The Gulf Oil Rig explosion has led to a virtual implosion of British Petroleum with the costs and damages mounting at an unprecedented pace for this company. British Petroleum the $200 Billion Oil Colossus has seen its market cap being shaved off by a massive $60 billion after the explosion.The Oil Spill which has been termed as the Greatest Environmental Disaster by President Obama will lead to a permanent diminution of British Petroleum if not its demise.The Company has been recently advised by 2 US Senators to suspend its Dividend Payments till the final damage figure is calculated.There have also been rumors about the possibility of BP’s takeover due to its weakened state.However the massive damage to its reputation and uncertainty regarding the damages it will have to pay make this an unlikely option in the near future.Now there are talks that it will have to sell off valuable assets to stay afloat.A classic case of implosion of a big company just like AIG which was brought to its knees by the Financial Crisis.
BP May Sell Prudhoe Bay Stake as Spill Costs Mount – Bloomberg
BP Plc may have to sell some of its most-valued assets, including a stake in the biggest U.S. oil field, to pay cleanup costs, fines and legal damages from the largest offshore spill in U.S. history.The 26 percent stake in Prudhoe Bay on Alaska’s North Slope and other BP assets could attract suitors such as China National Petroleum Corp., Occidental Petroleum Corp. and Hess Corp., said Douglas Ober, chief executive officer at Petroleum & Resources Corp. in Baltimore, the oldest U.S. oil fund.
“BP is going to have to look to other assets to pay for this mess they’re creating,” said Ober, who oversees a combined $1.6 billion at the fund and Adams Express Co. “They won’t be able to use any of that cash flow to expand production or add to reserves, and that’s really going to put them in a bind.”BP lost 31 percent of its market value since an April 20 fire in the Gulf of Mexico killed 11 workers, sank a $365 million rig and triggered subsea leaks that have spewed millions of gallons of crude into the Gulf. The company has spent more than $1 billion trying to stanch the leaks and remove oil from the ocean. Ober sold all of his BP stock after 15 refinery workers perished in a 2005 explosion at the company’s Texas City, Texas, plant.
The whole BP Oil Spill has been a tale of Corruption,Lies and Deception.President Obama has also come under fire for doing too little and too late in case of the BP Oil Spill.Obama has been a bit lethargic in waking up to the perils of the disaster that the Oil Spill has turned out to be . He did react to the pressure from the civil society and set up a Presidential Commision.But he has been seen to be through his actions not to be proactive enough.The US administration is trying to deflect all the blame to BP by starting a criminal investigation.
As the Gulf of Mexico spill goes on, pressure is mounting on the president – Economist
THE great fear of every political leader is events, especially unexpected ones, and especially unexpected ones that are beyond the power of politicians to control. This event has no precedent: a British company drilling a mile beneath the surface of the Gulf of Mexico punctures the earth’s skin, unleashing a plume of oil that nobody seems able to stop. Although responsibility for the accident plainly lies with BP, a slick of recrimination now laps around the White House too.
Because it is the waters, shores and livelihoods of Louisiana that have once again suffered most, Americans have from the start made inevitable comparisons between Barack Obama’s handling of the Deepwater Horizon spill and George Bush’s handling of Hurricane Katrina in 2005. True, Mr Bush’s job after the hurricane inundated New Orleans was to organise rescue and evacuation, a job for which governments are expected to be trained and ready. Until now, governments have not readied themselves to plug holes on the ocean floor. But what if the oil companies’ engineers cannot undo their mistake? Mustn’t the government step in?
The Oil Industry also finds itself in the eye of the storm with public glare turned towards the deleterious effects of fossil fuel energy addiction.It is trying to fight against the public anger which will take the form of strict regulations against the industry.The costs to the Oil Industry will rise with reduced profits and salaries for its executives.I don’t think its $175 million lobbying war chest would help it in totally deflecting this well deserved anger. Fossil Fuels have been running on state subsidies for a long time and managing to hide the huge costs they impose on human health and environment besides promoting terrorism and energy insecurity.If this Oil Spill manages to change the course of the Energy Policy in a meaningful ways there might be a thin Silver Lining to this Ecological Disaster.
Oil Companies Weigh Strategies to Fend Off Tougher Regulations – NY Times
Google+When the Obama administration imposed new restrictions last week on offshore drilling in the wake of the BP oil spill, officials carved out an exemption that received little public attention: Companies working in shallow waters, unlike deep-sea operators like BP, could again begin drilling for oil and gas.
The decision, which followed a furious appeal from lawmakers allied with the oil industry, represented a surprising victory for the shallow-water drillers in the midst of what could prove the biggest environmental disaster in United States history. And it reflected the intense lobbying efforts at work from all sides, as Congress and the administration consider ways to prevent another drilling disaster off the nation’s coasts.
Environmentalists and their supporters in Congress, hoping to seize the political momentum, are working to push through measures to extend bans on new offshore drilling, strengthen safety and environmental safeguards and raise to $10 billion or more the cap on civil liability for an oil producer in a spill.
