BP lands in more trouble on Caspian pipeline
By Terry Macalister

The Guardian
February 15, 2007

A US government lending agency has been told by its own internal
accountability watchdog that it must monitor more closely the safety of BP’s
vital pipeline in central Asia, amid allegations that the company failed to
report immediately cracks and leaks in its coating.

The warning to BP comes after pipeline spills in Alaska and as an internal
report into the accident-hit Texas City refinery has called for the sacking
of four senior executives. They include Mike Hoffman, who recently stepped
down as group vice-president for refining and marketing.

A report from the office of accountability at the Overseas Private
Investment Corporation – the US equivalent of Britain’s Export Credit
Guarantee Department – concludes that OPIC did not fully meet its own
guidelines on environmental monitoring of the Baku-Tbilisi-Ceyhan pipeline
from Azerbaijan to Turkey.

The office of accountability recommended "OPIC renew its focus on
environmental monitoring of the project in the medium to long term". It said
there should be "specific attention to implementation of the additional
monitoring for field joint coating cracks or leakage".

OPIC agreed to provide more than $140m (£71m) to cover political risk on the
pipeline on February 3 2004, only days before a newspaper reported that BP
had discovered coating cracks back in November 2003.

BP said yesterday it would work closely with OPIC to clarify any actions
required by the company on the 1,094-mile BTC link.

"We are confident that our extensive ongoing monitoring and assurance
programme for BTC addresses the recommendations made to BP during the
construction process," said a spokesman.

The report followed a complaint by Manana Kochladze, a Georgian
environmental activist, that the BP-led pipeline group had failed to
disclose material information about cracking on the pipeline until after the
contract with OPIC was signed. The activist charged OPIC with failing to
carry out proper monitoring.

BP also admitted an internal study undertaken by its group vice-president
Wilhelm Bonse-Geuking into management accountability after the explosion and
fire at the Texas City refinery had found "shortcomings in the management
performance of some members of the refining management team", although it
said there was no evidence that anyone acted in bad faith.

BP said it would not comment further but it is understood that Mr Hoffman,
the US refining vice-president, Pat Gower, the refinery manager, Don Parus,
and his expected successor, Willie Willis, have all been recommended for
dismissal.

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