BP records huge loss as oil spill takes its toll

Robert Dudley: steps up at BP
Robert Dudley: steps up at BP

BP has announced a record loss of more than $17bn (£11bn) in the second quarter and admitted that the Gulf of Mexico oil leak has damaged its brand.

The company had registered a $6bn profit in the first quarter of this year, but the cost of dealing with the aftermath of an explosion on the Deepwater Horizon oil rig has seen BP sink to an $11bn loss over the first half of 2010.

The brand warned investors that the clean-up operation would continue to impact the business over the coming months, stating the event had "damaged BP’s reputation and brand", leading to "adverse public and political sentiment".

A spokesman said BP was not putting out an estimate to quantify the brand damage in financial terms.

BP said it had taken a $32.2bn pre-tax hit from the disaster so far, with around $20bn set aside for compensating those living in affected areas.

BP has also confirmed that embattled chief executive Tony Hayward is to step down from his position on 1 October, to be replaced by fellow executive director Robert Dudley, who has been leading the Gulf of Mexico clean-up operation and compensation programme.

Hayward, who has been heavily criticised in the US for his PR gaffes during the oil leak, including travelling back to the UK to attend a sailing regatta at the Isle of Wight, will remain on the BP board until 30 November, and will be nominated for a non-executive director role at Russian joint-venture TNK-BP.

Dudley said: "I am honoured to be given the job of rebuilding BP's strengths and reputation, but sad at the circumstances. I have the greatest admiration for Tony, both for the job he has done since he became CEO in 2007, and for his unremitting dedication to dealing with the Gulf of Mexico disaster.

"The Gulf of Mexico explosion was a terrible tragedy for which – as the man in charge of BP when it happened – I will always feel a deep responsibility, regardless of where blame is ultimately found to lie."

Picture credit: ©BP plc

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