BP has finally made an initial $3 billion deposit to the Gulf of Mexico oil spill compensation fund. The company said it would make an additional $2 billion deposit in the fourth quarter.
According to a report in The Wall Street Journal, BP and the Obama administration are also close to a deal to use future revenues from the company’s Gulf of Mexico operations to guarantee the $20 billion fund.
Under an agreement it reached with the Obama administration earlier this summer, BP is supposed to put $5 billion a year over the next four years into an account to pay for spill-related costs, such as claims, environmental restoration and cleanup costs. The fund is to be administered by Ken Feinberg, the Washington, D.C. lawyer who oversaw the 9/11 victims compensation fund.
BP was supposed to make an initial deposit to the fund by September 30. But according to the Journal, the company chose to make an early deposit to “show its commitment to restoring the livelihoods of people affected by the worst offshore oil spill in history.”
On Monday, the company and the Justice Department announced they had completed talks to establish the fund, according to the Journal. Discussions continue, however, on how BP will guarantee its remaining obligation of $17 billion. The administration is seeking security in the form of collateral in the event that BP couldn’t meet its obligation due to financial or legal problems.