BP faces mounting cost, criticism over Gulf coast spill

19:06, June 10, 2010      

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British energy giant BP PLC says it has so far spent about 1.43 billion dollars containing the Gulf of Mexico oil spill, the worst environmental disaster in American history, as the company continues to deal with the nightmare in markets and public relations.

A containment cap on the damaged oil well is collecting almost 15,000 barrels, or 630,000 gallons, of oil a day, up sharply from previous amounts. In the past five days, the company has kept about 57,000 barrels from leaking into the Gulf.

U.S. Coast Guard Admiral Thad Allen, who is leading the government relief effort, said BP is anticipating moving another ship into the Gulf to help move the collected oil. BP next week is expected to boost its collecting capacity to 28,000 barrels a day.

BP is also trying to drill two relief wells that should be ready by August to completely plug the leak.

Allen said he had ordered a special task group to work up new estimates on how much oil is still gushing out.

Experts have estimated the leak spews 12,000 to 19,000 barrels a day, with one estimate as high as 25,000.


A commentary on the New York Times on Thursday said the moment has arrived for Tony Hayward to call an end to his career as chief executive of BP.

"The British oil firm's chief does not have the credibility with shareholders, regulators or consumers to continue in his role once the Gulf of Mexico crisis is over," the commentary said. "Mr. Hayward has made too many slips since the accident on the Deepwater Horizon rig on April 20. He was unwise to boast of the superlative scale of BP's response as if to suggest the company was well prepared for the disaster."

Meanwhile, the White House is facing public discontent as many Americans are unhappy with President Barack Obama's handling of the spill. Gulf coast residents have complained that the federal government has been slow to act and too dependent on BP for solutions.

Obama said in an interview earlier this week that he would fire Hayward if he worked for him.

White House spokesman Robert Gibbs said Obama is offering condolences to the relatives of the 11 workers who were killed in the April 20 explosion that triggered the spill. Obama wrote the families and invited them to visit the White House on Thursday.

Sean Snaith, an economist at University of Central Florida, calculated that coastal Florida could lose up to 195,000 jobs and nearly 11 billion U.S. dollars in economic activity from the impact of the oil spill.

U.S. Interior Secretary Ken Salazar told a Senate hearing he would ask BP to repay the salaries of the workers laid off because of the six-month moratorium on deepwater exploratory drilling imposed after the spill.

Scientists said the oil -- brick red in places, chocolate brown in others -- could spread as the hurricane season begins. The crude could travel wherever a storm surge takes it -- even to New Orleans, for example.

One-third of the Gulf's federal waters are closed to fishing and the toll of dead and injured birds and animals is climbing.


BP depositary shares trading in New York fell 15.8 percent to close at 29.20 dollars Wednesday, their lowest level since August 1996, on fears the company won't pay out its planned dividends and wider speculation about its ability to pay for the disaster.

After the dive, BP shares have lost more than half of their value in the recent six weeks since the crisis began on April 20.

Earlier Wednesday, BP's stock closed down four percent in London amid concerns the company may have to cut back dividend payments under pressure from the U.S. government.

In a statement on Thursday before the London exchange opened, BP underlined its strong financial position and said it has "significant capacity and flexibility" to deal with the cost of responding to the oil spill.

"BP notes the fall in its share price in U.S. trading last night," the company said in the statement. "The company is not aware of any reason which justifies this share price movement."

"BP faces this situation as a strong company," it said. "Under the current trading environment, we are generating signifcant additional cash flow."

The company reminded investors that it had indicated in March -- before the explosion at the Deepwater Horizon rig -- that its cash inflows and outflows were balanced at an oil price of around $60 per barrel.

It said its gearing was currently below the bottom of its targeted range and its asset base was "strong and valuable." The company had more than 18 million barrels of proven reserves and 63 billion barrels of resources at the end of 2009.

BP said those strong financials gave it "significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims."

Obama has urged BP not to be "nickel and diming" residents along the oil-stained Gulf of Mexico coast over damage claims while spending billions in shareholder dividends.

Hayward last week wouldn't estimate the total bill, though he told analysts that minority partners like Anadarko would be expected to pay as well.

Estimates for the total cost of the spill grow with every barrel that BP's failed well spews into the Gulf and with each oil-covered pelican or turtle that washes up on a devastated beach.

BP said on Tuesday it is selling the oil collected from the spill and plans to donate the money to a fund that helps restore and improve wildlife habitat in the four US states affected by the spill.

BP said it cannot predict how much money will be put into the fund, as the amount of funding "will be contingent upon the amount of oil collected during operations and the price at which the oil is sold."

On May 24, BP announced a commitment of up to 500 million dollars for an open research program that studies the impact of the Deepwater Horizon incident, and its associated response, on the marine and shoreline environment of the Gulf of Mexico.

Source: Xinhua


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