BP Hit With Record Fines

BP has been hit with record fines totalling US$303.5m for faulty equipment, violating environmental laws in Alaska and price fixing.

The charges have been brought by the US Department of Justice relating to an explosion and fire at the Texas City refinery in 2005, oil spills in Alaska in 2006 and improper propane trading in April 2003 and February 2004.

Following the fire at its Texas City refinery, BP Products says it has eliminated the use of blowdown systems similar to the one involved in the fire.

The refinery is expected to return to near full production by the end of 2007 after a 25-month, $1bn renewal program.

BP has pleaded guilty to a misdemeanor violation of the US Federal Water Pollution Control Act following the Alaskan leak, which resulted in 4,800 barrels being spilled across 1.9 acres - the largest oil spill to ever occur at Prudhoe Bay.

In a statement, BP's America Chairman and President Bob Malone apologises for "failing to meet its own standards and requirements of the law".

BP America will pay fines, penalties and restitution including $53.5m to a victim restitution fund, a criminal penalty of $100m, a civil penalty of $125m and a $25m payment to the US Postal Inspection Service Consumer Fraud Fund.

Earlier this week the company announced a 45 percent fall in third quarter replacement cost profit to US$3,867m compared with $6,975m in 2006 following low oil and gas production.

By Ozge Ibrahim