Monday, November 29, 1999

U.S. lawmakers grill BP boss as spill deal lifts shares

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BP Chief Executive Tony Hayward faced the wrath of U.S. lawmakers on Thursday as he appeared before a congressional hearing to apologize for the worst oil spill in U.S. history and say it should never have happened."Under your leadership BP has taken the most extreme risks," Democratic lawmaker Henry Waxman told Hayward at the start of the hearing. "BP cut corner after corner to save a million dollars here and a few hours or days there," he said of the events leading up to the Gulf of Mexico spill.Waxman's comments set the tone for what was expected to be tough questioning of Hayward. Public anger over the handling of the crisis is intense, especially on the U.S. Gulf Coast.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 59-day-old 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 up slightly in New York.For full coverage, click TV reports, click, and related graphics, click was Hayward's first appearance on Capitol Hill since an explosion aboard an BP-leased offshore oil rig on April 20 killed 11 workers and ruptured a deep-sea well, unleashing a torrent of crude into the Gulf.He has been the public face of BP's response to the spill but has been vilified for insensitive gaffes that played down the extent of the disaster.Democratic congressman Bart Stupak mocked Hayward's 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."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 was due to tell the congressional panel, according to an advance transcript of his testimony.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 his testimony, Hayward will try to widen the circle of blame on Thursday and is expected to rebuff those claims.The entire industry needs to improve, and it is too early to understand the cause of the "complex accident," Hayward said in his prepared testimony, adding 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, the Obama administration's point man for the disaster, Admiral Thad Allen, said the company was ahead of schedule in building a relief well to cap its blown-out well.But he could not guarantee that it would be completed before its target date of August.The company said on Wednesday it started a second system to siphon oil from the leaking well, a day after a team of U.S. scientists raised their high-end estimate of the amount of crude oil flowing from the well by 50 percent to between 35,000 and 60,000 barrels per day.Allen told reporters that BP would increase its capacity to capture oil from the well to 28,000 barrels a day by early next week.(Additional reporting by Deborah Zabarenko, Timothy Gardner and Christopher Doering in Washington, Raji Menon and Sarah Young in London, Writing by Sitaraman Shankar and Ross Colvin, editing by Philip Barbara)(For more news on Reuters India, click

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