BP 'strong despite spill setback'

image captionOnly a fraction of the oil is being captured

BP remains a "strong company" despite the "setback" it has suffered as a result of the oil spill in the US Gulf of Mexico, its chairman says.

In an interview with Sky News, Carl-Henric Svanberg dismissed comments by Russia's president that the oil giant may face "annihilation".

Mr Svanberg also confirmed that BP chief executive Tony Hayward would be handing over the day-to-day response to BP managing director Bob Dudley.

The BP oil rig exploded on 20 April.

Eleven people died in the Deepwater Horizon drill rig accident, which left a ruptured well spewing hundreds of thousands of barrels of oil into the Gulf of Mexico.

Despite BP efforts to contain the leak, oil continues to enter the sea, threatening states along the Gulf coast.

It has been described as the worst ecological disaster in the US.

A containment cap and another device are capturing some 25,000 barrels of oil a day - the latest estimates suggest 35,000-60,000 barrels a day are spewing out.

President Barack Obama has vowed to make BP pay for the damage.

The company has agreed to put aside $20bn (£13.5bn) to compensate victims of the oil spill - and has vowed to help with the clean-up.

On Friday, rating agency Moody's downgraded BP's credit rating by three notches, following similar moves by the other two rating agencies earlier this week.

It said the full costs of the oil spill would have a negative impact on the company's cash flow for "a number of years".

Complacency charges

On Thursday, Tony Hayward faced an angry US Congressional panel which told him BP had ignored dangers when drilling in the Gulf of Mexico.

House committee on energy and commerce chairman Henry Waxman said BP's "complacency" before the rig explosion had been "astonishing".

He accused Mr Hayward of "stonewalling" for failing to answer his questions.

But Mr Svanberg defended the chief executive, saying the answers would have to wait until a BP inquiry into what happened was completed.

Russian President Dmitry Medvedev said in an interview with the Wall Street Journal on Thursday that BP had to pay "a lot of money this year".

"Whether the company can digest those expenditures, whether they will lead to the annihilation of the company or its break up is a matter of expediency," Mr Medvedev said.

But the BP chairman rejected his company was facing that prospect.

"The company is strong, the company has strong underlying performance - strong cash flow, strong operations," Mr Svanberg said.

But he added that it was impossible to know the final cost of the spill until it had been stopped.

BP says it will withhold dividends until the end of the year as part of its response to the spill.

The long-term hope for ending the spill rests with two relief wells now being drilled, one of which has reached two miles (3km) below the seabed, or about two-thirds of the way to its target, US disaster co-ordinator Admiral Thad Allen reported on Thursday.

BP plans to seal the leak with concrete but that is not likely to happen until August at the earliest.

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