I have thought a lot in recent weeks about two visits I made as UK energy minister a few years ago, both to installations recently acquired by BP.
One was to Indonesia, where Arco had been a big operator. When BP bought that company and took a look at its offshore platforms, it found a pretty dreadful state of affairs.
As was demonstrated to me during my visit, the corroding structures had been woefully under-maintained for a decade or more, with the result that BP, in order to meet its own safety criteria, had to shut down these installations in order to bring them up to acceptable standards.
The second such experience was off Trinidad, where BP had inherited responsibility for offshore gas fields as part of the merger with US major Amoco. In this instance, as told to me, it was an environmental disaster waiting to happen because of the slipshod regime that was in place.
Once again, BP – according to itself – had taken over assets that were previously American-owned, had been appalled by what it had found and had taken the necessary steps to raise standards to meet its own global criteria.
Now, I am not so naive as to accept as gospel truth everything that is told to visiting ministers in the course of their perambulations round selected facilities. But neither do I have any reason to believe that BP was simply lying to me.
Long before recent events in the Gulf of Mexico, these two experiences stuck in my mind to form an essential lesson – which is that some oil companies operate to the lowest level that the regulatory system of the host nation allows them to get away with. Neither Indonesia nor Trinidad had been well placed to exert control over powerful American operators. I am also bound to say that I formed the impression that BP was more likely to raise standards in such locations than to lower them. Since, at that time, BP was rather less reticent about being described as a British company than now, I took satisfaction from this perception. Isn’t life full of ironies?
Nearly a decade on, such recollections still suggest to me that there is a high degree of double standards in the American vilification of BP. Like everyone else, I have huge sympathy for the rig personnel who perished, the unfortunate people of Louisiana and the other affected areas, not to mention the wildlife. But once one moves up the denunciation chain to institutional and governmental levels, perhaps the most admirable contribution that the US could make as a result of this episode would be to ensure that its own polluters around the world clean up their acts to the same standards that President Obama rightly demands of BP (incorporating Amoco and Arco, and which is 40% US-owned anyway).
It is clear that there are several major players in the Deepwater Horizon disaster, of whom BP is one. The only way to find out where responsibility lies is through an inquiry to the same rigorous standards that Lord Cullen presided over in the aftermath of Piper Alpha. A Congressional lynch mob is unlikely to achieve the same forensic outcomes or subsequent reforms. But whoever is primarily to blame among the major players involved in Deepwater Horizon, another uncomfortable fact for the US government is that the regulatory system of this highly sophisticated country allowed it to happen.
It is all very well ridiculing the inadequacy of the risk-assessment statements submitted by BP or the risible arrangements for responding to a catastrophic event. But the reality is still that the US offshore regulator, the Minerals Management Service, must have ticked the boxes and allowed operations to proceed. The US cannot blame anyone for that dismal state of affairs other than its own regulatory system. Obama might blame predecessors Bush (senior and junior), and it is probably true that the regulators and the oil industry had got far too close to one another. Maybe they have something to learn from the UK in that respect.
Perhaps the oddest sub-episode of the past few weeks was the apology offered to BP chief executive Tony Hayward by Texas Republican congressman Joe Barton for the “shake-down” suffered by the company in the form of a $20billion fund for restitution to people and businesses affected by Deepwater Horizon.
Barton is well known in American politics for one thing only – he is the oil industry’s most expensive hired hand in Washington, raking in huge contributions over the past decade.
Even so, the cross-examination of public enemy number one by a committee which smelled the blood of an oilman was surely an occasion for Barton to keep his head below the parapet.
So why did he blurt out this extraordinary apology linked to the use of the word, “shake-down”.
Well, maybe it had occurred to him – as it had certainly not occurred to others in the heat of the occasion – that a new tariff had just been set, and it will not have gone unnoticed in other parts of the world with offshore oil industries.
The next time an American company commits some dreadful act of pollution, its executives can – or certainly should – look forward to demands for a $20billion kitty. The precedent now exists and, on past form, we may not have long to wait before the occasion arises.