UPDATE:US: BP Must Pay Royalties On Oil, Gas From Gulf Well

15th Jul 2010 00:46

(Updates with comments from BP spokesman.) By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The Obama administration said Thursday that BP PLC (BP, BP.LN) must pay royalties on oil and gas collected from the broken well in the Gulf of Mexico--including royalties on lost or wasted oil if it is determined that negligence contributed to the spill disaster. The new head of the Interior Department's offshore-drilling oversight agency put BP on notice in a Thursday letter. The letter was described in a statement distributed by the Interior Department. "BP is required to report immediately" all "oil and gas-related activities associated with the Macondo well," Bureau of Ocean Energy Management, Regulation and Enforcement Chief Michael Bromwich wrote. He said that by law, BP also "is required to pay royalties immediately for all oil and gas captured from the Macondo well." He added that BP faces potential liabilities for royalties on lost or wasted oil, citing provisions in the Federal Oil and Gas Royalty Management Act and BP's lease. A BP spokesman said that the company has already agreed to pay 18.75% in royalties on oil collected from the Macondo well, and will donate net revenues to the National Fish and Wildlife Foundation. He declined to comment on potential royalties owed on lost or wasted oil. -By Siobhan Hughes, Dow Jones Newswires; (202) 862-6654; [email protected] (END) Dow Jones Newswires July 15, 2010 19:46 ET (23:46 GMT)