BP 2010 Deepwater Horizon Oil Spill Crisis: What The Specialists Say (Part 2)

This is the second of two posts, revealing the results of the second primary research method I used in my BP 2010 crisis case study- specialist interviews. As mentioned in the first post, for this research, four interviews with four different specialists were conducted – Crisis Communication Specialist, Maritime Law Specialist, Reputation Repair Specialist and Oil Industry Specialist. Previous post revealed the results of the Crisis Communication Specialist and Reputation Repair Specialist’s interviews. Today’s post will show the main findings made out of the Maritime Law Specialist and Oil Industry Specialist’s interviews.

Maritime Law Specialist Interview (MLS)

The MLS interview gave a new perspective to the research as it was given from a legal point of view. Unlike the other specialists who discussed and analysed BP in terms of its crisis response and reputation repair strategies, the maritime law specialist analysed it from a legal point of view which helped to understand some of the company’s decisions taken throughout the crisis as well as to predict what might be the possible consequences out of them.

BP was not the only one which was involved in the Deepwater Horizon disaster, there are many other companies such as Halliburton, Transocean, Anadarko Petroleum, Moex, Cameron International etc. which either held shares in the Macondo project or supplied the materials for it. However, BP was the one that was attributed the biggest responsibility and was involved in the whole compensation payment system without much/ any help from the other companies. Why was that? According to the maritime law specialist, the official statement was that after the accident BP officially accepted the responsibility for the whole crisis; BP made agreements with Transocean and Halliburton, protecting them from pollution claims (this might have happened as a result of panic straight after the crisis). According to these agreements BP took over the entire burden for the spill. Moreover there was a study conducted by 25 experts who all said the fault was BP’s for not following the advice given and the safety requirements. Also, no matter other companies were involved and it might have been their fault not providing highest quality materials or equipment, it was still the operator who had to ensure that the rig was operating under the highest quality standards.

However, the MLS gave another “unofficial” explanation to the above statement, which in their words was “marketing gossip”. According to it, BP was the strongest non-US party involved in the whole issue (the other companies are mostly American), so this was the reason why it was prosecuted so vigorously by the USA (underline politics of a country). It was a good thing for it to point at a company which was non-US one because this way the American companies came out clean. That is why BP was the one appearing mostly in the news and was actually framed by the media.

The maritime law specialist was not aware of the fact that BP was fined by SEC in the autumn of 2012, for lying to its investors and shareholders. However, a very important point the interviewee added to that issue was it could be used against BP in court. Moreover, the investors and shareholders might claim additional amount of money on top of this fine.

In terms of simple and gross negligence, the MLS explained the main difference was that in case of ordinary negligence one does something with the strong belief that nothing bad would happen, whereas in terms of gross negligence one does something with the hope that nothing would go wrong. The interviewee also expressed their personal view that it was hard to determine whether BP was simply of grossly negligent, whereas in their opinion Halliburton was definitely grossly negligent as it was not operating under the required quality and therefore it acted with the hope that nothing would go wrong. At the question whether going to court was the right decision for BP, the MLS shared the other interviewees’ opinion that this was the only logical step the company could have taken as part of its strategy.

Oil Industry Specialist Interview (OIS)

The oil industry specialist expressed an opinion that compensation and apology were the best strategies BP could have used because of the global nature of the company. Any other strategy would have had negative effect in long term for both BP and its shareholders and investors. On the question why the overall responsibility was attributed to BP, the interviewee said the other companies were sub-contractors and worked on behalf of BP. Moreover, unless someone is following the incident closely, they would not be aware of the other companies participating in the crisis and the majority was pointing the finger at BP due to the negative media coverage.

In therms of the fine by SEC, the oil industry specialist said BP went against one of the fundamental principles of crisis communication which is not to lie. When someone lies especially about something so big they will be found out at some point and this will aggravate the situation. The OIS also added that by signing the settlement with the Federal Government and the department of Justice, BP was hoping to limit its liability; however, it did not happen this way due to the US policy in case of incidents like this. That is why some companies such as Shell do not operate there.

On the question why the judge refused to halt the settlement programme due to the accusations of fraudulent claims, the oil industry specialist argued that “the judge was in favour of the little man and in favour of the national against the multi-national”. As a recommendation, the interviewee said that BP should have had better contractor control and better oversight of a risk that had the potential to have such an impact. The OIS also added that BP was good at reacting but wasn’t good at being proactive in terms of its risk control.

The next post will show the results from the last primary research method- financial analysis. It will look at BP’s performance on the American market (NYSE:BP) throughout the crisis and will analyse the reasond for the ups and downs of its share price. Don’t miss it out!

Lidiya Kirilova

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