US bans BP from pitching for new government work

Oil giant is punished for its 'lack of business integrity' over the Gulf of Mexico oil disaster in 2010

BP's recent run of good fortune ended yesterday as the US government accused it of showing "a lack of business integrity" over the Gulf of Mexico oil spill and temporarily banned it from pitching for new federal contracts.

In a decision with potentially far-reaching financial and reputational consequences, the Environmental Protection Agency (EPA) has temporarily suspended BP from bidding for new oil and gas exploration licences, contracts to supply fuel to the Department of Defence and all other government business until it can prove "it meets federal business standards".

However, the suspension does not affect existing agreements between BP and the US government.

David Buik, of Cantor Index, said: "This is awful. It's temporary, but for how long? It could have massive repercussions on shareholders and on dividends."

Although Mr Buik and other analysts cannot yet assess the likely extent of the damage on BP, they agree that it at least represents a setback for the oil giant after a string of positive developments, and could deal a sizeable blow to its bottom line and reputation.

The EPA's decision came two weeks after BP admitted 14 counts of criminal misconduct as part of its record $4.5bn (£2.8bn) settlement with the US government over the Gulf of Mexico oil disaster in April 2010, which killed 11 workers and spilled nearly 5 million barrels of oil into the sea.

The news came as a surprise to BP, whose general counsel, Rupert Bondy, told investors on the night of the settlement that the group had been given "no indication that any agency would move to suspend or debar us". In the same session, chief financial officer Brian Gilvary acknowledged that such a move would force BP to review the investment case for the US.

His comments underline how important the US is to BP, which accounts for a fifth of its daily global production and where the company has invested $52bn since 2007, more than in any other country. BP is the biggest fuel supplier to the US Department of Defence, which awarded it $1.35bn worth of contracts in 2011 alone.

"EPA is taking this action due to BP's lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill and response, as reflected by the filing of criminal information," said an EPA spokesman.

A BP spokesman said: "BP has been in regular dialogue with the EPA and has already provided both a present responsibility statement of more than 100 pages and supplemental answers … The EPA has informed BP that it is preparing a proposed administrative agreement that, if agreed upon, would effectively resolve and lift this temporary suspension."

The announcement came hours after BP agreed to sell its stakes in several North Sea oil and gas fields to Abu Dhabi for $1.3bn.

David Cameron welcomed the transaction, a fortnight after he travelled to the Gulf in a bid to strengthen Britain's business ties with the region. "This is a vote of confidence in the UK economy and once again highlights the North Sea's position as a global energy hub," the Prime Minister said.

The deal with Abu Dhabi means BP has sold $37bn of assets in the past three years, bringing it within a whisker of the $38bn it plans to raise to pay costs incurred by the Gulf of Mexico oil spill.

In recent weeks BP has settled all federal criminal charges and claims by the US Securities and Exchange Commission relating to the Gulf of Mexico spill and agreed to sell its 50 per cent stake in its troubled Russian joint venture, TNK-BP, to Russia's Rosneft in a $26bn in cash and shares deal. That will leave it with nearly a fifth of Rosneft and paves the way for much greater collaboration in the future.

Shares in BP fell by 1.85p to 429.4p.

BP pair charged over Deepwater disaster 'scapegoats'

Lawyers for the two BP supervisors who were on the Deepwater Horizon rig when it exploded in 2010 and now face involuntary manslaughter charges suggested their clients are being scapegoated.

BP well-site leaders Robert Kaluza and Donald Vidrine are charged with 23 criminal counts.

But their lawyers said they would plead not guilty, and had been unfairly singled out for blame.

"There were multiple failures at multiple companies," Mr Kaluza's lawyer, Shaun Clarke, said, "so it is difficult for me to understand why the government decided to single out two guys working on a rig."

Bob Habits, who is representing Mr Vidrine, said: "It is almost inconceivable that any fair-minded person would blame this hardworking and diligent man for one of the most catastrophic events in the history of the oil business."

Nikhil Kumar

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week