Deepwater Horizon clean up

UK-based energy firm BP is said to be considering asking UK Prime Minister David Cameron to intervene over the spiralling cost of compensation that US companies are demanding, in connection to the damages caused by the 2010 Gulf of Mexico oil disaster.

According to BBC business editor, Robert Peston, the company believes its financial revival is in trouble as the compensation system is being abused.

The company is also concerned that the financial burden of paying fictitious and inflated claims could make BP a takeover target and hopes the UK PM will raise the issue with the US Government.

The Deepwater Horizon disaster killed 11 people and led to spilling of an estimated four million barrels of oil into the Gulf and along the coastline.

In 2012, BP agreed to pay compensation and set aside $7.8bn; however, the company now anticipates the final figure to be much more than it earlier predicted. In March 2013, BP asked a federal judge to temporarily stop oil spill compensation payments, which it says are based on a ‘fictitious’ and ‘absurd’ business economic loss basis.

"The company is also concerned that the financial burden of paying fictitious and inflated claims could make BP a takeover target."

Peston said: "According to BP sources, the rate at which cash is leaking from the company could turn into a serious new financial crisis for the company, putting at risk its dividend and making it vulnerable to a takeover by another oil company."

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By GlobalData

"BP is so worried by the potential magnitude of alleged undeserved payments it is making to companies that it is planning to ask the UK Prime Minister and chancellor for help in persuading the US Government to intervene. It is hopeful that David Cameron will raise the issue at the G8 meeting of the government of the world’s richest countries, which the UK is hosting next month."

In 2012, BP agreed to pay compensation to nearly 100,000 people and companies, including fishermen and restaurant owners, who claimed their livelihoods and health had been impacted due to the spill.

In addition, BP, along with other oil majors such as Shell and Norway’s Statoil, had come under the European Commission probe regarding allegations that firms colluded in fixing oil prices.

On Thursday, UK Prime Minister David Cameron, speaking in New York, said anyone found guilty of the "hugely concerning allegations" of oil price fixing should face the "full force of the law", the Guardian reported.

Image: Deepwater Horizon clean-up costs mounted for BP to an estimated $3bn by July 2010.