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BP reportedly to raise $50 billion for spill

BP plans to raise $50 billion to cover the cost of the Gulf of Mexico oil spill, a London newspaper reported Sunday.
/ Source: staff and news service reports

BP Plc is planning to raise $50 billion to cover the cost of the Gulf of Mexico oil spill, a London newspaper reported Sunday, while the head of a $20 billion fund to compensate victims of the accident vowed that eligible claims will be paid quickly.

London's Sunday Times reported that BP plans to raise $10 billion from a bond sale, $20 billion from banks and $20 billion from asset sales over the next two years to cover the costs of the largest oil spill in U.S. history.

The newspaper did not cite its sources but said BP wants to raise the cash in order to avoid its credit ratings from being weakened further.

BP spokesman Andrew Gowers declined to confirm the report but did tell the Bloomberg news service that "we need to have an unusually strong cash position."

Moreover, BP said last week that it would suspend dividend payments to its shareholders and increase the pace of asset sales to $10 billion this year.

BP said on Sunday that 21,040 barrels of oil was collected by its siphoning systems on Saturday. One of the two systems was restarted on Saturday after a 10-hour shutdown to fix a problem on a piece of fire-prevention equipment, according to BP.

A large amount of oil continues to leak into the sea from the ruptured well a mile below the ocean surface despite the BP containment systems.

Exactly how much is still unknown. Rep. Ed Markey, D-Mass., on Sunday posted a BP document showing a worst case-scenario of 100,000 barrels per day — but only if the blowout preventer now restricting the flow was completely removed.

In another development, crews finished pouring cement Sunday morning on a section of metal casing lining one of two relief wells now at roughly 5,000 feet, said Mickey Fruge, BP’s wellsite leader aboard the drilling rig. When that cement is firm on Monday, the rig’s crew will keep extending the well.

Fund administrator weighs in
Kenneth Feinberg, the independent administrator appointed to run the $20 billion fund set up by BP to compensate victims, said Sunday that he would make sure that "every eligible, legitimate claim is paid and paid quickly."

Appearing on NBC's "Meet the Press" program, Feinberg also rejected the complaint of a senior Republican congressman, Joe Barton, who said last week that the fund set up by BP under pressure from President Barack Obama amounted to a government "shakedown" of the company.

"I don't think it helps to politicize this program," Feinberg said.

Feinberg, an arbitration lawyer, dispensed hundreds of millions of dollars to victims of the September 11, 2001 attacks on the United States, and was named last week to administer the BP compensation fund.

"This a voluntary program. No one is compelled to come into this fund," Feinberg said.

But, Feinberg added, "I would urge everyone to come into this fund," explaining the program would seek to provide relief within weeks while going to court could take years.

Feinberg said victims do not need a lawyer to file a claim with the fund and would retain the right to later sue the company.

"These emergency payments are without conditions," Feinberg said, adding that he aims to "treat everybody fairly."

The largest spill in U.S. history threatens the coastal economies of four states including hard-hit Louisiana. It has also severely dented the British energy giant's finances and reputation and eroded Obama's popularity.

So far, Louisiana's wetlands and its fishing industry have suffered the worst damage from the spill and downcast fishermen say times are harder than in the aftermath of Hurricane Katrina, which battered the Gulf Coast in 2005.

After falling 6.8 percent last week, BP's shares are down 26 percent so far in June, their worst month since the October 1987 market crash.

At Panama City, a popular Florida tourist destination, beaches remained open after clean-up crews removed tar balls from shore, authorities said. Even so, the sight is a worry for a state with an annual tourism industry worth $60 billion.

"The vast majority (of tar balls) disappeared with the tide. Our beaches are open and clean," said Valerie Lovett, spokeswoman for Florida's Bay County.

Some on the front lines say they are forced to fight two battles — one against the crude washing into lush wetlands and another against needless bureaucracy.

"My experience has been frustration, too much red tape, no sense of urgency. For the state and the coastal parishes that are directly affected to put forth a plan, you have to kick and scream every step of the way to get it approved," said John Young, council chairman for Jefferson Parish in Louisiana.

"The president said it's a war. I agree we're under siege, but if it was a war, we'd be occupied territory now."

It is time for the Obama administration to appoint an "oil spill czar" to streamline operations for the 31,000 people fighting the worst spill in U.S. history and avoid the costly delays, Young said as he prepared to board a boat to tour his region's fouled wetlands.

As a guide, many point to the arrival of U.S. Army Gen. Russel Honore in New Orleans following Hurricane Katrina in 2005. The tough-talking military man was credited with taking control and kick-starting the city's stalled rescue mission in the weeks after the storm.

Last week, the U.S. Coast Guard shut down 16 vacuum barges that were sucking up crude from Louisiana marshes. The units, which consist of trucks and tanks on barges that suck up thousands of gallons of crude, needed to be checked for stability and if they had life jackets and fire extinguishers.

Louisiana Gov. Bobby Jindal had asked officials to inspect them quickly without bringing them back to dock. But the units sat idle for 24 hours before being allowed to travel back to oil-fouled Barataria Bay, Bay Jimmy and Pass A Loutre.

After 24 hours, the barges went back to work, and according to media reports, no inspections were performed.

On Friday, the Coast Guard shut down two more barges, prompting Plaquemines Parish President Billy Nungesser to make an angry call the the White House, which ordered them back into operation, his office said.

'No streamlined system'
Jindal has blasted a lack of coordination between federal departments overseeing the fight and state and local officials waging it.

"It is frustrating because it doesn't seem like the left hand knows what the right hand is doing," he said recently. "There is no streamlined system here. This is why we keep stressing that we need to see more of a sense of urgency from the Coast Guard, federal officials and BP."

For its part, the Coast Guard said it supported the barge project, but had to ensure their safety.

The incidents followed a weeks-long effort by state and local officials to have a plan approved to construct sand berms to protect barrier islands from encroaching oil, an effort that is expected to cost $360 million.

Young said he supported a military-style chain of command where someone at the top has the power the make quick decisions putting response plans into action and making sure that crews have the equipment they need.

"Absolutely — one person. Maybe they need an escrow account for that. Get one military person who knows the chain of command to get things done, because this is a war-type situation," Young said. "We can't be deciding and executing by committee because it's just not getting done."