WASHINGTON (CN) - BP executives on Wednesday agreed to set aside $20 billion in an escrow account to pay claims for damages arising from the Gulf oil spill. "This is not a cap," President Obama said after meeting with the company's executives at the White House.
BP said it would direct an additional $100 million to oil rig workers who lost their jobs due to the 6-month moratorium on deepwater drilling in the Gulf. The company also said it would not make any more shareholder dividend payments this year and will cancel the first quarter dividend payment scheduled for June 21.
Obama said the fund provides "substantial assurance" to spill victims that their claims will be honored and sets up an independent claims process that will not be run by the federal government or BP.
Obama said federal officials and BP "mutually agreed" that the fund would be administered by Ken Feinberg, who ran the fund to compensate victims of Sept. 11. Any individuals or businesses that disagree with Feinberg's assessment may appeal their claims to a three-person panel, and then to federal court.
Under the agreement, BP can only appeal claims over $500,000.
BP says it has received 66,000 claims so far and answered 26,000, paying out $81 million using its own claims system, which has been criticized for being slow.
Under the new agreement, BP will pay $5 billion per year over the next four years into the fund, and will set aside $20 billion in U.S. assets to serve as insurance.
During a private, nearly half-hour meeting with BP Chairman Carl-Henric Svanberg in the Oval Office, Obama recounted stories of individuals whose livelihoods have been threatened by the spill in the Gulf and asked Svanberg to keep those individuals "uppermost" in his mind as he made business decisions.
Obama said the spill hit a region that had already been devastated by hurricanes Rita and Katrina as well as the economic recession. "This season was going to be the season where they were going to be bouncing back," Obama said.
He said that for many of the shrimpers and fishermen, the spill came at "the worst possible time," because the summer months are the time in which they make their income for the whole year. "A lot of these folks don't have a cushion," he said.
Obama said he was "absolutely confident" that BP could meet its obligations in paying for the spill. "BP is a strong and viable company and it is in all of our interests that it remain so."
Svanberg issued a public apology for the disaster. "I would like to take this opportunity to apologize to the American people on behalf of all employees of BP, many of whom are living on the Gulf Coast. I do thank you for your patience that you have in this difficult time," he said.
"I hear comments sometimes that large oil companies are greedy companies who don't care, but that is not the case in BP," Svanberg said, "We care about the small people." Svanberg, who is Swedish, became BP chair in January this year after serving as CEO of the Swedish telecom company Ericsson.
In paying claims, Svanberg said, "We mean what we say." He added, "We made it clear to the president that words are not enough. We will be judged by our actions."
During a press conference later that afternoon, White House officials were reluctant to disclose whether Obama got frustrated during the meeting. "His frustration was exhibited in the stories that he told," said White House press secretary Robert Gibbs.
"It was a business meeting," said White House energy adviser Carol Browner. "It was a focused business meeting."
The federal officials did say that the government directed BP to create the fund.
"Are you implying that the company would have done this on their own?" a reporter asked.
"No," Browner said firmly. Gibbs said the administration had been "directing them" concerning the fund.
"It is not a floor; it is not a ceiling," Browner said of the fund, "What this gives us is an assurance that small businesses claims will be met."
"All of the rights of the claimants have been preserved," she said. "The only people who have limited their rights here is BP."
During the meeting, BP discussed its plan to bring in shuttle tankers, not normally used in the Gulf, which will be connected to the containment cap with flexible hoses that can be detached in the case of a hurricane.
With the tankers, BP says it plans to increase its capacity for capturing oil from the gushing well to 53,000 barrels per day by the end of June and 80,000 barrels per day by the end of July.
BP says it plans to boost containment to 28,000 barrels per day by the end of the week.
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