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The Wall Street Journal: Report Broadens Criticism Of BP Safety Practices

Baker panel outlines
‘systemic’ problems
with U.S. refineries
January 15, 2007

LONDON — BP PLC board members and executives face a report this week from former U.S. Secretary of State James A. Baker III that will significantly broaden criticism of safety and management practices at the British oil giant and heighten pressure on board members and management to make deep changes as it transitions to its first new chief executive in more than decade.

BP and the U.S. Chemical Safety Board, an American investigative agency with no regulatory role, have issued a series of reports on poor management, maintenance and safety practices at BP’s Texas City, Texas, refinery, the site of an explosion in March 2005 that killed 15. The Chemical Safety Board, for instance, blamed cost cutting at the company for contributing to the accident, a finding BP had vigorously denied. Investigators, including the Justice Department, are continuing to probe that accident.

The Baker report broadens scrutiny to all five of BP’s American refineries, pointing out “systemic” problems in how BP managers — including top executives at BP headquarters in London — approached safety and how they made management decisions across the company, people familiar with the situation said.

The report was commissioned by BP, on the recommendation of U.S. safety officials. The document will be made public tomorrow morning. BP executives, who had been bracing for a highly critical report for months, have recently received copies.

The report isn’t designed to lay specific blame on individual executives for the Texas City accident, but it criticizes the way BP management and board members addressed safety issues, these people said. The report details shortcomings and lists a number of recommendations for improvement, focusing on “organizational deficiencies” across the company’s U.S. refinery operations and up through London headquarters, said one person familiar with the report.

Panel members determined BP executives appeared to take safety seriously and lauded the company for some of its safety practices, according to another person familiar with the report. But executives relied too much on reported safety statistics at its plants, which didn’t tell managers about deeper-seated safety problems, this person said. BP has acknowledged executives focused too much on tracking reported safety incidents at Texas City, and not understanding a corroded safety culture there that the statistics failed to uncover. The Baker report recommends BP engage an outside body to serve as an independent monitor of safety at the company for several years, this person said.

The report comes just days after John Browne, the company’s long-serving chief executive, said he would step down from the helm about 17 months earlier than expected. A number of U.S. executives have been replaced since the accident and a series of other problems — including oil spills and corrosion problems in Alaska and alleged energy-market manipulation at BP. BP denies the market manipulation charges and says it is cooperating with all investigations into its businesses.

The findings of the Baker report could be especially damaging to John Manzoni, BP’s global head of refining and marketing. Mr. Manzoni had been a top contender to succeed Lord Browne, but a run of accidents at the company’s American refineries, including a series of accidents at Texas City, worsened his odds considerably. On Friday, BP named Tony Hayward, head of exploration and production, as Lord Browne’s successor, taking over this summer.

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