BP guarantees US$20 billion for Gulf compensation

President Barack Obama wrested a US$20-billion compensation guarantee and an apology to the nation from British oil giant BP Wednesday, announcing the company would set up a major claims fund for shrimpers, restaurateurs and others whose lives and livelihoods are being wrecked by the oil flooding into the Gulf of Mexico.Obama had said he would make BP pay, and the company's chairman said after four hours of intense White House negotiations that BP was ready. The unending oil spill saga had yielded almost no good news before this. Creation of the fund to be run by an administrator with a proven track record is the first big success Obama has been able to give to Gulf residents and the nation in the eight weeks since the explosion, a period during which the spill has taken ever more of the public's attention, threatening anything else the president hoped to focus on or accomplish. Huge as the $20 billion seems, both Obama and London-based BP PLC said it was by no means a cap. The deal also adhered to what Obama had said was his non-negotiable demand: that the fund and the claims process be administered independently from BP. It won't be a government fund, either, but will be led by the administration's pay czar, Kenneth Feinberg, better known as the man who oversaw the $7-billion government fund for families of victims of the Sept. 11, 2001, terrorist attacks. The April 20 explosion of an offshore oil rig killed 11 workers and sent millions of gallons of crude spewing into the water from the broken well a mile below the ocean's surface, as much as 118 million gallons so far and still flowing. More wildlife, beaches and marshlands are fouled every day, jeopardizing not just the region's fragile ecology but a prized Gulf way of life that is built on fishing and tourism. On Wednesday, BP began burning oil siphoned from the ruptured well as part of its plans to more than triple the amount of crude it can stop from reaching the sea by the end of the month, the company said. It's the first time this particular burner has been deployed in the Gulf. Though the company hopes to install equipment soon to capture as much as 90 per cent of the escaping oil, the leak is expected to continue at least until relief wells are finished in August.