Business

BP engulfed in controversy again

BP logo attacked by Greenpeace
Image caption BP has suffered a number of controversies in recent years

It's not often that a US president has cause to declare that, given the chance, he would sack the boss of one of the UK's leading companies.

But that is precisely what Barack Obama said he would do on Tuesday, prompted by what he considers to be a series of misjudged comments by BP's chief executive Tony Hayward following the company's massive oil spill in the Gulf of Mexico.

And it's a view shared by many critics, some of whom are BP shareholders, unimpressed by Mr Hayward declaring that he "just wants his life back" and that the Gulf is a "big ocean".

Such comments have simply served to damage further BP's already battered reputation in the US and fuel anti-BP anger among many Americans, particularly those directly affected by the spill in Louisiana and beyond.

To accusations of negligence and incompetence can now be added charges of indifference in the minds of those incensed by the scale of the spill and the time it has taken for BP to stem the flow of oil.

Big profits

But Mr Hayward's comments are merely an unfortunate aside to the crisis that engulfs one of the world's leading oil and gas companies.

Image caption Tony Hayward's handling of the disaster has been under scrutiny

Shares in BP have slumped almost 40% since the Deep Horizon oil rig exploded on 20 April, while the clean-up operation has so far cost the company $1.25bn (£862m).

A high cost certainly, but considering the company made a profit of $14bn last year, down from $25bn in 2008, one that BP can afford to pay.

The 2009 profit was generated from revenues of $239bn and, even after its recent share price slump, BP's market capitalisation stands at $107bn.

Global reach

The fact that it reports its profit figures in dollars should come as no surprise, for despite its name, BP is very much a global company.

It began life as the Anglo Persian Oil Company in 1909, before becoming British Petroleum in 1954.

In 2000, it joined with Arco, the US petrol giant, and two years later acquired the German fuel group Aral and lubricant specialist Castrol.

Today, the BP brand also encompasses the US convenience store group Ampm and the Wild Bean Cafe chain in the UK.

It operates in 80 countries across the world and sells its products and services in more than 100.

It employs more than 80,000 people and runs 22,400 petrol stations globally.

Nor is the ownership of BP strictly British.

The company is 44%-owned in the UK, split largely between 33 institutions and seven large individual investors.

But, since it is one of the UK's biggest companies and a major constituent of the FTSE 100 index, many thousands of UK private investors will have exposure to BP though tracker funds and pensions.

US investors own 39% of the company, including 25 institutional and 14 big individual investors.

Record fines

Despite its success, size and profitability, BP is no stranger to controversy.

The Deep Horizon spill is certainly a massive challenge to the company, both financially and in terms of public relations, but it is not the first time BP has been in the international spotlight.

In 2006, a US congressional hearing accused BP of "unacceptable" neglect of pipelines in Alaska after it was forced to shut down oil operations in Prudhoe Bay because of leaking pipes.

In 2007, the company was fined a total of $373m by the US Department of Justice for environmental crimes and committing fraud.

The fine included $50m relating to a Texas refinery explosion in 2005 that killed 15 people and injured 170 more.

The largest single fine of $303m related to a price manipulation scam in the propane market.

Last October, BP was fined a further $87m for failing to correct safety hazards at the Texas refinery.

The company has also faced harsh criticism, from shareholders and environmental campaigners, about its plans to develop oil sands in Canada.

The methods used to extract oil from these sands give rise to far more carbon emissions than even standard oil drilling, they argue.

To some in the US, therefore, the Deep Horizon spill feels all too much like a terrible deja vu.

Indeed, given its chequered recent history and experience of controversy, perhaps the most surprising thing about the Gulf oil spill is just how badly BP has handled the publicity surrounding it.