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BP blames 'multiple' parties for oil spill disaster

Video by FRANCE 24

Text by News Wires

Latest update : 2010-09-08

British oil giant BP blamed "multiple companies and work teams" for the massive Gulf of Mexico spill that fouled waters and shorelines for months in an internal report released on Wednesday.

AFP - Failures by BP and other companies led to the Gulf of Mexico oil disaster, the British energy group concluded on Wednesday as it sought to defend itself against possible multi-billion-dollar US lawsuits.
   
As expected in the findings of its own inquiry, BP did not admit 'gross negligence' for the oil rig explosion in late April that killed 11 people and caused the worst ever US environmental disaster.
   
The report did however propose 25 recommendations, including improved staff training, designed to prevent a repeat of the Deepwater Horizon rig disaster.
   
An explosion on April 20 at the BP-operated rig ruptured a well, causing about 4.9 million barrels of oil to leak into the sea.
   
"No single factor caused the Macondo well tragedy. Rather, a sequence of failures involving a number of different parties led to the explosion and fire," BP said in a summary of the 200-page report.
   
The company said decisions made by "multiple companies and work teams" contributed to the accident, which arose from "a complex and interlinked series of mechanical failures, human judgments, engineering design" and communication breakdowns.
   
The four-month probe, led by BP's head of safety and operations Mark Bly,  is viewed as key to how BP defends itself against legal proceedings involving the spill.
   
"This report likely does its job in providing ammo (ammunition) for BP in future court cases, where the avoidance of the charge of 'gross negligence' is critical," said Peter Hutton, an oil market analyst at NCB Stockbrokers.
   
In the report, BP also blamed the rig's owner Transocean and Halliburton, which had cemented the well.
   
"The investigation report provides critical new information on the causes of this terrible accident," said BP's outgoing chief executive Tony Hayward.
   
"It is evident that a series of complex events, rather than a single mistake or failure, led to the tragedy. Multiple parties, including BP, Halliburton and Transocean, were involved."
   
Hayward said key failings included a "bad cement job" at the bottom of the well that allowed gas and liquids to flow up the production casing.
   
Additionally, the results of a negative pressure test were incorrectly accepted by BP and Transocean, while the rig's blow-out preventer on the seabed failed to automatically seal the well.
   
Failures resulted in oil spewing out into the Gulf for several months, killing wildlife and devastating the local economy as tourists stayed away.
   
US lawmakers have accused the oil giant of sacrificing safety to improve its profit margin but Hayward denied this during a hostile grilling in Congress in June. Hayward subsequently announced he would quit the top job in October.
   
Under US law, fines could be as much as 4,300 dollars per barrel spilled, if negligence is proved. This means BP could theoretically face fines of up to 21.1 billion dollars for the 4.9 million barrels that poured into the sea.
   
The leaking Macondo well has now been secured but the disaster is being examined in a string of court cases and probes, including a criminal investigation being carried out by the US Department of Justice.
   
BP has already spent eight billion dollars trying to contain the disaster and has forecast that it will eventually cost the group more than 32.2 billion dollars after clean-up costs and compensation are taken into account.
   
Also on Wednesday, ratings agency Fitch upgraded BP's credit rating three notches, citing an end to the threat of more leaks from the Macondo well.
   
The upgrade to A from BBB also "reflects both the improved visibility of potential liability scenarios the company could still face and substantial progress that BP has made to date in building up liquidity to address potential financial payments," Fitch said in a statement.
   
BP's market value slumped by tens of billions of dollars amid the crisis as its share price fell but its stock has recovered somewhat in recent weeks.
   
Following the report's publication, BP's share price was up 1.88 percent to 414.45 pence in late London trade.

 

Date created : 2010-09-08

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