Simmering Hope

Hope is the expectation that something outside of ourselves, something or someone external, is going to come to our rescue and we will live happily ever after. – Dr. Robert Anthony

Archive for June, 2010

Jun 23, 2010

Transocean’s accountability or the lack of it

Without taking any of BP’s responsibility away from them, the farce called ‘Justice for All’ should stop. It’s time to bring in in front of the fierce and hypocritical Congressional Hearing the other partners in crime, namely Transocean Ltd and Halliburton.

I started digging for information on Transocean, and the more I read, the more disgusted I am.

First of all, Transocean is the biggest contractor of offshore oilrigs in the world.
With drilling rigs and other vessels servicing the rigs, Transocean Ltd has about 141 vessels, 14 of them alone in the Gulf of Mexico. Following is a picture representing the platforms currently in the Gulf of Mexico.
gulf_coast_platforms.jpg

The Transocean/s vessels sail under various obscure flags: Marshall Islands, Panama and Liberia.
Because Deepwater Horizon is Marshall Islands flagged- along with 34 other rigs- the primary responsibility for safety and other inspections rested not with the U.S. government but with the Republic of the Marshall Islands. The Republic of Marshall Islands outsourced the inspections to private contractors, making the whole situation a lot more stinkier.
Transocean moved their legal domiciles first to Cayman Island, then to Switzerland to avoid paying U.S. taxes. According to Martin Sullivan, contributing editor of Tax Analysts, the move saved Transocean a grand total of $1.88 billion in taxes, since 2002.

As it can be seen, Transocean is not really a poor company, about to go bankrupt. They should face the music and part the guilt with BP. Instead of that, they shamelessly cited an 1851 law requesting that its liability to be limited to $27 million. That would be the cost of the sunken vessel

‘While the company may not succeed in limiting its financial liability, the filing could give Transocean an edge in what could be a lengthy, multipronged legal battle against claims for damages from the accident that killed 11 workers

Zug, Switzerland-based Transocean also said it contests any liability arising from claims filed under the Oil Pollution Act of 1990, enacted after 1989’s Exxon Valdez spill in Alaska, for damages from the oil emanating from the sea floor. Under the Oil Pollution Act and the British company’s contract with Transocean, oil-field owner BP is responsible for paying clean-up costs, and executives of the London-based company have said they will foot the bill and honour legitimate damage claims.
“We expect that BP will honour that contract,” Transocean Chief Executive Steven Newman said last week during a conference call on the company’s earnings. ‘
(Source: MarketWatch)

In case you are curious to know how much insurance money we are talking about, the company said it has received $481 million of the $560 million it expects in insurance proceeds to cover the cost of its oil drilling rig.
Of the insurance money, Transocean predicts an accounting gain of $270 million for the total loss of the rig.
Source: Insurancenewsnet.com

Transocean’s rigs are leased to various companies like: BP, Chevron, Stateoil, Total, Anadarko, Husky (now I am officially worried) etc. The rigs were commissioned over 30 something years and had been build at various shipyards, spread from Spain to Korea.
Source: Rigzone.com

At this point in time, I really don’t believe that we actually know the full extend of the damages or that we have been told the true story. It’s more interesting to figure out what it has not been told; however probably it’s classified information that will be buried for the next century or so.


Jun 12, 2010

British Petroleum,The Feds, Halliburton and Transocean

Now that every one is fully aware of the ecologico-economico-political catastrophe the spill in the Gulf of Mexico really is, let’s try to shed some light over who is responsible.

Various websites host articles and comments related to the spill. Most of the comments are pretty angry rhetoric flying back and forth between British and American people, each of them blaming the other ones for being inconsiderate or quite fully responsible just because.

Let’s start by saying the British Petroleum (BP) is NOT a 100% British company. British Petroleum merged with Amoco (formerly Standard Oil of Indiana) in December 1998,becoming BP Amoco plc. In 2000, BP Amoco acquired Arco (Atlantic Richfield Co.) and Burmah Castrol plc. In 2001 the company formally renamed itself as BP plc and adopted the tagline “Beyond Petroleum,” which remains in use today (see Wikipedia)

It’s owned 40% by the USA. Brits and Americans own shares in the company- mostly pension funds- both nations enjoying the dreadful dividends that are subject to immense pressure currently due to the approaching July deadline. On the stock market, BP has already lost about 40% of its value, along with some pensions I guess. Any bad news will translate into more loss.

Let’s move on and try to figure out why President Obama’s reactions are all over the place.
First of all he is worried about the coming November primaries. Accordingly, depending on the published articles and peoples’ reactions over the lack of government timely response to the disaster, his voice and tone will change to become ‘outraged’ if necessary. As a side note, I can only guess that Exxon’s executives are finally dancing the happy dance around the table, now that they lost the spot as the most hated people in the USA. Another side note: George W. Bush is vindicated (Disclaimer: I have never been a fan of the ex president of the USA)

Back to President Obama, it’s worth to mention that according to Reuters, he is on BP’s payroll, hence his reaction to the situation.
“During his time in the Senate and while running for president, Obama received a total of $77,051 from the oil giant and is the top recipient of BP PAC and individual money over the past 20 years, according to financial disclosure records.” (May 5, 2010).

However, critics in Washington said that the President Obama has gone too far by passing the entire blame to BP and that his rhetoric will hurt the diplomatic relationship with the UK and the US economy. So far his approval rate has dropped to 44%, the lowest point of his presidency.

What about BP’s executives? Well, the heavily battered CEO Tony Hayward is heading back to the UK, to be replaced by a figure that is considered by many out of his league regarding this situation. I am talking about BP Chairman Carl-Henric Svanberg, ex. executive for Ericsson.

bp-executives.jpg

He might be out of his league, but he was smart enough to counteract the American position by saying that attacking BP is like attacking itself, considering that BP is the biggest oil and gas explorer in the continental United States. Ouch!

Is BP the only responsible for the disaster? Of course not. Somehow the other bad guys managed to fly under the radar. It’s time to bring them out.
Drum roll please! We present you…. Halliburton and Transocean. Transocean is the owner of the drilling rig that BP leased and Halliburton was the one pumping the cement slurry into the drill hole prior to the Deepwater Horizon’s explosion.

The bad news for Halliburton is that a number of experts think the accident probably originated in the pipe that the cement was being pumped into. The good news for the company is that investigators may find it difficult to tell whether the cement did its job or not.

What about the Feds? Namely the inspectors from Mineral Management Service. Where were they? They are supposed to fly from one rig to another and check if documentation and procedures are in place and followed and that the deep water drilling is safe.

It looks like the circle is complete and it involves a few parties, not only BP. The kids were caught with their fingers in the cookie jar. Who is going to be punished?


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