BP oil spill costs top $3.5bn

Oil giant BP said today that the cost of the Gulf of Mexico spill had hit US3.5bn (€2.78bn), but added that its latest efforts to contain the disaster were on track.

The firm has engaged 46,000 staff and 6,400 ships so far in the clean-up effort since the Deepwater Horizon rig exploded and sank on April 20 and crude began spewing into the ocean.

The group said the installation of a new sealing cap over the leaking well - which is capable of collecting more than 50,000 barrels a day and is more resilient to the hurricane season - was "proceeding as planned".

BP has gathered around 749,100 barrels of oil from the various containment systems in place around the well so far and is developing plans to increase collection capacity to up to 80,000 barrels of oil a day by the end of July.

Investors in the oil giant - a staple of UK pension funds - have been alarmed by the fall in the share price since the spill but shares rose more than 5% following the update.

BP is also on track with two relief wells being drilled below the sea bed to intercept the leaking well at about 18,000 feet below sea-level and stem the flow of oil permanently. The first well should be completed during early August, when "kill" operations can begin.

The group has paid out about $165m (€131.24m) in claims to 52,000 businesses so far, although the intense political pressure on the oil giant has eased since the group set aside a $20bn (€15.9bn) compensation fund to meet the costs of the disaster in June.

Chief executive Tony Hayward - who caused a storm with a series of PR blunders - has stepped down from the day to day running of the clean-up, handing over to board member and American citizen Bob Dudley.

BP insists it is strong enough to tackle the spill, with its huge cash generation of more than £20bn (€23.8bn) a year as well as £6.7bn (€8bn) in banking facilities.

The firm is also passing its dividend for the first time since the Second World War in response to the crisis.

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