1.

0: INTRODUCTION

With headquarters located in London and formerly known as British Petroleum, BP

P.L.C is a multinational oil and gas company. BP P.L.C is one of the worlds publicly owned

oil and gas companies which are also known as Big Oil, whose tremendous performance as

recorded in 2012 pushed it to worlds sixth-largest oil and gas company and sixth-largest

energy company due to market capitalization. The supply chain of this company is owned by

itself in all areas of the oil and gas industry such as exploration and production (E&P),

refining, distribution, marketing, petrochemicals and trading. As of 31 December 2016, BP

had operations in 72 countries worldwide, produced around 3.3 million barrels per day

(520,000 m3/d) of oil equivalent, and had total proved reserves of 17.81 billion barrels

(2.832109 m3) of oil equivalent (Wikipedia). With 18,000 service stations globally, the

companys largest division is BP America located in the United States.

BPs involvement in some major environmental and safety threatening accidents have

been cited in chronological order below:

I. Texas City Refinery Explosion (2005)

II. The wreck of Torrey Canyon (2005)

III. Prudhoe Bay Oil Spill (2006)

IV. Deepwater Horizon Oil Spill (2010)

The first refinery explosion costed Texas City BP 15 lives of workers along with a very heavy

fine from OSHA. The Prudhoe Bay Oil Spill was the largest oil spill in 2006 on Alaskas North

Slope which brought BP a large penalty once again around US$25 million. The Deepwater

Horizon oil spill, also known as the BP Oil Spill is the largest marine oil spill in history in the

Gulf of Mexico that took lives of eleven. With Hyundai Heavy Industries as the builders and

Transocean as the owner, this 10- year old semi-submersible drilling rig was chartered to BP
under a seven year contract whereby the accident occurred before the completion of the

signed contract in 2010.

2.0: OPERATIONS

With operations conducted in 72 countries globally, BP housed around 74,500

employees all over the world as of December 2016. The modus operandi is mainly

segmented into two main business streams, upstream and downstream. In UK alone, BP

runs more than 40 oil and gas fields, four onshore terminals together with a pipeline and

network and intends to invest in the North Sea until 2017 under four development projects.

About one third of BP global business is administered under operations by the United States

with major subsidiary of BP in the United States is BP America.

2.1: Main business Segments

Oil and Natural Gas

In around 25 countries globally, activities involving exploration for new oil and gas

reserves, development of the resources, producing, transporting, storing and

processing of the resources are conducted. Apart from this exploration and

production, BP is currently considering selling its assets accumulated through the

stake it has in three oil sand projects in Canada.

Oil Refining and Marketing

BP is known to have had shares in 11 refineries and 17 petrochemical manufacturing

plants until December 2016. As Air BP provides with aviation fuel and services BP

Shipping contributes in delivering oil and gas cargoes to market. Furthermore, BP

also gains its revenues from marketing petroleum products in 50 countries all over

the world. As for industrial application and automotive lubricants, BPs main brand

that delivers the services is Castrol.

3.0: ENVIRONMENTAL RECORDS

From the series of environmental and safety accidents, BP garnered a lot of negative

attention from public and it was further severely criticised after the Deepwater Horizon Oil

Spill in the Gulf of Mexico in 2010. BP is known to have worst safety records in the United

States for being part of the supermajors. BP refineries in Ohio and Texas are scrutinized

with 97 percent of egregious, willful violations as handed out by OSHA. Washington post

published a report from ProPublica in 2010 found evidences that the company ignored

safety and environmental rules as they were revealed from internal investigations Though,

senior BP managers were warned multiple times that if actions are not implemented

immediately, a major accident could occur, they closed their eyes to the seriousness of the

situation. Despite the series of major accidents, the executives were not held attributable for

the failure in management, instead they were promoted.

