BP boss says Deepwater liabilities exceed cost of Hurricane Katrina
I interviewed Bob Dudley, the chief executive of BP, at Davos and after a lot of interesting discussion about the global oil price (he thinks it could stay flat for as much as three years), the conversation turned to America and the aftermath of the Deepwater Horizon disaster.
BP is still wrapped up in legal actions which will finally set the full costs the oil company is expected to pay in fines, clean-up costs and compensation to those affected.
As we were speaking, Mr Dudley made a remarkable point.
The cost to BP of the Deepwater disaster could be higher than the "actual" - to use his word - cost of Hurricane Katrina.
"We had a terrible industrial accident in 2010," Mr Dudley told me.
"The company has liabilities of $44bn, that's actually more than the actual damage of Hurricane Katrina. These numbers are absolutely extraordinary."
After the interview I checked the figures, and I think Mr Dudley must be referring to "insured losses", that is costs to businesses and households of the Hurricane Katrina tragedy which struck New Orleans in 2005.
Those figures have been estimated as between $40-$66bn. The "actual" total cost of Hurricane Katrina given the amount of "non-insured" damage it wreaked is somewhere between $96-$125bn.
And of course that doesn't take into account the human cost of Hurricane Katrina, in which more than 1,800 people died.
I think the point that Mr Dudley was making was that BP is paying a large economic price for the Gulf of Mexico accident.
Some might say "And so you should".
Others might be more sympathetic, saying BP has been suitably punished and has attempted to co-operate with the authorities.
And that, five years on, the fact that there is still little clarity on the level of total costs reveals a problem in the process.
BP is certainly privately of the opinion that they have become something of a political football in America, arguing that some appear keen to keep the fight going against the British oil giant.
"We have tried to do the right thing, meet our obligations, " Mr Dudley said, before turning to the legal actions to set the level of fines.
The latest stage of that process has just started again in America.
"I can't really see the end of it. And that of course may not be sending the right signals.
"When you try to do the right thing and it doesn't feel there is credit for doing the right thing, [it] makes you at least recalibrate and think."
I asked him if he feared that he could be at Davos on the 10th anniversary of the Deepwater disaster, still fighting legal actions.
His response was short. "I hope not."
- BBC News
- Published on:
- January 22, 2015
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