BP set to avoid US ban on drilling in Gulf of Mexico
BP has signed over six key Gulf of Mexico oil and gas assets as collateral for the $20bn (£12.6bn) compensation fund set up for victims of the Deepwater Horizon disaster, the oil giant revealed yesterday.
The move will be seen as good news for the company, with analysts pointing out that the US government would have been unlikely to sanction the arrangement if it planned to prevent BP from operating in the Gulf.
The fund, set up following angry meetings with President Obama, was launched with a $3bn contribution from BP, with another $2bn payment promised by the end of the year. The oil giant has then promised to make quarterly payments of $1.25bn to the fund until the end of 2013.
Yesterday, BP said the payments would come from revenues produced by six of its Gulf of Mexico assets, including its biggest field, Thunder Horse. "The value of the production [from these fields] will provide the fundsaccording to the schedule laid out."
Although BP would not comment on discussions it has held with the US government, it is understood the arrangement has been cleared with White House officials. That would suggest President Obama's administration does not expect to see legislation enacted in the US which would prevent BP continuing to operate in the Gulf, a ban that would jeopardise the revenues produced by the assets pledged.
The threat of such a ban has worried many investors in BP, which depends on the Gulf of Mexico for around 25 per cent of its total oil production. The House of Representatives hasalready passed legislation that would prevent oil companies found guilty of safety breaches from operating in the US – laws seen as being targeted at BP.
However, Robert Dudley, the new chief executive of BP, who took up his post yesterday, has moved quickly to try to restore the oil company's reputation, announcing a new safety unit within the business. BP hopes that having replaced its senior management, moved quickly on safety measures and provided funds for compensation, US anger towards it may begin to ease.
BP said yesterday the total cost to it of the spill has now risen to $11.2bn, up by $1.7bn in the past 11 days. Even so, Mr Dudley said this week he thought it likely the company would be able to restart dividend payments early in 2011.
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