TPT September 2010

G lobal M arketplace

Prices for iron ore rose about 90% in the April-June quarter, according to the German Steel Federation. Salzgitter, the German steel maker that holds 50% of Europipe, told its shareholders in June that it will not make any money on the second of two tenders for the Nord Stream link under the Baltic because of higher input costs. “We can’t take all the risk,” Europipe CEO Michael Graef told Nicholas Comfort of Businessweek at the pipe maker’s Muelheim headquarters. “We’re close to concluding an agreement with a large pipeline operator on a price-adjustment clause.” (“Europipe Nears Landmark Accord on Cost Risks,” 23 June)

Cleaning up the thick layers of oil on local beaches

With the spill of oil into the Gulf of Mexico apparently contained, a preliminary look at the BP compensation effort

Good news was in short supply for almost three months after the 20 April explosion on the Deepwater Horizon rig in the Gulf of Mexico, and the sinking of the rig on 22 April. But on 17 July a BP vice-president, Kent Wells, said in a conference call with reporters, “We’re watching every piece of data. We feel more comfortable that we have integrity.” When Mr Wells spoke, no oil had visibly leaked out of the British company’s blown-out Macondo well since a new cap was sealed two days earlier; and, he said, the pressure in the well was high enough to confirm a tight seal. Urged by US President Barack Obama, BP executives agreed to create a $20bn spill-response fund to help pay for cleanup and claims. In what might be termed a breather between the capping of the well and a full reckoning of the effects of the largest oil spill in US history, BP’s early remediation effort in the affected areas of the Gulf Coast is of some interest. The information that follows is abstracted from the article “Where BP’s Money Is Landing,” written by Amy Schoenfeld and published in the New York Times on 2 July: › Since May, BP has paid just under a third of the more than 90,000 claims it has received from businesses that rely on the Gulf for their revenue, with the cheques totalling more than $144mn. About 80% of the payments have gone to self-employed workers. Fewer large businesses have been compensated because their claims are more complex and take longer to process; › So far, payments have been fairly small, averaging about $2,500 a month for a deckhand or $5,000 for a fisherman. BP estimates that about 13,000 people are receiving pre-payments, often 30 days in advance; › The total bill is sure to grow exponentially, with more than 2,000 applications coming in each day. In addition to the $20bn pledged toward cleanup and administrative costs, BP has also set aside $100mn to assist oil rig workers who cannot find work because of the US moratorium on drilling in the Gulf; › Even so, federal, state, and local officials say the BP cheques have been too small, and the company has not disbursed money

quickly enough. Lawmakers say they are also concerned that the system of tracking claims has not been transparent. BP says it is doing the best it can to keep up with the sheer volume of claims, which it says it could not have anticipated when it wrote the first cheque on 3 May. “I’m not sure anybody in this kind of situation meets all expectations, but we’re trying,” Patricia Wright, a BP spokeswoman, told the Times . › Lawmakers expressed optimism that improvements would come in August, when Kenneth R Feinberg, the lawyer known for handling compensation claims for the victims of the 9/11 terrorist attacks on American soil, takes over BP’s claims system. Ms Schoenfeld wrote, “Mr Feinberg, who was selected by the Obama administration and BP and will be paid by BP, will work closely with a team already contracted by the oil company. The group consists of some 950 claims adjusters in 35 offices across the region.” She noted that one of Mr Feinberg’s biggest challenges will be to determine the eligibility of people requesting compensation for indirect effects of the spill. At a Congressional hearing the previous week, a legislator from Georgia asked Mr Feinberg how he would compensate homeowners for depressed real estate values along the shores of the Gulf. Mr Feinberg responded, “On the one hand, those people are suffering. They deserve some help. On the other hand, there’s not enough money in the world to pay every homeowner wherever they live on the Gulf Coast who says my property is down because of the oil spill.” Dorothy Fabian , Features Editor (USA)

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S eptember 2010

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