THE OIL industry faces a fundamental shake-up following a US commission’s report on the Gulf of Mexico spill, which calls for a new independent watchdog, more stringent safety measures and financial penalties for risky practices.
The commission said the mistakes made by BP, Halliburton and Transocean leading up to the Deepwater Horizon rig explosion in April “reveal such systematic failures in risk management that they place in doubt the safety culture of the entire industry”.
The American Petroleum Institute came under heavy fire for what the report said was a conflict of interest between its roles as both safety watchdog and oil industry lobbyist.
The 380-page report called for self-regulation similar to that used in the UK and in the nuclear power industry, where companies that fail to meet the safety standards are charged punitive fees for insurance coverage.
“Like it or not, oil and gas companies are in this together, and they must adopt rigorous standards through an industry-wide safety institute, or risk losing access to these leases and resulting profits,”said Bill Reilly, the panel’s co-chair.
The commission also complained that the statutory $75m cap on compensation payments arising from oil spills is far too low.
BP shares rose 2.8 per cent to 500p yesterday amid relief that BP was not blamed exclusively in the report.
Blue Phoenix’s chief investment strategist John Licata said: “Only well-capitalised firms will be able to operate in the Gulf under these recommendations.”