David Cameron defends BP as company tests capped well

LONDON/HOUSTON (Reuters) - Britain's prime minister defended BP before meeting U.S. senators seeking a probe into the oil major's role in the release of the Lockerbie bomber, as it tested the cap on its blown-out Gulf of Mexico well.

BP shares rose as much as 2.9 percent after Thad Allen, the top U.S. oil spill official, said a seep detected about 3 km (1.9 miles) from the well was not caused by a pressure test on the well, which BP capped on Thursday to choke off spewing oil.

By 1300 GMT (2 p.m. BST), the shares had reversed those gains and were trading 1.2 percent lower at 383.25 pence, roughly in line with the STOXX Europe 600 Oil and Gas index.

Three months to a day since an explosion on a rig killed 11 workers and started the flow of thousands of barrels of crude oil into the Gulf, BP was monitoring the pressure in the well to gauge whether it was structurally sound.

An intact well would help when a relief well now being drilled tries to permanently plug the leak.

BP, already under fire for the worst ecological disaster in U.S. history, is also facing scrutiny for any role it took in the release last year of Libyan Abdel Basset al-Megrahi, sentenced to life for bombing a Pan Am flight in 1988.

BP has confirmed it lobbied the British government in 2007 over a prisoner transfer deal for fear its commercial interests in Libya were being damaged, but said it was not involved in talks over al-Megrahi.

Cameron, in the U.S. to meet lawmakers and President Barack Obama, told National Public Radio in Washington: "Of course BP has got to do everything necessary to cap the oil well, to clean up the spill, to pay compensation. I've met with BP. I know they want to do that, and they will do that."

"But ... let's be clear about who released al-Megrahi; it was a government decision in the UK. It was the wrong decision. It wasn't the decision of BP. It was the decision of Scottish ministers," he added.

Jason Kenney, oil analyst at ING in Edinburgh, said the issue was being used as another stick with which to beat BP.

"(Cameron) should tell the senators to calm down," he said.

The oil spill remains a major political issue and will loom large when Cameron meets Obama in Washington on Tuesday.

RESULTS TO TAKE SPILL HIT

BP is due to report second-quarter results on July 27 and analysts at ING said they expected significant provisions for the rig explosion and oil leak.

For now, the focus continues to be on the test and the relief wells seen as a permanent solution to the problem.

Concern about potential problems with the well means U.S. official Allen is giving the London-based oil giant permission to proceed on a daily basis.

Kent Wells, BP's senior vice president of exploration and production, said continuing the test in 24-hour increments "is absolutely the way for us to go forward."

He said the longer the test lasts, and as long as the well shows signs that it is intact, "we'll just gain more confidence that the well has integrity and we have a depleted reservoir."

Wells and Allen mentioned another idea on Monday that scientists are weighing; a so-called "static kill" to help smother and plug the leak.

This would involve pumping heavy drilling mud and possibly cement into the well, much like BP's failed "top kill" in May.

During the top kill process, the well was not shut in at the top, so most of the mud shot out along with crude, BP has said. Wells said with the well enclosed, BP would not have to pump in so much so fast, because crude is not flowing.

(Additional reporting by Doina Chiacu and Tabassum Zakaria in Washington, Matthew Lynley in New York, and Mary Rickard in Kenner, Louisiana; Writing by Sitaraman Shankar and Deborah Charles; Editing by Stacey Joyce and Will Waterman)