Tuesday, June 15, 2010

BP - world's 4th largest company - survival at stake

BP says nothing has changed to justify a $20bn bill, but this is disingenuous. In less than a month, the size of the size has gone from 5,000 barrels per day to between 20,000 and 40,000 barrels. If BP estimated that the clean-up and damages would cost around $5bn, but the size of the spill has at least quadrupled, then the $20bn demanded by the US senators does not look unreasonable.

This $20bn does not include civil penalties, where BP is liable for up to $4,300 for every barrel spilt if it is found to have acted negligently. If 40,000 barrels per day keeps flowing until August, when a relief well is hopefully completed plugging the leak for good, and BP does not improve on its current collection rate, this could add a further $14bn to the bill.

SHOOT: A company with the arrogance that BP has demonstrated, and an unadulterated profit motive, deserves to be scuttled.
clipped from www.guardian.co.uk
BP headquarters

The Gulf of Mexico disaster was always going to hit BP in the pocket. But as the costs of the spill keep rising, it could end up finishing off the British oil giant .

Until now, the City has fretted over the fate of BP's dividend, supposed to be $10bn, due this year. Tony Hayward, BP's chief executive, has stuck to the line that the company is able to meet all its obligations to its shareholders and to the clean-up effort.

But as the size and scope of BP's liabilities grow with each passing the day, it is now no longer a question of whether BP can or should pay its dividend. It is increasingly whether it can survive.

The point is, unlike with the financial crisis two years ago, there is not going to be a bail-out for BP. As Barack Obama has made clear, US taxpayers will not pay for the clean-up or compensation.

As Hayward recently remarked, the US is a world-leader in pursuing damages.
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