BP hit by UK safety order and alleged US market fixing
Thursday 03 February 2011
BP was defending itself on multiple fronts yesterday after the UK health and safety watchdog ordered it to fix safety lapses on some North Sea rigs while American regulators mulled charges over alleged manipulations of the gas market.
The British oil giant is struggling to restore its reputation in the aftermath of the Deepwater Horizon explosion last April, which killed 11 people and unleashed the worst offshore oil spill in history into the Gulf of Mexico.
The "improvement order" from the UK Health and Safety Executive (HSE) referred to several incidents last September, including one on the Schiehallion platform where corroded equipment was left until it "failed catastrophically".
The failures came to light just a day after BP chief executive Bob Dudley vowed to instill a new safety culture at the company he took over in October, just after the events outlined in the HSE order.
Speaking as BP announced its first annual loss in nearly two decades, Mr Dudley said the company's new Safety and Organisational Risk division is "an organisation with teeth" that is "making changes to what we do day to day".
The HSE order was issued in November and BP yesterday said it has addressed the issues raised. "We have already taken a number of actions to improve this aspect of risk management and will ensure all lessons are shared and implemented," a spokesman said.
Meanwhile, on the other side of the Atlantic, BP faced further setbacks in its desperate attempt to restore public trust after the company was publicly vilified for the Deepwater tragedy and the then-chief executive Tony Hayward was hounded from his job after a series of public relations gaffes.
The company admitted that "several BP entities" are under investigation by the US Federal Energy Regulatory Commission (FERC) and the US Commodity Futures Trading Commission (CFTC) regarding trading on the next-day gas market at Houston Ship Channel in October and November 2008.
The company robustly denies any wrongdoing, stressing that it has fully cooperated with the FERC and CFTC investigations, and that its trading and transportation activities are conducted in compliance with the law and regulations.
BP was notified of the CFTC intention to bring charges at the end of November and the group submitted its response to the allegations shortly before Christmas. "As noted in our disclosure, BP has provided to both agencies a detailed response that it did not engage in any inappropriate or unlawful activity," a statement from the company said yesterday.
BP has had run-ins with US authorities over market manipulation before. In 2007, it was fined $303m (£187m) – a record commodity market settlement – to settle charges that four of its Houston traders manipulated propane prices.
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