3rd UPDATE:BP Shares Close -9.3% As Market Awaits Dividend News

14th Jun 2010 17:21

(Updates share price, adds letter from Democratic caucus.) By James Herron Of DOW JONES NEWSWIRES LONDON (Dow Jones)--BP PLC's (BP) London-listed shares closed more than 9% lower Monday as U.S. politicians continued to pressure the company to set aside billions of dollars for clean-up and compensation related to the Gulf of Mexico oil spill. Senate Majority Leader Harry Reid (D, Nev.) and members of the Democratic caucus on Monday asked BP to set aside $20 billion in a special account to be used to pay for economic damages and clean-up costs of an ongoing oil spill in the Gulf Coast. The figure dwarfs the $1.6 billion BP has spent since April 20 on containment, cleanup and compensation resulting from the oil spill and is at the high end of analysts' estimates of the ulitmate liability. BP is under growing pressure from analysts and investors to offer some kind of concession that will ease its relationship with the U.S. authorities, perhaps by suspending or reducing the dividend. However, BP said its board is not expected to make an announcement on whether it will go ahead with its second quarter payout to shareholders after a meeting Monday. BP Chairman Carl-Henric Svanberg is due to meet with President Barack Obama Wednesday to discuss the company's response to the spill, which has been declared the worst environmental disaster in U.S. history. BP's shares Monday fell as much as 10.5% before closing down 36 pence, or 9.3%, at 355 pence. London's blue-chip FTSE100 index was up 0.7%. BP has been subject to immense political pressure as oil continues to spill from its well in the Gulf of Mexico. White House officials Sunday have said they wanted BP to put "substantial" funds into an escrow account to cover claims and U.S. lawmakers also have demanded it suspend dividend payments until the crisis is over. BP Chief Executive Tony Hayward told the Wall Street Journal last week that the board of directors could consider cutting or deferring the second-quarter dividend, but that decisions does not have to be made until July 27. The company said Monday that it has spent $1.6 billion so far on containment, cleanup and compensation related to the spill. Analysts estimate the full cost of the spill at anywhere between $3 billion and $30 billion. BP could also face civil penalties of up to $1,100 a barrel of oil spilled, rising to $4,300 a barrel if criminal negligence were to be proved. Based on the current spill estimate of 40,000 barrels a day, these penalties would total $2.3 billion to $9.1 billion. Most analysts say BP will be able to meet these liabilities and continue to pay the dividend from a purely financial standpoint, but acknowledge that it may be necessary to reduce or briefly suspend dividend payments to assuage politicians in the U.S. Hayward last week said BP could pay all or part of its dividend in "scrip," effectively an I.O.U. to shareholders. "We are considering all options on the dividend. But no decision has been made," Hayward said. -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected] (END) Dow Jones Newswires June 14, 2010 12:21 ET (16:21 GMT)