BP (pensions), downgraded to two above junk by Fitch

[just john]

 Fitch-downgrades-BP-to-near-junk-rating. while despite Congress hears other companies "are no better prepared to deal with a major oil spill than was BP'' US continue to drive down value of company, us_gulf_oil_spill.

 

 

[Gluestick]

Well it's no surprise that Exxon-Mobil, Chevron and Connoco-Phillips are US corporations.

Only leaving BP, Royal Dutch Shell and Total as global Super-Majors.

The US Government, State and World Bank have always tended to act in America's commercial favour.

Did the US government act in similar fashion after the Exxon Valdez disaster?

Oil Spill Disasters:

http://www.infoplease.com/ipa/A0001451.html

 

[NormanH]

This is why we need Europe as a strong unity to fight American self-interest, which despite English sentimentality about a 'special relationship' will never support Britain when the chips are down.

[mint]

I thought they did come to our aid in WWII?

[pachapapa]

[quote user="just john "]

 Fitch-downgrades-BP-to-near-junk-rating. while despite Congress hears other companies "are no better prepared to deal with a major oil spill than was BP'' US continue to drive down value of company, us_gulf_oil_spill.

 

 

[/quote]

Purely a reflection of financial reality and a company slipping into Never Never Land. If you feel the Fitch rating is not warranted then go buy some stock.

[AnOther]

It's not a question of other companies coping with a spill. A loss of containment of this magnitude is (was) almost inconceivable and way beyond any worst case scenario therefore nobody could be prepared for it.

The issue at the moment is that all the other majors have said that it shouldn't have happened and they are right.

The BOP's sole purpose is to prevent what has happened and why it failed to function properly I believe has yet to be fully explained.

[NormanH]

[quote user="sweet 17"]I thought they did come to our aid in WWII?[/quote]

That's what they said to the Iraquis too.

[Anton Redman II]

[quote user="sweet 17"]I thought they did come to our aid in WWII?[/quote]

Without Pearl Harbour would they have entered the fray ?

[Thibault]

[quote user="Anton Redman II"]

[quote user="sweet 17"]I thought they did come to our aid in WWII?[/quote]

Without Pearl Harbour would they have entered the fray ?

[/quote]

 

Probably not as they were making a lot of money from Lend-Lease [;-)]

[just john]

[quote user="AnOther"]It's not a question of other companies coping with a spill. A loss of containment of this magnitude is (was) almost inconceivable and way beyond any worst case scenario therefore nobody could be prepared for it. The issue at the moment is that all the other majors have said that it shouldn't have happened and they are right.  The BOP's sole purpose is to prevent what has happened and why it failed to function properly I believe has yet to be fully explained.
[/quote]

No Matter what ''blame'' is attached to BP sub-contractors at a latter date, this result is part of the risks of operating in this arena in order to provide cheap energy (at whatever margin) to comply with what the market is prepared to pay, and as such was an accident waiting to happen, like all the others.
The same criticism has not been applied by the US to its own operators in other serious spills around the world. No doubt the oil companies who have now been found wanting by congress in their plans (''there have not been walrus's in Florida for 3 million years'' lol) will ensure it doesn't happen to them. [Www]

[quote user="pachapapa"]  Purely a reflection of financial reality and a company slipping into Never Never Land. If you feel the Fitch rating is not warranted then go buy some stock.[/quote]

In this case it is not the financial reality as much as the political will applied to BP's successful piggy bank by the US, out of proportion to previous actions by US companies, but more to the point to show Obama flexing muscle. Double standards and a failure to accept failure of the risk in these operations;
In fact BP is still a strong buy today and it's price has risen £2.40 but it will no doubt take a long time to recover fully, as will the stock holders and pensions which is what concerns a lot of people.

[Quillan]

I saw on 'Good Morning' that the other oil companies are trying to distance themselves from this claiming it wouldn't have happened if it was their rig. The problem with saying that is who's to really know. What was interesting was one of the 'Governors' of the committee pointed out he had read all the other companies procedures for dealing with this type of thing and said they were all inadequate. I suspect that the other companies who bid for this are now quite relieved they lost.

[just john]

[quote user="Quillan"]I saw on 'Good Morning' that the other oil companies are trying to distance themselves from this claiming it wouldn't have happened if it was their rig. The problem with saying that is who's to really know. What was interesting was one of the 'Governors' of the committee pointed out he had read all the other companies procedures for dealing with this type of thing and said they were all inadequate. I suspect that the other companies who bid for this are now quite relieved they lost.[/quote]

[quote user="just john "]  the oil companies who have now been found wanting by congress in their plans (''there have not been walrus's in Florida for 3 million years'' lol) will ensure it doesn't happen to them. [Www] [/quote]

I think it was the coverage on CNN that showed the Governor holding up contemptously documents produced by the other main five oil companies, clearly produced by the same PR company in style, content and same images, including in two of the documents the procedures for dealing with walrus's! (see his comment above)

Discussion on Jeremy Vine programme on Radio 2 this afternoon about equivalent American company disasters eg  Bhopal_disaster

[just john]

Well fine, bully bama gets his way and BP stops dividend to create a fund to pay compensation and clear up mess. Result.

