Transatlantic spat sees BP shares plunge 7%
Thursday 10 June 2010
BP's share price plunged a further 7% today as a transatlantic spat broke out over the ecological disaster in the Gulf of Mexico.
London Mayor Boris Johnson led the backlash against the US administration, hitting out at "anti-British rhetoric", "buck-passing" and "attempts to damage the reputation of a great British company".
Prime Minister David Cameron will discuss the fall-out of the oil spill during a phone call with President Barack Obama over the weekend.
Downing Street officials insist that it is a "routine" conference call despite the pair having only spoken once since Mr Cameron entered Number 10.
"This will be the start of a routine," a spokeswoman for the prime minister explained.
Earlier, Mr Cameron said he understood the US government's "frustration" over BP's efforts to cope with the Deepwater Horizon oil leak.
Speaking in Afghanistan, he added: "Obviously everyone wants everything to be done that can be done. Of course that is something I will be discussing with the American president."
But the London mayor appeared to strike a more confrontational tone.
Mr Johnson echoed previous comments by business leaders by suggesting that the "anti-British rhetoric" was becoming a matter of "national concern".
He added that BP was paying "a very, very heavy price" for what had been an accident, and pointed out that UK pension funds had a "huge exposure" to BP.
Mr Johnson acknowledged that the spill was a "huge environmental disaster", but added: "I think that the best thing now is not to get into too much name-calling and buck passing and attempts to damage the reputation of a great British company but to get on, to work together to sort it out."
In recent weeks, Mr Obama and other US politicians have repeatedly criticised the response of the firm and its under-fire chief executive Tony Hayward.
Members of the US administration have also insisted on referring to BP by its former name, "British Petroleum".
Earlier this week, the president suggested that Mr Hayward should be sacked and slammed BP for spending money on advertising and shareholders while "nickel-and-diming fishermen or small businesses here in the Gulf".
On the request of the prime minister, Chancellor George Osborne contacted Mr Hayward today.
Following the phone call, Mr Osborne said: "We are all concerned about the human and environmental impact and as the Prime Minister has said, we understand the concerns of the US administration.
"The Prime Minister is also clear that we need constructive solutions and that we remember the economic value BP brings to people in Britain and America."
The effect of the ongoing crisis was again felt by BP investors today.
The company's share price closed down 6.6%, wiping another £5bn off the value of the group.
During the day shares plunged as much as 12% as US officials threatened to seek a ban on dividend payouts.
Investors were spooked after US Department of Justice officials reportedly said they were planning "to take action" to make sure BP had enough cash to cover claims arising from the spill.
This was seen as a threat to the BP dividend, which has not been cut since 1992 and provides around £1 in every £7 of share payouts from UK blue-chip firms.
The company has so far refused to comment on the future of dividends, with the board due to make the decision at the end of July.
But it faces the wrath of the US government over payouts to shareholders while the leak is still pumping out oil into the Gulf at an estimated rate of up to 19,000 barrels a day.
The firm is struggling to control the spill with a containment cap placed over the well last week.
Efforts appear to be improving, with the cap collecting around 15,000 barrels of oil a day on Tuesday and around 7,920 in the first 12 hours of yesterday.
BP is also working on two ways to improve the cap further, while it is drilling two relief wells to provide a longer-term solution - although these will not be finished until August.
The firm has said revenues from the recovered oil as well as liquid skimmed from the sea surface would be put into a new fund to help wildlife habitats along the coastline of Louisiana, Mississippi, Alabama and Florida.
BP has said that the cost of the clean-up and containment efforts had now hit 1.43 billion US dollars (£979 million).
Around £50 billion has been wiped off the value of the firm since the Deepwater Horizon oil rig disaster on April 20, which killed 11 workers.
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