Uninsured BP Could Owe a Billion Dollars for Plant Explosion

Uninsured BP has to pay for Texas blast
By Andrew Cave

Oil giant BP does not have catastrophe insurance cover for the Texas refinery explosion that claimed the lives of 15 workers and will have to foot the bill from its own resources.

The disaster, which happened as contractors attempted to bring on-line a unit that had been closed for maintenance for several weeks, left 70 people injured.
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One source said: “BP does have low-end cover but the bulk of its refinery losses in Texas will not be insured. The company took a decision not to take out major catastrophe cover.

“It did it until about 1994-1995 but their analysis at the time was that, with such a large balance sheet, the group was better placed than most insurance companies to absorb risk and volatility in its operations. Fundamentally, it considers that it has better ability to transfer risk and a better credit rating than most insurers. But this was a pretty big explosion.”

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Other risk analysts said damage to the refinery and potential litigation could put the costs of the incident over the $1billion (£530m) mark.

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