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June 17, 2010    

BP shares up 9% as compensation fund unveiled

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by Kay Murchie
BP shares up 9% as compensation fund unveiled

BP shares have risen more than 9% this morning after it was revealed that a $20 billion (£13.5 billion) compensation fund for victims of the Gulf of Mexico oil leak is to be set up.

Details of the fund emerged late yesterday following talks at the White House after BP’s chief executive Tony Hayward and chairman Carl-Henric Svanberg, were summoned by US President, Barack Obama.

The fund is to be operated by Kenneth Feinberg - the lawyer who oversaw compensation after the 9/11 terrorist attacks.

Meanwhile, BP’s chairman, Mr Svanberg, has confirmed that dividends would not be paid for the remainder of this year.

This year’s first dividend payment of $2.6 billion was due next week, but has now been scrapped and this is the first time that BP has withheld the dividend since World War II.

The company’s dividend payment accounts for £1 in every £6 paid out to UK pension funds so this will come as a major blow to many.

“The BP board decided we will not pay any further dividends this year,” said Mr Svanberg. “Words are not enough. We understand we will and we should be judged by our actions.”

Mr Svanberg expressed regret over the spill, and said BP felt “sorrow and sadness for the tragic accident which should never have happened”.

Oil has been leaking into the Gulf after an explosion on a BP oil rig on 20 April, which left 11 workers dead.

Two days later, oil began to leak into the Gulf of Mexico from the damaged well and since that time, BP has been battling to contain the leak.

It managed to place a cap over the leaking oil pipe earlier this month, and is now collecting some of the oil.

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