DOW JONES NEWSWIRES: FOCUS: TNK-BP Fatalities Highlight Flaws In Data Transparency

By Benoit Faucon and Alexander Koliandre
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)–A rising death toll among TNK-BP Holding’s (TNBP.RS) workers searching for oil and laboring on its rigs and pipelines in Russia highlights flaws in the accuracy and transparency of the company’s safety record and clouds attempts by joint venture partner BP PLC (BP) to polish its own reputation for safety.

Deaths from road accidents have fallen since 2004 and thus lowered the total number killed at TNK-BP from 22 to 15 last year, which includes one killed in a road accident, the company says.

But as new BP Chief Executive Tony Hayward seeks to balance leaner management with better on-site safety, the numbers of those killed while working on facilities at BP’s most important joint venture climbed to 14 staff and contractors last year from 13 in 2004, TNK-BP said, after Dow Jones Newswires reviewed safety reports in the hands of both BP and TNK-BP.

It is exactly twice as many deaths as the BP Group says it suffered last year.

Pressed on the deaths in Russia, the London-based oil giant said it doesn’t disclose the joint venture’s fatalities because it isn’t the operator of the projects. Half of TNK-BP is owned by prominent Russian investment groups Alfa Group, Access Industries and ZAO Renova.

BP’s annual report says fatalities at the group level, excluding joint ventures, fell last year to seven, “the lowest level in nearly 20 years of reporting.”

TNK-BP has previously said that it is committed to reporting its safety performance in line with international practices, whereby all international oil majors disclose all fatalities, including those of contractors, in their annual reports.

However, there are huge discrepancies between numbers available to the public and those reviewed internally, which the company declined to explain.

The company’s director of Planning and Performance Management for Heath and Safety, Vladimir Lyutov, confirmed 15 deaths in total last year but that contrasts with the one death a year since 2004 through February this year reported in TNK-BP’s annual report. Confusing matters, Oleg Sovaschenko, then head of the company’s Department of Work Place and Industrial Safety, said at a presentation made in Moscow in May the number of deaths, including those from road accidents, in 2004 was 37, nine of which were non-road fatalities. Sovaschenko reiterated the figures to Dow Jones Newswires this week but refused to say how many workers died last year.

Presented with the different numbers, a company spokeswoman said it was considering disclosing all fatalities in a sustainability report in future. The company said in its 2006 annual report that “in the next five years, we will spend at least $2.68 billion” on health, safety and the environment.

TNK-BP also stressed that its Day Away From Work Case Rate, a universally applied measure of industrial accidents, fell by a third last year compared with 2004, and was 18% lower than the industry average. Also, the number of man-hours worked has increased in the last three years, the company added.

What is clear is that the number of workers killed at work on facilities and infrastructure or while exploring for oil has risen since 2004, a stark contrast with progress made on road safety.

The company confirmed there were 14 non-road related oil worker deaths last year, including contractors and sub-contractors. That compares with nine in 2004 according to Sovaschenko’s May presentation, or 13 according to Lyutov. The death toll isn’t mentioned in the annual reports of BP or TNK-BP.

The BP CEO has said safety is a priority and its involvement in the joint venture makes a positive difference to safety at TNK-BP.

In June, Hayward said in Moscow that “through the introduction of our driver safety standard, we have, for instance, significantly cut work-related road fatalities.”

Road accidents tends to be primarily related to local habits, such as a reluctance to use seat belts.

But the higher death toll among those working on infrastructure and facilities or hunting for oil could prove an embarrassment to BP as it tries to draw a line under the consequences from an explosion that killed 15 workers at its Texas City refinery in the U.S. in 2005.

At a recent staff meeting in Houston, Hayward said the company now needed to alter its culture and take well-judged risks. “Assurance is killing us,” the Financial Times reported him saying.

TNK-BP provides BP with a fifth of its hydrocarbon reserves base and a tenth of its profits, according to Hayward.

• Causes

Documents reviewed by Dow Jones Newswires and in the hands of both BP and TNK-BP show the causes of death in Russia include falls from heights, an explosion during seismic work, suffocation from fuel vapors or heavy equipment dropped on workers.

Among the incidents was a case from January last year, when a contractor died after the pipe-laying machine he was driving sank under ice at the giant Samotlor field in Western Siberia, where at least three workers died in 2006. A safety assessment said no data had been available regarding the presence of boggy areas and the ice thickness at the sites.

Elsewhere in Western Siberia, a young worker died after he began dismantling a cover that was under pressure. A photograph of the unnamed worker shows him with his blackened eyes tightly closed and a deep gash in his forehead.

An internal assessment found that he and his team attempted a repair without appropriate training and without any procedure for risk assessment. Documents advised the repair of such equipment shouldn’t take place unless it is depressurized.

The death toll at TNK-BP compares with Russia’s largest independent oil company, Lukoil Holdings (LUKOY), which claimed in its annual report that it had eight fatal accidents last year, despite being a company with twice as many workers as TNK-BP. Dow Jones Newswires couldn’t confirm the accuracy of the Lukoil figures.

The lack of public information on key ventures such as TNK-BP has spurred safety experts to call for broader safety disclosure by the oil majors.

“If companies don’t disclose (the number of fatalities at large joint-ventures) to investors, then they are not giving enough information,” said David Ramsay, managing director of Scotland-based incident investigation company The Kelvin Consultants Ltd., adding he was speaking generally and not about BP specifically.

“Non-operated joint-ventures where the company has a substantial stake should be accounted” for in the annual reports in a column separate from operated companies, said Leiden University’s Patrick Hudson, author of the “Hudson Model”, a widely applied corporate safety culture model.

Company Web site: http://www.tnk-bp.com

By Benoit Faucon and Alexander Koliandre, Dow Jones Newswires; +44-20-7842-9266; [email protected]

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