BP lands in more trouble on Caspian pipeline

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 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.

By Terry Macalister

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