BP spill costs surpass $1bn

COSTS for the Gulf of Mexico oil spill response have pushed through the $1bn mark, BP said yesterday.

The embattled oil company said costs, including the response, relief well drilling, claims payments, containment, grants and federal charges have surged to $1.25bn (£863m).

Over 18,000 claim payments totalling $48m have so far been paid out of the 37,000 claims submitted so far.

The current costs of the oil spill, the worst environmental disaster ever recorded in US history, do not include the further $360m BP pledged to pay towards the construction of six barrier islands off the Louisiana coast, nor do they include what the company may have to pay out once it is hit with legal suits.

“Even if BP manages to staunch the spill in the days ahead, as the well’s majority owner and operator, it faces significant containment, cleanup, and litigation costs that diminish the quality of its credit profile… BP must also grapple with the significant overhang of litigation exposure and financial liability that is likely to persist in the years to come,” said senior analysts at credit rating agency Moody’s, which downgraded BP’s rating last week.

However, BP’s shares were up 0.62 per cent yesterday on news that further successes were made in containing the oil spill, which has devastated local wildlife and livelihood.

The group said that 2,600 vessels, are involved in the surface response, which has recovered 368,000 barrels of oily liquid. Chief executive Tony Hayward has launched an apologetic ad campaign in the US, which says: “To those affected, and your families, I am deeply sorry. We will make this right.”