New York:
BP's embattled chief executive, Tony Hayward, prepared to tell Congress on Thursday that he was "deeply sorry" for the oil disaster in the Gulf of Mexico, seeking to demonstrate that he and the oil giant understood the enormity of the spill's environmental, economic and human toll.
Mr. Hayward has faced withering criticism for his response to the spill, and was expected to receive another onslaught of anger as he testified before the House panel later Thursday morning.
"People lost their lives; others were injured; and the Gulf Coast environment and communities are suffering," Mr. Hayward said in prepared remarks to be delivered to the House Energy and Commerce Committee. "This is unacceptable, I understand that, and let me be very clear: I fully grasp the terrible reality of the situation." (
Read: Transcript of BP chief Tony Hayward's speech)
His appearance before the Congressional panel comes one day after President Obama announced that BP would create a $20 billion fund to pay damage claims to thousands of fishermen and others along the Gulf Coast. BP also said it would suspend dividend payments to shareholders.
In prepared remarks, Mr. Hayward offered deep contrition, but few answers to the pressing questions stemming from the explosion aboard the Deepwater Horizon offshore rig, and the two-month oil spill.
"How could this happen?" Mr. Hayward said in the statement. "How damaging is the spill to the environment? Why is it taking so long to stop the flow of oil and gas into the Gulf?"
He goes on to say: "We don't yet have answers to all these important questions."
The $20 billion fund announced on Wednesday will be administered by Kenneth R. Feinberg, the lawyer and mediator who ran the fund for victims of the Sept. 11 attacks and has emerged as a troubleshooter on issues like executive compensation and resolving claims for asbestos and Agent Orange victims.
While acknowledging that oil is likely to continue spewing from the well for perhaps months to come, Mr. Obama was able to throw something of a lifeline to desperate coastal residents worried about meeting payrolls, mortgages and shrimp boat payments.
Under the famous portrait of a charging Theodore Roosevelt on horseback, administration and company officials haggled over last details in an extraordinary White House meeting that went more than four hours, double the time scheduled, and was punctuated by breaks as each side huddled separately. Finally, participants said, Mr. Obama sealed the deal in a private, 25-minute session with BP's chairman, Carl-Henric Svanberg.
"This is not just a matter of dollars and cents" for a region upended by the spill, Mr. Obama, who returned Tuesday from a fourth tour of the coast, said he had told Mr. Svanberg.
"I emphasized to the chairman," he said, "that when he's talking to shareholders, when he is in meetings in his boardroom, to keep in mind those individuals -- that they are desperate, that some of them, if they don't get relief quickly, may lose businesses that have been in their families for two or three generations. And the chairman assured me that he would keep them in mind."
Mr. Svanberg, looking somber as he left the White House, confirmed to waiting reporters that the president seemed "frustrated because he cares about the small people." But he added: "People say that large oil companies don't care about the small people. But we care. We care about the small people."
The "small people" comment set off an immediate uproar in the blogosphere and elsewhere from people who said it showed BP's indifference to those harmed by the spill. A BP spokesman called the remark a "slip in translation" by Mr. Svanberg, who is Swedish. Later Wednesday Mr. Svanberg apologized, saying he was "very sorry" he had spoken "clumsily."
"What I was trying to say -- that BP understands how deeply this affects the lives of people who live along the gulf and depend on it for their livelihood -- will best be conveyed not by any words but by the work we do to put things right for the families and businesses who've been hurt," he said in a statement.
Mr. Svanberg said the BP board, which met in emergency session on Monday in advance of the White House meeting, had agreed not to pay further dividends to shareholders this year. Faced with mounting criticism of his company, including from within the oil industry, he denied reports that BP had taken safety shortcuts on the Deepwater Horizon rig, where an April 20 explosion killed 11 workers and set in motion the leak that Mr. Obama has called the worst environmental disaster in American history.
Still, Mr. Svanberg said he wanted to "apologize to the American people on behalf of all the employees of BP."
