BP agrees $28 billion spill claims fund.
President Barack Obama and BP have reached agreement on a $20 billion (NZ$28b) fund to compensate victims of the disastrous oil spill in the Gulf of Mexico, and the giant British company's chairman apologised to America for the worst spill in US history.
BP is suspending its dividends to shareholders to help pay for the costs, said chairman Carl-Henric Svanberg.
Obama announced the agreement after a four-hour meeting with BP officials.
He also said the company had agreed to set up a separate US$100 million fund to compensate oil rig workers laid off as a result of his six-month moratorium on deepwater drilling.
"The structure we are establishing today is an important step toward making the people of the Gulf Coast whole again, but it will not turn things around overnight," Obama said.
The claims system sets up a formal process to be run by a specialist with a proven record. Instead of vague promises by BP, there will be a White House-blessed structure with substantial money and the pledge that more will be provided if needed.
The news was applauded in the Gulf - a rare positive development in a terrible two-month period since the April 20 explosion that killed 11 workers and unleashed a flood of oil that has yet to be stemmed.
Company officials talked separately outside the White House.
Svanberg announced the dividend suspension and expressed sorrow for victims of the spill. "This tragic accident ... should have never happened," he said, and he also used the occasion to "apologise to the American people."
Obama said the independent fund will be directed by lawyer Kenneth Feinberg, who oversaw payments to families of victims of the September 11, 2001, terrorist attacks. There will be a three-member panel to adjudicate claims that are turned down.
"This is about accountability. At the end of the day, that's what every American wants and expects," Obama said.
BP would pay US$5 billion a year over the next four years to set up the US$20 billion fund.
"The people of the Gulf have my commitment that BP will meet its obligations to them," Obama said. "This $20 billion amount will provide substantial assurance that the claims people and businesses have will be honored."
He emphasised that the US$20 billion was "not a cap" and that BP would pay more if necessary.