BP agreed on Wednesday to pay 20 billion dollars into a fund to meet mounting oil spill claims, as US President Barack Obama won key concessions from company bosses in high-stakes talks.
Flanked by somber looking BP executives on the White House steps, chairman Carl-Henric Svanberg said no more shareholder dividends would be paid this year as the company meets the bill from the Gulf of Mexico disaster.
The Swede insisted BP did care about the "small people" most affected by America's worst environmental disaster and in a surprise move announced it would set up a 100-million-dollar foundation to help unemployed rig workers.
"We have made clear from the first moment of this tragedy that we will live up to all our legitimate responsibilities," a conciliatory Svanberg said, adding that compensation claims would be handled "swiftly and fairly."
"We will look after the people affected, and we will repair the damage to this region, the environmental damage to this region and to the economy."
The British energy giant will pay into the escrow account over the next four years, and it will be overseen by prominent lawyer Kenneth Feinberg, who managed compensation claims by victims of the September 11, 2001 terror attacks.
A panel of three judges will hear appeals of Feinberg's decisions over the fund, which is designed to meet the claims of all individuals and businesses harmed by the spill.
"BP has agreed to contribute 20 billion dollars over a four-year period at a rate of five billion dollars per year, including five billion dollars within 2010," a White House statement said.
"This account is neither a floor nor a ceiling on liability," the statement said, adding BP would not seek to take advantage of the 75-million-dollar federal liability cap for oil companies.
The announcements represented a major victory for Obama, who has been under fire over his handling of the disaster, which has raised questions about his leadership and threatened to damage his presidency.
Reading a statement moments before BP bosses exited the White House, the president stressed that 20 billion dollars was not a cap for the company's liability, but was quick at the same time to try to reassure investors.
"I'm absolutely confident BP will be able to meet its obligation to the Gulf Coast and to the American people. BP is a strong and viable company and it is in all of our interests that it remain so."
But the scale of the company's financial woes was hinted at by an announcement Wednesday from chief financial officer Byron Grote that it planned to offload 10 billion dollars of assets.
Analysts said BP, which has already spent some 1.6 billion dollars battling the spill and made a profit of around 14 billion dollars in 2009, should be strong enough financially to weather the storm even if it has to borrow more.
"Regardless how the payments mechanically happen, BP has the financial strength to fund it," said Jason Gammel of Macquarie Research. "They have enough cash flow and quality assets that will allow it to fund that type of liability."
US experts estimate between 35,000 and 60,000 barrels of oil a day are still spewing into the waters off the Louisiana coast, after an April explosion sank an exploratory deepwater drilling rig operated by BP.
A massive slick is now threatening the coastlines of four southern US states, and has crippled the fishing and tourist industries -- vital economic lifelines for the region.
BP is currently containing an average of 15,000 barrels a day of oil, which is now being siphoned up to two processing ships on the surface, but hopes to increase that significantly in the coming weeks.
The leak is not expected to be permanently capped until August, when one of two relief wells being drilled is complete.
Svanberg attended Wednesday's talks with BP chief executive Tony Hayward, along with a battery of lawyers from both the British energy giant and the US Justice Department and US administration. But White House officials said there was no mention of any Justice Department investigation into the spill.
The meeting came the day after Obama used an Oval Office address to the nation to try to persuade Americans to embark on a "national mission" on clean energy and end its century-long addiction to fossil fuels.
Oval Office speeches are normally reserved for the nation's most somber moments such as the announcement of war.