More than £5.6billion has been wiped off Total’s shares since Tuesday and the French oil giant could face costs of up to £6billion if its North Sea gas leak leads to an explosion, it emerged last night.
It will have to fork out nearly £1.9billion if the troubled well takes months to fix, according to experts’ early estimates.
An explosion on the platform could cost £4billion more, even without potential fines for environmental damage, Bank of America Merrill Lynch analysts said.
As Total tries to work out how to stop the leak on the Elgin platform, investors are figuring out the possible cost in lost production, repairs and environmental fines. If a fix happens quickly and production is lost for only two weeks, estimates go as low as £94million.
Even at the top end of the range, the accident is not expected to be as costly as BP’s Gulf of Mexico’s oil disaster in 2010. BP made provisions of more than £20billion and its reputation also suffered heavy damage. Analysts at credit rating agency Fitch say the Elgin incident is unlikely to escalate to a crisis on the scale of Deepwater Horizon.
Total is expected to keep its “AA” credit rating because it had around £12billion to cover costs from the leak.
After falling nearly 7% on Tuesday, shares in France’s biggest listed company closed down a further 1.4% yesterday.
Total is looking at two main options to stop the leak – drilling a relief well nearby, which could take six months, or sending in engineers to kill the leak, which would be faster but riskier.