BP shares hit seven-month low after oil spill
BP shares have hit a a seven-month low as concerns grow about the cost of cleaning up a massive oil spill off the Louisiana coast in the Gulf of Mexico.
Shares fell 25 pence, or 4.3%, to 550.6p in early trading. They have now plunged more than 15% since the explosion on the rig two weeks ago.
On Tuesday, the company said it had started drilling a new relief well to stem the flow of oil into the sea.
BP has admitted full responsibility for cleaning up the spill.
It has refused to accept blame for the accident, however, as the failed equipment that caused the explosion was owned and operated by drilling firm Transocean.
By mid-afternoon, BP shares closed down 3% lower at 558.5p. Transocean shares also continued to fall, down 3.7% at $70.11 in early trading in New York. Its shares have fallen more than 20% since the explosion.
BP said the cost of containing the spill and securing the original well is running at about $6m (£3.9m) a day.
"This figure is rising as activity increases." it said in a statement. "It is too early to quantify other potential costs and liabilities associated with the incident."
Experts have warned that the total cost of clearing up the spill, including compensation claims, could run into billions of dollars. Some estimates are as high as $15bn.
Under US law it is the oilfield operator that has financial responsibility, even if fault lies with a contractor.
BP has already said it will pay the costs of the clean-up, though observers suggest it could pursue Transocean at a later stage to try to get some money back.
The British oil giant has a two-thirds stake in the field, so its minority partners will also be liable for some of the cost, too.
BP said it had begun to drill a relief well to try to isolate the one that is spilling oil into the Gulf of Mexico and permanently seal it.
It added the drilling is estimated to take three months.
"At the same time, we are continuing with our efforts to stop the leak and control the oil at the seabed, to tackle the oil offshore, and to protect the shoreline through a massive effort together with government agencies and local communities," said BP's chief executive Tony Hayward.
Thousands of barrels of oil have been leaking into the Gulf of Mexico every day since the Deepwater Horizon rig sank, two days after the initial explosion.
The oil is already having a devastating effect on the area's fishing industry, and officials fear much wider environmental damage if the full slick hits land.
BP insures itself through its own insurance company, so there's little scope to pass the cost on to outside insurers, says BBC World Service business reporter Mark Gregory.
"But even in the worst case scenario, the direct financial burden of the clean-up and paying compensation is unlikely to be a crippling burden for a firm as gigantic as BP, which last year made profits of over $40bn," our reporter says.
Analysts say the main damage could be to the company's reputation in the US, which has yet to recover from a refinery accident in Texas and pipeline problems in Alaska.
The fall in BP's shares is largely to do with investors' fears that the reputational damage may undermine BP's ability to do business in the US, its most important market.