Monday, November 29, 1999

Obama meets BP execs, demands special spill fund

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WASHINGTON/VENICE, La.(Reuters) - President Barack Obama confronted BP Plc on Wednesday with a demand that it set aside billions of dollars to pay damages from the Gulf of Mexico oil spill, the worst in U.S. history.BP executives, including Chairman Carl-Henric Svanberg, CEO Tony Hayward and BP U.S. boss Lamar McKay, filed into the West Wing of the White House just before 10 a.m. ET (1400 GMT) for talks with Obama, their first since the crisis began.The meeting came a day after Obama, in a televised address to Americans, accused BP of recklessness and the U.S. government massively increased its estimate of the flow rate from BP'S ruptured deep-sea well.The talks were expected to last two hours but Obama was not due to stay the whole time, a White House official said.An April 20 explosion on an offshore rig owned by the British energy giant killed 11 workers and ruptured a deep-sea well. The ensuing spill has fouled 120 miles (190 km) of U.S. coastline, imperiled multibillion-dollar fishing and tourism industries and killed birds, sea turtles and dolphins.Obama wants BP to establish an independently managed fund to guarantee it will cover the billions of dollars needed to clean up the 58-day-old spill and compensate affected individuals and businesses.On recent visits to the U.S. Gulf coast, Obama has heard complaints from residents that the claims process is too long and complicated and that BP is paying out too little money.For full coverage, click an INSIDER TV report, click GRAPHICS, click White House has been careful not to say how much it thinks BP should pay into the special fund, but some U.S. lawmakers have called for $20 billion to be paid.There has been much debate over whether the Obama administration can legally force the company to set up such a fund, also known as an escrow account. The White House has been in talks with BP to discuss a mutually acceptable framework.The BP executives were accompanied by the company's legal counsel Rupert Bondy and noted Washington lawyer Jamie Gorelick, a former deputy attorney general in the Clinton administration.The White House team included: White House counsel Bob Bauer; Larry Summers, one of Obama's top economic advisers; Coast Guard Admiral Thad Allen, the administration's point man for the crisis; Attorney General Eric Holder; and a number of other Cabinet members.Setting the tone for what could be a strong message to BP, Obama said in his televised speech on Tuesday he would tell BP to set aside "whatever resources are required" to compensate the workers and business owners harmed by the spill."And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party," Obama said.'GET IT STOPPED'Obama, who has faced criticism from some people that he has appeared to be detached in his handling of the crisis, was due to make a statement at 12:15 p.m. ET (1615 GMT) on the oil spill.Residents of Venice, Louisiana, one of the Gulf Coast communities hardest hit by a ban on Gulf coast fishing, said they wanted Obama to get tougher with BP."He's got to tell them to man up and do what they've got to do to get it stopped and get it cleaned up," said Jan Moreau, whose husband is a shrimper in Venice.Underscoring concerns in Britain that Obama is trying to increase BP's potential liabilities for the spill, British Prime Minister David Cameron said BP was eager to face claims arising from the spill but it should not have to pay any that are too far removed from the disaster.Cameron is under intense domestic pressure to stand up for BP, which many Britons perceive is being treated too harshly by the U.S. administration to the detriment of British pension funds and other investors with big stakes in BP."While it's important that they (BP) pay reasonable claims, and BP accept this themselves, they do need a level of certainty, and this is BP's worry, that there won't be claims entertained that are three or four times removed from the oil spill," Cameron said during a BBC radio phone-in program.James Guiang, senior portfolio manager at Millennium Global Natural Resources Fund, said BP needed to cut a deal with Obama. "Whenever you go up against a government, you're not going to win," he said.BP STOCKShares in BP, which have lost nearly half their value since the spill began, closed down 1.46 percent in London and dropped as much as 5 percent in morning trade in New York before rebounding at midday.The cost of insuring BP debt against default rose after rating agency Fitch downgraded BP's rating by six notches on Tuesday. Dutch bank ING said it expected other agencies to follow suit.Fitch said on Wednesday BP had a large enough war chest to cover the clean-up costs of the spill and defended its downgrade of BP's rating, saying the company faced a number of uncertainties.As BP tries to rebuild its battered image with investors worried about how much the spill is going to end up costing, it continued to wrestle with the oil spill in the Gulf.It started up a second system to siphon oil from its gushing leak early on Wednesday, a day after a team of U.S. scientists raised their high-end estimate of the amount of crude oil flowing from its well by 50 percent to between 35,000 and 60,000 barrels per day.The new containment cap system is intended to increase overall collection capacity to 28,000 barrels a day from around 15,000 a day now. The company is drilling relief wells that it hopes will definitively halt the spill in August.(Additional reporting by Matt Spetalnick and Patricia Zengerle in Washington, Estelle Shirbon and Tom Bergin in London and Kristen Hays in Houston; Writing Ross Colvin; Editing by Will Dunham)
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