Britain stuck up for beleaguered BP today against US criticism over a massive Gulf of Mexico oil spill that US scientists said was far bigger than previously thought.
The backing helped to lift BP shares, which have taken a battering this week as the Obama administration ratcheted up pressure on the London-based energy company over the 53-day-old spill, the worst environmental disaster in US history.
Millions of gallons of oil have gushed into the Gulf since an April 20 explosion on an offshore rig killed 11 workers and ruptured a deep-sea well. US scientists have now doubled their estimate of the amount of oil flowing from the well.
Senior Obama administration officials have threatened to increase BP's liabilities for the spill. Some US lawmakers are pressuring the company to suspend its quarterly dividend to ensure it has enough cash to pay for cleaning up the mess.
BP expects the total bill for the clean-up of the spill, which has affected 120 miles of US coastline and closed down rich fishing grounds, will be $3-$6 billion, an analyst briefed by BP said in a research note today.
BP said it was collecting more oil from its blown-out well, while the Obama administration's point man for the crisis, Coast Guard Admiral Thad Allen, said the company hoped to double its collection efforts to 40,000-50,000 barrels a day by mid-July.
However, the well will not be sealed until August, when a relief well now being drilled is due to be completed. And even with the new government estimates of the oil flow rate, it is still not known exactly how much oil is gushing out.
Shares in BP, which has lost tens of billions of dollars in value since the crisis began on April 20, closed over 7% in London this evening, rebounding from yesterday's 13-year low and extending a rally that began in New York yesterday.
Investors appeared unfazed by the news from US scientists that the well's flow rate may be as high 40,000 barrels of oil a day.
The new estimates could have huge financial implications because under the US Clean Water Act, BP and others could face fines up to $4,300 for every barrel leaked. With more than 2 million barrels of oil already in the ocean, that could means fines of $8.6 billion at least.
British investors are particularly concerned about the calls from US lawmakers for BP to suspend its dividend. 'We are considering all options on the dividend. But no decision has been made,' BP's Hayward told the Wall Street Journal today.
The newspaper said BP, which has seen its market value more than halved since the start of the crisis, may cut or defer the dividend due to be announced on July 27 or offer scrip - an IOU to shareholders.
BP said today that its containment cap system on the ruptured well captured 15,400 barrels of oil yesterday. The cumulative total collected since the system began operating a week ago reached 88,700 barrels with yesterday's tally, according to BP figures.
