More than a month after a rig collapsed and ruptured a deepwater well to release at least 5,000 b/d of crude oil into the ocean, investors have wiped out more than US$40 billion from BP’s market value. The company said it has already spent more than US$760 million in clean-up operations in the first month of the disaster while it desperately seeks a solution to plug the leak.
Within weeks of the incident, Moody’s and Standard & Poor’s downgraded their credit ratings of the firm, raising its borrowing costs. The accident has worsened BP’s risk profile and boosted its insurance costs, and will make peers and contractors think twice about working with the firm. These factors are expected to hamstring BP in its ability to enter into new oil and natural gas projects.
BP’s brand has also been further and possibly irreparably damaged by the admission in the US Congressional hearings that the well currently spilling oil had failed a pressure test prior to the incident. US President Barack Obama has hinted that his government may seek criminal prosecution of the company and its senior execvutives.
Eleven workers were killed in the incident on April 20. Some of the survivors have blasted BP for allegedly attempting to silence them about what happened on board the rig before it blew up and sank to 5,000 feet below the ocean. The environmental disaster of “unprecedented” proportions is threatening to forever destroy rich fishing grounds and marine life in the Gulf of Mexico and further out as well as
BP has been involved in other serious incidents in the past few years. In 2005, a refinery explosion in Texas killed 15 people and a pipeline in Alaska leaked oil in 2006.