US imposes 'awful' ban on BP pitching for new work
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Your support makes all the difference.The recent run of good fortune for BP ended yesterday as the US government accused it of showing "a lack of business integrity" over the Gulf of Mexico oil spill and temporarily banned it from pitching for new federal contracts.
In a decision with potentially far-reaching financial and reputational consequences, the Environmental Protection Agency (EPA) has temporarily suspended BP from bidding for new oil and gas exploration licences, contracts to supply fuel to the Department of Defence and all other government business until it can prove "it meets federal business standards".
However, the suspension does not affect existing agreements between BP and the US government.
David Buik, of Cantor Index, said: "This is awful. It's temporary, but for how long? It could have massive repercussions on shareholders and on dividends." Although Mr Buik and other analysts cannot yet assess the likely extent of the damage on BP, they agree that it at least represents a setback for the oil giant after a string of positive developments, and could deal a sizeable blow to its bottom line and reputation.
The EPA's decision came two weeks after BP admitted 14 counts of criminal misconduct as part of its record $4.5bn (£2.8bn) settlement with the US government over the Gulf of Mexico oil disaster in April 2010, which killed 11 workers and spilled nearly 5 million barrels of oil into the sea.
The news came as a surprise to BP, whose general counsel, Rupert Bondy, told investors on the night of the settlement that the group had been given "no indication that any agency would move to suspend or debar us". In the same session, chief financial officer Brian Gilvary acknowledged that such a move would force BP to review the investment case for the US.
His comments underline how important the US is to BP, which accounts for a fifth of its daily global production and where the company has invested $52bn since 2007.
Shares fell by 1.85p to 429.4p.
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