BP Plc Chairman Carl-Henric Svanberg and Chief Executive Officer Tony Hayward arrived at the White House this morning for a meeting with President Barack Obama and his senior advisers intended to hammer out a plan for compensating Gulf Coast residents.
The Obama administration doesn’t expect BP to agree to any compensation fund that would undermine the company’s viability, a White House official said today.
The official, who spoke on condition of anonymity, said the administration expects to make progress on settling issues related to setting up an escrow fund to cover cleanup costs and claims stemming from the Gulf of Mexico oil spill. Obama wants the claims handled by an independent third party.
Obama planned to attend the meeting for about 20 minutes at the start and is scheduled to make a statement from the Rose Garden at 12:15 p.m. Washington time.
Svanberg and Hayward were accompanied by Lamar McKay, president of BP America Inc., Robert Dudley, BP managing director, and company lawyers. Among the administration officials in the meeting are Lawrence Summers, head of the National Economic Council, Bob Bauer, chief lawyer to the president, and Carol Browner, the president’s adviser on energy and climate change.
BP fell $1.55, or 4.9 percent, to $29.85 at 10:48 a.m. in New York. It has fallen 50 percent since the April 20 explosion aboard the Deepwater Horizon drilling rig that killed 11 workers and trigger the oil spill.
David Axelrod, Obama’s senior adviser, said today there is no limit on the compensation fund.
“There’ll be no upward cap there,” Axelrod said on NBC’s “Today” show. “If they owe more money, they’ll have to pay more money. This is not a get-out-of-the-situation-free card.”
At issue is the size of the fund, the naming of a person to administer it and whether BP shareholders would have to approve the transfer of money required for the account, according to people familiar with the situation, who asked not to be identified describing the private talks.
“We believe we have the authority to compel” creation of a compensation fund administered by a third party, Axelrod said on NBC.
Obama said in a nationally televised address yesterday from the Oval Office that he will inform Svanberg “that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness.”
Senate Majority Leader Harry Reid, a Nevada Democrat, has suggested that BP set aside $20 billion for the fund.
BP has spent about $1.6 billion on containing and cleaning up the spill so far. The London-based company’s spending for cleanup and liabilities may reach $40 billion, Standard Chartered Plc estimated last week.
BP’s payments accounted for about 14 percent of all dividends in the U.K.’s FTSE 100 stock index last year. Fitch Ratings yesterday lowered BP’s credit rating by six grades to BBB, two levels above junk, on concern that costs will escalate.
BP had $5 billion of cash available, $5.25 billion of credit lines it hadn’t used and another $5.25 billion of stand- by bank facilities, the company said in an investor conference call June 4. Fitch said yesterday it expects BP’s lenders to let the company use the credit lines if needed.
BP generated $27.7 billion in cash flow from operations last year and posted profits of $6 billion in the first quarter. Capital spending will total about $20 billion, the company said in a strategy presentation.