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Daily Telegraph: Fatal blast report condemns BP board

Daily Telegraph Baker grahic

(James Baker said there had been a substantial gulf between actual safety and the perception of safety among BP’s management)

By Russell Hotten, Industry Editor
Last Updated: 12:29am GMT 17/01/2007

The board of BP failed to provide the leadership necessary to keep the oil giant’s US refineries safe, according to a damning report commissioned after a fatal explosion at the company’s Texas plant.

A lack of resources and training, and an absence of an “open and trusting” culture at some plants, all contributed to a “substantial gulf between actual safety and the perception of safety” among BP’s management, the report said.

James Baker, the former US secretary of state, whose 374-page report into BP’s safety culture was published yesterday, said the company should appoint an independent monitor to assess whether standards improved over the next five years.

“BP did not ensure, as a matter of best practices, that its management implement a comprehensive and effective process safety system,” Mr Baker said. The company did not create “a common, unifying process-safety culture among those refineries”.

He added: “Instances of a lack of operating disciplines, toleration of serious deviations from safe operating practices, and apparent complacency toward serious process safety risks existed at each of the US refineries.”

Mr Baker made 10 recommendations in his report, all of which BP said it would implement. He also advised the rest of the industry of heed his report, saying that he was “not so naive” to believe there were not similar failings at other companies.

The explosion at Texas City in 2005 killed 15 people and injured more than 170. It was the worst industrial accident in the US for more than a decade, and BP set aside $1.6bn (£816m) to compensate victims. The company has also vowed to spend about $1.7bn a year over the next few years to improve safety standards at its US refineries.

Mr Baker said that, although there had been cost-cutting at the refineries, he found no evidence of a wilful attempt to reduce spending on safety, and he acknowledged that BP had already made great strides to improve standards. Although Mr Baker declined to lay the blame at the feet of any particular individual, Lord Browne, BP’s chief executive, said he must accept some responsibility because “this happened on my watch”.

He said: “We are truly sorry for what happened. I said it was a watershed and will forever change BP.”

City analysts said BP would weather the storm. BP shares closed down 8p at 541p.

But the issue is not over. In March, the US Chemical Safety Board (CSB) is expected to release its full report into the explosion and is likely to make more uncomfortable reading for BP than the Baker report. A preliminary CSB report said BP knew of safety lapses before the explosion.

Yesterday, Carolyn Merritt, the CSB chairman, said: “Safety culture is created at the top. When it fails there, it fails workers far down the line. That is what happened at BP.”

BP has already made several management changes. In addition to Lord Browne retiring early, the company’s vice- president for global refining, Mike Hoffman, is leaving this year. BP’s head of US operations, Ross Pillari, was replaced last year by Robert Malone. The manager of the Texas City plant has been replaced by BP twice since the accident, and officials in Alaska, where there was an oil spillage, were also replaced.

John Manzoni, head of BP’s refining and marketing division, which was ultimately responsible for Texas City, said yesterday he had no intention of standing down.

Lord Browne said the report had nothing to do with him bringing forward his retirement date.

“I concluded in December that I should retire as chief executive sooner rather than later, because uncertainty is not good,” he said.

http://www.telegraph.co.uk/money/main.jhtml;jsessionid=D0APKAXIKG1OTQFIQMFSFFOAVCBQ0IV0?xml=/money/2007/01/17/cnbp17.xml

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