BP, BP Exploration & Production, BP latest, David Nagell, Deepwater Horizon, Gulf Oil Compensation, Gulf oil disaster, Gulf oil spill, Law, Media, obama, Politics, President Obama, THe BP escrow account, The economy
Now according to the papers the most important thing that happened in the gulf lately has been the explosion this week of Mariner Energy platform. There has been no loss of life – thankfully- but this hasn’t stopped the cries for a stop to drilling.
Its bad certainly, spectacular undoubtedly, but the real news down in the Gulf is that BP are playing a blinder.
Remember in my posting about “Gulf Oil Spill : The vultures circle” I said it would get interesting? Well it sure has. And, from a previous life in law I have to admire the style of this – it is simply stunning.
BP has now fired a broadside across Congress that if they pass legislation that bans BP from any new offshore drilling permits in the Gulf of Mexico, which if you recall seemed to be the way the administration was moving in a move to punish BP, its been made quite clear the US will not get the compensation. Not a brass nickle.
“If we are unable to keep these fields going, that is going to have a substantial impact on our cash flow” said David Nagell BP’s Executive Vice President for BP American. “That makes it harder for us to fund these”
Which is pretty blunt.
And the Americans ain’t got their money yet have they? Now I bet you thought that BP had already given over the whole of the $20 billion compensation into that escrow box slipped safely underneath Barak Obama’s bed. I couldn’t blame you if you did, as the actual details were never made very clear. All they actually have is $3 billion which is hardly small potatoes but is nowhere near what was promised, or is needed.
Remember how stridently Obama bestrode the world on June 15 “We will make BP pay for the damages….This fund will not be controlled by BP…BP will pay for the impact this spill has had on the region.” Remember especially that bit about the fund not being controlled by BP.
He allowed himself to be seen leading the negotiations to wrest the money from the grip of BP
Obama making the deal.
The Huffington Post has said that the linkage of the leases to drill in the gulf with payment of the compensation is “extortion”. Hardly, this is good old American hardball and someone in the American administration has taken his eye off the ball a treat.
So how did this all happen?
Well, the voluntary agreement negotiated with the Department of Justice was NOT with the British based multinational company, nor even with BP America. Remember how I had warned that the way BP is constructed is of a series of smaller interlocking independent companies? The Department of Justice, for reasons that are not clear, and which they are not expanding on, chose to deal instead with a small far away and remote subsidiary called BP Exploration & Production (BPEC) based in Delaware which operate the Gulf leases. This is where this David Nagell comes from.
Not a great publicist he is not well known, so in the interests of the readers here is a picture of him at Capitol Hill.
David Magell Ex VP of BP speaking to a reporter as he leaves a closed briefing on Capitol Hill May 4, 2010 after brifing legislators on the oil spill in the Gulf of Mexico
BPEC only has money from Gulf drilling leases, and so if Congress does shut down that stream of revenue there simply will be nowhere else to get the money needed to pay compensations. After all the Americans chose to deal exclusively with BPEC so they cant go looking elsewhere. Obama has got himself trapped by Nagell.
And BP is now in full control of the compensation.
Now, like you, I thought Obama smarter than that. So maybe he is stupid and so too is the Department of Justice. So this was an own goal an unforced error, or perhaps in light of just how much Obama’s Presidential campaign was funded by BP, it’s a recognition of who funds ya baby?
Is it interesting yet?
Copyright David Macadam 2010