I'm not holding my breath til he orders Union Carbide to do the same (belatedly) in  Bhopal_disaster, despite Union Carbide CEO, Anderson knew about a 1982 safety audit of the Bhopal plant, which identified 30 major hazards and that they were not fixed in Bhopal but were fixed at the company's identical plant in the US.

EDIT; Sorry, for Union Carbide, read Dow Chemicals, death toll was 2,259 and the government of Madhya Pradesh has confirmed a total of 3,787 deaths, Other agencies put the toll at 16,000 and still counting.

Obviously US caused deaths in other countries not as important as shrimp on its own shores.  

 

[Iceni]

"Discussion on Jeremy Vine programme on Radio 2 this afternoon about equivalent American company disasters eg Bhopal_disaster"

What utter rubbish, the death of foreigners in a faraway country is not equivalent to loss of jobs, damage to tourism etc in one's own constituency.

Barry O is doing what all politicians do when faced with a disaster, make a lot of noise to cover up his own lack of action.

John

[velcorin]

With a Gearing of 0.5 EBITDA, and a BBB Rating, BP has merely dropped from having the strongest Balance Sheet in the world, to being in the top 10%. Potentially they could borrow USD 500Billion, and maintain their BBB Rating. Free Cashflow is still the highest of any company in the world. The Rating Agencies are merely noting the increase of Debt to Market Equity due to the fall in the share price, Equity has not changed, Free Cashflow has not changed, Net Debt has not changed.

[Will]

And don't forget that it was inadequate regulation in the US financial sector that allowed Fanny Mae and Freddy Mac to offer excessive numbers of sub-prime mortgages and thus set the wheels in motion for deepening the world-wide recession by a considerable amount... As if that wasn't bad enough for pensioners in UK (and elsewhere) they stand to suffer more through devaluation of BP stock held by pension funds. Why is D Cameron not pressing for compensation from the US financiers?

[pachapapa]

[quote user="AnOther"]It's not a question of other companies coping with a spill. A loss of containment of this magnitude is (was) almost inconceivable and way beyond any worst case scenario therefore nobody could be prepared for it.

The issue at the moment is that all the other majors have said that it shouldn't have happened and they are right.

The BOP's sole purpose is to prevent what has happened and why it failed to function properly I believe has yet to be fully explained.
[/quote]

Agreed and the candid observations of an ex Shell Executive are interesting.

Keep in mind the contingency plans for worldwide drilling is the blow out protector. Some 30,000+ have been built and installed. This is the one that did not work. There is also evidence emerging that its design was compromised and that it was damaged several weeks before the blowout during a test and was not repaired. This needs to be fully investigated and understood before we draw final conclusions about what other contingencies are possibly needed
For forty years and for over 35000 wells in the Gulf of Mexico the proven safety measure has been the blow out protector. It is also the device used around the world. Something went wrong with the blow out protector and we need to get to the bottom of it and hold people accountable. It should have worked.
It's my belief that the root cause issues in this spill will come down to human factors. Not unlike a pilot who unknowingly flies his plane into the ground by making judgment errors, I believe we lost these lives, the rig and experienced the blow out due to wrong human judgments. We'll find out in due course. The systems and equipment and safe and reliable. Unfortunately people make mistakes.
What are the chances that the well casing below the sea floor has been compromised, and that gas and oil are coming up the outside of the well casing, eroding the surrounding soft rock. Could this lead to a catastrophic geological failure, unstoppable even by the relief wells?

John Hofmeister:

This is what some people fear has occurred. It is also why the "top kill" process was halted. If the casing is compromised the well is that much more difficult to shut down, including the risk that the relief wells may not be enough. If the relief wells do not result in stopping the flow, the next and drastic step is to implode the well on top of itself, which carries other risks as well. We really need to find out what went wrong from the beginning so that we don't have this happen again
The internal investigation of the main sub contractor is worth a look http://energycommerce.house.gov/documents/20100614/Transocean.DWH.Internal.Investigation.Update.Interim.Report.June.8.2010.pdf

[just john]

Congress has the temerity to accuse BP Ceo Tony Hayward of stonewalling, after UC Ceo Warren Andersen stonewalled for some 25 years after the Bhopal gas leak, toxic chemicals abandoned at the UCIL plant continue to pollute the  region affecting thousands of Bhopal residents.

How very dare they . . . 

[Quillan]

I felt very sorry for him when I saw him being bullied by the committee yesterday. He has said he, on behalf of BP, is very sorry, he is not trying to apportion blame elsewhere but he can't give an answer on what went wrong until a proper investigation has been completed. As he said lessons have already been learnt, the results of the report in to the accident may well effect the way things are done in the future.

