BP will create a $US20 billion ($23 billion) fund for clean-up costs in the Gulf of Mexico in the first concrete agreement to pin blame solely on the British oil major.

The escrow account announced by BP CEO Tony Hayward and US President Barack Obama will be funded over a period of four years and will be delivered alongside a separate $US100 million ($115 million) fund to support recently unemployed oil workers and their families.

BP will cut its dividend by 75%, curtail investment and sell $US10 billion ($11.5 billion) in assets to fund the plan.

In a statement, BP says the fund does not represent a cap on liabilities, and will be available to satisfy all “legitimate claims”.

In addition to the commitments, BP must also pay any fines, which according to updated leakage figures could run into trillions of dollars.

The Insurance Information Institute estimates 1.05 million barrels of oil have leaked into the Gulf of Mexico up to June 1. But based on new figures, the spill could have reached 1.99 million barrels. If the new figures are correct, it would represent an Exxon Valdez-sized oil spill every four days.

Under the Oil Pollution Act (1990), BP could face fines of $US1100 ($1268) per barrel leaked, or more than $US2 trillion ($2.3 trillion).

The seemingly outlandish prospect of BP defaulting on its debts has now become a distinct possibility. A report in the New York Times says bond market prices for credit default swaps – insuring against the possibility of a BP default – have climbed dramatically from $US50,000 ($57,667) to $US425,000 ($490,175) for a $US10 million ($11.53 million) swap.