October 1, 2010 / 10:20 AM / 10 years ago

BP pledges Gulf of Mexico oil fields to spill fund

LONDON (Reuters) - BP, which faces U.S. opposition to drilling for oil in the Gulf of Mexico, named fields there that it will use to help finance its $20 billion fund for victims of the worst oil spill in U.S. history.

A logo is seen at a BP fuel station in London July 27, 2010. REUTERS/Toby Melville

The oil major on Friday said it would channel revenue from a number of its fields in the Gulf, including Thunder Horse, Atlantis and Mad Dog, into its compensation fund.

“It’s quite a clever thing that BP’s done which is, here are our deep water Gulf of Mexico assets, and we’re pledging overriding royalties as collateral which should suggest to the U.S. administration not to in any way meddle with these facilities,” said Seymour Pierce analyst Alan Sinclair.

There have been concerns that the U.S. could ban BP from future drilling after lawmakers in July voted to pass an amendment to a bill that would prevent BP from acquiring new exploration leases after the blow-out at its Macondo well in April.

A BP spokesman declined to comment on whether the move means the U.S. government has told BP, or the company expects, it will not be banned from future drilling.

Shares in BP gained 2.9 percent to 440 pence at 7:02 a.m. EDT on Friday, their highest level since early June, outperforming Britain’s blue-chip index, which was up 0.6 percent and slightly ahead of the European index of oil and gas companies which was up 2 percent.

Another analyst, who did not wish to be named, noted that BP is planning to sell $30 billion of assets and said the deal between Chinese refiner Sinopec and Spanish oil major Repsol, announced earlier could be driving market optimism on asset prices.

“Repsol’s got a very good price for some of its assets today so maybe people are getting hopeful on that,” he said.

BP also said on Friday that the total bill for fighting the spill and compensating victims hit $11.2 billion by September 29, rising from $9.5 billion on September 18.

The pledging of the assets is in line with the terms of the fund set out in August, when BP agreed to give the fund first priority to some oil revenues to finance its $5 billion contribution this year and the $1.25 billion every quarter from 2011 to 2013.

Additional reporting by Tom Bergin; Editing by Erica Billingham

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