Monday, June 21, 2010

Gulf of Mexico oil spill costs BP $2 billion

Louisiana (Reuters) - British energy giant BP, accused by U.S. lawmakers of putting savings over safety, said on Monday it has spent $2 billion so far on cleaning up its huge Gulf of Mexico oil spill.

U.S. | Green Business | Barack Obama | Gulf Oil Spill

But investors, who drove down BP's share price more than 2 percent on Monday, are more concerned about the final tally of cleaning up the spill. The company faces lawsuits, huge fines and damage claims that are expected to cost many billions more. BP agreed last week to set up a $20 billion compensation fund.

BP plans to raise cash from banks to ensure it has enough money on hand to pay for the clean-up, sources familiar with the matter told Reuters on Monday. Banking sources said last week that it was seeking to arrange $7 billion from banks.

BP has said it will suspend dividend payments to its shareholders and increase the pace of asset sales to $10 billion this year to offset liabilities from the spill, which began after an explosion on an offshore oil rig on April 20 that killed 11 workers.

The spill, now in its 63rd day, has soiled the coastline of four U.S. states, threatening tourism and fishing industries; seeped into ecologically sensitive wetlands and marshes; battered BP's image; and tested President Barack Obama, who has come under fire over his handling of the crisis.

Seeking to keep the focus on the unfolding ecological disaster, New Orleans Mayor Mitch Landrieu on Monday was taking mayors from 17 U.S. cities to visit the slick-damaged Mississippi Delta, where oil has coated fragile marshlands, tarred wildlife and decimated fisheries.

"Educating the rest of the country is what's going to help us win this fight," said Tim Kerner, mayor of Lafitte, Louisiana, where the mayors gathered for a presentation from BP and the U.S. Coast Guard.

"Every day it's a new oil spill," said Coast Guard Captain Roger Laferriere. "In previous spills, we always had a known quantity of oil."

Obama, working to convince Americans he is on top of the crisis, canceled a trip to Indonesia and Australia that had been set for last week to stay at home to deliver an address to Americans and castigate BP executives at the White House.

But the White House has been anxious that Americans do not think that the president's focus on the oil spill, the worst in U.S. history, means he is taking his eye off other pressing issues, such as fixing the sputtering economy.

Obama's official schedule this week focuses on selling healthcare reform, one of his signature achievements, managing the war in Afghanistan and talking to other major powers about the need for economic reforms at the G-8 summit in Canada.

Kenneth Feinberg, the administrator of the $20 billion fund to compensate victims for financial losses due to the spill, said on Monday he will "err on the side of the claimant" in paying emergency relief. "We've got to ease the burden on these folks in the Gulf," he told CNN.

Away from Washington, BP continued to siphon more oil from the blown-out deep-sea well. It said it collected or burned off 23,290 barrels (978,180 gallons/3.7 million liters) of crude on Sunday, still well below the 35,000-60,000 barrels a day that government scientists estimate are gushing from the well.

Both BP and the U.S. government are placing their hopes on two relief wells that are being drilled to permanently cap the leak. Those wells are expected to be finished in August.


BP's shares, meanwhile, fell after a U.S. lawmaker released an internal company document on Sunday pegging the worst-case scenario rate for the spill far higher than the government figures. The oil giant's stock, nearly halved in value since the crisis began, slid more than 2 percent in London and New York trading after the document estimated a rate of 100,000 barrels per day.

BP spokesman Toby Odone said the document appeared to be genuine but the estimate applied only to a situation in which a key piece of equipment called a blowout preventer is removed.

"Since there are no plans to remove the blowout preventer, the number is irrelevant," Odone said.

BP also rejected claims by its partner in the oil well, Anadarko Petroleum, that it had been negligent in the way it operated the installation.

"It's a combination of things (affecting the share price)," said Barclays Capital analyst Lucy Haskins.

"Over the weekend we were getting the news flow about Anadarko refusing to pay and then there's these stories about higher flow rates in an internal memo."

(Additional reporting by Kristin Hays in Houston and Sarah Young and Victoria Bryan in London; Writing by Ross Colvin; Editing by Will Dunham)

No comments:

Post a Comment