BP will initially make payments of $3bn in the third quarter of 2010 and $2bn in the fourth quarter of 2010. These will be followed by a payment of $1.25bn per quarter until a total of $20bn has been paid in.
While the fund is building, BP’s commitments will be assured by the setting aside of US assets with a value of $20bn. The intention is that this level of assets will decline as cash contributions are made to the fund, the company said.
The fund will be available to satisfy legitimate claims including natural resource damages and state and local response costs. Fines and penalties will be excluded from the fund and paid separately. Payments from the fund will be made as they are adjudicated, whether by the Independent Claims Facility (ICF) or by a court, or as agreed by BP.
The ICF will adjudicate on all Oil Pollution Act and tort claims excluding all federal and state claims. Any money left in the fund, once all legitimate claims have been resolved and paid, will revert to BP. The fund does not represent a cap on BP liabilities, but will be available to satisfy legitimate claims.
As a consequence of this agreement, the company has reviewed its dividend policy. BP said that notwithstanding its strong financial and asset position, the current circumstances require its board to be prudent and it has therefore decided to cancel the previously declared first quarter dividend scheduled for payment on June 21, and that no interim dividends will be declared in respect of the second and third quarters of 2010.
