By Tim Webb and Ed Pilkington, Guardian
The future of BP was in doubt tonight as the U.S. government launched a criminal investigation into the Gulf of Mexico disaster and some commentators predicted the oil giant would face an operating ban in the country.
The U.S. attorney general, Eric Holder, opened a criminal and civil probe into the worst oil spill in American history. Though he did not specify which companies would be in the cross-hairs of the investigation, the actions of BP are likely to come under close scrutiny.
"We will closely examine the actions of those involved in the spill. If we find evidence of illegal behaviour, we will be extremely forceful in our response," Holder said.
BP shares plummeted by 13 percent today, wiping $17.6 billion off the company’s value, as financial markets reacted to the news that oil is likely to continue spewing into the Gulf of Mexico for at least two more months. It was the worst one-day fall for 18 years for what was once Britain’s most valuable company.
Political pressure is also mounting from the U.S., where BP’s ongoing failure to stem the leak has led for calls to President Obama to take a more hardline approach.
Robert Reich, the former labour secretary under Bill Clinton, today called for BP’s U.S. operations to be seized by the government until the leak had been plugged. A group called Seize is planning demonstrations in 50 U.S. cities this week and is calling for the company to be stripped of its assets.
Holder’s criminal investigation was launched just hours after Obama promised to prosecute any parties found to have broken the law in the lead up to the disaster.
The president dropped several threatening comments into a 10-minute address from the White House to mark the start of an independent commission he has convened to look into the causes of explosion at the Deepwater Horizon oil well.
City experts advised clients to sell shares following BP’s admission over the weekend that the much vaunted "top kill" attempt to bung up the well had failed.
One stockbroker, Arbuthnot, captured the gloomy mood around the company, saying that the disaster "has a real possibility of breaking the company." The key question, it added, was now "can BP survive?"
It said that judging by the increasingly hostile rhetoric coming from the White House, BP might even be prevented from operating in the U.S., which could make it a takeover target.
BP is the largest oil producer in the Gulf of Mexico, and its production growth plans for the next decade are dependent in part on finding new deepwater reserves.
BP said today that its costs from the disaster had risen to $990 million.
Although it is impossible to quantify the full financial impact of the disaster, it seems set to run into the tens of billions of dollars, and the costs will mount as long as the leak continues.
BP will attempt a riskier way of stopping the leak this week, but this could result in the amount of oil increasing and the chances of success appear slim. It hopes to plug the spill in two months, when the first of two relief wells are completed, but this operation could be hampered by the imminent hurricane season.
Today Obama called the oil spill the "greatest environmental disaster of its kind in our history" and said "if laws were broken leading to this death and destruction, my solemn pledge is we will bring these people to justice."
He added that for years the relationship between the oil companies and their regulators has been "too cozy" and said "we will take a comprehensive look at how the oil and gas industry operates."
The U.S. justice department is expected to pursue a dual-track approach in its investigation of BP and the other main entities involved: Transocean and Halliburton.
One track will explore whether the company broke rules in the days and months before the explosion, and the other will look at whether it contravened any environmental laws.
So far the Obama administration has moved cautiously on the legal side of the oil disaster, aware of the awkwardness of issuing criminal proceedings against a company upon which the federal government continues to remain deeply dependent for the shutting off of the stricken well and for the clean-up operation.
But as political pressure has mounted on the administration, and with Obama himself coming under fire for being insufficiently aggressive in dealing with the catastrophe, the administration has shown renewed willingness to take on BP.
As for BP, it has taken steps in the past few days to beef up its PR operation, in an attempt to limit some of the massive damage that has been dealt to its reputation. The company has recruited as head of the firm’s US media relations Anne Womack-Kolton, who was the then vice-president Dick Cheney’s press secretary in the 2004 presidential election.
(Republished with permission of the Guardian)
(Image: Deepwater Horizon Response team )