BP Deepwater bill rises by $4.1bn


BP Deepwater bill rises by $4.1bn

Total charge for 2010 oil spill stands at $42.4bn, as company races to prevent civil trials reaching court


Terry Macalister

guardian.co.uk, Tuesday 5 February 2013 10.10 GMT

Smoke billows from a controlled burn of spilled oil during the BP Deepwater Horizon disaster. Photograph: Sean Gardner/Reuters

The financial damage resulting from the Deepwater Horizon spill in the Gulf of Mexico continues to mount at BP, which has taken a further $4.1bn charge in the final three months of 2012, bringing the total impact so far to $42.2bn (£27bn).

The oil company has settled criminal charges with the US Department of Justice, but will suffer further financial hits as it prepares for a final civil trial scheduled to start later this month.

Worst case scenarios could mean a further $20bn of liabilities, but BP expects them to be very much smaller and is still desperately working on an out-of-court settlement to avoid the trial.

The latest numbers resulting from the Deepwater disaster were released by BP on Tuesday morning as part of its fourth-quarter and full-year financial results, which showed the company had already sold $37.8bn of assets even before its sale to Rosneft of its half share in the Russian joint-venture TNK-BPx§.

That disposal has not been completed yet, but BP’s overall group production – excluding TNK-BP – was down 7% in the final three months to 2.29m barrels of oil equivalents a day.

The output figures were damaged by the sale of assets to pay for the Macondo blowout in 2011, and they helped drive down quarterly underlying replacement cost profits by 20% in the final period, to $4bn from $5bn.

The $4.1bn Deepwater charge, however, was considerably better than analysts had forecast, and despite the downturn BP chief executive, Bob Dudley, gave an upbeat assessment of where the company had reached.

“We have moved past many milestones in 2012, repositioning BP through divestments and bringing on new projects,” he said. “This lays a solid foundation for growth into the long term. Moving through 2013 we will deliver further operational milestones and remain on track for delivery of our 10-point strategic plan, including our target for operating cash flow growth, by 2014.”

BP expects four new major upstream projects to begin production by the end of 2013 – Angola LNG, North Rankin 2 in Australia, Na Kika 3 in the Gulf of Mexico, and the Chirag Oil project in Azerbaijan.

A further six major projects are expected to come onstream through 2014 while the major upgrade of the Whiting refinery in Indiana is expected to come online in the second half of 2013.

“We aim to be a focused oil and gas company, creating value by growing long-term sustainable free cash flow,” said Dudley, who made clear the company had learned lessons from the Deepwater Horizon accident, which caused the worst marine pollution in US history, by adding: “We will deliver this through safe and reliable operations, and through disciplined and paced capital investment into a portfolio rich in high-margin opportunities.”

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