MARKET TALK: BP Escrow Account Sets Dangerous Precedent--Analyst

17th Jun 2010 17:37

[Dow Jones] BP PLC's (BP, BP.LN) agreement to set up a $20 billion escrow account to compensate victims of the massive oil spill in the Gulf of Mexico may have set a dangerous precedent that could have a significant impact not only on BP, but also on the energy industry and business in general, says Fadel Gheit, analyst at Oppenheimer & Co. The agreement, which does not cap BP's potential financial liabilities, forces the company to suspend dividends for three quarters and sell $10 billion of assets. "Many experts think the concessions are illegal, and may have set a dangerous precedent," Gheit says. However, BP agreement could reduce the political and financial pressure on the company, he adds. Gulf's spill resulted after Transocean Ltd's (RIG) Deepwater Horizon rig, which was leased by BP, exploded and sank in April. BP's shares are trading down two cents at $31.83. Contact us in New York at 212-416-2138 or [email protected] (END) Dow Jones Newswires June 17, 2010 12:37 ET (16:37 GMT)