BP shares hit after report of oil spill charges

By Reuters
Posted March 29 at 5:14 p.m.

Shares in oil major BP fell on Tuesday on a report that its managers could face manslaughter charges following the Gulf of Mexico oil spill, which could lead to much higher fines over the disaster.

U.S. prosecutors are considering whether to pursue manslaughter charges against BP managers for decisions made before the explosion on the rig that killed 11 workers and caused the biggest offshore spill in U.S. history, according to a report from Bloomberg, which cited people familiar with the matter.

A U.S. official said the Department of Justice is investigating possible criminal charges related to the deaths of the workers. These charges could include manslaughter, but the official declined to confirm this was under consideration.

BP has admitted mistakes in the run-up to the rig blast but has denied accusations it was “grossly negligent,” a charge that could add tens of billions to the final bill it pays for the disaster.

“A manslaughter charge makes a charge of gross negligence more likely.” one dealer said.

If BP is found to be grossly negligent, the maximum possible fines it faces would rise to more than $21 billion (13 billion pounds) from around $5 billion.

Also, it might mean the company could not force its partners in the well — Anadarko Petroleum Corp and Mitsui & Co — to pay their 35 percent share of the total clean-up bill, now estimated at $42 billion.

It could also open the floodgates to legal claims worth many billions.

BP declined to comment.

BP America President Lamar McKay said later at an industry gathering that the company, having spent $19 billion so far, now had a better handle on the ultimate cost of the spill.

“The range of uncertainty is narrowing on that because we’re midway through that process,” McKay told the Howard Weil Energy Conference in a lunch presentation, in which he made no mention of the report on potential manslaughter charges.

BP shares fell 2.2 percent in London, against a 0.3 percent drop in the STOXX Europe 600 Oil and Gas index.

Another dealer said a downgrade from Collins Stewart had also weighed on the stock. The brokerage cut BP to “sell” from “hold,” partly due to a spat between the company and its partners in Russian venture TNK-BP, traders said.

Asked about the joint venture’s blocking of a BP strategic alliance with Rosneft, McKay said Russia was a “complicated” place to do business and he expected more permutations to come on that deal.

“It has to play out over a period of time, and somewhat unfortunately it plays out in a public venue rather than a private venue,” he said.

He said BP had a long history in Russia, and that the TNK-BP investment had already returned its original $8 billion investment, as well as $6 billion more.

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