BP Shares Fall in London After U.S. Lawsuit

BP (BP) shares fell the most in four months in London after the Obama administration sued the oil giant, saying it violated environmental laws during the Gulf oil disaster.

BP shares retreated by as much as 3.2%, the most since August, Bloomberg News said. As of 9:08am local time, the shares were down 2.3% at 465.4 pence.

The stock has fallen 29% since April 20 explosion on the Deepwater Horizon rig, which killed 11 workers and left a ruptured oil well spewing crude into the Gulf of Mexico.

The stock had rallied since June, when the company agreed to pay into a $20 billion escrow account to compensate victims of the disaster. The company has set aside $40 billion to pay for cleanup and litigation.

Sponsored Links

The latest development has sent the shares tumbling again.

"Just when it looked like BP had turned a corner and was beginning to move on from the Gulf oil spill, it's dealt another blow to its recovery efforts," Manoj Ladwa, senior trader at ETX Capital, told Reuters.

The U.S. government filed a lawsuit in New Orleans against BP and four other companies. The suit seeks damages under the Clean Water Act and a declaration that four of the defendants are liable under the Oil Pollution Act for all removal costs and damages from the oil spill. This would include damages caused to the environment.

The suit does not specify an amount of damages.

Under the Clean Water Act, the U.S. can seek civil penalties of $1,100 for each barrel of oil spilled. In certain circumstances, it can claim as much as $4,300 a barrel.

In August, the government reported that 4.9 million barrels of oil were spilled.

"We intend to prove that these violations caused or contributed to this massive oil spill, and that the defendants are therefore responsible -- under the Oil Pollution Act -- for government removal costs, economic losses, and environmental damages," Attorney General Holder said yesterday, according to Bloomberg News.

The Justice Department did not ask for damages because it will take years to quantify the damages, assistant attorney general Tony West said.