BP Says Oil Disaster Cost $1 Billion

The news of the cost of the disaster sparked a 13% plunge in its shares wiping out more $17.6 billion off its market value.

BP revealed on June 1 that the disaster in the Gulf of Mexico had cost it almost a billion dollars, sparking a 13% plunge in its shares after the latest attempt to fix the leaking well failed.

The sell-off wiped more than 12 billion pounds (US$17.6 billion)off its market value -- its biggest one-day shares fall for 18 years.

There was more bad news for BP following the failure of the "top kill" operation to plug the undersea well when President Barack Obama warned that the culprits of the disaster would be held legally accountable.

In a statement, BP said: "The cost of the response to date amounts to about 990 million dollars, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid and federal costs. It is too early to quantify other potential costs and liabilities associated with the incident."

BP faces an even higher bill after Obama made a "solemn pledge" to bring those responsible to justice "on behalf of the victims of this catastrophe and the people of the Gulf region." US Attorney General Eric Holder said the US had launched civil and criminal investigations and would "prosecute to the fullest extent of the law anyone who has violated the law." He warned: "We will not rest until justice is done."

The group had announced on May 29 that the risky attempt to plug the leak by pumping heavy drilling mud into the well had failed to stop the flow of oil. Engineers had spent days pumping heavy drilling fluid into the leaking well head on the ocean floor in a bid to stem the gushing crude and ultimately seal the well with cement.

BP said its next approach would be to place a cap on the fractured oil pipe and contain the spill within the next 24 hours. "If everything goes well, within the next 24 hours, we could have this contained," chief operating officer Doug Suttles told reporters in Louisiana.

At least 20 million gallons of oil are feared to have already flooded into the Gulf since the rig exploded, threatening an environmental disaster.

In a gloomy assessment, Dougie Youngson, oil analyst at Arbuthnot, warned that the crisis had the potential to "break" BP. "This situation has now gone far beyond concerns of BP's chief executive Tony Hayward being fired, or shareholder dividend payouts being cut -- it's got the real smell of death. This could break BP," said Youngson.

"Given the collapse in the share price and the potential for it to fall further, we expect that it could become a takeover target -- particularly if its operating position in the US becomes untenable."

Copyright Agence France-Presse, 2010

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