BP crack downs on safety in major shake-up
Head of exploration division at time of Deepwater Horizon explosion to leave
Thursday 30 September 2010
BP tried to turn the tide against its battered reputation yesterday, creating a new safety and risk division and reshuffling its top team of managers just two days before Bob Dudley takes over as the energy giant's new chief executive.
Andy Inglis, the current head of the Upstream business, who was in charge of drilling at the time of the Gulf of Mexico spill, will also leave the company. The spokesman declined to say whether Mr Inglis had been made redundant, but confirmed that his "role has disappeared".
The changes follow the explosion in April on the group's Deepwater Horizon rig in the Gulf of Mexico, which killed 11 employees and led to the worst oil spill in US history. The company finally sealed the leaking Macondo well last week.
"These are the first and most urgent steps in a programme I am putting in place to rebuild trust in BP – the trust of our customers, of governments, of our employees and of the world at large," Mr Dudley said.
"That trust is vital to the restoration of shareholder value which has been so adversely affected by recent events. The changes are in areas where I believe we most clearly need to act, with safety and risk management our most urgent priority."
The company hopes that the move will assuage the anger that has followed both the spill, and BP's initial reaction to it. On 14 May, more than a month after the explosion, outgoing chief executive Tony Hayward said: "the Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume."
Later, referring to the extra work the disaster had caused, he told reporters, "I want my life back".
BP said yesterday that its new safety unit would have "sweeping powers to oversee and audit the company's operations around the world" and would have staff imbedded in BP's operating units, with the "authority to intervene in all aspects of BP's technical activities".
The department will be headed by Mark Bly, who is already the company's head of safety, and had overall responsibility for safety on the Deepwater Horizon. A spokesman said that Mr Bly's role would be strengthened and he would now be given a seat on the executive leadership team. He will report directly to Mr Dudley.
"I sincerely hope it will work, but safety was a cornerstone of the strategy before the Deepwater accident," said Dougie Youngson, an analyst at Arbuthnot Securities. "It is a positive first step, but we'll have to wait and see how effective it will be."
BP faced criticism for its safety record before the Deepwater Horizon accident, especially in the United States. In 2005, an explosion at the company's Texas City oil refinery killed 17 workers, and injured more than 170.
As part of the changes, which BP said yesterday were already planned but speeded up after the decision was taken to replace Mr Hayward, the group will split its Upstream business – the exploration and production arm – into three divisions: Exploration, Development and Production. The three units are to carry out a "detailed and wide-ranging review of how it manages third-party contractors".
BP has accepted responsibility for the accident, and has set up a $20bn escrow fund to compensate the victims, but has also sought to share responsibility with US group Transocean – the owner and operator of the rig – and Halliburton, which was contracted to perform several services related to the drilling. The disaster happened after signs that pressure was building at the Macondo well head were missed.
BP also said that it will conduct a fundamental review of how the group incentivises business performance, including reward strategy, with the aim of encouraging excellence in safety and risk management.
Mr Hayward is set to join BP's Russian joint venture, TNK-BP.
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