* Production payments held by new BP subsidiary
* Group says deal interferes with government investigation
* BP guaranteed future oil drilling to fund trust fund
By Tom Doggett
WASHINGTON, Aug 11 BP (BP.L) will use revenue
from its U.S. oil and natural gas production as collateral for
the $20 billion trust fund established to pay victims of the
Gulf oil spill, but one public advocacy group is worried the
deal makes the government too cozy with BP.
The government released on Wednesday the 40-page document
formally establishing the escrow fund, which requires the
company to contribute $5 billion this year and $1.25 billion
every quarter starting in 2011 through 2013.
To ensure BP will make those payments, the company will
give the trust fund first priority to the security interests in
its U.S. oil and and gas production. The production payments
from its current 149 Gulf of Mexico oil and gas wells will be
held and issued in a new BP subsidiary.
However, that arrangement has drawn the ire of the Public
Citizen advocacy group, which said it is a conflict of interest
for the government to become a partner with BP in future Gulf
oil and gas production.
The group sent a letter on Wednesday to President Barack
Omaha saying the deal would interfere with the Justice
Department's investigation of BP.
"A criminal investigation resulting in sanctions imposed
against BP -- including banning the company from federal leases
in the Gulf -- will be at odds with the government's agreement
to use BP's leases as collateral for the fund," the group
The group said the deal would also ensure BP had a "robust
presence in offshore drilling" even though the company has a
bad environmental and worker safety record.
"The administration might be less likely to address those
problems if it means the company can't continue its profitable
business-as-usual style," the group said.
(Reporting by Tom Doggett)