BP spin doctors pour water on oily spills
The Age
Friday March 4, 2011
Gulf spill statements are a self-serving textual symphony of carefully worded indulgence. THERE are times when words fail, when disasters are so profound or devastating that one's vocabulary runs dry. That's not the case at BP, though, the London-based global oil giant whose undersea rig blowout and subsequent oil spill in the Gulf of Mexico now ranks as North America's worst environmental calamity triggered by man.In its 2010 annual report just out, BP is not short of words far from it. BP's finest spinners have joined forces to produce a triumph of apologia and bravado, an acutely pitched tome describing what the company's chairman, Carl-Henric Svanberg, avows was a "profoundly painful and testing year".With few prepared to forgive BP for the Deepwater Horizon oil spill a cataclysmic event that killed 11 workers and injured many more, then fouled vast expanses of the Gulf's fishing and fauna reserves with plumes of sludgy oil and decimated Gulf-state economies the plucky BP has tried to explain to investors what it did wrong and how it intends rebuilding its reputation.It's a textual symphony of squirming, book-ended with accounts that underscore the financial impact on the company. As BP chief executive Bob Dudley points out in a classy understatement: "Part of BP's task right now is to show we can be trusted to handle the industry's most demanding jobs, including exploration and production in deep water." Yup. That would be right, Bob. In one.And there's this pearler, also from Dudley: "I have heard people ask: 'Does BP get it?' Residents of the Gulf, our employees and investors, governments, industry partners and people around the world all want to know whether we understand that a return to business as usual is not an option."We may not have communicated it enough at times, but yes, we get it."But what exactly does BP get? According to Dudley, who points out that he was raised in Mississippi and knows the region well, the message of the past year seems to be at its very least that BP, like other corporates, bears a responsibility to be "part of society, not apart from it".Well, that's a relief. BP gets it. Not before time, and not before the company has spent $40 billion trying to mop up the spill, committed $20 billion to a trust fund to cover future liabilities, and endured blistering criticism from governments, environmental groups and the public. It still faces multiple investigations and a maze of litigation as those affected by the spill seek financial redress.Dudley describes what happened as an "unprecedented oil spill with deep consequences for jobs, businesses, communities, the environment and our industry. From this grew a corporate crisis that threatened the very existence of the company."Indeed, Svanberg and Dudley acknowledge that "2010 will forever be written in the memory of this company" and that of its employees.So how does BP even start to make good its reputation? This annual report offers some insights. It contains plenty of acknowledgements of "weakness" and "failures", yet peppered throughout are key words such as "risks", "demands" and "challenges", "complexity", "crisis" and "trust", balanced by "determination" and "responsibility".BP's internal investigation of the circumstances leading up to the oil spill found what Dudley called "a complex and interlinked series of mechanical, human judgment, engineering design, operational implementation and team interface failures". Yet he acknowledges BP has to do more than simply talk about gaining trust; he says it has to show clearly that it can manage the high risks inherent in the oil industry and "demonstrate that we respect the environment and the needs of local communities and society as a whole".It is CEO Dudley who makes the apology a compact and contained one directed, appropriately, to the families of the 11 men killed when the Deepwater Horizon raged with fire. "We are deeply sorry for the grief felt by their families and friends," he says. "We know nothing can restore the loss of those men."Svanberg stops short of an apology, but says in his first few sentences: "The accident should never have happened. We are shocked and saddened that it did."He suggests that after "a very troubled and demanding 12 months, BP is a changed company". For one thing, BP's former chief executive, the well-regarded Tony Hayward, who was vilified by the US media in the aftermath of the oil spill, has gone. Hayward in December was appointed a $150,000-a-year non-executive director of BP's TNK-BP unit. Chairman Svanberg paid tribute, saying fellow directors were "saddened to lose someone whose long-term contribution to BP was so widely admired".Also gone is the former head of exploration and production, Andy Inglis, who Svanberg said was a "strong leader". As well, there have been five board appointments during the year and numerous internal reports on the technological issues associated with the oil spill, the financial impacts and the damage to internal morale.Whether the public believes that BP really does "get it", however, is yet to be seen. Whether investors believe it is something that probably can be measured by the share price. From levels around 6.50 in April, just before the oil spill, BP's shares tumbled to around 3 in mid-June.The stock has since edged up to around 4.80 as oil prices for benchmark West Texas Intermediate crude, at a little more than $US102, surge to their highest since 2008.The company, which suspended three of its quarterly dividend payments after the spill, has already sold $22 billion of assets to fund its clean-up and liability commitments. It will resume paying dividends this month.In other words, BP is on the slow path back to investor acceptance. But the destruction to its reputation is something that, despite the best efforts of well-meaning executives and spin doctors, will dog BP for decades.Workplace errors that cause human tragedy and oil spills that cause such environmental and economic devastation as the Deepwater Horizon should not be forgotten. Words can soothe but they don't fix things. Actions do.
© 2011 The Age