July 20, 2010 / 9:41 AM / 9 years ago

WRAPUP 4-BP to sell assets to pay for spill

* BP to sell Pakistan, Vietnam assets worth $1.7 billion

* Britain’s Cameron defends BP ahead of Obama talks

* Stocks flat in London, New York

* Test on well continues, scientists consider options (Recasts, adds details on asset sales)

By Tom Bergin and Matt Spetalnick

LONDON/WASHINGTON, July 20 (Reuters) - British energy giant BP Plc (BP.L) (BP.N) on Tuesday announced plans to sell assets worth about $1.7 billion as it seeks to build up cash to pay for the worst oil spill in U.S. history.

As British Prime Minister David Cameron sought to defend the energy giant before meeting President Barack Obama and U.S. senators, the energy company outlined its latest plans to raise money. [ID:nN20102371]

Exactly three months after an explosion on an offshore rig killed 11 workers and caused millions of barrels of crude to spill into the Gulf of Mexico, BP announced it would sell its Vietnam pipeline and upstream assets as well as its Pakistan assets. [ID:nLDE66J1O3]

It is the first major asset sales announcement since BP committed to raise $10 billion in the coming year to pay for damage claims, the cleanup and legal costs related to the leaking well. [ID:nLDE66J1O3]

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For full spill coverage link.reuters.com/hed87k

Breakingviews [ID:nLDE6671DQ]

Insider TV link.reuters.com/hyr57m

Graphic on BP shares link.reuters.com/vys95m

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BP, which said on Monday it had spent about $3.95 billion so far on the oil spill, agreed under intense pressure from U.S. authorities last month to set up an independently administered $20 billion escrow fund for damage claims from the spill.

The Obama administration has stressed that the amount is not a cap on the company’s liabilities.

The broken well was capped last week — at least temporarily — after spilling up to 60,000 barrels a day of crude for three months.

Shares were flat in London and New York trade after the latest asset sale announcements.

Analysts said investors, who reacted positively after the top U.S. oil spill official said on Monday that seepage about three kilometers (1.9 miles) from the well was not caused by a pressure test, were still wary.

“So much is unknown, the problem with the stock is investors are making bets with very little information,” said Mark Coffelt, chief investment officer, Texas Capital Value Funds in Austin, Texas. “It’s a difficult stock to hold, because it’s so hated right now, which probably means it’s a good buy.”

‘STATIC KILL’

The test on the well, which has been extended in 24-hour increments by the U.S. government, will continue until Tuesday afternoon and then be reevaluated for a possible further extension. Scientists are now weighing another option — a so-called “static kill” to help smother and plug the leak.

This would involve pumping heavy drilling mud and possibly cement into the well, much like BP’s failed “top kill” in May.

The American public and U.S. lawmakers are angry with BP for the oil spill, which has caused an economic and environmental disaster in five states along the Gulf Coast, hurt Obama’s approval ratings and complicated traditionally close ties with Britain.

Illustrating that anger, the energy giant is facing questions on an unrelated issue — whether it had a role in the release last year of Libyan Abdel Basset al-Megrahi. He was sentenced to life for bombing a Pan Am flight in 1988 over Lockerbie, Scotland, in which most of the 270 dead were Americans.

BP has confirmed it lobbied the British government in 2007 over a prisoner transfer deal for fear its commercial interests in Libya were being damaged, but said it was not involved in talks over al-Megrahi.

Cameron, in Washington to meet Obama and lawmakers, told National Public Radio: “Of course BP has got to do everything necessary to cap the oil well, to clean up the spill, to pay compensation. I’ve met with BP. I know they want to do that, and they will do that.”

Several U.S. lawmakers have called on the United Kingdom to review its decision to release al-Megrahi and will talk to Cameron about the issue.

“But ... let’s be clear about who released al-Megrahi; it was a government decision in the UK. It was the wrong decision. It wasn’t the decision of BP. It was the decision of Scottish ministers,” Cameron said. (Additional reporting by Doina Chiacu and Tabassum Zakaria in Washington, Matthew Lynley in New York, Writing by Deborah Charles and Sitaraman Shankar; Editing by Eric Beech)

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