Another share drop heightens crisis for BP

SHARES in troubled oil giant BP plunged again as concern mounted it would bow to rising political pressure and cut dividends to help pay for the Gulf of Mexico disaster.

A scathing attack on BP and its chief executive, Tony Hayward, by US President Barack Obama pushed down the stock by six per cent at one stage before it saw a slight recovery. Last night the firm's shares closed at down 17.35p at 391.55p, a loss of four per cent.

The fallout from the worst oil spill in American history will worsen the already poor position of many major British pension funds, in the public and private sector, which had invested heavily in BP. About 1 in every 7 of blue-chip dividend payouts every year comes from BP.

Yorkshire's four main taxpayer-funded schemes, which handle the contributions and payments for ex-council, court and police authority staff, all have multi-million pound sums in BP shares. West Yorkshire Pension Fund has the largest stake, with 197m invested in BP, according to figures in last year's annual report.

The company has lost 40 per cent of its stock market value since the Deepwater Horizon disaster on April 20, which killed 11 workers. It has so far refused to comment on the future of dividends, with the board due to make the decision at the end of July.

Yesterday's share price fall came as investors fretted over the prospect of the first cut in shareholder payments since 1992.

President Obama has steadily increased the political pressure on BP and Mr Hayward will come under heavy fire from angry US senators in a stormy Congressional hearing next week.