Cost of Gulf disaster

Sep 4 2010 by Iain Laing, The Journal

OIL giant BP has said that the cost of tackling the Gulf of Mexico disaster had risen to £5.2bn so far.

The ruptured well has been shut since July 15 after pumping almost five million barrels of oil into the Gulf when the Deepwater Horizon rig exploded and sank in April, killing 11 workers.

BP this week began work to replace the rig’s failed blow-out preventer. The firm has paid out £278m in claims so far. Provisions for the crisis sent BP crashing £11bn into the red for the April-June period – its first loss in 18 years.

The relief well which will seal the well permanently is likely to be completed in mid-September.

The group said more than 28,400 staff are working on the relief efforts as well as 4,050 vessels and dozens of aircraft. At the peak of the crisis 3.5 million feet of containment boom was used to rein the spill, although this has now been reduced to 1.72 million.

BP has come under fire in the US but the political pressure has eased since the firm set up a £13bn fund to meet compensation payouts and costs.

The crisis cost former chief executive Tony Hayward his job after a series of PR blunders and he will make way in October for fellow board member Bob Dudley, who becomes BP’s first overseas boss.

The longer-term fall-out – fines, penalties and potential legal action – is also set to add to the bill and spread the pain over a number of years.

BP hopes to sell 10% of its production assets over the next 18 months, with the aim of raising £20bn to beef up its balance sheet to meet the crisis.