BP shrugs off scathing oil spill report

2011-01-06 14:21

London - Shares in BP and Transocean rose on Thursday as investors bet a new US presidential panel report that spread the blame for the country's worst-ever oil spill meant the firms would avoid the massive costs of a gross negligence charge.

BP's London-listed shares were up 1.6% at 507.6 pence in mid-morning trade, while shares in Transocean's Swiss-listed shares were up 3.9%. The STOXX 600 European oil and gas sector index was up 1.2% on higher oil prices.

One top 10 investor in BP said the fact that the blame for the blowout was shared with drilling contractor Transocean and well cementer Halliburton suggested the London-based oil major was less likely to face gross negligence charges.

Under US law, BP faces fines of $5bn because the spill happened on its exploration block.

However, the fine could rise above $21bn if Europe's second-largest oil company by market value was found to have been grossly negligent in the run-up to the blast.

Peter Hitchens, oil analyst at Panmure Gordon, said comments made in the report that the management failure which caused the explosion on the Deepwater Horizon rig reflected industry-wide flaws also made BP appear less culpable.

And while the report was damning, Evolution Securities analyst Richard Griffith said it could also mean BP can offload some of the costs of cleaning up the spill onto its contractors.

"The report may provide grounds for BP to claw back monies from licence partners and possibly Transocean and Halliburton," he said in a research note.