BP manages to plug leak as US finds a new reason to vilify it

Friday, 16 July 2010

The leak might be (temporarily) plugged - but BP is still public enemy number one in the US.

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Just when things were starting to look better, another spanner has been unceremoniously hurled into BP’s works. Although BP's managed, for the first time in 87 days, to fit a cap over the oil leak in the Gulf of Mexico that looks as if it’s going to work, the US government has found a new reason to vilify the company.

According to a US committee, BP negotiated with the UK government to get the Lockerbie bomber released in return for a lucrative offshore mining contract from the Libyan government.

The announcement that BP has managed, for now at least, to reduce the gush of oil into the ocean to a mere trickle took many by surprise. The new cap was fitted on Monday and last night, engineers managed to close all five valves and stem the flow.

The news sent shares soaring, with prices jumping 9% on Wall Street and 5% in London. It’s a relief for BP, which has so far had to shell out more than £2.3bn for the disaster (some have estimated the total cost could hit $100bn), and saw its stock dip to its lowest point since 1996 last month.

But the company has been cautious over saying this is a final solution. The new cap will undergo rigorous testing over the next 48 hours, and one of the main factors engineers will be checking is pressure. If the pressure holds with the valves closed, the company will be able to begin collecting oil again. If the pressure drops, it will be an indication that there’s a leak somewhere further down the well and the oil is seeping into rocks below the seabed – effectively meaning engineers are back at square one.

BP has warned that whether it works or not, the cap is only temporary – the real answer will come in the middle of August, when engineers finish drilling two relief wells. The plan is then to pump mud and cement into the leaking well, forcing oil into the two relief wells and plugging the leaky one ‘for good’.

If Hayward experienced any relief at the news, it will have been short-lived: it looks as if America’s hate campaign against BP continues apace. Senior BP executives have been called before a US Senate foreign relations committee at the end of this month, after it was alleged the company negotiated with the British government for the release of Lockerbie bomber Abdelbaset Ali Al Megrahi in return for a £450m offshore drilling deal.

US Secretary of State Hillary Clinton has accused the company of taking ‘blood money’ from the country, but in a (very measured) statement today, BP seemed to neither confirm nor deny the allegations, merely saying that it was ‘aware that a delay (in Al Megrahi’s release) might have negative consequences for UK commercial interests’. It doesn’t look good, does it?

Whatever comes of the temporary cap, it seems Hayward and his BP henchmen are now firmly cast as villains in the US. Expect a substantial management shake-up when the dust eventually settles. And a new CEO, possibly sporting a ten-gallon hat and a distinctive Southern drawl…

In today's bulletin:

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BP manages to plug leak as US finds a new reason to vilify it
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