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British PM Cameron pledges help in BP oil spill

British Prime Minister David Cameron said on Thursday he was ready to help deal with BP Plc's Gulf of Mexico oil spill, speaking out on the crisis while the beleaguered British company's shares took a fresh hit in London but rebounded from a massive slump in New York.

world Updated: Jun 10, 2010 22:52 IST

British Prime Minister David Cameron said on Thursday he was ready to help deal with BP Plc's Gulf of Mexico oil spill, speaking out on the crisis while the beleaguered British company's shares took a fresh hit in London but rebounded from a massive slump in New York.

Ratcheting up political pressure on the company, U.S. Attorney General Eric Holder said in Washington he would make sure BP paid for all costs related to cleaning up the spill.

BP said it was capturing more oil from its deep-sea well in the Gulf of Mexico that ruptured on April 20, unleashing a torrent of oil that has caused the biggest U.S. environmental disaster in history.

On day 52 of the spill, it is still not known how much oil is gushing out.

Shares in BP sank to their lowest level since 1997 in London trading on Thursday, catching up with a sharp fall on Wednesday in the United States, before bouncing off their lows.

In New York, the stock rebounded about 9 percent in early trading after taking a 16 percent dive to a 14-year-low on Wednesday amid concerns over BP's ability to meet mounting costs from the oil spill.

Illustrating the extent of investor concerns about BP, the cost of insuring its AA-rated debt traded for a time at levels normally associated with "junk" status.

In Britain, business leaders urged the government to defend BP -- the biggest single payer of dividends among UK listed companies -- against U.S. threats to expand the company's liabilities for the spill and growing pressure from U.S. lawmakers for it to suspend payment of its quarterly dividend.


Cameron, speaking on a visit to Kabul, said, "This is an environmental catastrophe. BP needs to do everything it can to deal with the situation, and the UK government stands ready to help."

He added, "I completely understand the U.S. government's frustration. The most important thing is to try to mitigate the effects and get to grips with the problem. It's something I will discuss with the American president when we next talk."

Earlier on Thursday, a British government spokesman said Cameron would talk to President Barack Obama on the subject over the coming weekend in their first discussion since speaking when Cameron took power in May.

The Obama administration has intensified pressure on the company amid opinion polls that show voter unhappiness with its own handling of the crisis, which has emerged as a critical test of Obama's presidency.

"I can make this pledge to the American people that the American people will not pay a dime for the cleanup of the Gulf region and that BP will be held responsible for all the damages that have occurred," Holder told reporters during a news conference.

U.S. Interior Secretary Ken Salazar told a Senate hearing on Wednesday he would seek to make BP responsible for workers laid off because of the six-month moratorium on deepwater exploratory drilling imposed by the government after the spill.
The prospect of new government penalties has dented investor confidence in BP. BP shares opened trading in London on Thursday 11 percent down before recovering to trade down 6.6 percent.

"It's tough to make price predictions on the stock, but I think the downside risks are outweighed by the near-term upside potential," said Mike Breard, analyst with Hodges Capital Management in Dallas.

After Wednesday's battering in New York, BP had lost more than half its market value since the crisis began.

"BP notes the fall in its share price in US trading last night. The company is not aware of any reason which justifies this share price movement," BP said in a statement.


BP, one of the world's largest corporate giants, said it had the financial flexibility to deal with liabilities related to the spill, which to date had cost it around $1.43 billion.

Restructuring experts agree that by running the numbers alone, BP looks able to handle the financial damage.

BP's latest containment effort, which follows a series of earlier failed attempts, involves placing a containment cap with a seal on a deep-sea pipe from which the oil is gushing into the Gulf of Mexico.

It said on Thursday the cap system had collected 15,800 barrels (660,000 gallons/2,500,000 litres) in the previous 24-hour period. The cumulative total since the system was installed last week has reached 73,324 barrels (3,080,000 gallons/11,660,000 litres), according to BP figures.

The spill has fouled wildlife refuges in Louisiana and barrier islands in Mississippi and Alabama. It has also sent tar balls ashore on beaches in Florida. One third of the Gulf's federal waters remains closed to fishing.

There were visible signs of anger in Louisiana, where the fishing ban is taking a heavy toll on the local economy.

At Maw's Sandwich and Snack Shop in Boothville, Louisiana, where french fries smothered in gravy are on the menu, a poster said, "Obama Needs A Lesson In Leadership And Compassion."

First Published: Jun 10, 2010 22:51 IST