The Guardian (UK): Few bright prospects after the Sun King

Nils Pratley
Wednesday January 17, 2007

The passage where Lord Browne will have felt the twist of the knife is on page 67 of the Baker report, just after the authors note that BP’s chief executive was named by the Financial Times as the fifth most respected leader in the business world.

“Browne’s passion and commitment for [addressing] climate change is particularly apparent,” it says. “In hindsight, the panel believes that if Browne had demonstrated comparable leadership and commitment to process safety, that leadership and commitment would likely have resulted in a higher level of process safety performance in BP’s US refineries.”

In the context of the US oil industry, where attitudes to climate change are ambivalent, this accusation is almost gratuitous. Baker is not quite saying the “sun king” overdid the flim-flam on green issues and forgot about protecting his workers, but the remark is designed to wound. American oil executives, variously embarrassed and resentful of the way BP and Shell have spoken about the need to invest in alternative fuels, will lap it up.

It is one reason why one can’t suppress some sympathy for Browne as he is mauled. As the report’s introduction also notes: “We are under no illusion that deficiencies in process safety culture, management, or corporate oversight are limited to BP.” Quite.

Unfortunately for Browne and BP, sympathy is irrelevant. The corporate game is unforgiving, and the more Browne insists the timing of his resignation as chief executive was unrelated to the publication of the Baker report, the less believable it sounds. It would have been impossible, surely, for him to survive another two years at the top in these circumstances.

BP, of course, cannot walk away. Far from being the end of the story of the Texas City disaster, the Baker report may simply mark the moment we start to think about “new BP”. It is not only the lawsuits that could be expensive. Substantial sums must also now be invested in safety procedures; estimating the annual bill is almost impossible at this point, even if BP appears to have implemented many of Baker’s major recommendations already.

But major acquisitions and deals are now effectively off limits, a penny that is yet to drop in the City, where too much wishful thinking imagines a piece of financial wizardry can rescue shareholders. Forget it. BP’s overwhelming priority is to demonstrate that it is fit to run assets that many politicians in the US would regard as strategic. How quickly can BP’s reputation be restored? It’s anybody’s guess.

The nightmare would be a piece of bad luck. BP has accepted its share of blame for Texas City, but risk can never be eliminated entirely when you are producing and refining volatile substances. Reports are also due into BP’s oil spill in Alaska, its role in alleged propane trading irregularities, and other issues.

In other words, it is easy to imagine ways in which BP’s sea of troubles become overwhelming. It is a company desperately in need of some friends in high places. James Baker was not one.

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