• Wednesday, 16 May, 2012

BP shares rise ahead of Macondo report

Diagnosing disaster: Final report on Macondo eagerly awaited by investors

REUTERS

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By News Wires

 14 September 2011 08:25 GMT

Shares in BP have risen more than 4% on the London market over hopes that a forthcoming US inquiry report into the Macondo disaster will spread the blame for the spill, Reuters has reported.

A London-based trader told the wire service a report in the Wall Street Journal quoting someone said to have seen the report has been fuelling speculation BP’s liabilities will be limited, catapulting BP stock into Wednesday's top FTSE 100 gainers.

The news report said the inquiry would share the blame between BP, fellow owners Anadarko Petroleum Corp and Mitsui Co, as well as contractors Transocean and Halliburton.

Analysts have said the report could be a catalyst for BP's recovery as it will enable investors to assess whether the company will be found grossly negligent - something on which tens of billions of dollars worth of fines and penalties hinge.

The report by the US Coast Guard and Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) could be released as early as Wednesday, the wire service said.

It has been heavily anticipated by investors eager for clues on possible legal ramifications BP and its partners may face from April 2010’s massive oil spill.

The investigative team has declined to say when it will release the report, which was initially supposed to be published earlier this year, will be issued.

But BOEMRE chief Michael Bromwich said on Tuesday the team was in the "final stages" of completing its investigation and the release of the report was "imminent".

Last year's explosion on the BP-leased Deepwater Horizon rig killed 11 workers and spewed more than 4 million barrels of oil from the Macondo well into the sea.

The drilling disaster spurred a slew of investigations, lawsuits and regulatory reforms.

The US Justice Department has already sued BP, Anadarko Petroleum Corp and Mitsui Co, as well as Transocean.

More charges could be brought, however, and the findings from federal investigators could provide fodder for lawsuits that BP and its contractors have filed blaming each other for the biggest offshore oil spill in US history.

Other official investigations of the spill have blamed the catastrophe on a series of mistakes made by BP and its partners.

Probes conducted by a presidential commission and the National Academies have said one pivotal mistake was the rig crew's decision to move ahead with the abandonment of the well despite tests that indicated problems with the well's integrity.

The presidential commission also blamed contractor Halliburton for faulty cementing on the well.

The US Coast Guard also released a draft report in April citing serious safety lapses in the lead up to the accident by Transocean, which as the owner the oil rig, falls under the coast guard’s jurisdiction.

Both Halliburton and Transocean strongly dispute these findings, however.

Unlike some of the earlier probes, the forthcoming report will include findings about Macondo's blowout preventer, which was supposed act as a last line of defence against a major spill.

A forensic review commissioned by the federal team found that an off-centre pipe stopped the device from operating properly.

In addition to the legal impacts of the federal report, the team's investigation may lead to further changes in the regulatory landscape for offshore drilling.

Following the spill, the US government imposed a raft of new rules aimed at preventing another disaster and began a complete reorganization of the scandal-prone offshore drilling agency, which was then known as the Minerals Management Service.

The new rules, coupled with a temporary moratorium on deepwater oil exploration, slowed oil and gas development in the Gulf significantly.

Oil drilling activity is picking back up in the region, with 20 deepwater floaters drilling in area, up from four at this point last year, according to a Barclays Capital Research note.

Bromwich said the team's findings would help guide future regulatory efforts for his agency, but he does not anticipate the report will call for any immediate changes in drilling rules.

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