BP Plc Chief Executive Officer Tony Hayward’s failure to set safety standards to prevent the Gulf of Mexico oil spill may cost the company control over US oil fields, refineries and pipelines that account for more than one-third of its sales, lawmakers and analysts said.
Less than 24 hours after Hayward met President Barack Obama’s demand to set aside $20 billion to clean up and compensate victims of the worst oil spill in US history, lawmakers yesterday accused the BP CEO of “stonewalling.” Hayward appeared before a House committee probing the cause of the April 20 offshore rig explosion that killed 11 workers.
Citing a five-year string of accidents and deadly disasters at BP-operated facilities, Representative Bart Stupak suggested the poor safety record could justify banning the London-based company from doing business in the US .
“Setting up the fund was a nice pro-active approach by BP, but in reality it’s going to take a decade for them to recover and regain public trust in this country,” said Jonathan Dison of Bender Consulting, a risk management and strategy firm that has advised BP, Chevron Corp and Royal Dutch Shell Plc. At risk is BP’s standing as the biggest producer in the US, built up after spending $100 billion buying Amoco Corp and Atlantic Richfield Co.
Shares gain
BP rose as much as 5.5 per cent in London trading before paring gains to trade 2.1 per cent higher at 356.40 pence as of 12:50 pm local time. The shares have lost 44 per cent of their value since the April 20 explosion and fire aboard the Deepwater Horizon rig.
BP’s senior unsecured ratings were cut three levels to A2, the sixth-highest investment grade, from Aa2 by Moody’s Investors Service today, which warned that further downgrades are possible.
The cost of credit-default swaps protecting BP’s debt against default for one year fell 7 basis points to 624 basis points, prices from CMA DataVision in London show.
Congressman Stupak didn’t elaborate on how BP could be banned from operating in the US and whether such authority rests with Congress, the administration, or regulatory agencies.
