BP had blowout preventer modified in China

Discussion in 'Wall St. News' started by pupu, Jul 18, 2010.

  1. pupu


    Not just your socks, knickers and drywall


    BP ordered the owner of the Deepwater Horizon rig, whose explosion led to the worst environmental disaster in US history, to overhaul a crucial piece of the rig's safety equipment in China, the Observer has learnt. The blow-out preventer – the last line of defence against an out-of-control well – subsequently failed to activate and is at the centre of investigations into what caused the disaster.

    Experts say that the practice of having such engineering work carried out in China, rather than the US, saves money and is common in the industry.

    This weekend BP remained cautiously optimistic that the cap placed on top of the Gulf of Mexico well on Thursday night would continue to hold back the torrent of oil. It is the first time the flow has been stopped since the accident happened almost three months ago. But BP said that the pressure readings from the Macondo well were not as high as it had hoped, which could indicate that it has ruptured and that oil could be leaking out somewhere else.

    There is no evidence that the significant modifications to the blowout preventer (BOP), which were carried out in China in 2005, caused the equipment to fail. But industry lawyers said BP could be made liable for any mistakes that a Chinese subcontractor made carrying out the work. It would be almost impossible to secure damages in China, where international law is barely recognised.

    It is understood that lawyers for Cameron International, the manufacturer of the BOP, will argue the device was so significantly modified in China that it no longer resembled the original component, and that Cameron should therefore not be held liable.

    Transocean, the owner of the Deepwater Horizon, which bought the BOP from Cameron, has already told congressional hearings into the disaster that the modifications were carried out at BP's request and "under its direction" as the lessee of the rig. BP and Cameron declined to comment this weekend.


    This sounds like it could be an interesting legal twist as the case is argued in court on who besides BP will be stuck with some of the costs of the disaster. The Cameron argument looks like it could have some merit on the surface. It may depend on how the lease agreement permits modifications.