Posts Tagged ‘bob dudley’

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Perspective makes all the difference. On this side of the pond, BP – along with its two US partners –made a dreadful error. In the case of BP the causes of the errors were complex. Its boss at the time was trying to change the culture, and make the company more safety aware. BP works with cutting edge technology, drilling for oil in the deep places of this planet. It possesses skills at searching for and releasing oil lying beneath the oceans which are second to none, but inevitably, when you push technology to its limit, you occasionally get it wrong. With the Macondo oil platform, the consequences of getting it wrong were calamitous. BP was unlucky, it could have been a rival, a US firm, for example, but alas BP was the one hit by a bolt of misfortune.

From the perspective on the other side of the Atlantic, the view is quite different. Run by a complacent Brit, “who wanted to get his life back”, BP put profits before all else. It ignored warnings. It allowed a culture to develop in which employees at the firm told their bosses what they thought they wanted to hear. BP was a company that represented all that was bad about corporate culture. Consider this anecdote to illustrate the point. Its partner, Halliburton told BP that it needed 21 metal centralising collars to stabilise cement laid down before drilling. So what did BP, with its attention forever on cost cutting, do? It laid down just six such collars.

There is no doubt that there are companies, individuals and indeed lawyers, in the region of the US affected by the Gulf of Mexico oil spill that have tried their luck. Ads have circulated urging people to lodge claims. Stories abound of firms gaining compensation from BP for the most spurious of reasons. Perhaps their turnover fell in the year of the oil spill, but for reasons quite unrelated to BP. Perhaps their turnover fell because their finance director booked invoices that would normally have been sent in the year of the oil spill into the following year. Perhaps their turnover fell because firms changed their accountancy practice for just that one year.

Is it fair? It depends on the narrative to which you are subjected. If you believe that BP was guilty of huge arrogance, with compete disregard to human life in the build-up to the oil spill, then you might say the company hasn’t changed; that it is shamelessly trying to put the blame on innocent US victims.

If you believe BP was unlucky, and is no more guilty than its two main US partners in the oil project – Halliburton and Transocean – if you believe that its former boss Tony Hayward was singled out by the US because they just didn’t get the British tendency for understatement, then you might feel that the giant oil company has been treated shamelessly by the US system of so-called justice.

The ‘FT’ has run a number of anonymous articles fighting BP’s corner. One article headlined America’s shameful shakedown of BP and said that the “gulf settlement should be fair, not an exercise in extortion.”

Robert Kennedy Jr told the other side of the story. In a recent interview with the ‘Telegraph’ he responded to the argument that BP was being bullied by the US legal system. He said: “They are being picked on as an oil company that wrecked our Gulf and lied about it… I don’t care if it’s a British company or Exxon. I would rather sue Exxon than BP, because I think Exxon is a worse company. But Exxon didn’t do the Gulf spill.” He said damages should be sufficiently punitive that “it gives an incentive to their industry to spend as much money on protecting the safety of the public and the environment as they do on their tax lawyers, who are trying to reduce their tax liabilities.” Now take legal fees. BP forked out no less than $1.5 billion in payments to law firms acting for apparent victims of the oil spill in May and June alone. BP called these charges “perverse and outrageous.”

What it has managed to do is get the US legal system to investigate and former judge and – more to the point – former director of the FBI Louis Freeh is on the case. The Feds, as it were, are trying to see whether BP has a right to cry foul.

Yet federal judge Carl Barbier doesn’t seem impressed with BP’s arguments. The oil company has been accusing the US claims administrator Patrick Juneau and his office of acting unfairly. But Judge Barbier accused BP Boss Bob Dudley of “going beyond the line”, and of making “unfair, inappropriate, personal attacks” on Mr Juneau.

It does seem to depend on the narrative to which you were subjected in the first place.

Supposing, however, the narrative is retrospectively changed. It turns out that had BP followed Halliburton’s advice and employed 21 metal centralising collars, instead of six, it would have made no difference. Soon after the oil spill, Halliburton ran two simulations of what would have happened in the event that BP had heeded its advice, and the simulations showed that the end result would have pretty much been the same. So what did Halliburton do? It asked the people who ran the simulations to destroy them.

Halliburton has been fined $200,000 for its wrong doing, while BP has forked out around $40 billion. Some say there is a disconnection there.

