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, and will also be liable for royalties on lost or wasted oil if it is determined that negligence or regulatory violations contributed to the spill disaster. The new head of the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement notified BP of its liability in a July 15 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," BOEM 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.
BP couldn't immediately be reached for comment.
