BP's woes over handling the Deepwater Horizon oil disaster increased on Wednesday when its latest attempt to contain the massive spill floundered with a saw getting stuck in the pipe from which the oil was gushing.

Remotely operated equipment was used on the sea bed, 1,500 metres beneath the surface in the Gulf of Mexico, to position a diamond-edged saw against the bottom of the riser, the damaged pipe from which up to 19,000 barrels of oil are spewing every day.

Engineers were hoping to make a clean cut across the pipe to allow a custom-built cap to be put on top to collect the oil and siphon it to tankers on the surface. But after the saw jammed a second device had to be taken down from a nearby boat to make the cut, a manoeuvre that caused further delay to the efforts to contain the spill, which is already in its fifth week.

Admiral Thad Allen, leader of the federal response to the disaster, said “I don't think the issue is whether or not we can make the second cut, it's about how fine we can make it, how smooth.”

BP's chief executive, Tony Hayward, said the oil industry might have to change the way it operated in extracting deep-water oil. He told the Financial Times “We have been driving safe, reliable, operations through the company within the existing industry paradigm. What this causes us to question is whether that paradigm is right for the future.”

He conceded that BP had not had the equipment to deal with the blow-out on April 20. “What is undoubtedly true is that we did not have the tools you would want in your tool kit.”

BP's survival as an independent company is now being openly discussed in the City of London. Its share price continued to tumble on Wednesday following the failed well capping. Analysts are now wondering whether merger talks — as happened between BP and arch-rival Shell in 2007 — might arise again as BP's ability to pay dividends is questioned, and its public credibility in America, which provides 40 per cent of its income, plummets.

BP saw its share price fall three per cent in early trading on top of the double-digit falls seen on Tuesday, and it has now lost a third of its value (equating to £44bn) since the Deepwater Horizon explosion.

“If BP's share price continues to fall, it could become a takeover target,” said David Buik a financial commentator at the brokerage BGC Partners, in London. “There are so many imponderables over whether its liabilities would be capped or not.” He added that Hayward's position seemed vulnerable.

Speculation about BP's future intensified after the US attorney general, Eric Holder, announced a criminal investigation of the disaster, though he did not specify BP by name.

— The Guardian, London