BP Ties Compensation Fund to Gulf Coast Drilling Revenues
The Huffington Post is reporting the oil giant BP appears to have structured its $20 billion compensation fund so that it will only be solvent if the company continues profiting from oil drilling in the Gulf of Mexico. The US government’s agreement establishing the fund isn’t with BP or even BP America, but with a subsidiary called BP Exploration & Production, or BPEC, which operates BP’s Gulf oil leases. Vested with BPEC, the compensation fund could presumably fold in the event BPEC stops generating revenue from its Gulf operations. The structuring also could increase BP’s leverage in ensuring a continued Gulf presence, should it come under challenge. In a statement, the watchdog group Public Citizen called the arrangement "wildly inappropriate," adding, "It will give the government a financial incentive to become an even bigger booster of offshore oil drilling in the Gulf—the fatal flaw of the Minerals Management Service at the time of the BP disaster."