BP admits Gulf failings - but looks to spread the blame around

BP's trying to strike an impossible balance with its new report on the Deepwater Horizon explosion...

by James Taylor
Last Updated: 19 Aug 2013
BP has just published the findings of its internal investigation into the Gulf of Mexico oil spill disaster and our first impression is that its two (rather conflicting) priorities are immediately evident. On the one hand, this is at least partly a PR exercise, designed to help in the rehabilitation of its battered reputation – so there had to be a degree of mea culpa about it. On the other, admitting too much responsibility would potentially expose it to billions of dollars worth of lawsuits. So the result is pretty much as you'd expect: BP admits that it made mistakes, but suggests that its suppliers were also at fault. Judging by the bounce in its share price, the market seems to think that this blame-shifting strategy is a good one...

Today's report, based on an investigation conducted by BP's head of safety Mark Bly, with the help of independent experts, sets outs its stall from the very first sentence of the accompanying statement: 'No single factor caused the Macondo well tragedy,' it insists. Rather, it was due to 'a sequence of failures involving a number of different parties', arising from 'a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces'. In other words: stop blaming it all on us, America.

BP did admit that it got some stuff wrong – notably in failing to spot that things were going wrong. But outgoing boss Tony Hayward defended BP's much-criticised well design, saying it appeared 'unlikely' that it contributed to the explosion. And the oil giant pointed the finger at a 'bad cement job' by Halliburton, while also suggesting that Transocean rig crew failed to react to the danger signs.

Perhaps the biggest question mark still concerns the blow-out preventer, which, as its name rather suggests, is supposed to stop this sort of thing happening. The original bit of kit was made by Cameron International and then bought by Transocean. But there was a suggestion last month (possibly emanating from one of those two, we'd hazard a wild guess) that BP had had it modified in China – and that this had altered it so much that anything that went wrong susequently was entirely BP's fault. But this BOP has only just been rescued from the sea-bed, so we'll have to wait and see what the precise fault was.

As new boss Bob Dudley stressed today, BP has always said that responsibility should be shared equally between all those involved, rather than BP getting absolutely all the blame as it has done so far (particularly in the US). It clearly hopes this report will go some way towards proving that – which would be great for BP, becasue it will presumably reduce the eventual sum it has to shell out in compensation. And the market seems to rate this strategy, judging by the rise in its share price today.

Then again, BP is still worth less than two-thirds of its pre-explosion value, so it's got a long way to go. But this could turn out to be another step in the right direction.

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