Political India: Engaging America

From The Hindu

Oil major BP found itself furiously back-pedalling over yet another public-relations blunder when one of its officials said that the company was again considering drilling for offshore oil near the very site of the Deepwater Horizon rig from which vast amounts of oil spewed into the Gulf of Mexico for over three months.

The Associated Press quoted BP Chief Operating Officer Doug Suttles as saying that BP might drill again someday into the same undersea reservoir of oil, which is still believed to hold nearly $4 billion worth of crude. “There's lots of oil and gas here... We are going to have to think about what to do with that at some point,” Mr. Suttles reportedly said.

However late on Friday evening, BP issued another statement, emphasising that it would, at this time, focus on killing the well and on the recovery of the Gulf coastline, not on future drilling in the offshore reservoir.

The company said in a statement that its “present focus is entirely on the response effort in the Gulf of Mexico and the future use of the reservoir is not currently under consideration.”

The controversy follows a string of gaffes that caused public anger, particularly comments by former BP CEO Tony Hayward, which underplayed the significance of the oil spill and the environmental damage it has caused.

The latest episode occurred even as BP finally succeeded in completing cementing operations at the ruptured wellhead, as part of the “static kill” procedure. The company said that it was also continuing with relief well operations, and “Depending upon weather conditions, mid-August is the current estimate of the most likely date by which the first relief well will intercept the Macondo well annulus.”

Labels: BP gaffes, offshore drilling, oil spill, Tony Hayward

From The Hindu

In a bid to save what is left of its reputation, BP announced that its gaffe-prone British CEO, Tony Hayward would step down and be replaced by an American chemical engineer and head of mop-up operations in the Gulf of Mexico, Robert Dudley.

The company, which has not only come under scathing attacks for its role in the oil spill but also courted controversy relating to the release of convicted Libyan terrorist Abdel Baset al-Megrahi, said Mr. Hayward would stop functioning as group chief executive with effect from October 1, 2010.

Seeking to project the change in the leadership as a break from its past, BP chairman Carl-Henric Svanberg said, "The tragedy of the Macondo well explosion and subsequent environmental damage has been a watershed incident. BP... will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board."

The announcement came even as BP admitted that it had made a record "replacement cost" loss during the second quarter of the year, amounting to a staggering $17 billion. The company said it was facing a charge of $32.2 billion, "to reflect the impact of the Gulf of Mexico oil spill, including costs to date of $2.9 billion for the response and a charge of $29.3 billion for future costs, including the funding of the $20 billion escrow fund".

Remarking on the financial results, Mr. Hayward said, "We expect we will pay the substantial majority of the remaining direct spill response costs by the end of the year. Other costs are likely to be spread over a number of years, including any fines and penalties, longer-term remediation, compensation and litigation costs."

On stepping into the shoes of Mr. Hayward, Mr. Dudley said that in the change of roles, he particularly wanted the people of the Gulf Coast to know that his commitment to remediation and restitution in the region was not lessened. "I gave a promise to make it right and I will keep that promise," he said.

In a comment that reflected the management’s commitment to those affected by the spill but equally to BP shareholders, Mr. Svanberg said, "We remain confident in our ability to meet our obligations to those on the Gulf Coast of the United States, other impacted parties and all our stakeholders... As we said last month, the Board remains strongly committed to the payment of future dividends and delivering long term value to shareholders."

Labels: BP, BP oil spill, Robert Dudley, Tony Hayward