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Black week for BP

Friday, December 12, 2014 - 02:03

It's been a challenging seven days for BP. After losing a legal challenge to a compensation deal over the 2010 Gulf of Mexico spill, it's also cutting thousands of jobs across its business. Ciara Lee asks: what next for the oil giant?

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REFEEDING SCRIPT WITH SPELLING CORRECTION ON 'LOUISIANA 2010' GRAPHIC It's one of the world's biggest oil companies and it's not had a great week. First came the rejection from the US Supreme Court of BP's legal challenge to a compensation claim of the 2010 Gulf of Mexico oil spill. The company had argued it would be vulnerable to false or inflated claims and wanted to limit payments over the environmental disaster. BP has sold over 43 billion dollars worth of assets to cover the expense of the disaster as well as the industry's rising costs. Justin Urquhart Stewart is from Seven Investment Management. (SOUNDBITE) (English) JUSTIN URQUHART STEWART, HEAD OF CORPORATE DEVELOPMENT AT SEVEN INVESTMENT MANAGEMENT, SAYING: "How bad can it get for a company like BP? What a history it has had over the past decade or so. And when you see whether it is the court case in the States, or the oil price and of course that's not going to change any time soon. So therefore it does get difficult. Therefore I think you have to be really rather wary indeed of dividends potentially being cut." BP is also cutting thousands of jobs across its global oil and gas business by the end of next year in a one billion dollar restructuring programme A reported eighty-seven thousand people are expected to lose their jobs. Pressure is being piled on BP and its peers as crude prices remain close to a five year low - and it's set to last. (SOUNDBITE) (English) JUSTIN URQUHART STEWART, HEAD OF CORPORATE DEVELOPMENT AT SEVEN INVESTMENT MANAGEMENT, SAYING: "The previous arrangements you had amongst the big oil producers and the big producers in terms of the countries not just the companies is relatively stable for a while. All of that has changed. OPEC is considerably weaker. The cartel has broken down. Alternative fuels and the big majors don't have the power that they had before." Global oil and gas exploration projects worth more than a hundred and fifty billion dollars are likely to be put on hold because of plunging prices. And deeper cuts to BP's 2015 budget are also being considered. But facing up to tougher times with a "shrink to survive philosophy" could keep BP in favour with its shareholders. It's hoping it's still relatively strong balance sheet will buy it time to adjust to the changing energy environment, and its radical downsizing.

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Black week for BP

Friday, December 12, 2014 - 02:03