BP hit with record $87m fine

Fiona Bond
30.10.09 15:48

Oil major BP (BP-) has been hit with a record fine of over $87 million for failing to rectify safety hazards at its Texas City refinery in the US.

The Occupational Safety and Health Administration (OSHA), part of the U.S. Department of Labor, imposed the fine as a result of a massive explosion in March 2005 which killed 15 and left 170 people injured.

The fine is the largest in OSHA's history and is over four times greater than its largest penalty of $21 million in 2005, also against BP.

The FTSE 100 (UKX) oil company has been issued with 270 notifications of failure to comply, following a six-month inspection into whether BP had repaired hazards.

In a statement, BP expressed its disappointment at the fine: "We continue to believe we are in full compliance with Settlement Agreement. While we strongly disagree with OSHA's conclusions, we will continue to work with the agency to resolve our difference," before adding that its efforts to improve safety at the refinery have been among the most strenuous seen in the refining industry to date.

BP had previously signed a settlement agreeing to take comprehensive action to protect employees, but OHSA has since found that the company allowed hundreds of potential hazards to continue unchecked, as well as allowing hundreds of new violations to occur.

Secretary of Labor Hilda L. Solis blasted: "Fifteen people lost their lives as a result of the 2005 tragedy, and 170 others were injured. An $87 million fine won't restore those lives, but we can't let this happen again. Workplace safety is more than a slogan. It's the law. The US Department of Labor will not tolerate the preventable exposure of workers to hazardous conditions."

The fine was split into two; $56.7 million for the 270 "notifications of failure to abate" and $30.7 million for 439 new wilful violations for failures to follow controls on the pressure relief safety systems and other safety management violations.

BP was fined $50 million by the Department of Justice two years ago for the explosion, which lawyers for the victims' family accused of being too little.

The BP Texas City refinery is the third largest refinery in the US, with a capacity of 475,000 barrels of oil per day.

The news closely follows BP's better-than-expected financial results earlier this week. The company posted third-quarter profit of $4.98 billion, down from $10 billion in the same period last year, but ahead of analysts' forecasts of $3.2 billion.

Thomas Pearmain of IHS Global Insight, however, does not believe this latest news will harm the company's share standing to a great extent: "BP knew it was coming and they want to put it in the past. It happened under a different chief executive and since that time BP has undergone a lot of changes, including within its safety measures."

Following the news, BP's share price fell 5.20p to 581.30p.

BP hit with record $87m fine

More Articles