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BP suspended from new US government contracts

11.28.2012  | 

The move has an immediate impact on BP. The suspension will prevent the company from buying new oil-drilling leases or other government contracts until the company can provide sufficient evidence that it meets federal business standards, the Environmental Protection Agency said Wednesday.

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By TENNILLE TRACY

WASHINGTON -- The Obama administration has temporarily blocked BP from obtaining new contracts with the US government, citing a "lack of business integrity" that resulted in the Deepwater Horizon oil spill.

The suspension will prevent the company from buying new oil-drilling leases or other government contracts until the company can provide sufficient evidence that it meets federal business standards, the Environmental Protection Agency said Wednesday.

The move has an immediate impact on BP. The London-based oil giant will be prevented from obtaining new drilling leases being auctioned off in the Gulf of Mexico Wednesday. That auction, held by the Interior Department in New Orleans, involves more than 20 million acres in the Western Gulf.

EPA said this type of suspension is put in place when a "responsibility question is raised by action in a criminal case." The agency has imposed more than 100 of these suspensions in fiscal year 2012, an administration official said, but a suspension involving such a well-known company with potentially significant impacts is "fairly uncommon" for the agency to take.

The government "take[s] these actions to ensure the integrity of federal programs by conducting business only with responsible individuals or companies," the EPA said. The suspension does not affect existing contracts BP has with the government.

BP was unavailable for immediate comment.

Earlier this month, BP agreed to plead guilty to 11 counts of misconduct or neglect of ship officers and other charges. The charges stem from BP's role in the 2010 Deepwater Horizon explosion, which resulted in the deaths of 11 workers and the release of 4.9 million bbl of oil into the Gulf.

Wednesday's lease sale is the first to be held under a new five-year plan adopted by the Obama administration. The sale involves lease blocks located up to 250 miles offshore in water depths of up to 11,000 feet.

Being kicked out of Wednesday's sale is a big hit for the biggest producer of oil and gas in the US Gulf of Mexico, and also one of its most active oil prospectors. The region remains a big priority for BP, and the company has said it intends to spend $4 billion there this year and at least that amount annually during the next decade.

The Gulf has been where BP has struck some of its biggest oilfields so far, including Thunder Horse, which has become the largest production facility in the Gulf and one of the largest oilfields in the US. More recent discoveries include Kaskida and Tiber.


Dow Jones Newswires



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