BP says Gulf oil spill costs hit 11.2 billion dollars

October 1, 2010

, LONDON, Oct 1 – British energy giant BP has so far spent 11.2 billion dollars (8.2 billion euros) in response to the Gulf of Mexico oil spill disaster, it said Friday, as new boss Bob Dudley began his first day.

"The cost of the response amounts to approximately 11.2 billion dollars, including the cost of the spill response, containment, relief well drilling, static kill and cementing, grants to the Gulf states, claims paid and federal costs," BP said in a statement.

That compared with the estimate of 9.5 billion dollars given last month. The firm expects the spill will eventually cost it more than 32.2 billion dollars.

BP said Friday that it would pledge certain Gulf of Mexico assets as collateral for a 20-billion-dollar compensation fund set up for residents affected by the oil spill tragedy.

"The pledging of these assets underscores our commitments to the trust which we set up to pay all legitimate claims arising from the tragedy," said Lamar McKay, Chairman and President of BP America Inc. and BP\’s Gulf Coast Restoration Organization.

The news was delivered on Dudley\’s first official day as chief executive at the group\’s headquarters in central London.

The oil spill, the worst environmental disaster in the United States, dealt a major blow to BP and forced out former boss Tony Hayward, who was slammed by the media for his clumsy handling of the spill response.

Dudley, who was previously in charge of Gulf clean-up operations, announced a series of measures earlier this week that were aimed at improving safety and restoring the company\’s battered reputation.

On Wednesday, he unveiled a major shake-up, creating a powerful new safety division and overhauling the group\’s structure.

BP will also conduct an assessment of how it motivates its staff in trying to improve safety and risk management, and will review how it manages third-party contractors.

Dudley told the BBC on Thursday that the company could resume its shareholder dividend early next year, after axing the payments in the wake of the disaster.

BP scrapped the dividend in June under heavy pressure from the US government to find billions of dollars in clean-up costs and compensation.

Dudley said on Friday that BP does not expect the US Justice Department to accuse it of "gross negligence" at the conclusion of its investigation into the Gulf of Mexico oil spill.

A finding of gross negligence would dramatically increase the fines assessed due to the spill and could open BP up to criminal charges and more substantial civil liabilities.

The oil disaster was triggered by a blast on the Deepwater Horizon rig — leased by BP and operated by Transocean Energy — that killed 11 workers on April 20.

The broken well was eventually plugged but not before it gushed about 4.9 million barrels of oil into the Gulf waters.

BP\’s share price, which jumped 1.62 percent on Thursday in response to the dividend news, added another 2.90 percent in early afternoon deals on Friday.

The disaster wiped tens of billions of dollars off the company\’s stock market value but the shares have been finding support recently as the well was finally sealed.

Latest Articles

Live prices

Stock Market

Most Viewed