BP under pressure to boost capital spending

Investors are pushing BP, Europe’s second-biggest listed energy group, and its board to increase capital expenditure to avoid the type of safety lapses that the company has suffered at its Alaska pipeline and Texas City refinery.

The issue came up at the last meeting of the Association of British Insurers, with some members of the group pushing for a direct meeting between the ABI and Peter Sutherland, BP’s chairman.

One of BP’s top 20 investors said: “There is a big issue for the board. This is a time when the board needs to have very strong oversight. It needs to ask whether enough attention has been paid to spending on maintenance.”

Matt Simmons, a Houston-based analyst, said that many of the world’s oil facilities were not built to last more than 30-40 years but were being run longer because of the current high oil price. He said that companies were now catching up on maintenance deferred during the 1980s and 1990s when oil prices fell to as little as $8 a barrel.

Financial Times