BP’s declaration that it would set up a $20 billion fund to pay for the damage arising from the Deepwater Horizon oil spill disaster was widely seen as concession forced by a tough talking White House. However, an article in today’s Wall Street Journal says the oil company may have dodged an even bigger hit.
The WSJ says that BP won important concessions in negotiations with President Obama’s team:
BP successfully argued it shouldn’t be liable for most of the broader economic distress caused by the president’s six-month moratorium on deep-water drilling in the Gulf of Mexico. And it fended off demands to pay for restoration of the Gulf coast beyond its pre-spill conditions.
Crucially, while BP offered up $100 million for oil workers in the Gulf who have been forced off work by a drilling moratorium, this amount is nowhere near the total cost of the moratorium. “You won’t find many lawyers who will say when the government imposes a moratorium, it’s the company’s obligation to help the workers impacted,” an unnamed BP source told the paper.
More Deepwater Horizon news
A Deepwater Horizon rig worker has told the BBC that he identified a leak in the oil rig’s safety equipment weeks before the explosion.
Large and small donations flowed in Monday evening as dozens of celebrities answered phones for Larry King’s telethon to help the people of the U.S. Gulf Coast suffering from the oil disaster.
BP admitted on Tuesday that the Deepwater Horizon oil rig explosion was a “major setback at a key frontier”, acknowledging that the financial consequences for the company would be “severe”.
Top executives from BP, Transocean and other oil firms have warned against over-regulating deep sea oil drilling.
Image: NASA satellite image of the Gulf from 19 June / Rebecca Lindsey/NASA’s Earth Observatory/NASA Goddard Space Flight Center