BP puts spill costs at €40bn

EMBATTLED BP is understood to be working on plans to raise $50 billion (€40bn) to cover the cost of the Gulf of Mexico oil spill – more than double the amount previously thought.

Directors at the oil group are said to have approved a scheme last week to raise the money in a bid to ensure they have enough reserves to cover any claims as a result of the disaster, according to the Sunday Times newspaper.

The figure is more than double the $20 billion (€16bn) that the group has already agreed to pay into a compensation fund for those affected by the spill, although analysts have warned that the final cost of the disaster could be as much as $100bn (€81bn).

BP is expected to start raising the cash as early as next week through a $10bn bond sale.

It is also understood to be in talks with banks to raise a further $20bn through loans, with another $20bn raised through assets sales in the next two years.

It has already scrapped shareholder dividends until the end of the year to help pay for the clean-up operation.

BP declined to comment on the report, but pointed out that its chairman Carl-Henric Svanberg had said last week that the company needed to have “an unusually strong cash position”.

The group was also reported to be preparing to take legal action against one of its partners Anadarko Petroleum, after it said it would not cover any of the cost of the clean-up.