BP shares plunge more than 10 percent on oil spill fears
BP shares plunged more then 10 percent on Monday as investors fretted over the spiralling cost of the Gulf Mexico oil spill crisis and the future of the group's shareholder dividend, dealers said.
In late afternoon trade, BP tumbled to 351 pence amid mounting pressure from US President Barack Obama over the group's handling of the worst-ever environmental disaster in the history of the United States.
Reports have suggested that BP will bow to massive US pressure and decide to suspend dividend payments as its potential liability over the oil spill soars.
BP directors, meanwhile, met in London to discuss whether to suspend the dividend after the embattled company said the cost of sorting out the disaster had jumped to about 1.6 billion dollars (1.3 billion euros).
"The shares dropped to a low of 351 pence, a 41-pence plunge, which suggests that some investment firms are fearing that the dividend will be scrapped," said Rajesh Patel, head trader at financial betting firm Spread Co.
"Obama is demanding an escrow fund be set up to cover the clean-up costs and their latest proposal to cap the leak has no guarantee of succeeding either."
US officials on Sunday had demanded that BP set up a special fund to cover claims for damage done by the spill.
"BP's board are discussing what to do with their dividend this afternoon and it is a massively important decision for investors whatever they decide," Patel said.
"It looks though like some (investors) have decided that enough is enough with BP."
The share price later recovered slightly to close at 362 pence, down 7.63 percent. London's FTSE 100 index finished 0.74 percent higher.
A BP spokesman told AFP that no formal announcement on the dividend was due on Monday.
Ahead of the board meeting, BP said that "the cost of the response to date amounts to approximately 1.6 billion dollars, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs."
The figure is up from an estimated 1.43 billion dollars announced by BP on Thursday. BP's market value has fallen by tens of billions of dollars as its share price has plunged since the BP-operated Deepwater Horizon rig sank on April 22.
The accident, following an explosion that killed 11 people two days earlier, sparked an enormous spill from a leaking well on the sea bed, with huge amounts of oil washing up on the US Gulf coastline, threatening precious wildlife and local communities.
BP said in Monday's statement that "work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore."
US Coast Guard Admiral Thad Allen, in charge of the US response to the Gulf oil spill disaster, said Sunday that he expected BP chief executive Tony Hayward to attend a White House crisis meeting due Wednesday.
Allen said issues at the top of the agenda would include oil spill containment options and the claims process for victims.
Obama's political opponents have piled criticism on the president for his failure to so far meet, or talk by telephone with Hayward, who has become the public face of the disaster for BP.
© 2010 AFP