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BP taking 'full responsibility' for Gulf of Mexico oil spill

Text by News Wires

Latest update : 2010-05-01

Energy giant BP said it would pay to clean up an oil spill leaking from an offshore rig in the Gulf of Mexico and honour "legitimate claims" for damages related to what could become one of the worst ecological disasters in recent history.

REUTERS - BP Plc will compensate all those affected by an oil spill from one of its wells in the Gulf of Mexico, said its chief executive, who admitted that the disaster could hit plans to open new areas off the U.S. coast to drilling.

“We are taking full responsibility for the spill and we will clean it up, and where people can present legitimate claims for damages we will honor them. We are going to be very, very aggressive in all of that,” Tony Hayward told Reuters in an interview on Friday.
 
The massive spill, which started when an oil rig caught fire and sank last week, washed up to wildlife refuges and fishing grounds on the Louisiana coast on Friday.
 
The cost to the fishing industry in Louisiana could be $2.5 billion, while the impact on tourism along Florida’s panhandle coast could be $3 billion, Neil McMahon, analyst at investment firm Bernstein, said in a research note on Friday.
 
The spill could also hamper President Barack Obama’s plans to open some offshore areas of the U.S. where oil exploration is currently barred to drilling, Hayward said.
 
“There may be an industry issue around what may or may not be opened,” he said.
 
However the CEO hopes an effective response to the spill, including a flotilla of around 80 vessels and several aircraft, would reassure people about the risks of drilling.
 
“It would be bizarre to say it shouldn’t influence the debate. How the debate will come out, I think ultimately will be judged by the success we have in dealing with this incident,” he said.
 
Regulations on drilling safety will also come under scrutiny, Hayward predicted.
 
“Rightly, there will be a reaction. Whenever you have something of this significance, it’s right that regulators should look very hard at what they can do to further ensure that something like this never happens again,” he said.
 
He said possible changes could relate to testing of equipment like the blow-out preventer on the ocean floor which failed to operate correctly and shut off the flow of oil, although he added it would be impossible to say how testing could be improved until the cause of the accident was known.
 
Failures of blow-out preventers are extremely rare and the equipment is regularly tested.
 
The scale of the disaster could also lead to changes in the rules on who is allowed to operate licenses in the deeper waters of the Gulf of Mexico, analysts said.
 
The government could limit operating licenses to larger companies—like BP—which have the deep pockets and operational capability to mount large cleanup operations.
 
BP shares closed down 1.5 percent on Friday, bringing the total drop in the shares since the rig disaster was announced to around 13 percent—a loss of around $20 billion in its market capitalization.
 
Analysts expect the final cost of the incident to BP to be under $10 billion, and so said the price drop represents a buying opportunity.
 
BP has spent the last five years trying to rebuild its reputation in the U.S., after it took a big hit from a refinery explosion in 2005 in Texas which killed 15 workers and oil and gas leaks in Alaska in 2006 -- both of which regulators blamed on cost-cutting.
 
Eleven workers are missing, presumed dead, following the explosion on the Deepwater Horizon drilling rig, which was operated by Swiss-based Transocean Ltd, the largest independent driller in the world.
 
BP owns 65 percent of the block in which the well was being drilled, and is field operator. U.S. explorer Anadarko Petroleum Corp owns 25 percent.
 
The partners in the field are responsible for the cleanup costs on a basis proportionate with their shareholding, although BP has the leadership role because of its operatorship of the block.

 

Date created : 2010-04-30

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