It's typical of the Americans to look round for somebody to blame before the full facts are know. There's no point in bullying the man for answers he currently just does not have. There has been a lot of anti-American feeling out there for the last 10 years and as people on the street still believe (rightly or wrongly) that BP is still an English company the BP 'bashing' will only confirm their attitude and increase the number of people having the same feeling. Don't forget however that whilst BP may no longer be an English company many UK pension funds have money invested in them.

I think if you really feel strongly about it just don't go on holiday to the USA. America is the second most visited country for holidays (France is the first) and over 50% of those holidaying in the US are English. If none of us Brits went as a form of demonstration they would loose around $45+bn, that might focus them a little.

Source.: http://en.wikipedia.org/wiki/Tourism

[Gluestick]

Whilst I much agree with your ethos, Q and also very much agree that the mighty USA has much to answer to the World for in terms of all sorts of chemical, geological and oil and gas industry disasters and pollutants, and massive rape of minerological resources, it is an inescapable fact that under the helm of previous incumbent, Browne, the gentleman who abused shareholder value by whisking his partner around the globe on company jets and spending company cash on his lavish entertainment, BP engaged in a wide and swingeing cost cutting operation to optimise profits: and part of this strategy was to outsource as much of their exploration, and recovery operations as possible: simultaneously, BP dispensed with many skilled staff with clear expertise in disaster management: and much associated equipment.

Safety and expertise inevitably tend to be amongst the first victims in savage cost-cutting exercises and corporate greed.

Hayward has been with BP for many years: and was Browne's Exec. Assistant since circa 1990: ergo, he was intimately familiar with the cost cutting and pip squeezing regime: more particularly so, since Hayward was previously - since 2000 - Group Treasurer: and thereafter, Chief Executive of exploration and production in January 2003. Therefore he would be pretty familiar with the risk-taking and short cuts: more so, as Hayward has a PhD: and was a Rig Geologist, in 1982! With BP.

Now since he knew the risks better than most, yet still went for gold and the ego and income of top honcho, then he deserves all he gets!

If it is too hot in the kitchen: then don't even open the damned door!

 

 

[woolybanana]

Funny, I thought that the expression was 'If you don't want a bun in the oven, don't turn up the heat'![6]

[just john]

In a risk/cost analysis, market prices dictate margins and influence decisions, and the history of this field go back to 1840 - without comparable safety concerns, sub-contractors do not lack expertise, more likely a variety of expertise is concentrated, so there were plenty of reasons to believe reasonable practice was being attended to until proven otherwise.

Neither is this one sided, America not only consumes and drives this oil supply, it expects cheap oil, the inherent risk in the combination of these factors mean you can't absolve yourself from risk, - or blame.

This might have been handled in a different way with America recognising that environmental protection funds could be available from oil taxes from these fields, it must recognise also that users should pay more for this risk, (and almost certainly will now).

I can't see any of the competitors any better placed to provide this safety and more likely now will ratchet up costs to include future safety belt, braces and condom!

[Quillan]

Sorry Gluestick you either missed the point or I didn't get it over clear enough. The investigation in to what actually happened is by no means complete. The interim report (as per the link in a previous post), all 3 or 4 pages of it, says it could be this or it could be that, in fact it says it could be many things, or not, if you read it. There is no point in bullying the man in front of the world when all there is is hearsay. The man can't give an answer until the report is completed and the factual reasons why this happened are known. This is why, for the moment, they should leave him alone until we all know what exactly happened. Then by all means if its down to bad practice or basically PB's fault then sue the *rse of them, bleed them dry, put this fellow in prison or whatever justice you think should be dealt out.

For all we know the company that BP subcontracted too may have lied about their ability to do such work, there's so many things we just don't know at this stage other than the terrible effect its having on the environment and peoples lives.

[just john]

Quite so Quillan, Interestingly a Republican on the committee, Joe Barton of Texas, apologised to Mr Hayward for the events of the previous day. Saying he was "ashamed", Mr Barton said: "I think it is a tragedy of the first proportion that a private corporation can be subjected to what I would characterise as a shakedown, a $20bn shakedown. It's got no legal standing and sets a terrible precedent for the future."  (I hope India is watching very closely to pick-up Shakedown tactics for Dow Chemical). He later apologised for using the term "shakedown" and then withdrew his apology to the company after vice-President Joe Biden called his comments "outrageous" and his own party condemned him.

It took BP to join US and Russia, who has also joined the shakedown, even annihilation. Russian-President-fears-BPs-annihilation

 

 

[Quillan]

One could argue that the risks were caused by Americas massive thirst/demand for oil. They are the largest consumer in the world, bigger that all of Europe put together. I therefore can understand Betty Sutton, (Democrat from Ohio) when she said: “Like many Americans, I feel physically sick when I see all this oil gushing into the gulf.” yeah like it should be gushing in to America. In the unlikelihood of the gulf oil running out will America be suing BP for loss of oil that escaped in to the sea?

I think this is also a bit of showmanship by many of the senators as well given that they will all be up for re-election shortly.