BP oil spill costs rise by more than £1 billion

The estimated total cost of BP's Gulf of Mexico oil spill has risen by £1.1 billion in the group's fourth quarter results released on Tuesday.

The total cost of the spill was now £27 billion, the group announced. Lawsuits relating to the spill begin later this month and BP chief executive Bob Dudley said it was ready to settle on "fair and reasonable terms" but added that the company was "preparing vigorously" for the cases.

The increased estimate reflected higher costs for clean-up and a £315 million charge for legal costs beyond 2012, to add to the £630 million already set aside.

The group said it faced around 600 civil lawsuits from people in states as far away as South Carolina and Kentucky, as well as litigation from the government and Gulf Coast states.

BP said contributions from its partners in the blown-out Macondo well, Anadarko Petroleum and Japan's Mitsui, would reduce the final bill it faced.

The £3 billion+ BP has received has contributed to the £13 billion fund created to compensate those impacted by the worst-ever offshore oil spill in the US, and will allow BP to end its own payments into the fund in 2012, a year earlier than expected.

Progress in meeting the costs of the spill allowed BP to announce an increase in its dividend, which had been cut at the height of the spill in 2010.

Photo credit: Reuters