3.1: Deepwater Horizon Explosion and Oil Spill

The Deepwater Horizon Oil Spill is known to have brought upon major impacts on

economy and ecosystem of the Gulf of Mexico. This oil spill has burdened BP in terms of

financial, legal and public relation though it was clear that misconduct on their part

contributed to the core of this tragedy. An estimated of 4.9 million barrels of oil have leaked

to the surrounding marine environment before the well could be capped on 15th of July

2010. With 810,000 barrels of oil were somehow managed to be collected or burned, sadly

around 4.1 million barrels of oil still escaped to the gulf. This oil spill also cited some

significant events like usage of high volume of Corexit oil dispersant that was used as

control measure. 1.4 million US gallons consisted of various chemical dispersants were used

by workers for further breakdown of oil after some research stated that microbes mainly

digested natural gas instead of oil unlike the dispersants were said to function. A 2012

survey of the health effects of the spill on clean-up workers reported "eye, nose and throat
irritation; respiratory problems; blood in urine, vomit and rectal bleeding; seizures; nausea

and violent vomiting episodes that last for hours; skin irritation, burning and lesions; short-

term memory loss and confusion; liver and kidney damage; central nervous system effects

and nervous system damage; hypertension; and miscarriages" (Wikipedia). BPs expenditure

on the spill comprises the cost of spill response, containment, relief well drilling, federal

costs including fines and penalties and so on.

4.0: CURRENT ISSUES INVOLVING BP

A 193- page report was released on official website by BP in 2010. From this

report, it was notified that though BP takes responsibility for certain causes,

Halliburton and Transocean were to be blamed as well. Sales at some stations saw a

major drop from 40% to 10% due to protests from thousands of people at the BP

service stations. After some time of the oil spill occurrence, a divestment program

was initiated by BP which sold around $38 billion worth of non- core assets by 2013

as compensation for its liabilities involving the tragedy. In September 2012, BP sold

its subsidiary BP Chemicals (Malaysia) Sdn. Bhd., an operator of the Kuantan purified

terephthalic acid (PTA) plant in Malaysia, to Reliance Industries for $230 million

(Wikipedia). BP Solar, the modus operandi of solar power business was brought to

halt after the decision of shutting down the business of alternative energy in 2011.

In 2016, the company's revenue was US$183 billion and net profit was $172 million.

In November 2010, an investigation on BP for reportedly exploiting gas market was

conducted by US regulators FERC and CFTC. In May 2013, the European

Commission started an investigation into allegations the companies reported

distorted prices to the price reporting agency Platts, in order to "manipulate the

published prices" for several oil and biofuel products (Wikipedia). After numerous

trials, the case was withdrawn in December 2016 due to lack of evidence.
 It was asserted by The Justice Department that BP committed gross negligence and

willful misconduct to which BP opposes while appealing for the toughest penalties

possible. The case was carefully watched, because a ruling of gross negligence would result

in a four-fold increase in Clean Water Act penalties, which would cause the penalties to

reach approximately $17.6 billion, and would increase damages in the other suits as well

(Wikipedia). No federal income tax was paid to the U.S. government by BP in 2010 thanks to

the deductions relating to the tragedy.

On 25 February 2013, the trials first phase commenced in order to figure out the

liability of BP, Transocean, Halliburton, and other companies, and to decide whether the

companies indeed acted with gross negligence and let willful misconduct to be carried out.

The second phase concentrated on the how much oil escaped into the gulf despite the

immediate response plan and who was responsible for stopping it. As for the third phase,

the focus was on all other liabilities that occurred while process of oil spill clean-up and

containment issues were going on, including the use of Corexit dispersants.

Judge Barbier managed to prove in the first phase of the case that BP had indeed

committed gross negligence on 2014. He rejected BP's assertion that other parties were

equally responsible for the oil spill, and ruled that "its employees took risks that led to the

largest environmental disaster in U.S. history (Wikipedia). The percentage of faults was

divided as in 67% for BP, 30% for Transocean and 3% for Halliburton. Barbier stated that

BP acted and chose to do nothing while being aware of the seriousness of the issue. BP

strongly opposed the judgement and filed an immediate appeal. On 2 July 2015, an $18.5

billion settlement was released to the public by BP and five states that will be used for Clean

Water Act penalties and various claims.