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(Stefan Wermuth)
(Stefan Wermuth)

BP reports $17-billion second-quarter loss Add to ...

BP PLC says the worst oil spill in U.S. history has triggered a $17-billion (U.S.) quarterly loss and it has set aside $32-billion to tackle the spill.

BP also said it planned to sell assets worth up to $30-billion over the next 18 months and would cut its net debt to between $10-billion and $15-billion in that period.

The company said it would consider its position on future dividend payments at the time of its fourth-quarter results.

Analysts had expected BP to set aside tens of billions of dollars to cover the cost of the April 20 oil rig explosion that killed 11 people, ruined the Gulf's fishing and tourism industries, and polluted the Gulf shoreline with slimy goo.

Excluding a $32.2-billion charge for the oil spill and other non-operating costs, the replacement cost profit was $4.98-billion, in line with the average forecast from a Reuters poll of 11 analysts and up 77 per cent on the same period of 2009.

Replacement cost profit strips out gains or losses related to changes in the value of fuel inventories and as such is comparable with net income under U.S. accounting rules.

BP shares, which lost more than $100-billion in value at the height of the crisis, eased 0.2 per cent in early London trading.

"It's basically a kitchen sink job and we've got the way forward," said Panmure analyst Peter Hitchens.

"They've taken all the charges at once and we're seeing the first way forward - how they're going to deal with the balance sheet - which is the key thing ... I think it's the board trying to wipe the slate clean."

BP said it plans to offset the cost of its Gulf of Mexico oil spill against its tax bill, reducing future contributions to U.S. tax coffers by almost $10-billion.

BP said the net impact of its pretax provision of $32.2-billion for the spill will only be $22-billion, with the company recording a $10 billion tax credit, most of which will be borne by the U.S. taxpayer.

BP's British tax bill will also be reduced, the company added.

Analysts said BP could prompt more public and political anger in the United States by deducting all the costs, and especially the expected fines BP will face.

Protesters from environmental group Greenpeace shut down several of BP's 50 gasoline stations in central London on Tuesday in protest at the Gulf of Mexico oil spill.

Greenpeace said its activists had managed to close down 47 service stations in the capital. BP said only about 30 had been forced to close. The company said in a statement it would reopen them as soon as it was safe to do so.

Greenpeace and BP said activists stopped the flow of fuel by flipping safety switches on forecourts before removing them to prevent the service stations from reopening.

BP described the action as "an irresponsible and childish act which is interfering with safety systems".

An activist puts up a placard as Greenpeace blocks off a BP gasoline station during a protest in London.

At one station in Camden, north London, Greenpeace climbers replaced BP's logo with a new version showing the green "sunflower" disappearing into a sea of oil.

In reporting the company's results, BP chairman Carl-Henric Svanberg said the company would take a "hard look" at itself in the aftermath of the spill: "BP... will be a different company going forward".

However, Robert Dudley, who will replace Tony Hayward as CEO on Oct. 1, denied that BP's culture, which investors and analysts say encourages greater risk taking than some rivals, contributed to the disaster in the Gulf of Mexico.

More than five million barrels of oil have spilled into the Gulf of Mexico since the undersea leak began, according to U.S. government estimates. Some Gulf Coast residents, seething about damage from the spill and BP's compensation process, said they would be happy to see Mr. Hayward go.

"He will not be missed," said Larry Hooper of Empire, La., who runs an offshore fishing charter business.

Mr. Hayward will receive one year's salary, $1.61-million, and be appointed a non-executive director at TNK-BP as part of his departure deal. He will also keep his pension pot of around $17- million.

Investors had cheered Mr. Hayward's expected departure, sending BP shares up nearly 5 per cent in London and New York despite expectations for large financial losses.

BP has lost 40 per cent of its market value since the spill.

Analysts said Mr. Hayward's exit was good for the stock because he had become an easy target for angry U.S. lawmakers and Gulf residents. Mr. Hayward was pilloried in the United States for complaining he wanted his "life back" weeks after the deadly rig explosion and start of the spill.

"It is customary that when things don't go right, you are going to chop heads and usually that starts at the top," said Steve Goldman, a market strategist with money manager Weeden & Co in Greenwich, Conn.

Mr. Hayward is the third of the last four BP chief executives forced into an early exit. John Browne left after lying in court papers about a gay love affair and Bob Horton was pushed out over strategic disagreements in 1992.

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  • Updated November 24 1:00 PM EST. Delayed by at least 15 minutes.

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