BP has recorded a $17bn (£11bn) loss over the second quarter, one of the largest corporate losses in British history.
This compares to a profit of $3.1bn in the second quarter of 2009, and $5.6bn in the first quarter of this year.
The replacement cost loss for the half year was $11bn, compared to a $6.9bn profit in the first half of 2009.
The oil giant has set aside $32.2bn to cover the costs of cleaning up the oil spill in the Gulf of Mexico, including the $20bn legal fund it has already earmarked.
It also plans to sell off parts of the business worth $30bn and says it may divest further non-core assets.
Dividends will remain suspended for the second and third quarters of the year. BP says the board will consider its position on future payments when it issues its fourth quarter results in February 2011.
Meanwhile, the group confirmed Tony Hayward is to step down as chief executive in October, to be replaced by Bob Dudley, the man in charge of the cleanup operation.
Hayward will become non executive director of BP's Russian joint venture, TNK-BP,
which has operations in Siberia. Controversially, he will be entitled to draw a £600,000 annual pension as soon as he leaves his post, and will also receive a one-off payment of £1m, according to some estimates.
BP's share price remained flat in early trading at 416.95, as the markets digested the announcement.
"The incident has damaged BP's reputation and brand, with adverse public and political sentiment evident. This could persist into the longer term, which could impede our ability to deliver long-term growth," the group says.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till