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BP fined $370m by US regulators

26/10/2007

Oil giant BP has been fined a record $370 million (£182 million) by US regulators over its environmental record and fraud charges.

The US department of justice said the company had agreed to pay the fine over environmental violations stemming from a fatal explosion at BP's Texas refinery in March 2005, leaks of crude oil which occurred from its pipelines in Alaska and claims that it committed fraud by conspiring to manipulate the price of propane.

BP's agreement to pay the fines settles the charges levied against the company by the US government and means the oil firm will not face additional criminal charges for the Texas explosion which killed 15 people and injured more than 170 others on March 23rd 2005.

It has been agreed that BP will pay a total $50 million (£24 million) in criminal fines over the Texas disaster, as part of a deal under which the company has agreed to plead guilty to one charge that it violated America's clean air law.

BP will pay a further $20 million (£9.7 million) in fines in order to resolve criminal liability over pipeline leaks at its Prudhoe Bay oil field in Alaska. The largest ever oil spill occurred in the North Slope region in March 2006, when a pipeline leak discovered at Prudhoe Bay resulted in more than 200,000 gallons of crude oil spilling over the tundra and reaching a nearby frozen lake.

The largest part of BP's overall fine relates to civil and criminal penalties levied against the oil firm over charges that it attempted to corner the propane market in 2004, with the company having agreed to pay a total of $303 million (£148 million) over the price manipulation claims.

Commenting on the fines the US acting attorney general Peter Keisler said: "The BP cases demonstrate our commitment to enforcing the laws that protect our environment, the safety of Americans, and the integrity of the marketplace."

"Businesses that ignore those laws and endanger their workers and communities, or corrupt our markets, must be held accountable," he added.

BP said the agreements reached with US officials were an admission that in some cases the company had failed to meet legal requirements and its own standards.

Apologising for the company's behaviour BP America chairman and president Bob Malone said of the agreements: "They represent an absolute commitment to work with the government as we continue our efforts to prevent another tragedy like Texas City, to make our Prudhoe Bay pipeline corrosion programme more responsive to changing operating conditions and to ensure that our participation in the nation's energy markets is always appropriate.

"In the months and years since these violations occurred, we have made real progress in the areas of process safety performance and risk management," he insisted, adding that the oversight of BP's trading operations had also been "greatly enhanced".

The fines announced against BP come at the end of a bad week for the oil giant. On Tuesday the company reported a 45 per cent fall in third quarter profits, with a slowdown in production partially to blame for the drop.