BP defends safety record
Oil giant BP today defended its safety record at the end of a year that senior executives described as challenging and of mixed fortunes.
Chairman Peter Sutherland said the company did not accept there was an “endemic problem” relating to safety following a fatal fire at its largest oil refinery in North America a year ago and a recent oil spillage in Alaska.
His comments followed criticism from shareholders attending the annual meeting that the company had also failed to plan effectively against threats such as hurricanes in the Gulf of Mexico and the freezing Russian winter.
Although profits rose by a quarter to $19.3bn (€15.7bn) last year on the back of record oil prices, daily production of crude was little changed at 4.01 billion barrels because of setbacks that included the shutdown of its Thunder Horse rig in the Gulf due to storm damage.
Mike Porter, a private shareholder, said: “Do you accept that there have been serious management failures and that you have been unable to assess risks properly?”
“Surely board members must take ultimate responsibility for this and they should show that in their remuneration.”
Mr Sutherland said the company had immediately accepted responsibility for the blast in March 2005 at its Texas City refinery, which killed 15 people and injured about 200.
An internal inquiry was held and an independent panel of advisers was set up under former US Secretary of State James Baker to study the safety systems and the safety culture at all the US refineries owned by BP.
Chief executive Lord Browne said BP was determined to learn lessons from the accident and to put these into practice across all its global operations to improve safety.
But the company also came under fire from a US lobby group over an oil spillage in Alaska, where BP had some 7% of its production capacity.
Zak Brown, representing the US Public Interest Group, said: “Unfortunately, safety continues to be an issue, especially in BP’s North American operations.”
Mr Sutherland responded: “I don’t accept broad criticism of failure as if it was an endemic issue within BP.”
In spite of the record profits, he pointed out that BP executive directors had received lower bonuses for last year. Lord Browne picked up an annual performance bonus of £1.75m (€2.5m) compared with £2.28m (€3.3m) in 2004, although his overall pay package totalled almost £10m (€14.5m).
Lord Browne told the meeting: “In many ways 2005 was a year of mixed fortunes for BP. In some respects it was a very difficult year.”
As well as the fire at Texas City, BP operated against a backdrop of continued war in the Middle East, acts of terrorism, the aftermath of the tsunami in Asia and the devastating hurricane season in the US.
