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BP claims could be under $20 billion

By Aaron Smith, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) -- Total claims against BP could end up being less than the $20 billion the company pledged to set aside, according to incoming Chief Executive Robert Dudley.

A Citigroup (C, Fortune 500) report said that analysts met with Dudley, who told them "that given current estimates of claims the $20 billion Independent Claim Fund that BP established probably exceeds calls." BP confirmed the comments.

BP (BP) has pledged to set aside $20 billion to compensate businesses and individuals hurt by the worst offshore oil spill in history, stemming from the April 20 explosion of an offshore oil rig that killed 11 workers.

Dudley also said that BP's "eventual cost" from the disaster would probably total $32 billion, as the company had forecast earlier this year, according to the Citigroup note.

BP spokesman David Nicholas told CNNMoney.com that the $32 billion estimate includes the total cost of the disaster for BP - including claims as well as clean-up.

As for the claims, he said the $20 billion escrow fund is "neither a floor nor a ceiling." BP is not bound to pay $20 billion if the claims total less than that, he said, and the company would be required to pay more than $20 billion if the claims end up totaling more than that.

So far, the first payment of $3 billion has been made into the escrow fund, said Nicholas.

Dudley, an American, is the replacement for the maligned former CEO Tony Hayward. To top of page

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