The Guardian reports on BP and the oil industry….
Analysts said that blaming the oil industry, and not singling out BP, would help the company in its fight against being found guilty of gross negligence. But industry and legal sources told the Guardian that BP would still have to strike a deal out of court to settle myriad lawsuits.
BP is more likely to escape the potentially ruinous charge of gross negligence, according to City analysts, after a powerful US commission blamed “systemic” causes for the Gulf of Mexico disaster. Barack Obama’s national commission released part of its final report into the disaster last night on Wednesday night. The report, to be published next week, could influence several other parallel investigations into the spill that are yet to finish.
The commission was scathing in its criticism of BP, as well as its contractors Halliburton and Transocean, which it blamed for a collective “failure of management”. But it added that it had found no evidence that the blowout which led to last April’s disaster was the result of “aberrational decisions made by rogue industry or government officials”.
Commission co-chair William K Reilly said: “So a key question posed from the outset by this tragedy is, do we have a single company, BP, that blundered with fatal consequences, or a more pervasive problem of a complacent industry? Given the documented failings of both Transocean and Halliburton, both of which serve the offshore industry in virtually every ocean, I reluctantly conclude we have a system-wide problem.”
Analysts said that blaming the oil industry, and not singling out BP, would help the company in its fight against being found guilty of gross negligence. But industry and legal sources told the Guardian that BP would still have to strike a deal out of court to settle myriad lawsuits. Separately, the US justice department has launched a civil action against BP and is investigating potential criminal violations.
BP shares rose by more than 2% during morning trading in London but finished the day slightly down. Analysts expect BP to resume paying dividends – which were suspended last summer under intense White House pressure – when it reports full-year results on 1 February, as the company tries to move on from the disaster.
Before the spill the company paid out $10bn (£6.5bn) annually to shareholders but it is likely to resume dividends at only half that level. Investors could receive dividends for the last quarter of 2010 as soon as March.
Analyst Peter Hitchens, of stockbroker Panmure Gordon, said: “The national commission’s report is another chink of light for BP. BP was named and held responsible in the report but it also said ‘we can’t solely blame BP’.
“It’s hinting that there won’t be a finding of gross negligence. What seems to be coming through is there was an unfortunate string of accidents which led to the disaster. BP had a near-death experience. But time is a great healer for BP, it seems.”
The national commission report was also highly critical of the now-disbanded offshore regulator, the Minerals Management Service (MMS), which it previously accused of giving a higher priority to increasing production in the gulf than to safety. The full report, to be released on Tuesday, is likely to recommend a radical overhaul of the regulatory regime to improve offshore drilling.
Charlie Kronick, a spokesman for Greenpeace, said: “The report sets up a big flag that the regulatory regime is going to be much tighter. The new regulator has already indicated that it won’t be a permit-fest once new guidelines for offshore drilling are drawn up.”
But he said that pointing the finger at BP’s contractors should not exonerate the company from blame. “Halliburton and Transocean were operating on BP’s behalf. It’s hard to see how that lets BP off the hook.”
If BP avoids a charge of gross negligence it will be able to charge its junior partners in the fateful Macondo well – Anadarko and Mitsui – for a third of the costs. US federal fines would triple under a gross negligence finding, with JP Morgan estimating that the total bill for BP under this scenario could be as high as $69bn.
BP has made good progress in its programme of selling assets worth $25-30bn, having netted about $20bn so far.
http://www.guardian.co.uk/environment/2011/jan/06/bp-gulf-oil-spill-commission
Lessons from the oil spill…
Following one of the biggest disasters in recent history, BP boss Tony Hayward admitted to his company’s insufficient response to the Deepwater Horizon rig accident in the Gulf of Mexico. But was there anything better they could have done to avert the tragedy?
January 8, 2011 – Washington
Following one of the biggest disasters in recent history, BP boss Tony Hayward admitted to his company’s insufficient response to the Deepwater Horizon rig accident in the Gulf of Mexico. But was there anything better they could have done to avert the tragedy?
Obama’s commission pointed out lack of safety procedures as a determining factor behind the disaster.
“Major accidents such as the Deepwater Horizon disaster in the Gulf of Mexico could also happen in the North Sea. But strong, organizational barriers between the oil industry, trade unions and the Petroleum Safety Authority Norway reduce the risk,” says Preben Lindoe, professor of societal safety and security at the University of Stavanger, Norway.
The researchers compare oil industry regulation in the USA, Great Britain and Norway.
The US regulator, Minerals Management Service, carries out inspections based on a fairly meticulous body of rules. Inspectors are transported to offshore installations, equipped with long and detailed check lists.
Norwegian authorities rely on the companies administering their safety work themselves. The model is based on trust – built up over time.
“The reason this model has succeeded in Norway, is because the parties have been able to fill the concept of internal control with substance. Both employers and unions are involved in developing industrial standards and good practice which can be adhered to,” he said.
“When attention fades, accidents happen more easily, and are followed by increased awareness. Societal safety is thus a perpetual Sisyphus effort. It is a big challenge for all organizations to maintain a high level of safety awareness over time,” he added.
According to Lindoe and associate professor Ole Andreas Engen, it is common practice in the US to look for scapegoats, and pin the blame for accidents on them, instead of changing the systems.
In Norway, the parties are more likely to come together to find out how systems and routines may have contributed to an employee making a mistake.
The researcher sum up the lessons learned after the Gulf of Mexico disaster:
“The Deepwater Horizon accident has uncovered some evident weaknesses within US safety regulation. The Government being restrained from intervening directly with the industry is one of them.
“To the Norwegian industry, this accident and the near-accident on Gullfaks C, should serve as reminders of the importance of maintaining the foundation pillars of the Norwegian safety management system: Effective and well qualified authorities, and clear guidelines for cooperation and trust between the parties,” Lindoe concluded.
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