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BP suffers major loss as oil spill costs hit 32.2 bln dlrs

by Staff Writers
London (AFP) July 27, 2010
BP said Tuesday it suffered a loss of 16.9 billion dollars in the second quarter in the wake of the devastating Gulf of Mexico oil spill, which is forecast to cost the company 32.2 billion dollars.

The group added in a statement that it will sell 30 billion dollars of assets over the next 18 months, as it streamlines the business, while under-fire boss Tony Hayward will be replaced by Bob Dudley in October.

"BP announced today that it has taken a pre-tax charge of 32.2-billion-dollars for the Gulf of Mexico oil spill, including the 20-billion-dollar escrow compensation fund previously announced," it said.

"The company will also tell analysts later today that it plans to sell assets for up to 30 billion dollars over the next 18 months, primarily in the upstream business, and selected on the basis that they are worth more to other companies than to BP.

"This portfolio high grading will leave the company with a smaller but higher quality exploration and production business."

related report
Russian affiliate of embattled BP sees profits soar
TNK-BP, the Russian joint venture of embattled oil giant BP, announced on Tuesday that its profits for the first half of this year soared over 20 percent to 2.4 billion dollars (1.86 billion euros) on rising production.

TNK-BP, seen as one of the British firm's most valuable assets, is jointly owned 50 percent by BP and 50 percent by a group of Russian billionaires who at one time were involved in a bitter power struggle with the energy giant.

BP announced on Tuesday that as a part of the management reshuffle prompted by the devastating Gulf of Mexico oil spill, outgoing BP chief executive Tony Hayward will be nominated as a non-executive director of TNK-BP.

"During the first six months of 2010, TNK-BP continued the track record of strong operating and financial performance," said one of its Russian owners, billionaire Mikhail Fridman, who is acting TNK-BP chief executive.

"This is the 11th successive quarter of production growth, supported by continued development of new projects in West and East Siberia.

"This set of results once again confirms the company's growth potential going forward," he added.

Revenues for the first half rose to 20.7 billion dollars from 14.5 billion the year earlier. Net profits rose to 2.4 billion dollars from 2.0 billion in the same period last year.

TNK-BP was hit by a major management dispute in 2008 that threatened the future of the joint venture when its then chief executive Robert Dudley was accused of damaging the Russian shareholders' interests.

However the dispute was patched up after Dudley's departure and the shareholders agreed to appoint Maxim Barsky TNK-BP chief executive effective from 1 January 2011, with Fridman taking the reins in the interim.

Ironically, BP announced on Tuesday that Dudley would be replacing Hayward as the overall BP chief executive.

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