Analysts' estimates of the potential cost of the Gulf of Mexico oil spill range from $29 billion to $63 billion, writes NIALL STANAGEin New York

MOST COVERAGE of the massive BP oil spill in the Gulf of Mexico has focused on the disaster's environmental and political dimensions. But, more than two months after the Deepwater Horizon rig first exploded, are we any closer to determining the final cost to BP itself?

And is there any real possibility that the oil giant could be forced out of business?

The answer to the second question is most likely "no". BP simply has too many prodigious assets for bankruptcy to loom large, unless an additional catastrophic event occurs.

A more likely possibility - though also far from certain - is that the corporation could find itself in the sights of a rival seeking to take it over.

Calculations as to the ultimate cost of the disaster to BP are speculative, but some losses can be easily calculated - none more so than the precipitous decline in the company's market value.

On April 19th, the day before the rig exploded, BP shares were priced at $59.48 on the New York stock exchange. Now they hover around the $30 mark. (On Wednesday, they closed at $29.67.) Extrapolating from those prices, BP was valued at about $186 billion (€150 billion) before the oil spill. Today it is worth half that - a loss of $93 billion.

Many analysts believe BP will recover its standing in the long run. To do so, it will first need to absorb the costs that it has already incurred. The largest of these is the $20 billion BP has agreed to place in an escrow fund to compensate those economically affected by the disaster. The money will be disbursed by Kenneth Feinberg, who previously adjudicated on compensation claims arising from the terrorist attacks of September 11th, 2001.

The fund was agreed at a White House meeting earlier this month, and it became a political hot potato when Joe Barton, a Republican congressman from Texas, described it as the consequence of a "shakedown" by President Barack Obama. Barton also told BP's chief executive Tony Hayward "I apologise", creating a major embarrassment for members of his own party.

Republican leaders rushed to distance themselves from Barton's remarks while Obama's press secretary, Robert Gibbs, seized upon them with glee.

The $20 billion fund, importantly, does not cap BP's liabilities - private citizens will still be able to sue the company while the threat of criminal charges from the federal government also hangs over the company.

Separate to the fund, BP has agreed to provide $100 million to compensate oil industry workers who will lose earnings because of the moratorium Obama announced on deep-sea drilling in the wake of the catastrophe.

Although it is unusual for a private corporation to appear to pick up the tab for a government decision, the actual cost of the moratorium is expected to be more than three times as large as the sum BP is providing.

BP says it has already paid out over $105 million in response to claims arising from the spill. The company says this sum is comprised of more than 32,000 payments. Around 65,000 claims have been submitted.

In addition, the cost of the clean-up operation itself, for which BP is also liable, is currently hovering around $2 billion.

Adding together the figures for the escrow fund, the moratorium payment, the already-paid claims and the post-spill operation gives a total of $22.2 billion for BP's liabilities.

This is almost certain to grow further. BP itself says that "it is too early to quantify other potential costs and liabilities associated with the incident".

Some analysts have tried to do precisely that but the inherently speculative nature of the task is reflected in the fact that their estimates range from $29 billion (a figure arrived at by JP Morgan Chase) to $63 billion (the estimate given by Raymond James).

The discrepancies are largely due to different assumptions on the part of the analysts involved. For instance, Fred Lucas of JP Morgan Chase seems to suggest that the penalties for pollution will amount to somewhere between $1,100 per barrel of oil discharged and $4,300 per barrel. (The latter figure would take precedence if the oil giant is found to have been grossly negligent.) Importantly, his estimate suggests that the final scale of the spill will be about 1.9 million barrels.

But Pavel Molchanov of Raymond James reckons the total spill could amount to about 5.3 million barrels. He then takes the per barrel cost of all liabilities that struck Exxon in the wake of the 1989 Exxon Valdez disaster ($7,942 per barrel) and marks that sum up by a 50 per cent premium because "the US legal system has generally become more plaintiff-friendly over the past 20 years". Those calculations result in his estimate of a $63 billion price tag.

One way or another, BP is clearly facing massive costs. But its likely saving grace is straightforward: it also has massive wealth. The company's pretax earnings for 2009 were $25.1 billion - and that was the lowest figure of the past four years.

In addition, the company's 2009 balance sheet showed total assets of $235 billion, including $108 billion in property, plant and equipment, almost $38 billion in long-term investments and over $8 billion in cash.

Add to this the fact that the $20 billion compensation account will be funded by payments of $5 billion per year over four years, and it becomes clear why rumours of the oil company's demise may have been greatly exaggerated. The sharp reduction in the company's market value could make it a takeover target, but most observers believe none of its rivals will make a bid until the overall picture in relation to the oil spill liabilities is much clearer.

There is also the damage to BP's reputation to consider - though this is a factor that is notoriously difficult to quantify financially. One element that does carry a definite price tag is the possibility of the company becoming politically radioactive.

Spending by the US government on BP products amounted to about $1.6 billion in 2009; it remains to be seen whether that level of spending will remain politically viable.

John Lott, a senior research scientist at the University of Maryland and an expert on reputational damage, notes that the overall effect upon companies in environmental disasters can be very different - and lesser, in some respects - than that of corporations caught in some kind of fraud.

While acknowledging that there have been some reports of people boycotting BP, Lott adds that "the bottom line is that the reputational damage is greater when there is a fraud involving the product the consumer is directly buying".

To Lott, the greater peril to BP is from the possibility of criminal charges being brought. A criminal case on such a scale, he says, "really paralyses the inner workings of a company."

"The $20bn fund does not cap BP's liabilities - private citizens will still be able to sue the company