BP has agreed to set up a $20-billion fund to cover the cost of claims filed by individuals and businesses harmed by the oil spill in the Gulf of Mexico, U.S. President Barack Obama said Wednesday.

BP Chairman Carl-Henric Svanberg speaks to reporters outside the West Wing of the White House in Washington on Wednesday. BP Chairman Carl-Henric Svanberg speaks to reporters outside the West Wing of the White House in Washington on Wednesday. (Jim Young/Reuters)"This $20-billion amount will provide substantial assurance that the claims people and businesses have will be honoured," Obama told reporters after a four-hour meeting with BP executives at the White House that started shortly after 10 a.m.

Despite its size, the amount "is not a cap," Obama stressed. "The people of the Gulf have my commitment that BP will meet its obligations to them."

The fund "will make sure that the right people will get the right money at the right time," BP chairman Carl-Henric Svanberg told reporters after the meeting.

BP chairman Carl-Henric Svanberg said Wednesday the company will not pay any further dividends this year as it sets up the $20-billion US escrow account.

The company will contribute $5 billion a year over four years, beginning with $5 billion in 2010.

It will provide assurance for these commitments by setting aside $20 billion in U.S. assets, the White House said.

BP stock closed up 45 cents, or 1.4 per cent, at $31.85 US on the New York Stock Exchange. The shares hit a 14-year low of $29.20 on June 9 and have lost half their value since the blowout on April 20.

"We will look after the people affected and we will repair the ... environmental damage to [the] region and to the economy," Svanberg said.

Then Svanberg, who until Wednesday had remained almost out of sight during the crisis, offered what many had waited weeks to hear: an apology.

"I would like to take this opportunity to apologize to the America people," he said. "Through our actions and commitments, we hope that over the long term we will regain the trust that you have in us.

"We care about the little people," the Swedish-born Svanberg said before leaving.

The fund will be managed by an "impartial, independent third party," Obama said, specifically Ken Feinberg, who administered the compensation fund for the victims of the 9/11 attacks.

Clean up efforts

Obama and Svanberg, along with other senior White House and BP officials, also discussed cleanup efforts.

The Transocean Deepwater Discoverer drilling rig, center, and other support vessels operate over the site the Deepwater Horizon oil spill, on Sunday in Gulf of Mexico. The Transocean Deepwater Discoverer drilling rig, center, and other support vessels operate over the site the Deepwater Horizon oil spill, on Sunday in Gulf of Mexico. (Eric Gay/Associated Press)The president said he ordered BP to "mobilize additional technology and equipment" to clean up the spill, emanating from a broken wellhead on the bed of the Gulf of Mexico off the coast of Louisiana.

BP is trying to capture most of the oil with a containment dome placed over the top of the wellhead and draw it to a barge on the water's surface 1,500 metres above.

The containment efforts are expected to capture up to 90 per cent of the oil "in the coming days and weeks," Obama said, adding the problem would not be fixed entirely until BP finishes a relief well, likely in August.

For its part, BP tried to assure the American people that it is a willing partner in both the cleanup efforts and claims process.

"We made it clear to the president that words are not enough," Svanberg said. "We understand that we will, and we should, be judged by our actions."