BP agrees to $20 billion fund for spill costs
NEW YORK (CNNMoney.com) -- BP has tentatively agreed to put $20 billion into an escrow account to cover costs related to the oil spill in the Gulf of Mexico, a senior White House official told CNN Wednesday.
The development comes as President Obama and top administration officials meet with BP executives, including chief executive Tony Hayward, in Washington to discuss the spill.
Obama is expected to make a statement later Wednesday.
BP has been under intense political pressure to ensure that it can cover all costs related to the spill, which has become the worst environmental disaster in US history, including cleaning up the mess and paying all claims of economic damage.
"We will make BP pay for the damage their company has caused," Obama said Tuesday in a televised address to the nation. The president said he would push BP on Wednesday to set aside "whatever resources are required" to deal with the harm caused "as a result of his company's recklessness."
A BP spokesman declined to comment on the fund.
Under the terms of the agreement, the $20 billion fund would not cap the amount BP is responsible to pay, according to administration official familiar with the negotiations.
In addition, the $20 billion figure could be revisited, the official said, adding that the fund may need to be replenished if there were more claims made for further damage.
Separately, an administration official confirmed to CNN that attorney Kenneth Feinberg, who served as Special Master of the 9/11 victims compensation fund, will oversee the fund.
BP (BP) has said repeatedly that it plans to pay all costs related to the spill. But the company has been criticized for not moving fast enough to process claims of economic damage filed by Gulf businesses impacted by the disaster.
In a June 14 letter, a coalition of Senators called on BP to establish a $20 billion fund "to be used for economic damages and clean-up costs" related to the spill.
Establishing the fund, the lawmakers said, would ensure "that there will be no delay in payments or attempts to evade responsibility for damages," adding that the fund would in no way limit BP's liability.
Analysts say it's too soon to say how much the spill could end up costing BP, but estimates have ranged between $11 billion and $60 billion on the low end, to upwards of $100 billion in the worst case.
Much depends on the amount of oil flowing from the well and whether BP is found guilty of gross negligence.
Reports from congressional committees and in the press have indicated BP chose cheaper, riskier drilling tactics in the lead-up to the disaster.
Meanwhile, government scientists on Tuesday increased their estimate of oil flowing into the Gulf by 50% to between 35,000 and 60,000 barrels per day. That translates into 1.5 million gallons to 2.5 million gallons per day.
Wednesday was the 58th day that oil has been spewing into the Gulf of Mexico.
However, documents released by a Senate committee Wednesday show that BP has already given some money to the government for spill-related costs.
BP transferred about $71 million in two separate transactions last week to the Coast Guard for clean up costs, according to the documents.
-- CNN's John King, Tom Dunlavey and Evan Glass contributed to this report.
