BP oil spill costs soar further in second quarter

Suzie Neuwirth

OIL GIANT BP yesterday said it had set aside a further $1.4bn (£900m) for claims relating to the Gulf of Mexico disaster, bringing the firm close to draining the $20bn fund it has set aside for compensation costs.

BP is appealing the claim payouts, arguing that terms of the compensation framework are being misinterpreted, resulting in fictitious submissions.

Claims beyond what the $20bn fund can pay – which now has $300m unaccounted for – will be taken from future profits.

“As we continue to fight these absurd [compensation] outcomes ... we want everyone to know that we are digging in and are well prepared for the long-haul on legal matters,” said chief executive Bob Dudley at BP’s quarterly results news conference.

Clean-up and liability expenses from the 2010 disaster, which left 11 people dead and sent millions of gallons of oil into the Gulf of Mexico, have cost BP $42.4bn so far.

The disclosure comes as the FTSE 100-listed firm fell short of analysts’ expectations by posting a 25 per cent fall in second-quarter profits to $2.7bn, attributed to lower oil prices and currency-linked tax effects.

However, Dudley said that the results “show strong underlying pre-tax performance” and that BP is “making good progress in exploration and project delivery”.

BP shares closed 3.4 per cent down.