BP to escape crippling fine over oil spill

By ROB DAVIES FOR THE DAILY MAIL
Updated: 15:42 EST, 7 January 2011

BP is looking more likely than ever to escape a crippling fine for its role in one of the worst ecological disasters in living memory, despite scathing criticism from a US presidential commission.

Barack Obama's National Commission probing the Gulf of Mexico oil spill said 'systemic' problems in the industry, coupled with a 'failure of management', caused the explosion of the Deepwater Horizon rig, at the cost of 11 lives and untold environmental damage.

'Better management by BP, Halliburton and Transocean would almost have certainly prevented the blowout,' the commission said in a preview chapter of its full report due on January 11.

Gross negligence? BP is likely to escape the charge, which would reduce its potential environmental fines from a possible £13.8billion to around £3.5billion

It warned that without ' significant' industry reform, there was a risk of a fresh catastrophe.

But the inclusion of rig owner Transocean and Halliburton - which made the cement casing on the Macondo well - diminishes the likelihood that BP will be charged with 'gross negligence' by the US Department of Justice. Escaping the charge would reduce BP's potential environmental fines from a possible £13.8billion to around £3.5billion.

Peter Hitchens, oil analyst at Panmure Gordon, said the report represented a 'chink of light' for BP, just days after US compensation czar Kenneth Feinberg said claims could reach just half of the firm's £13billion victims' fund.

'It [the report] is saying that they all made mistakes and there is a systematic failure within the industry, rather than saying it's all BP's fault,' he said.

Shares in BP traded above £5 for the first time since May 2010 at one stage, before settling to close down 2.35p at 496.9p. However, in Westminster, the Commons energy and Climate Change select committee said cost-cutting at BP contributed to the spill. It also expressed 'serious doubts' about Britain's readiness for a large spill, accusing many firms of having 'cut and paste' approaches to disaster planning.

The MPs called for oil companies to install more robust blow-out preventers, a piece of equipment that failed in the Gulf of Mexico.

They also criticised a £158million cap on the UK oil industry's rescue fund, designed to make up the shortfall if a firm responsible for a spill cannot pay up.

But a spokeswoman for industry body Oil & Gas UK warned against a 'dumbing down' of a regulatory regime that is already tougher than that in the US. She said it was more effective to judge safety measures on a case-by-case basis.