Oil spill costs BP $350m, final bill may be higher

Oil major BP said the oil spill in the Gulf of Mexico had cost it $350 million (Dh1.28 billion) so far, suggesting the final bill could be much higher than many analysts predicted, and hitting the company's shares.

BP said in a statement the sum referred to the cost of spill response, containment efforts, relief well drilling, payments to the Gulf Coast States to speed up their response plans, some compensation claims and federal costs.

The London-based oil major – until the leak, Britain's largest company by market value – declined to give a further breakdown, such as what types of compensation payments had been made, or were still pending.

BP shares fell 1.1 per cent at 0829 GMT, lagging a 2.5 per cent rise in the STOXX Europe 600 Oil and Gas index. The stock has lost 16 per cent since the Deepwater Horizon rig caught fire with the loss of 11 lives, wiping around $30bn off BP's market value.

Analysts have offered forecasts for spill clean-up costs and compensation that range from a few hundred million dollars to $12.5bn.

BP's latest figures show the lower estimates to be wildly optimistic but so far there is no indication the higher estimates will be exceeded.

Until the end of last week, BP said the clean up effort was costing $6 million/day.

Over the weekend, BP suspended operations on a plan to cap the leak with a metal dome, due to problems with gas coming from the well.

The company said it was investigating other possible options to cap the leak, while continuing to drill another well that it said was certain to stem the flow but which could take three months to complete.

"BP appears to be turning to more adventurous, and potentially more expensive, solutions," analysts at BOA Merrill Lynch said in a research note.

The final bill is likely to be much higher than the $350 million figure announced on Monday as the well which caused the leak is still pumping at least 5,000 barrels per day of crude into the sea and the spill has yet to hit land.

Only traces of oil have been reported on Gulf beaches so far and clean up costs will accelerate when major landfall occurs.

Follow Emirates 24|7 on Google News.