Business | Oil & Gas
BP stock gains 6% as cap on stricken oil well holds up
Washington insists on permanent solution
- Gulf News Report
- Published: 00:00 July 17, 2010
Dubai: Hope surfaced yesterday that history's worst environmental disaster may be nearing its end as energy giant BP said there was no seepage of crude 20 hours after it placed a new cap on the leaking well in the Gulf of Mexico.
The news sent its stock price soaring by more than six per cent to 426.45 pence in London trading, but the company faces an uphill task in raising cash to pay for the clean-up of large swathes of US shoreline.
BP's market value has dropped to almost half and chief executive Tony Hayward has been looking at multiple ways to raise cash, including a meeting with Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, in Abu Dhabi earlier this month.
US President Barack Obama gave a cautious welcome to the "good news" that BP has halted the flow of oil from the Macondo well, saying a permanent solution still needed to be put in place.
Obama — who has promised to make BP face up to its obligations over the disaster — cautioned that celebrations were on hold until the cap had been tested and BP's executives adopted a cautious approach.
"The company is far from out of the woods," said analyst Peter Hutton at broker NCB Oils, but "it will be more in charge of its destiny than it has been at times".
Top of BP's immediate concerns is the bill for the disaster and the compensation to those affected. Analysts agree it will amount to between $30 billion (Dh110 billion) and $40 billion, with Goldman Sachs even estimating the final sum could be $70 billion. The Financial Times reported yesterday that BP was speeding up the sale of up to $20 billion of assets, including the sale of $12 billion of assets to raise funds to foot the Gulf of Mexico bill.
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