BP escrow idea further muddies oily waters Rationally speaking, the escrow idea is flawed. There should be no doubting BP’s intention to pay legitimate claims. Despite its other failings, the company has always had a “no quibble” attitude to this. Nor can there be any real doubt about its ability to pay — unless the U.S. administration creates massive new obligations that make bankruptcy loom larger.
Rationally speaking, the escrow idea is flawed. There should be no doubting BP’s intention to pay legitimate claims. Despite its other failings, the company has always had a “no quibble” attitude to this. Nor can there be any real doubt about its ability to pay — unless the U.S. administration creates massive new obligations that make bankruptcy loom larger.
The moment has arrived for Tony Hayward to call time on his career at BP. The UK oil major’s chief executive clearly does not have the credibility with shareholders, regulators or consumers to continue in his role once the Gulf of Mexico crisis is over. BP, and Hayward’s own career prospects, will be better off if he admits this simple truth today.
Hayward has made too many slips since the tragic accident on the Deepwater Horizon rig on April 20. At the lower end of the scale, he was unwise to boast of the superlative scale of BP’s response as if to suggest the company was well prepared for the disaster. Worse were comments that he “wanted his life back”, and the suggestion that the spill was a drop in the ocean.
BP’s efforts to focus global attention on its all-out response to the Gulf of Mexico oil spill are flagging. U.S. congressional hearings have raised tricky questions about the UK oil group’s conduct prior to the tragic explosion on the rig last month. With the well still leaking, the credibility of BP chief executive Tony Hayward is being tested.
It would be wrong to draw premature conclusions from smatterings of evidence raised at highly charged hearings so soon after the disaster, when any formal probe is far from being concluded.
But there is no dispute that it was only after the accident that BP became aware that the well’s blow-out preventer — the supposedly failsafe device that malfunctioned and caused the leak — had been modified. We also know now that the well failed certain operational tests on the day of the explosion.
BP has long maintained that it was not directly responsible for the accident, since the rig and the drilling had been outsourced to deep-sea expert Transocean. But that defence would be undermined if it became clear that BP sanctioned drilling on a rig known to have had problems.
Moreover, it reflects badly on BP’s response effort if it turns out that the company’s engineers did not realise that they were working on a modified blow-out preventer.
Having tried to argue that BP should be judged only on the clean-up effort and its success in stopping the leak, Hayward would be in big trouble if it turned out that BP procedures were implicated in the accident itself. After all, Hayward got the top job at BP precisely because he was seen as the best person to address BP’s poor safety record.
Hayward has always said that the spill will be stopped within 90 days of when BP started to drill on relief wells to ease the pressure from the main well. That means the beginning of August. He had better deliver on that promise. If he doesn’t, someone else may end up defending BP against any other attacks that emerge.
BP wants to be “judged by its response” to the Gulf of Mexico disaster. The politicians and the public already seem to be concluding the UK oil giant has failed in its duty to address the consequences of the accident. BP should not be surprised that authorities with an interest in diverting attention from their own failings want it to take all the blame. But it hasn’t helped itself either.
The company has made much of its overkill response, including record-breaking amounts of dispersant for tackling the oil slick. But that simply reflects the size of the calamity. Results are what counts – and oil is fast approaching the Louisiana shoreline.