Monday, November 29, 1999

BP`s Hayward slammed in Congress; shares up on deal

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Angry U.S. lawmakers hammered BP Chief Executive Tony Hayward at a congressional hearing on Thursday, accusing his company of taking "extreme risks" that triggered the worst oil spill in U.S. history.In his first appearance before Congress since the start of the 59-day-old crisis in the Gulf of Mexico, a tired-looking Hayward sat alone and hunched over the witness table as lawmakers took turns to lambaste the energy giant."Under your leadership BP has taken the most extreme risks," Democratic lawmaker Henry Waxman told Hayward, who sat impassively during the lawmakers' nearly 90-minute barrage."BP cut corner after corner to save a million dollars here and a few hours or days there," Waxman said, his comments reflecting the intense public anger over BP's handling of the crisis.Hayward's opening statement to the hearing, in which he said he was "deeply sorry" for the spill, was interrupted by a protester with her hands painted black and yelling "you need to be charged with a crime Tony." She struggled vigorously with police before she was hustled out of the chamber.Investors meanwhile welcomed a BP deal with the White House a day earlier that set up a $20-billion fund for compensation claims arising from the spill. The agreement gave them a clearer picture for the first time of the potential costs of the spill for BP.In London, BP's stock price soared 7 percent on the back of the news, while the company's U.S.-listed shares were flat in New York.Graphics told the committee BP was doing everything possible to contain the oil spill, which was triggered by an explosion on an offshore oil rig on April 20 that killed 11 workers and ruptured a deep-sea well, unleashing a torrent of crude into the Gulf.The Obama administration's point man for the disaster, Admiral Thad Allen, told reporters on Thursday that BP was ahead of schedule in drilling a relief well to cap the blown-out well. But he said he could not guarantee that it would be finished before its completion date of August.The spill has soiled 120 miles (190 km) of U.S. coastline, threatened multibillion dollar fishing and tourism industries and killed birds, dolphins and other sea life."The explosion and fire aboard the Deepwater Horizon and the resulting oil spill in the Gulf of Mexico never should have happened and I am deeply sorry that they did," Hayward said.Democratic congressman Bart Stupak mocked Hayward's earlier comment, for which he has since apologized, that he would "like my life back." Stupak also ridiculed BP chairman Carl-Henric Svanberg for his remark outside the White House on Wednesday that the energy giant cared about the "small people."BP IGNORED WARNINGSLawmakers have said BP ignored warnings from contractors and their own employees and chose faster and cheaper drilling options that increased the danger of the well rupturing."We have learned that time and again BP officials had warning signs that this was -- as one employee put it -- 'a nightmare well,'" Stupak said.A number of other oil companies were seen to throw BP to the wolves in congressional hearings this week, portraying themselves as a cut above the London-based firm in terms of safety practices and operational standards.In written testimony submitted to the committee, Hayward said it was too early to understand the cause of the "complex accident," and noted that a "number of companies are involved, including BP."A day earlier Hayward took part in talks between BP and President Barack Obama at the White House. After four hours of intense talks, the company bowed to Obama's demand to set up the independently managed $20 billion fund for spill claims.But Republican congressman Joe Barton of Texas, a major oil-producing state, took issue with the deal, telling Hayward he was "ashamed of what happened in the White House yesterday.""I think it is a tragedy of the first proportion, that a private corporation can be subjected to what I would characterize as a shakedown, a $20 billion shakedown. It's got no legal standing and sets a terrible precedent for the future."The deal was seen as a much-needed victory for Obama, who has faced criticism that he has not been tough enough on BP, while easing political pressure on the British company."Investors were seriously worried that BP as we know it was under threat and that the company could be broken up or forced into liquidation. What we see now for the first time is that Obama is not going to bring BP to its knees," said Tom Nelson, co-manager at the Guiness Atkinson Global Energy Fund, which owns BP stock.The cost of insuring BP debt against default, which hit record levels ahead of the deal, fell 145 basis points to 400 basis points, according to data from Markit. This is still a level corresponding to a sub-investment grade company.While Hayward was testifying in Washington, BP continued to siphon off oil from its ruptured well in the Gulf.BP is boosting its oil-containment effort after activating a new oil-burning system on Wednesday. Siphoning capacity will hit 28,000 barrels per day "early next week," versus the 18,600 barrels that BP trapped on Wednesday, Allen said..(Additional reporting by Deborah Zabarenko, Timothy Gardner, Alina Selyukh in Washington, Kristen Hays in Houston, Raji Menon and Sarah Young in London, Writing by Ross Colvin, editing by Philip Barbara)
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