BP to 'suspend dividend' as liability soars

12th June 2010, Comments 0 comments

BP will bow to massive US pressure and decide to suspend dividend payments as its potential liability over the Gulf of Mexico oil spill soars, British media reports said Friday.

The Times newspaper said BP was preparing to place the second-quarter dividend money -- an expected 1.7 billion dollars -- in an escrow account in an attempt to ease political pressure on the firm.

The BBC said BP directors were to meet on Monday to discuss the payments, although the decision was not expected to be announced at least until company bosses meet US President Barack Obama at the White House on Wednesday.

Under fire BP CEO Tony Hayward told The Wall Street Journal that the discussions were ongoing, saying: "We are considering all options on the dividend. But no decision has been made."

Pressure for the dividend, due on July 27, to be scrapped has intensified since US officials announced Thursday they were doubling their estimate of the amount of oil gushing into the sea.

Top US lawmaker Nancy Pelosi urged BP, whose liability is directly linked to the amount of leaking oil, not to pay dividends and echoed pleas from Obama not to short change those hit by the disaster.

"I'm saying that they should not be paying dividends until they make these people whole, and make a better effort to do it in a timely fashion," the Democratic House Speaker told reporters.

Meanwhile, the Coast Guard admiral heading the US response to the nation's worst ever environmental catastrophe said BP was working to double the amount of oil it could recover from a containment system placed over the leaking well.

Thad Allen told journalists he was reviewing plans from BP to build the system's capacity so it can collect 40,000 to 50,000 barrels of oil a day by July once a more permanent cap has been placed over the well.

Allen said the current capacity is 28,000 barrels per day but that new processing ships and shuttle tankers were being brought in.

"They're incrementally building it out," Allen said. "We will shift to a hard cap that will allow us to capture more."

A permanent solution will not come before the first of two relief wells is completed, in August at the earliest, allowing the leak to be plugged with cement.

New data Thursday suggested the oil's flow -- before the containment system was put in place last week -- was between 25,000 and 30,000 barrels a day and could be upwards of 40,000 barrels a day -- or some 1.68 million gallons.

Asked whether the cut-and-cap operation to attach the containment device to the leaking pipe could have increased the flow, Allen said it was not yet possible to get exact figures.

"We want to put some sensors down there and get pressure readings... that can validate what is coming out of the riser pipe."

Amid fears of an anti-British backlash in the United States over the spill, British Prime Minister David Cameron will discuss BP's handling of the crisis with Obama over the weekend.

Investors are worried that Obama intends to exact a heavy price from the British energy giant and BP's share price has fallen more than 40 percent -- wiping tens of billions of dollars off its market value -- since the Deepwater Horizon rig sank on April 22.

BP chairman Carl-Henric Svanberg and other company bosses have been summoned to a White House meeting next Wednesday with Obama and senior administration officials. There was no word on whether Hayward would participate.

Cameron held talks Friday with Svanberg and threw his support behind a "financially strong" BP while voicing frustration over the spill, his office said.

Obama, who heads to the Gulf next week for his fourth visit since the disaster, met Thursday at the White House with relatives of the 11 workers killed when the Deepwater Horizon rig exploded on April 20.

Earlier this week, US Interior Secretary Ken Salazar said the company's liability should include reimbursing all companies hit by a six-month moratorium on deep sea drilling.

US government officials said BP had agreed to speed up payouts to individuals and businesses affected by the spill following a meeting Wednesday with Allen.

© 2010 AFP

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