BP posts $17.15 bn loss on oil spill | world | Hindustan Times
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BP posts $17.15 bn loss on oil spill

world Updated: Jul 27, 2010 17:23 IST

Bogged down by soaring costs related to the Gulf of Mexico oil spill, BP Plc on Tuesday posted a mammoth second-quarter loss of $17.15 billion and also announced the departure of embattled CEO Tony Hayward.

Under fire for the environmental disaster, which leaked thousands of barrels of oil into the sea, speculation was rife that Hayward would be stepping down from the top seat.

The incumbent will be replaced by fellow executive director Robert Dudley, who is in charge of the oil spill response. Hayward will cease to be Group CEO from October 1, BP said in a statement.

The second quarter results also reflect a pre-tax charge of $32.19 billion related to the oil spill. The amount includes costs worth $2.9 billion.

"This amount comprises costs incurred up to June 30, 2010, obligations for future costs which can be estimated reliably at this time and rights and obligations under the escrow account," the firm said.

BP had posted a profit of $4.39 billion for the year-ago period.

The company's total revenues and other income in the second-quarter climbed to $75.87 billion from $56.56 billion in the comparable period.

Commenting on Hayward stepping down, BP Chairman Carl-Henric Svanberg said the company's board was deeply saddened to lose a CEO whose success in driving the firm's performance over some three years was widely admired.

Hayward will remain on the BP board until November 30.

"BP also plans to nominate him as a non-executive director of TNK-BP (the Russian joint venture)... under the terms of his contract, Hayward would receive a year's salary in lieu of notice, amounting to 1.045 million pounds," it added.

Hayward's replacement, 54-year-old Dudley, is a main board director of BP and currently runs the unit responsible for clean-up operations and compensation programmes in the Gulf of Mexico. He joined BP from Amoco after the merger of the two companies in 1998. He was President and CEO of BP's Russian joint venture, TNK-BP, until 2008.

Budging under intense pressure from the US government, BP last month unveiled a USD 20 billion fund to meet obligations arising out of the devastating oil spill.

The Gulf of Mexico spill occurred on April 20, when an explosion took place onboard the Deepwater Horizon drilling rig, which also claimed 11 lives.

BP noted that it is facing a number of legal proceedings and investigations related to the incident, including a US Department of Justice probe into whether the entity violated American civil or criminal laws.

"To date, approximately 127,400 claims have been submitted and payments totalling approximately $243 million have been made," the statement said.