Shares in BP hit a 14-year low this morning after the oil giant revealed that its bill for containing and cleaning up the oil spill in the Gulf of Mexico – the worst in US history – had climbed to $2.35bn (£1.57bn).

The shares dropped 6.8% at one stage and later traded down 6.3% at 304.5p, making BP the biggest faller on the FTSE 100. Five-year BP credit default swaps, which insure the company against debt default, widened 19 basis points to 555 points.

The latest cost estimate is up from a previous figure of $2bn. It includes $126m already paid out in claims to those affected by the disaster, mainly workers in the fishing industry. So far, nearly 74,000 claims have been filed and more than 39,000 payments have been made.

The bulk of the cost covers wages paid to 37,000 people involved in efforts to capture oil at the blown-out well in the Gulf and the clean-up operation on the shore.

It has emerged that the oil company has ordered clean-up contractors to pay out wages to workers suspected of claiming for work they have not done. Rear Admiral James Watson, the federal on-scene co-ordinator for the oil spill, admitted that there had been "instances of fraud".

Under intense pressure from the White House, BP agreed to set up a $20bn independently administered fund to pay for the clean-up and meet compensation claims last week.

The oil giant said this morning that work on two relief wells, designed to kill the leaking well, and measures to improve the capture of oil, were on track. A new containment system will start operating next month.

The company had to reinstall an oil-siphoning cap on the blown-out well and resumed collecting crude yesterday after an accident led to oil flowing unhindered into the ocean for 10 hours on Wednesday. So far, 364,500 barrels of oil have been recovered from the ocean.