October 25, 2007 / 5:02 PM / 12 years ago

BP fined 182 million pounds in U.S.

WASHINGTON (Reuters) - BP on Thursday agreed to pay $373 million (182 million pounds) to settle U.S. charges stemming from a deadly Texas refinery explosion, an Alaska oil spill and allegations it manipulated the propane market.

A BP oil refinery is seen in Whiting, Indiana, August 15, 2007. BP will pay $373 million (182 million pounds) to settle U.S. charges stemming from a deadly Texas refinery explosion and an Alaska oil spill, as well as allegations it manipulated propane markets, the government said on Thursday. REUTERS/John Gress

The criminal fines and civil penalties come as fledgling BP CEO Tony Hayward seeks to close a dark chapter in the company’s history in the United States through a restructuring aimed at improving its safety and environmental record.

“These agreements are an admission that, in these instances, our operations failed to meet our own standards and the requirements of the law,” said Bob Malone, chairman of BP’s U.S. subsidiary. “For that, we apologize.”

BP will pay up $303 million in civil and criminal penalties for attempting to corner the U.S. propane market in 2004, the largest fine ever handed down by the Commodity Futures Trading Commission.

In addition, the British oil giant will pay a $50 million criminal fine for the massive 2005 explosion at its Texas City refinery — the deadliest U.S. industrial accident in more than a decade — that killed 15 people and injured more than 170.

BP agreed to plead guilty to one felony violation of the Federal Clean Air act and will face the biggest penalty ever levied under the act for the refinery explosion, the U.S. Justice Department said.

The company has already given $1.6 billion to victims of the explosion and has resolved over 1,600 personal injury claims. Ongoing civil lawsuits could push the payment higher.

BP will also pay $20 million in criminal fines and restitution to Alaska to resolve criminal liability for a pipeline spill at its Prudhoe Bay oilfield in Alaska in 2006.


BP, known for its aggressive trading practices, will also have its U.S. trading operations watched by an independent monitor for three years. The top North American propane supplier made the concession in a “deferred prosecution agreement” with the government.

In return, the government agreed to end criminal probes related to propane, gasoline, crude and other commodity trade. A Chicago federal grand jury on Thursday indicted four former BP employees of conspiring to corner the propane market.

The U.S. accidents tarnished the image promoted by BP’s former CEO John Browne, who stepped down early after lying to a UK court in an attempt to keep his personal life private.

“There was clearly a gap between their green advertising and the way some of their plants were managed. Hopefully this will close the gap,” said Eric Schaeffer, a former Environmental Protection Agency official who negotiated deals with BP in the past.

Representative John Dingell of Michigan, head of the House Energy and Commerce Committee, questioned the severity of the penalty.

“When an average citizen commits a felony it usually leads to a prison sentence,” he said. “Apparently, when a big oil company commits a felony that causes 15 deaths, it pays a criminal penalty equal to less than a day’s corporate profits.”

Analysts said the settlements are a move to put BP’s problems behind them.

“The cost of a distracted organization greatly outweighs the cost of the settlements,” said Robin West, chairman of oil consultancy PFC Energy in Washington. “It is very clear they want to clear the decks and get back to focusing on their business.”

Additional reporting by Tom Doggett and Randall Mikkelsen

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