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updated 10/31/2006 10:29:37 AM ET 2006-10-31T15:29:37

BP's global management was aware of "significant safety problems" at the Texas City refinery and 34 other locations around the world well before last year's deadly explosion at the U.S. plant, investigators said on Monday.

The U.S. Chemical Safety Board, an independent federal agency charged with investigating industrial chemical accidents, said internal BP documents prepared between 2002 and 2005 revealed knowledge of those problems before the March 2005 explosion killed 15 and injured 500 people in and around BP's biggest refinery. The Texas blast was the worst U.S. industrial accident in more than a decade.

The CSB report comes a week before BP's first civil trial arising from the explosion and is likely to lead the UK company to step up negotiations to settle the case, as it has most of the 1,000 or so others arising from the blast. The report will also likely be used by the federal grand jury investigating whether to bring criminal charges against BP and its executives for the Texas explosion.

BP has been under scrutiny by regulators, Congress and the U.S. Department of Justice following the explosion and closure of half of BP's Alaskan oilfield for severe corrosion. The CSB has led the investigation of the Texas City explosion.

"The CSB's investigation shows that BP's global management was aware of problems with maintenance, spending and infrastructure well before March 2005," said Carolyn Merritt, CSB chairwoman. She said BP did make some safety improvements, though the focus was on improving procedural compliance and reducing occupational injury rates, "while catastrophic safety risks remained".

"Unsafe and antiquated equipment designs were left in place, and unacceptable deficiencies in preventative maintenance were tolerated," Ms Merritt said.

Ms Merritt said budget cuts throughout the BP system caused a progressive deterioration of safety at the Texas City refinery, referring to the 25 per cent cut on fixed costs from 1998 to 2000.

Ronnie Chappell, BP spokesman, said: "BP agrees with CSB that the March 23, 2005 explosion and fire was a preventable tragedy. However, we do not understand the basis for some of the comments made by the CSB."

Chappell said the BP Texas City fatal accident investigation team did not identify previous budget decisions or lack of expenditure as a critical factor, or immediate cause of the accident. Indeed, he said, maintenance spending had increased 40 percent over the previous five years and was higher than the industry average per barrel of throughput.

Copyright The Financial Times Ltd. All rights reserved.

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