Jeremy Warner's Outlook: BP's new safety-first approach makes its mark with delays to Thunder Horse

London: hot money capital of the world; Alice in Wonderland extradition

Somewhere deep down in the bowels of the vessel there is finally an unmistakable whirring of engines and bustle of activity. In recent months, BP has seemed like a ship stranded on the reefs, unable to respond to or explain an extraordinary series of mishaps and bungles which battered the vessel like incoming waves. Now at last the supertanker seems to be responding. There's movement once more.

Thus it is that the story suddenly appears of a root-and-branch, bottom-up review of safety and environmental procedures, which like the one ordered by Exxon Mobil in the wake of the Valdez oil spill, is so all-embracing it could take anything up to 10 years to implement fully.

Never mind that the man charged with this exercise - John Mogford - was actually appointed to the position more than a year ago, or indeed that the event that triggered it - the explosion at the Texas City oil refinery in which 15 people died - happened as long as 18 months ago. It has taken a number of other disasters for the company to start talking about what's being done to correct the problem.

The first fruits of this new safety-first approach were on display yesterday with news that development of the Thunder Horse oilfield in the Gulf of Mexico has been further delayed because of fears over the strength of the sub-sea production equipment. The field, one of BP's biggest, won't now open until 2008, two years later than originally scheduled.

The metallurgical failures identified came to light only after testing at a higher level than industry standards generally demand. Would BP have adopted such a stringent approach before being overtaken by the disasters of Texas City and corroding pipes in Prudhoe Bay, or would the demands of the bottom line have persuaded the company not to test to such levels in the first place, or worse still, to sweep the findings under the carpet?

It's anyone's guess. Should Thunder Horse be seen as another blow to an already damaged company, or a much-needed triumph in public relations which shows the company is serious about putting safety and the environment before profits?

People will interpret events as they will, but despite speculation to the contrary, the smart money is on Lord Browne, the chief executive, remaining in the hot seat at least long enough to see Thunder Horse open for business.

London: hot money capital of the world

Clara Furse, chief executive of the London Stock Exchange, has been extolling the virtues of London as a financial centre on the comment pages of the Financial Times. The reason London has become so much more successful in attracting international listings, she argues, has little to do with the iniquities of Sarbanes-Oxley - the oppressive regulatory regime put in place by the US for the post-Enron era. Rather, it is chiefly down to lower costs, better international liquidity, faster transaction speeds and so on.

Yet in singing London's praises, she misses a couple of points, perhaps deliberately. As Ms Furse suggests, London's growing success as an international centre is indeed partly down to a tough but sensible regulatory environment.

The Financial Services Authority's principles-based approach to regulation is proving infinitely more effective than the more rules-driven approach, epitomised by Sarbox, adopted by the US. The UK is getting the balance right between regulation which is both light-touch enough to allow for speed of action and innovation in financial services but tough enough to command international trust.

Yet perhaps the main reason why London has become successful at New York's expense tends to get overlooked. It is to do with American foreign policy. Britain is said to be joined at the hip to the US in this regard, yet perhaps oddly we are still not seen that way by large parts of the rest of the world. So it is London, rather than New York, which is chosen as the conduit for Russia's new-found oil wealth, and even for the new wave of petrodollars spilling out of the Middle East.

Fortunately for London's position as a financial centre, Tony Blair's unquestioning support for all that President Bush does, including backing for Israel's position in the recent conflict in Lebanon, is regarded as an aberration.

The US really means it in giving unreserved backing for Israel; Britain only half means it. So the money keeps flowing in London's direction. Intense US scrutiny of foreign wealth in the supposed interests of homeland security has further alienated the Middle East, and large parts of the rest of the world, from New York. Add in America's ridiculous over-reaction to Dubai Ports' acquisition of P&O, and it is a wonder any foreign wealth goes there at all any longer.

All this hot money flowing in Britain's direction, in part a reaction to events post 9/11, is a much underestimated feature of London's success as a financial centre. It also helps explain sterling's strength as an international currency. The dollar is falling in response to the country's growing current account deficit. Yet the pound is actually strengthening in the same circumstances. There is even evidence of its growing use as a reserve currency by central banks, which for those of us who remember the perennial sterling crises of the past is an extraordinary reversal of fortune.

Despite what Ms Furse says, London's achievement is in large measure down to the perceived disadvantages of New York, which range from Sarbox to the weakening dollar and American foreign policy. London has become the default centre of choice. New York's loss is London's gain. Yet despite all London's advantages, there is one key negative which Ed Balls, the Treasury minister charged with City affairs, scarcely ever mentions in trumpeting this extraordinary British success story.

It's called stamp duty. The cost of it makes all the argument about which stock exchange has the lowest transaction charges look marginal by comparison. It applies only to UK-domiciled companies, which is another reason why as fast as overseas companies scramble to list here, our own indigenous industries and companies are heading in the other direction as soon as they decently can.

Once related inefficiencies are taken into account, stamp duty adds something close to one percentage point to the cost of capital for UK listed companies, a key disadvantage in a fast globalising marketplace. Will the Chancellor listen to sense? Some £4bn a year of tax revenues related to share transactions suggests powerfully that he won't. The process can be seen as a parable of our times. As fast as everybody else is trying to get into Britain, everybody already here - those who must obey the rules and pay their taxes - is trying to get out. Hey ho.

Alice in Wonderland extradition

The latest white-collar extradition from Britain to the US has descended into farce with news that Jeremy Crook (no, that really is his name), bailed after being forcibly flown to California last week, is now banged up awaiting deportation for being an illegal immigrant.

This would no doubt suit Mr Crook very well, but it surely cannot be what the US intended when it went to all that bother and expense of having him extradited from Britain to face fraud charges in connection with the collapse of the software company Peregrine Systems. One arm of the US executive, the one charged with homeland security, doesn't appear to know what the other, law enforcement, is doing.

We often complain of a lack of joined-up government here in Britain, but this one comes straight out of Alice's Adventures In Wonderland. I've on the whole supported America's right to extradite in cases of alleged white-collar crime, but this kind of incompetence leads you to wonder if these people can ever expect justice.

j.warner@independent.co.uk