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£3m fine for oil giant as new HSE sentencing guidelines start to bite

ConocoPhillips, one of the largest oil and gas exploration and production companies in the world has been the first “very large” entity to be sanctioned under the new HSE guidelines (turnover measures in the billions), which came into force on 1 February 2016.

ConocoPhillips (UK) Limited admitted serious safety failings in Lincoln Crown Court after two uncontrolled and one controlled but unexpected gas release occurred on the Lincolnshire Offshore Gas Gathering System (LOGGS) between 30 November and 1 December 2012.

Whilst there were no fatalities on the site the Court found that at one stage the lives of 66 workers were in danger had an ignition occurred. The Company was found guilty of three breaches of the Offshore Installations (Prevention of Fire and Explosion, and Emergency Response) Regulation 1995. It was fined £3,000,000 (£1,000,000 for each offence) and ordered to pay costs of £159,459. The HSE inspector found that “there was a deviation from following procedures fully. The underlying cause of the incident was the inadequate implementation, control and oversight of the permit to work system, and the common isolation procedure. It is only a matter of good fortune these incidents didn’t result in a serious, tragic incident.” 

The case suggests that the Courts are now willing to levy significant fines that, pre-February 2016, were reserved for only the most serious, multiple fatality, health and safety breaches. To put this fine into perspective, Network Rail were ordered to pay £3,500,000 in 2004 for their part in the Hatfield rail crash, in which 4 people died and 70 people were injured. This clearly demonstrates how the new guidelines focus on the potential consequences, rather than the actual consequences, of the breach.

The new guidelines re-iterate that health and safety offences are concerned with failures to manage risks to health and safety and do not require proof that the offences caused any actual harm. The offence is made out in simply creating a risk of harm. A large company (defined by having an annual turnover of over £50 million) can now find itself facing fines in the millions where a court finds a high degree of culpability and/or a high risk of harm.

It should be noted that ConocoPhillips has previous convictions for similar incidents in the UK, in 2005, it was fined £895,000 and ordered to pay £218,854 costs following an explosion at its Humberside Refinery. It is not known to what extent the company’s historic health and safety breaches were taken into account in this instance, but the new guidelines already seem to be sending the clear message that large companies cannot afford not to take health and safety seriously, as evidenced by the tripling of fines for the same company suffering similar incidents in a decade.

If you have any questions or would like more information, please contact a member of the Regulatory team below.

Author: Simon Naylor

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Paul Matthews

Partner - Head of Regulatory (Yorkshire and North East)

I am a Partner in the Regulatory team and a corporate defence specialist who provides up-front regulatory compliance advice and representation to businesses and senior managers in relation to investigations and prosecutions by regulatory bodies.