Another share drop heightens crisis for BP

A scathing attack on BP and its chief executive, Tony Hayward, by US President Barack Obama pushed down the stock by six per cent at one stage before it saw a slight recovery. Last night the firm's shares closed at down 17.35p at 391.55p, a loss of four per cent.

The fallout from the worst oil spill in American history will worsen the already poor position of many major British pension funds, in the public and private sector, which had invested heavily in BP. About 1 in every 7 of blue-chip dividend payouts every year comes from BP.

Yorkshire's four main taxpayer-funded schemes, which handle the contributions and payments for ex-council, court and police authority staff, all have multi-million pound sums in BP shares. West Yorkshire Pension Fund has the largest stake, with 197m invested in BP, according to figures in last year's annual report.

The company has lost 40 per cent of its stock market value since the Deepwater Horizon disaster on April 20, which killed 11 workers. It has so far refused to comment on the future of dividends, with the board due to make the decision at the end of July.

Yesterday's share price fall came as investors fretted over the prospect of the first cut in shareholder payments since 1992.

President Obama has steadily increased the political pressure on BP and Mr Hayward will come under heavy fire from angry US senators in a stormy Congressional hearing next week.

The President said Mr Hayward should be sacked in a television interview this week although the BP boss has said he would "see this through to the end".

The firm is struggling to control the spill with a containment cap placed over the well last week, which collected 14,800 barrels on Monday and 7,800 barrels in the first half of Tuesday before pumping the oil to a ship on the surface.

Coast Guard Admiral Thad Allen, who is leading the government relief effort, said BP planned to move another rig to the spill site on June 14. This would enable the company to boost its capacity to collect oil from the well to 28,000 barrels (1.18 million gallons) a day, he said.

Mr Allen did not indicate this meant the flow rate of the oil could be as high as 28,000 barrels a day, but his comments are likely to underscore that neither BP nor the government have yet managed to determine just how much oil is gushing out.

Government scientists have estimated that the leak spews 12,000-19,000 barrels a day, with one estimate as high as 25,000 barrels. They are due to present revised estimates later this week or early next week.

BP has said revenues from the recovered oil, as well as liquid skimmed from the sea surface, would be put into a new wildlife fund to help habitats along the coastline of Louisiana, Mississippi, Alabama and Florida.

Despite the severity of the catastrophe, Seymour Pierce analyst Alan Sinclair said the stock market was not taking a "rational" view of the overall impact on the company. "As far as the share price is concerned, the situation – inflamed by ill-informed comments from ignorant US politicians and assorted commentators – has now descended into farce," he said.

Tony Shepard, an oil analyst at brokerage Charles Stanley in London, said: "People are resigning themselves to the fact that there may be a suspension of the dividend."

Investors do not, however, appear to be betting against BP by "shorting" its shares – selling in the hope of price falls – according to research from Data Explorers.

Just 0.5 per cent of BP's shares are on loan with short-sellers, according to the firm, compared with around four per cent for the average FTSE 100 stock.

OBAMA TURNS UP HEAT OVER DISASTER

BP has become a huge political issue in the US as President Obama struggles to reassert his authority with voters.

He has said he would sack Tony Hayward, the firm's chief executive, and Interior Secretary Ken Salazar told a Senate hearing he would ask BP to repay the salaries of any workers who were laid off because of the six-month moratorium on deepwater exploratory drilling imposed by the US government.

Mr Salazar said he would consider lifting the moratorium early if he received recommendations from a presidential commission investigating the spill sooner than expected

The Obama administration has also kept up the pressure on other oil companies. Top executives from Exxon Mobil Corp, Chevron Corp, ConocoPhillips and Shell Oil Co, as well as BP America President Lamar McKay, have been called to testify at a June 15 congressional hearing that will look at the oil spill and America's energy future.