The resolution of both the $20 billion fund, to be held in escrow, and the looming controversy over as much as $10.5 billion in dividends BP had been prepared to pay out provided the first triumphal moment for Mr. Obama since the disaster. Weeks of bad news about failed attempts to plug the well and ever-increasing estimates of how much oil was leaking were creating a political crisis for a president who had promised to restore competence to government.
The agreement, by settling much uncertainty about BP's ultimate liabilities, also gave the company a boost on Wall Street. After the announcement, markets regained ground lost earlier in the day and finished the day mixed. BP shares, which had been down as much as 4.6 per cent, closed up 1.4 per cent, or 45 cents, to $31.85.
Mr. Obama's announcement and subsequent information from the White House and BP was in effect a response to some critics, including normally supportive commentators, who had faulted him the night before for being short on specifics about the disaster in his first address to the nation from the Oval Office.
Nonetheless, as the administration also disclosed this week, new government reports suggest that oil is gushing at far greater volume than many had thought, as much as 60,000 barrels a day. BP does not yet have the capacity to capture that much oil in ships stationed above the leak, a mile down on the ocean floor.
So, as Mr. Obama acknowledged, the crisis continues. But the president said the escrow fund "will provide substantial assurance that the claims people and businesses have will be honored."
"It's also important to emphasize this is not a cap," Mr. Obama said. "The people of the gulf have my commitment that BP will meet its obligations to them."
He said that the fund would not preclude individuals or states from pressing claims in court, and that it would remain separate from BP's liability for the damages to the environment.
In the discussions between the administration and BP, one sticking point was settled by the company's agreement to "voluntarily" -- as the president put it -- establish a separate $100 million fund to compensate oil rig workers left jobless by Mr. Obama's six-month moratorium on all deep-water drilling. That moratorium, which the president said would stay in place until a study of what went wrong with the BP well was concluded, has been a subject of much complaint from affected coastal residents.
While Interior Secretary Ken Salazar and other administration officials have repeatedly said that BP is liable ultimately for compensating laid-off oil workers, the company adamantly opposed open-ended responsibility for all of those laid off, including employees of other big oil companies, as a result of the government moratorium.
"We made clear we do not think this is a liability of the company," said Jamie Gorelick, a former deputy attorney general in the Clinton administration who now represents BP. "The president said he's concerned about those workers. He asked if this was something we could do as a voluntary gesture."
She said the two sides had not discussed whether the $100 million fund meant that the White House would refrain from pressing BP further on behalf of those idled by the drilling moratorium.
The fund will be created over four years, at $5 billion a year. It is backed by the collateral of $20 billion in company assets in the United States. Though it is a significant hit for any company, the phase-in is intended give BP enough breathing space to manage its cash flow. BP said it would raise money by reducing spending programs and selling $10 billion in assets over the next month. Last year, BP generated profits of $17 billion.
Mr. Feinberg will segue into his new role as the fund administrator, perhaps setting up shop in Louisiana, just as he is nearing the end of his stint as the government's "pay czar" overseeing executive compensation at the nation's biggest banks, a post created in response to public outrage at bankers' bonuses after the financial bailouts of recent years. Besides serving as special master for the Sept. 11 Victim Compensation Fund, he helped in cases involving compensation for victims of illnesses related to asbestos and to Agent Orange chemical poisoning, among many others.
The claims process will be independent of BP and the government. Claimants who are rejected will be able to appeal to a three-person panel. BP can appeal only claims exceeding $500,000, unless Mr. Feinberg decides otherwise, said Carol M. Browner, a White House energy official.
The escrow agreement was hailed in Congress, where some Democrats in recent days had called for such a fund and for legally blocking BP dividends. Senator John McCain, Republican of Arizona, typically one of Mr. Obama's most vocal critics, called it "a step in the right direction."
Along the Gulf Coast, many residents were relieved but skeptical at the news.
In Louisiana, Clint Guidry, acting president of the Louisiana Shrimp Association, said, "What Obama's talking about sounds O.K." But, he said, "You have to remember: we went through federal programs after Katrina, Gustav, Rita and Ike, and we're still fighting over that money."