Lack of news on dividend sees shares in BP plunge

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The Independent Online

Shares in BP dropped by nearly 10 per cent yesterday after the oil giant refused to make public the conclusions of a scheduled board meeting that had been expected to recommend a suspension of its controversial £1.8bn dividend payments to shareholders.

The dividend has been the subject of a transatlantic tussle. BP accounts for about £1 in every £7 of dividends paid out to British shareholders, and any suspension would be a blow to UK pension funds, but pressure is building in Washington for the firm to make a dramatic gesture and prove how seriously it is taking the oil spill from its Deepwater Horizon rig into the Gulf of Mexico .

More than 40,000 barrels of oil a day are thought to be leaking into the sea, although estimates vary. Analysts had been expecting BP to cave in to US pressure yesterday, but a spokesman for the group would only say that an announcement would be made at "the right time".

Many now believe that the multinational company will use tomorrow's meeting between chief executive Tony Hayward, chairman Carl-Henric Svanberg's and President Barack Obama at the White House to reveal the suspension.

"The board is still likely to move to give the authority to act on the dividend," said Malcolm Graham-Wood of Westhouse Securities. "We are likely to get a statement on Wednesday to say that the US authorities and the company have agreed that the only way to move the situation forward is to suspend the dividend. The company is likely to have to give an assurance on this."

BP refused to comment on reports that Mr Obama has demanded they set up an escrow account to pay for the clean-up. The company is thought to be considering a proposal that would see the money set aside for dividends rerouted to the escrow account, a move that is likely to prove unpopular with shareholders.

BP said yesterday that the cost of the spill has already reached $1.6bn (£1.1bn), as some analysts traded predictions on the total eventual cost of the crisis: most expect BP to face a final bill of between $25bn and $40bn.