BP counts the cost as storm clouds gather

Author : Paul Gay

09 July 2010

BP’s costs in its seemingly endless task of dealing with the Macondo oil spill disaster have now soared to $100m a day. The company admitted this week that the cost of recovering the oil, which has been spewing into the sea since April, and the clean-up operation in the Mexican Gulf has now reached $2.65bn. And now, with the start of the hurricane season in the Gulf, the weather is set to play a bigger part.

Hurricane Alex may hamper BP's operations

Tropical Storm Alex, is the first named hurricane of the season and is predicted to reach full strength this week. It is reported that the storm has already killed 10 people in Nicaragua, Guatemala and El Salvador although it is forecasted to run to the west and south of the Macondo spill, which lies about 50 miles off the Louisiana coast.

Despite this course, Storm Alex is still likely to affect BP's plans to move a third containment vessel to the Macondo Well site, a company spokesman said on Monday. High waves could hamper the operation for about a week, he added.

US government officials recently raised their estimate of the oil gushing from the damaged well to 60,000 barrels/day. BP's current containment system can handle up to 28,000 barrels each day. The planned addition of another vessel would have raised that to 53,000 daily, BP has claimed.

Apart from the weather, the political storm clouds have been swirling around the company’s management, especially its chief executive officer Tony Haywood, who was been called to task by a US congressional committee over the causes of the crisis and BP’s response to it. Many hours of cross-examination and considerable pressure from President Obama’s administration established a firm commitment that BP would resolve the problems in the Gulf, temporarily suspend its dividend payments to shareholders and set up a $20 billion escrow fund to cope with the cost of the clean-up and future compensation claims.

Hayward's future as CEO of Britain’s biggest company was called into question earlier this week when Russia's deputy prime minister Igor Sechin claimed the beleaguered oil boss was about to resign. BP put the comment down to a misquote during Hayward's official trip to Russia and denied that he is making way for new blood after the Gulf of Mexico oil spill.

The deputy prime minister apparently told reporters that Hayward was leaving his position and he was about to introduce his successor. Naturally, the comment triggered fevered speculation that BP had privately briefed Moscow that there will be change at the top of the oil company. But Sechin later appeared to backtrack, saying the BP chief's future had not been discussed at a meeting on the company's TNK-BP joint venture with Russian oligarchs.

Russia's interest will, however, add to pressure on Hayward, after President Obama said last month that he would already have fired the BP boss for his handling of the crisis. The storm clouds are gathering on Capitol Hill and in the Gulf.