BP to Pay $303 Million to Settle Propane Charges
Oil major BP faces fines in excess of $300 million to settle civil and criminal probes related to market manipulation charges and a Texas refinery explosion that killed 15 workers in 2005.
The London-based company will pay $303 million to settle civil charges that it tried to manipulate propane prices in the United States by cornering the market in February 2004, a source familiar with the matter said late on Tuesday.
The world's third-largest non-government controlled oil company by market capitalization is also close to settling charges that it was criminally indifferent to worker safety, contributing to the Texas blast, the New York Times reported on Wednesday, citing government officials.
BP has agreed to plead guilty to criminal environmental charges and pay $50 million to settle a U.S. federal investigation into the deadly 2005 explosion, newswire Dow Jones said, citing people familiar with the situation.
Safety regulators said cost cuts were partly to blame for the Texas City blast.
BP declined to comment on the cases. The Commodity Futures Trading Commission (CFTC) refused to comment on a settlement of the market manipulation charges it had brought.
BP shares were unmoved by the reports, falling 0.16 percent, in line with a 0.15 percent fall in the DJ Stoxx European oil and gas sector index as oil prices eased.
BP Chief Executive Tony Hayward earlier this month announced a restructuring which he hopes will address some of the weaknesses which BP executives blame for the problems at BP's U.S. operations in recent years.
These problems have included the fatal explosion, the market manipulation charges, delays in bringing big new fields on line and pipeline leaks.
Hayward was appointed in May after predecessor John Browne was forced to stand down early after lying to a UK court in an attempt to keep his personal life private.
The $303 million which BP is expected to pay to settle the CFTC charges suggests the company is prepared to pay a big price to put its difficulties behind it.
The payout would dwarf the $2.5 million BP paid the New York Mercantile Exchange in 2003 to settle allegations it had improperly traded crude oil futures, and the $120 million Royal Dutch Shell paid the Securities and Exchange Commission in 2004 to settle accusations it overstated its reserves.
BP's aggressive energy trading operations made it one of the most successful players on international oil and gas markets.
In 2005, the last period for which the oil major published its trading profits, the company made over $2 billion from taking bets on energy markets.
However, BP said in its annual report that it had made "internal improvements" in its trading compliance processes following the propane-related charges last year, and dealers and industry sources said these changes appeared to have toned down the company's appetite for risky trades.