Compensation for Oil Spill Victims is Tied to BP’s Drilling Success
The Wall Street Journal reports today that BP and the federal government are nearing the end of talks on a plan to ensure that the embattled oil company can fulfill its commitment to put $20 billion in an escrow account to compensate oil spill victims.
As Sarah Laskow noted yesterday, BP put an initial $3 billion into the escrow fund. Now, the federal government is orchestrating an agreement with the company that would require the company to use revenues from its future offshore drilling projects for the fund.
According to the Journal:
Under the latest negotiations, BP would use production payments from its producing Gulf wells as collateral for the fund, and would provide quarterly production updates to the government. The collateral requirements would be reduced as BP pays money into the fund.
But the Journal also notes that this new agreement between the government and BP would “give both sides an incentive to continue production in the Gulf, scene of the U.S.’s worst-ever offshore oil spill.” In other words, in order for oil spill victims to be adequately compensated by BP, the company must continue to drill in the Gulf of Mexico, the very thing that led to the oil spill in the first place.