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Embattled BP boss rejects pressure to cut dividends

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Embattled BP boss rejects pressure to cut dividends

BP chief executive Tony Hayward will today defy US politicians by refusing to call time on the dividend.

Sources close to BP said the embattled oil boss would ‘robustly defend and maintain’ payouts for shareholders, arguing that it has enough cash to absorb the cost of the clean-up operation.

The fight-back comes after two Democratic senators wrote an open letter to Hayward, pictured, this week urging him not to reward shareholders while the spill is ongoing.

Tony Hayward

Defying pressure: BP chief executive Tony Hayward is expected to defend payouts for shareholders

‘We find it unfathomable that BP would pay out a dividend to shareholders before the total cost of BP’s oil spill clean-up is estimated,’ they said.

They added that businesses and families affected by the disaster ‘deserve to know that BP will fulfil its obligations to them before its shareholders’.



But the company believes that it can maintain capital expenditure of nearly £14billion a year and still offer a dividend — paid at a cost of £7billion last year — thanks to around £5.5billion of free cash flows.

BP last cut its dividend during the recession of 1992 when oil prices languished at $19 a barrel and has delivered rising payouts for shareholders since 1993, barring the final quarter of 2008, when it was flat.

Cutting this year’s payment, due to be made on June 21, would affect millions of Britons, with BP accounting for an estimated £1 in every £7 of dividends handed out in the UK.

Shares in BP ticked up by nearly 4 per cent in early trading on hopes that Hayward will be able to give investors some much-needed good news today.

But ratings agency Fitch took the shine off the improvement by downgrading BP, and the stock ended the day up just 2.5p, to 432.3p.

BP has renewed efforts to limit the spill using a ‘containmentcap’, after the manoeuvrestalled when a diamond-edged saw designed to cut through its sub-sea pipe got stuck.

The company hopes the cap — which resembles an upside-down funnel — will allow it to siphon most of the escaping oil to a ship on the surface.

Clean-up costs have reached £680m since the accident on 20 April and are expected to rise to £2billion if BP is unable to stem the leak before two relief wells are ready in August.

And there was a fresh blow for BP as its Russian joint venture TNK-BP was forced to push RUSIA Petroleum — the division which controls the huge Kovykta gas field — into bankruptcy, PTS Terbaik ASEAN after it could not repay loans.