British Petroleum (BP) said yesterday that it did not have external
insurance to cover the damage caused to its Texas City refinery in the
US, where an explosion killed 15 people.
The company has yet to reveal the likely cost of the explosion on Wednesday in one of the refinery’s 30 operating units.
The refinery, 35
miles south-east of Houston, is BP’s biggest and the third-largest in
the US. It processes 460,000 barrels of crude oil a day, enough to
supply 3 per cent of America’s petrol demand.
The explosion happened in a unit that was being started up again following extensive maintenance.
A BP spokesman said that the output of the refinery had not been
affected by the explosion. He would not give an estimate of the likely
cost of the explosion, which also injured 70 people, and said that
investigators were still trying to determine the cause of the incident.
The investigation is likely to last several months.
The spokesman said that the damage caused to the refinery and
the cost of any lost production would not be covered by insurance, in
line with BP’s longstanding policy to “self-insure”.
The policy dates back to at least 1991, when BP decided not to insure against incidents worth less than £300 million.
Instead, the group opted to use its internal cashflows to pay
the cost of these incidents. The cost threshold is expected to have
risen significantly since then. However, the spokesman said that BP had
insurance to cover third-party and personal liability.
Both BP and the America’s Federal Bureau of Investigation have dismissed a claim of responsibility by a fringe Islamic group.
The Jund al-Sham Organisation (Organisation of Soldiers of the
Levant) issued a statement claiming: “It was a new kind of operation as
we promised before.”
The BP explosion was the deadliest in America’s gas and
chemical industry since 1990, when 17 were killed at an Arco Chemical
plant in nearby Channelview, Texas.
Oil prices soared on news of the BP explosion amid renewed fears of fuel shortages and the company’s share price fell slightly.
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