BP to admit 'unprecedented' failures behind oil spill
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BP chief executive Tony Hayward will attribute the Gulf of Mexico oil spill to "an unprecedented combination of failures" on Thursday when he makes his first appearance before US lawmakers, who have accused the oil giant of cutting corners on safety.
AFP -BP boss Tony Hayward was to face a flaying by furious US lawmakers Thursday and tell them he was "personally devastated" by the Gulf of Mexico spill, blaming it on a series of unprecedented disasters.
Some lawmakers have publicly suggested senior BP officials should "commit hara-kiri," after Hayward and BP Chairman Carl-Henric Svanberg were summoned to the White House on Wednesday for talks with President Barack Obama.
In his first appearance in Congress since the catastrophe erupted in April, Hayward was to tell lawmakers the blast which ripped through the Deepwater Horizon rig triggering the blow-out was virtually impossible to predict.
"I understand people want a simple answer about why this happened and who is to blame," BP's chief executive said in his prepared testimony.
"The truth, however, is that this is a complex accident, caused by an unprecedented combination of failures."
He was appearing before a Congress committee a day after the British energy giant pledged to set aside some 20 billion dollars over the next four years to meet claims arising from the nation's worst environmental ever disaster.
In addition to the special fund, BP bosses also announced after the White House talks that the firm would halt shareholder dividends this year.
And Hayward, who has been sharply criticized in America as BP's public face of the disaster, was likely to face a barrage of angry questions from lawmakers.
Obama has already said that had Hayward been working for the US administration, he would have been fired by now.
But Louisiana Representative Joseph Caotold told one of Hayward's colleagues at hearings earlier this week that even resignations from BP officials would not be sufficient to placate him.
"In the Asian culture we do things differently. During the samurai days, we just give you a knife and ask to you commit hara-kiri," he said.
News of the escrow fund deal with the US administration sent BP's share price soaring almost 10 percent on Thursday, after days of falls.
After leaping in early trading, the stock later fell back slightly to 361.17 pence, up 7.17 percent from Wednesday's closing level, as investors welcomed news of firm commitments following weeks of uncertainty.
The compensation fund will be run by prominent lawyer Kenneth Feinberg, who managed claims by victims of the September 11, 2001 terror attacks, and will be overseen by a panel of three judges who can hear appeals.
BP will fund the account in four annual payments of five billion dollars, the White House said in a statement.
"This account is neither a floor nor a ceiling on liability," the statement said, adding BP would not seek to take advantage of the 75-million-dollar federal liability cap for oil companies.
The announcement represented a major victory for Obama, who has struggled to assert leadership over the crisis, and was welcome news for the thousands of people whose livelihoods are threatened by the spill.
"It is probably the best news I've gotten since this thing started. It gives us some security for the future," Brent Roy, whose fishing charter business in Venice, Louisiana has been shut down for a month, told AFP.
The 20-billion-dollar pledge comes amid speculation about BP's financial health, which both British and US political leaders have sought to dismiss.
British finance minister George Osborne told the BBC on Thursday BP was a "very strong company," and Obama said he was "absolutely confident BP will be able to meet its obligation to the Gulf Coast and to the American people."
"BP is a strong and viable company and it is in all of our interests that it remain so," he said.
Analysts said BP, which has already spent some 1.6 billion dollars battling the spill and made a profit of around 14 billion dollars in 2009, should be strong enough to weather the storm even if it has to borrow more.
"They have enough cash flow and quality assets that will allow it to fund that type of liability," said Jason Gammel of Macquarie Research.
The firm's final bill will be tied to the amount of oil still spewing into the ocean each day, with US experts now putting that figure at between 35,000 and 60,000 barrels.
BP is siphoning up an average of 15,000 barrels a day of oil to two processing ships on the surface. It hopes to increase that amount significantly in the coming weeks.
But the leak is not expected to be permanently capped until August, when one of two relief wells being drilled is completed.