BP agrees to suspend dividend and create compensation funds

BP has agreed to set aside a $20bn (£13.5bn) compensation fund for victims of the Gulf of Mexico oil spill and says it will withhold dividends until the end of the year, following a meeting with US President Barack Obama last night.

The oil giant, which has been under increased pressure to demonstrate it is taking its corporate responsibilities seriously, has also agreed to establish a £68m fund to support unemployed oil workers.

The oil disaster in the Gulf of Mexico has now cost BP £1.1bn ($1.6bn) and the pressure on the oil giant is likely to intensify over the next few days.

The company says its containment device for the ruptured well is working again after a brief shutdown and a second containment system has been launched, designed to bring oil and gas to the surface.

BP’s woes in the Gulf of Mexico seem to be deepening after the US Geological Survey said the oil spill crisis could double the number of estimates previously thought.

An ad campaign for BP apologising for the oil spill polluting the Gulf of Mexico was also slammed by President Obama. The company is responsible for almost one in every seven pounds of dividends paid to British pension pots.

London 2012 chiefs are continuing to back Games partner BP despite the oil giant being the subject of international condemnation following the Gulf of Mexico oil spill. Greenpeace has warned London Olympic chiefs that the 2012 Games risk being “tarnished” by their partnership with BP.

Greenpeace also recently unveiled a press advertisement accusing BP CEO Tony Hayward of cutting investment in clean energy in favour of dirty sources of oil.

However, BP’s brand reputation crisis following the oil spill in the Gulf of Mexico has left rival petroleum companies relatively unscathed, according to YouGov BrandIndex data published last month.

The BP oil crisis and its aftermath – from a brand that had tried to reposition itself as sustainable – has raised the question whether rebrands can ever really work:

  • To read the cover story relating to this: ’Actions speak louder than logos’click here
  • To read Mark Ritson’s response to the cover story click here.
  • To view the Top 10 mistakes marketers make when rebranding – and how to avoid them table, click here.
  • To read Mark Choueke’s opinion on BP’s woes, click here.
  • For three business viewpoints click here.

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