BP shares hit new low as drilling legal fight heats up

BP's share price slipped further this morning, hitting a 14-year low after the company announced that clean-up and compensation costs relating to the Gulf oil spill have hit $2.35bn.

With fears mounting that hurricane season is about to further complicate the clean-up project, shares in the company dropped 6.8 per cent at one point this morning, making the company the biggest faller on the FTSE 100.

Reports said the markets were also responding to news that the US government is undertaking a review of the environmental impact of BP's plans for drilling projects in Alaska.

The company said the latest cost estimate includes $126m in compensation payments made to 39,000 claimants. A further 35,000 claims are still being processed with more expected to be lodged as the spill continues to spread.

BP, which last week agreed to pay $20bn into an independently administered compensation and clean-up fund, did have some moderately good news to report yesterday, confirming that it has fixed the cap collecting oil from the leak after it was disabled after being damaged in an accident on Wednesday.

It also said that it was making progress with work on two relief wells that are expected to be completed by August and is planning to have a new containment system in place next month to capture more of the leaking oil.

However, the project could be seriously hampered by the weather over the next few months as the Gulf hurricane season begins.

The US National Hurricane Centre said yesterday that there was a good chance that the first major tropical depression of the year could develop over the next couple of days.

Meanwhile, the legal battle between the White House and a group of oil firms over the legality of the six-month moratorium on deepwater drilling heated up yesterday when the judge ruling over the case refused to temporarily suspend his ruling that the ban should be lifted until an appeal hearing has been c ompleted.

Louisiana judge Martin Feldman controversially ruled on Tuesday that the moratorium should be lifted while a court case is heard to determine whether the government has the authority to impose the ban.