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Daily Telegraph: Oil blast partners face huge claims

By Katherine Griffiths, City Correspondent (Filed: 22/02/2006)
Insurers representing airlines whose fuel supplies were hit by the Buncefield explosion last December are preparing to sue France's Total and Texaco of the US, the main operators at the site in Hertfordshire.
The news comes as the insurance industry braces itself for claims of up to £500m following the explosion near Hemel Hempstead on December 11. The largest blast in Europe since the Second World War miraculously caused no deaths but destroyed several local businesses and forced residents to move out of their homes.
Major airlines such as British Airways, Virgin Atlantic and BMI were severely affected with the Buncefield site being one of four main suppliers of fuel to Heathrow airport. Supplies have been dramatically cut, forcing up the price of fuel when it is already at historic highs.
Those hit by the disaster were disappointed by the first report into events surrounding the explosion, issued yesterday, as it contained nothing on who was to blame. A final report will be issued in several months' time following further investigations by the Health and Safety Executive and the Environment Agency.
Sources say several major corporate claims are being prepared. Among those considering litigation are members of Lloyd's of London which writes much aviation insurance.
BA, Virgin and BMI would not comment on whether their insurers were planning litigation. US carriers such as American Airlines, which use Heathrow as their UK base, might also take legal action because of being hit by the fuel shortages.
Total and Texaco are the main oil companies in the firing line as the owners of the joint venture Hertfordshire Oil Storage Terminal (HOSL) which took up the majority of the space at the Buncefield complex.
But BP and Shell could also be implicated as they own stakes in the British Pipeline Agency which operated storage tanks at Buncefield and was part of the consortium running the West London Pipeline supplying Heathrow.
A spokesman for HOSL said: “We have great sympathy for all those affected by the Buncefield incident, but the cause of the incident has not yet been determined so we are not yet in a position to discuss compensation claims or comment on specific legal proceedings.”
Companies involved are concerned that claims could escalate to cover a wide range of issues, from breach of contract over fuel supply to airlines to hundreds of demands for compensation from those who breathed in noxious fumes.
Several individuals and small businesses have already filed claims for compensation and people close to the situation believe that there could even be grounds for a criminal prosecution.
A row is also brewing over whether Buncefield will be rebuilt. Companies relying on fuel will want the site to be replaced, but environmental groups and local politicians are keen to fight against the rebuilding of such a potentially dangerous site.

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