But then that is the snag with narratives. When pieces of the narrative are changed at a later date, the overall initial impression is unaltered. The narrative changes us, and retrospective changes to the narrative don’t reverse the original effect it had on us. If we were to find out years after we first heard the story that that actually Cinderella was a manipulative little so and so, we would probably still think she had an evil step mother and sisters. Not that BP is Cinderella, but there is someone who is as white as the hero from the best child’s story: Dick Cheney, former US Vice President, no less.

Of course Halliburton is essentially honourable; its former boss went on to become US Vice President.

But if your narrative of US history when Cheney was Vice President is a tad cynical, and you view him as something of a war monger, who made Attila the Hun seem like a socialist, then no doubt you will see this as yet more evidence that BP has been screwed by the US legal system, while Halliburton with its links to the very top of the US government, has got away with the tiniest of fines.

© Investment & Business News 2013

When Vladimir Putin isn’t shooting tigers, saving Siberian cranes, catching whales or just looking all round tough, he is being nice about BP.

Let’s face it, during the last few years things have been a tad troubled for BP. Cast your mind back to 2003. In that year the company agreed a joint venture called TNK-BP with a group of Russian billionaires. The British company invested $8 billion in the venture, and it all seemed rather promising. The joint venture appointed a BP man, a certain Bob Dudley, as CEO.

But while BP was busy laying the foundations for an environmental disaster in the Gulf of Mexico on a scale to make even its loyal shareholders shudder in disbelief, its relationships in Russia deteriorated. Eventually, things had got so bad that Mr Dudley was forced to leave Russia in something of a hurry, with questions about his visa. And ever since, BP and its partners in TNK-BP could barely look each other in the eyes without making evils at each other.

The bucks still came flooding in, however, and BP has enjoyed no less than $19 billion in dividends from its shareholding in TNK-BP.

So while Barack Obama was being all horrible to the company, and its CEO Tony Hayward, who (in typical British understatement) said: “I want to get my life back”, BP found itself promoted to the role of public enemy number one in the US. In the meantime, Vlad took time off from teaching Nicholas Sarkozy some Judo holds, to say how much he liked BP, and how very upset he was about the way in which Tsar Barack the First of the USA was treating  the company.

By then BP had a new boss, none other than Bob Dudley. His American accent helped to alleviate some of the bad PR Stateside, but how would Bob be able to manage the lucrative relationship with TNK-BP when he had personally suffered such a falling out?

Mr Putin said he wanted BP to work with Russia in developing oil resources in the Arctic. “Err, no to that,” said TNK-BP, “We have the exclusive on all dealings between BP and Russia.”

So that left BP in a difficult spot; its reputation in America was in tatters (and that might be kind to tatters), but its dealings in Russia seemed to remind one ever so slightly of wading in treacle.

Now things have changed. The huge Russia state owned energy company Rosneft– the one that picked up a lot of business from Yukos, the energy giant that went down after its boss Mikhail Khodorkovsky found himself in trouble over taxes/after moving into politics – has bought BP’s stake in TNK-BP. At least it has, subject to the normal legality issues.

BP is getting $12.3 billion plus shares in Rosneft worth 12.84 per cent of the company. Actually BP is getting more cash than that, but it is using some of the money to buy the Rosneft shares, so the $12.3 billion is a net figure. BP will also have two seats on the Rosneft board. Meanwhile, according to this morning’s ‘FT’, Rosneft is also going to buy the rest of TNK-BP.

All of a sudden BP finds it is in a pretty powerful position in Russia. Rosneft’s CEO, Igor Sechin, is a former deputy Prime Minister of Russia, and said to be one of Putin’s favourites.

For BP this is a pretty unique opportunity. Tsar Vladimir likes the company and the potential riches in the Arctic are great indeed.

BP’s rivals may well find they are squeezed out of Russia.

Not sure how the US will react. Many have said the last thing BP wants is too much cash from the deal, because Uncle Sam may then decide that actually BP needs to fork out more money in damages for the 2010 Deepwater Horizon disaster.

There is one thing BP has going for it, and that is superb skills in exploiting oil in those hard to reach places of the Earth.

The Russian deal may prove to be most lucrative for BP – that is for as long as the company has the confidence of Mr Putin.

Here is some advice for Mr Dudley: don’t suddenly decide you like that Russian punk group called Pussy Riot.

©2012 Investment and Business News.

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