BP investors count the cost of US legal action

Investor confidence in BP wobbled yesterday after the US government launched a legal challenge claiming unlimited liabilities for the Gulf of Mexico oil spill, sending the company's stock down by nearly 1.4 per cent.

BP and eight other companies,including Anadarko and Transocean, will be sued under the US Clean Water and Oil Pollution Act to determine how much they must pay for the Deepwater Horizon disaster in April, which claimed 11 lives and caused the biggest oil spill in history.

BP downplayed the implications of the lawsuit yesterday, stressing it is part of the expected process in the aftermath of the slick and was always factored into the company's financial plans. But the size of the fine remains unclear, potentially spiralling as high as $21bn (£13bn) if the companies are found guilty of gross negligence.

The legislation specifies fines ofeither £1,100 per leaked barrel, or £4,300 per barrel if the companies are found grossly negligent. But the issue of negligence remains unresolved. BP's own internal report – published by group head of safety Mark Bly in September – determined that the explosion at Macondo was caused by "asequence of failures" arising from "a complex and interlinked series ofmechanical failures, human judgements, engineering design, operational implementation and team interfaces".

The Presidential Commission also appears to be erring in the oil giant's favour, with last month's preliminary report concluding that BP had not put cost before safety, and chief investigator Fred Bartlit saying he agreed with 90 per cent of the Bly report.

But it is the conclusions of theDepartment of Justice investigation, currently under way, which will inform the civil case. The Marine Board and the Chemical Safety Board are also conducting analyses of the event.

There is disagreement over the size of the spill itself. The most recent estimates from the government put the total at 4.9 million barrels. But the figure is disputed by BP, with someinsiders suggesting the final figure to be not much more than half of the government estimate. While the worst-case scenario could see a total fine of $21bn, if the companies are held to be liable but not negligent the fine drops to $5.4bn.

BP has already made considerable provision for the financial impact of the Deepwater Horizon disaster. The group has estimated total costs of up to $40bn, of which $20bn is to meet damages claims from individuals pursued through the compensation process run by Kenneth Feinberg, and another $11bn has already been paid out to cover the operational clean-up costs. Some $9bn therefore remains to cover any fines levied.

The provisions are supported by a $30bn divestment programme launched earlier in the year. So far, BP has raised around $24bn through a string of disposals, most recently the $775m sale of its exploration and production business in Pakistan, earlier this week.

Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
Is this how Mario Balotelli will cruise into Liverpool?
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Junior Quant Analyst (Machine Learning, SQL, Brokerage)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Day In a Page

10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan