Obama gets tough on oil spill

15 June 2010 - 00:38 By Sapa-AP
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US president Barack Obama was to go back to the Gulf of Mexico last night, this time venturing on to new ground tainted by oil, before speaking to Americans about what he's seen in the afflicted states.



Before the start of two-day trip to Mississippi, Alabama and Florida yesterday, the White House announced Obama would order BP to establish a major victims' compensation fund.

When he returns to Washington Obama will use his first Oval Office speech as president to address the catastrophe.





BP said in a statement yesterday its costs for responding to the spill had risen to $1.6-billion (R12-billion), including new $25-million grants to Florida, Alabama and Mississippi.

This also includes the first $60-million for a project to build barrier islands off the Louisiana coast. The estimate does not include future costs for damage lawsuits already filed.



Obama's first three trips to the Gulf took him to the hardest-hit state, Louisiana. Yesterday, day 56 since BP's leased Deepwater Horizon drilling rig exploded and unleashed oil into the Gulf, he was to fly to Gulfport, Mississippi.

From there he would travel along the coast to Alabama, where oil was washing up in heavy quantities along the shores on Sunday in the eastern part of the state.







The administration said early yesterday that BP had responded to a letter sent at the weekend asking the company to speed up its ability to capture the spewing oil.



In its response, BP said it would target containing more than 8million litres of oil a day by the end of June, from about 2.4million litres of crude a day now. The government's high-range estimates say 8million litres a day could be billowing from BP's damaged well.



Though BP is now siphoning off significant quantities of oil from its well 1500m below the ocean's surface, the leak will not be stopped until relief wells are finished in August.





Tomorrow, Obama will convene his first meeting with BP Plc executives, expected to include the company's much-criticised CEO Tony Hayward.

The president will tell company officials he expects them to establish a multi-billion-dollar compensation fund for people and companies damaged by the spill, administered by an independent panel. He said he would use his legal authority to ensure BP complies, White House officials said.

The board of BP was due to discuss US demands yesterday to suspend dividend payments to shareholders until it pays for the clean-up of the Gulf of Mexico oil spill.



BP has a number of options regarding dividend payments and analysts believe the company is unlikely to scrap it. It can also defer it, pay it into shares or pay it into a ring-fenced account.



Any decision is not expected to be announced immediately.

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