When the BP oil spill has finally dried-up, you can be sure of one thing: one of the world’s greatest oil companies will have changed for good.

But it won’t have changed because of The White House, or Downing Street. The pressure will ultimately come from the dealing rooms in the City of London and Wall Street.

Like all public companies BP is not owned by its management; 40% of its shares are held by UK shareholders and 39% by American. More importantly though, BP was the UK’s biggest company, accounting for some 7% of the FTSE All Share Index and represented a huge wedge of the UK dividend payments, some 15%. Should BP choose at any time to shave, or cancel the dividend, then the effects will be felt in pension plans and payments throughout the country as well as overseas.

President Obama is rightly fuming that he can’t stop the BP oil spill by sheer will power alone and is becoming trapped in that peculiarly American attitude that whatever happens, it’s always the fault of the President.

Prime Minister David Cameron has perhaps the most delicate task of all: he’s being asked to stop BP being bullied by US politicians, whilst at the same time trying to look as though he’s helping his ally across the Pond. It’s being said that Obama doesn’t have the same fondness for the UK as his predecessors, which may explain the ease with which this has become a UK/American stand-off.

You have to have some sympathy with BP of course. Obama and his team might be sticking pins into a voodoo doll of chief executive officer Tony Hayward, but cynics point out that this is a very much a home-grown disaster with few authentic British elements. Operating the rig on behalf of BP was contractor Transocean, a US company. Most of the workforce and support services were provided by US personnel.

Transocean quite cleverly had a clause in its contract (normal in the oil industry) which stated that if anything went wrong – and it did, the rig blew up - then all blame passes to its client, BP. Indeed, Transocean received a multi-million insurance payout to cover its troubles. BP is facing a clean-up bill which current estimates put at around $1.5 billion.

What’s more, another American company supplied the well-head kit which failed. Most of the effort being used to contain the rig is also American supplied.

And when it came to an assessment of what might go wrong when drilling for oil at such depths, most American regulatory authorities – it appears – looked the other way. It was revealed that last week BP’s own environmental impact report still had some clauses on what might happen to the sea lions and walruses in the event of an oil-spill, suggesting that a previous report, based on cold climate drilling, had just been hacked about and key names changed. The fact that the American authorities had overlooked such errors might confirm to many that the oil industry did indeed have an easy ride from previous US administrations.

 

To be fair to the oil industry itself, they do take drilling for oil very seriously. Anyone paying even the briefest visits to an oil platform knows immediately that health and safety are the watchwords. It’s the guys who operate these platforms, often in the harshest conditions that nature can dream up, that understand too well what happens when they slack.

It’s been said that if a spanner is accidentally dropped on deck of a Transocean drilling platform, then the next day managers from the client (including BP) are flying-in and apportioning blame, and creating countless reports. The nightmare for any rig manager is a poor health and safety assessment from the client.

But for all this, BP cannot dodge the bullet. It does have ultimate responsibility for its drilling operations. It should have ensured that the risk scenario of a deep water blowout could be dealt with. It’s what disaster planning is all about.

Nor did Mr Hayward make matters easier when he called the BP oil spill a drop in the ocean. BP reckoned that at first only 1,000 gallons a day were leaking from the ripped pipe, an estimate quickly revised upwards to 5,000, then 12,000 and now it’s believed to be nearer 40,000.

But the danger to BP lies not with a grandstanding Obama, a troubled Cameron, nor the American government, or indeed, with the poor folks of Alabama who are seeing their way of lives ruined for decades to come. It lies with the institutional investors, who are waiting quietly in the wings; waiting their turn to act.

And they have to wait until the BP oil spill is over. Mr Hayward and BP Chairman Carl-Henric Svanberg will not be removed until the initial shouting match is over and the blame game has started in earnest. Only then will a new CEO and Chairman be ‘requested’ by the big shareholders to mend fences and get the company back on track again.

The investors won’t forgive the current management team for not so much causing an environmental disaster, but for threatening the dividend and flushing billions down the drain in compensation payments. BP can easily afford the clean-up cost, but that’s money that should have gone to shareholders in dividends, or to fund new wells.

BP will likely either be re-organised (creating a new company which takes on the clean-up as a separate entity, safe away from the main group), or fall victim to a corporate takeover who will take all the juicy bits, but leave the mess for someone else to cleanup.

The BP oil spill will come to an end, so will an era which has seen one of the globe’s biggest companies go from strength to strength.

Long term, the oil industry has scored a massive own goal and handed the environmentalists a gift. It’s a safe bet that many more jobs than that of Messrs Hayward and Svanberg will go over the coming years.

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