At first glance, the $20 billion “escrow account” BP has agreed to fund to begin to cover damage from the Gulf oil spill would seem like a major victory for President Obama. It certainly goes far beyond the federal government’s efforts after the Exxon Valdez. Still, unknowns and pitfalls abound.
One of the least noticed developments is the report that BP has retained Goldman Sachs and Blackstone Group as “financial advisers.” While in theory, these two Wall Street playerz perform a number of duties for clients, they are mostly known in these circumstances for their mergers and acquisitions work. As in, shopping BP to another oil company or trying to fend off a hostile bid (and how long before major BP institutional shareholders and the board rebel?).
Who would want a company saddled with a $20 billion initial obligation to the United States, and, according to a Credit Suisse estimate early this month, facing a tab of $37 billion for the cleanup? Nobody. Unless, of course, the cleanup liabilities were quietly shifted into segregated corporate subsidiaries while the highly profitable ($14 billion in 2009) remainder of the company was sold off.More