August 18, 2011 / 9:54 AM / in 6 years

Book Talk: Tom Bergin exposes spin behind BP spill

<p>An absorbent boom surrounds oiled marshland, one year after the BP Oil Spill, in Bay Jimmy near Myrtle Grove, Louisiana April 20, 2011. REUTERS/Lee Celano</p>

LONDON (Reuters) - A year after oil major BP capped its doomed Macondo well, Tom Bergin’s account of the worst offshore oil spill in U.S. history suggests that this was an accident which was more likely to happen to BP than any other oil company.

The Gulf of Mexico spill had its roots in a BP culture of cost cutting and short term incentives which also helped cause an earlier fatal accident at Texas City Refinery, Bergin argues in his recent book “Spills and Spin: The Inside Story of BP.”

Bergin, head of Reuters oil industry coverage in Europe, the Middle East and Africa since 2004, talked to former senior executives to uncover the whys and hows of a spill that devastated Gulf coastlines.

Bergin spoke about his book, a story which fundamentally challenges the narratives BP offered to explain the disaster.

Q: Why did you think this book needed to be written?

A: “If a disaster happens, I think that the victims of that, and their families, are very much entitled to a proper explanation as to what happened. I think that they are not well-served by some legal settlement in which everything remains, all the documents remain, shut and they end up getting a check through the post. I also don’t think that it’s very useful in preventing such accidents happening again because if we don’t really investigate the root causes of disasters then how are we going to stop them from happening again?”

Q: When did you start thinking that the way BP had operated over a long time might have been partly to blame for the spill?

A: ”Because I knew that BP had been cutting costs very harshly I did suspect that that would be a factor, but the problem with that as an overarching explanation is that every company cuts costs. There has to be a reason why, if it’s true that BP cut costs to an unsafe level, and it had a culture of doing that over a long period of time, there has to be an explanation for that. I guess what I was looking for was the why on all these things.

“I had certain ideas about things but to be honest it was really with going and doing the deep dive with it and spending a lot of time talking to former senior executives that I got a better understanding.”

Q: Would another accident at BP surprise you?

A: ”In terms of accidents if there’s going to be an accident, a disaster which is a result of structural issues, it largely comes down to what those structures are. The problem is that we don’t know what they are.

”For example, BP had incentives in place before the Gulf of Mexico spill which encouraged its drilling managers to drill quickly. We don’t know if they’ve been done away with. There have been indications that those kind of incentives may have been abolished but we don’t know that. Also, BP’s procedures for designing wells were also criticized but the company has refused to say what, if any, improvements it has made in this area.

“One thing that has changed that should be positive is the way that Bob Dudley has abolished independent strategic business units in the upstream. One of the things that I outline in the book is how the fundamental restructuring of the company into autonomous different units in the early 1990s created really dangerous incentives for managers to run their business for the short term. He has made that change. That should be positive but we’re back to the same old problem that we really don’t know what goes on inside big companies.”

Q: How did you decide on the name for the book?

A: ”The title came in the course of doing the research. What I found was that BP’s approach to the media was very different to that of its peers... And what I also found was that BP continually developed narratives to offer to investors, analysts and journalists that were helpful to advancing its business but really on closer examination didn’t hold a lot of water.

”BP’s account of the oil spill is very clearly that its mistake in this disaster was not to have applied tighter oversight in relation to its contractors.

“The problem with that position is, that’s a position which Tony Hayward had already voiced three years earlier. When he became CEO, investors and analysts expressed concerns about the degree of outsourcing, and he said don’t worry about it, we’ve hired lots of people to look over these people’s shoulders. A couple of months later people are saying oh my gosh oversight, they didn’t realize how important it was. It was this issue of these narratives being offered over time that appear confusing, if not contradictory, that I guess led me toward this title.”

Q: Have you found that since the Macondo disaster, people have been less accepting of BP’s narratives?

A: ”What I’ve been surprised about is how widely accepted, particularly in the UK, BP’s message... has been. There does seem to have been quite a lot of sympathy for Tony, that he was hard-done by, that he inherited this poisoned chalice, he tried to make the situation better, he didn’t have enough time and then he ended up having this disaster but it wasn’t anything that he had done to contribute to it.

“The problem with that narrative is that there’s just not a lot of evidence to support it. Tony Hayward had been the head of the exploration and production division (E&P). E&P, as he told me once, very forcefully, is 80 percent of the company. So he ran 80 percent of the company for four years before John Browne (BP chief executive before Hayward) left. If E&P was in a mess, he can’t really blame it on anybody else.”

Reporting by Sarah Young; editing by Elaine Lies

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