Official report: BP shares spill blame

FLAWED risk management at BP as well as at two of its contractors was responsible for the Deepwater Horizon disaster last year, according to an official US inquiry into the incident.

The disaster at the Macondo well in the Gulf of Mexico, which killed 11 men and led to the largest ever offshore oil spill, could have been avoided by the British oil giant and its contractors Transocean and Halliburton if better management practices had been in place, says the report.

A chapter from the report by the National Commission set up by President Barack Obama amid public anger over the spill says: “Most of the mistakes and oversights at Macondo can be traced back to a single overarching failure – a failure of management. Better management by BP, Halliburton and Transocean would almost certainly have prevented the blow-out.”

Yet the report warns a similar catastrophe could happen again should significant reform of the oil industry not take place.

It says “systemic failures” by the industry as well as government regulators failed to prevent the spill, which without “significant reform in both industry practices and government policies, might well recur”.

The 48-page chapter released today ahead of next week’s full report into the leak points to several “individual missteps and oversights” by BP, Halliburton and Transocean, including inadequate risk evaluation and flawed procedures for securing the well on the ocean floor.

It also criticised an apparent lack of attention to key initial signals that a blowout might occur, as well as an “ineffective response” to the situation once the explosion had taken place, including the failure of the rig’s blowout preventer.

The three firms at the centre of the chapter are also found to have “clearly saved money” from cost-cutting measures that ultimately contributed to the oil spill.

“Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time [and money],” the report said.

BP attracted a large proportion of public anger at the height of the Gulf of Mexico spill, seeing its share price slump to as little as 296p in June, valuing the company at £55.6bn, less than half its peak value of £123.6bn before the disaster.

Yet co-chair of the National Commission William K. Reilly today moved the blame solely from BP, concluding there was a “system-wide problem”.

A spokesperson for Transocean said: “Consistent with industry standards, the procedures being conducted in the final hours were crafted and directed by BP engineers and approved in advance by federal regulators. Based on the limited information made available to them, the Transocean crew took appropriate actions to gain control of the well. They were well trained and considered to be among the best in the business.”

A spokesperson for Halliburton said: “The report acknowledges that cementing an oil well is an inherently uncertain process and things can go wrong even under optimal conditions. Halliburton acted at the direction of BP, as acknowledged in several places in the national commission report.”

BP declined to comment.