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Blast at BP Texas Refinery Pushes Oil Price to $61

Posted on: Saturday, 30 July 2005, 06:00 CDT

The price of oil surged to its highest level in two weeks yesterday after a further disaster at BP's troubled Texas refinery and a fire at its north sea platform prompted fears around the world that there could be a sudden shortage of fuel.

Crude oil futures soared briefly to $61, with traders speculating that the blasts in Texas could hit production from BP's Texas City site, the third largest refinery in the US, which produces 3 per cent of America's petrol.

BP said it had sent investigators to the scene after the blast, which happened late on Thursday. The accident is the second to occur at the plant in four months. An explosion in late March killed 15 workers and injured 170 others.

The latest blast originated in a hydrotreater, which takes sulphur out of fuel. It caused no deaths, but shook the community, which was still recovering from the disaster earlier this year.

'We don't know what caused this incident. We're focusing on getting any problems taken care of and finding out what happened,' a BP spokesperson said.

Across the Atlantic, BP's Schiehallion oilfield in the North Sea, which produces 120,000 barrels a day of crude, was affected by a fire in staff facilities.

Difficulties were not limited to BP. A fire on Thursday forced the closure of a kerosene hydrotreater in Louisiana at a plant owned by America's Murphy's Oil.

The string of setbacks fuelled a rise in the price of oil. Crude was trading at $60.90 on the New York Mercantile Exchange at lunchtime in the US, having hit $61.05 earlier. The price was the highest in two weeks and $1.05 below the year's record of $62.10 on 7 July.

Brent crude for September added 39 cents, or 0.7 per cent, to $59.15 on the International Petroleum Exchange. It reached a record $60.70 a barrel, also on 7 July. The oil market turbulence came as the one of the largest merger battles in the sector intensified. Cnooc, the Chinese government-controlled oil company, was last night weighing whether it should launch a knock-out bid of up to $20bn for Unocal, the California- based energy group, or accept defeat from Chevron.

Cnooc may this weekend increase its $18.5bn bid for Unocal in spite of pressure in Washington and Unocal support of Chevron. It is understood the Chinese group has drafted plans to increase its $67- a-share cash bid to more than $70, valuing Unocal at $19.3bn " about $2bn above Chevron's proposal.

Source: Independent, The; London (UK)

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