the recession.

But the spill fund may provide an even tougher challenge, according to insurance experts who said calculating claims for businesses would be particularly difficult.

For the next six months, anyone claiming an emergency payment can also sue BP at a future date but beyond that period claimants would forfeit the right file against the company, Feinberg said.

The position is controversial. Florida's Attorney General Bill McCollum issued a statement last week saying the ruling favors BP and weakens provisions advocated by state attorney generals along the coast.

'Less generous'

"The current process appears to be even less generous to Floridians than the BP process. Such an outcome is completely unacceptable," McCollum said in a statement.

In his defense, Feinberg said the idea for the cut-off point was his rather than BP's.

"I am beholden to neither the administration nor BP. I am entirely independent," Feinberg said, adding that entry into the compensation process was voluntary.

He said no decision had been taken on whether people who claimed after the six-month window would be able to sue other companies involved with the rig that exploded April 20, killing 11 workers and triggering the spill.

So far, BP has paid $375 million in compensation, Feinberg said, though that money was separate from the $20 billion.

Even so, a flood of new claimants were expected to hit the 35 offices set up in the five coastal states of Texas, Louisiana, Mississippi, Alabama and Florida when they opened for business.

Claimants could also apply by mail and online at www.gulfcoastclaimsfacility.com.

VietNam Business