Kiran Stacey Hayward: Banks stopped lending to BP

Tony Hayward’s first interview since stepping down as CEO of BP airs on UK television tonight. And it looks like it’s going to mark another fascinating chapter in the terrible story of the Gulf oil spill.

A preview from the BBC on Tuesday presented snippets of Hayward describing just how dire the financial situation became for the company. Amongst other things, Hayward admits that banks had even stopped lending to BP  before his meeting with President Obama on June 16:

Prior to the meeting, the capital markets were effectively closed to BP. We were not able to borrow either short or medium-term debt at all.

Current boss Bob Dudley hinted as much to the FT last week, but this is the first time the company has been so explicit about the liquidity crisis it faced.

Dudley says on the BBC programme:

Word was beginning to circulate externally about the potential going-under of BP. Could it survive this accident? The Bank of America called, it wouldn’t buy crude from us, suppliers were asking for money up front. This was a very unusual environment for BP.

Hayward also says the company was “not prepared” for the “enormous feeding frenzy” that occurred in the media following the spill. But more significantly, nor was it prepared for the physical consequences:

BP’s contingency plans were inadequate. We were making it up day to day.

At times the air of self pity that got him in so much trouble at the time returns:

If I had done a degree at Rada [The Royal Academy of Dramatic Art] rather than a degree in geology, I may have done better, but I’m not certain it would’ve changed the outcome. But certainly the perception of myself may have been different.

And sure enough, the immediate focus in the aftermath of this interview may be on his media “gaffes”. The Times report this morning leads on his justification of taking part in a yacht race off the Isle of Wight with his son while the oil was still spilling. Hayward says:

I hadn’t seen my son for three months. I was on the boat for six hours, between midnight and six o’clock in the morning US time and I’m not certain I’d do anything different. The only way I could see my son was to be with him on a boat race he was on.

But there are still those in the industry willing to back Hayward and BP. John Hofmeister, former president of Shell, told the BBC this morning that the White House has embarked on a “bullying campaign” in the way it treated BP at the time. He said:

It was an insult to the company and the industry the manner in which this was being discussed by political figures in the US.