The latest attempt by BP to halt the flow of oil into the Gulf of Mexico has struck further difficulties as clean-up and recovery costs reach $1.17 billion.

BP’s latest gambit, involving shearing off the well pipe using a diamond-tipped saw, stalled when the saw snagged halfway through the operation.

The British oil giant has now lowered a containment cap over the well and says it’s capturing about half the crude oil leaking into the Gulf of Mexico each day.

If this approach fails, BP’s final hope will be drilling a relief well, which could take months to complete.

The cost of plugging the well and clean-up operations have so far cost BP $US990 million ($1.17 billion) since the Deep Horizon drilling rig exploded on April 20. US Government figures say up to 45 million litres of oil has gushed into the gulf, although BP claims the figure is much lower.

Loss experts estimate insurance losses from the incident so far are about $US12 billion ($14.5 billion).

BP’s attempts to limit the financial toll have been hampered by legal proceedings launched by a group of insurers and Lloyd’s syndicates to block the oil and gas giant claiming on a $US700 million ($848 million) accident policy.

The group has filed a claim in a Houston court alleging it has “no additional insured obligation to BP”.