(Adds CSB approves report, union comment)

By Erwin Seba and Eileen O'Grady

HOUSTON, March 20 (Reuters) - An unsafe culture that pervaded BP Plc.<BP.L> was behind a deadly explosion at its giant Texas oil refinery in 2005, and the U.S. agency charged with worker safety failed to spot the warning signs, federal investigators said on Tuesday.

The final report from the U.S. Chemical Safety Board was the first to assign a share of blame to the U.S. government for the nation's worst industrial accident in more than a decade, which killed 15 workers and injured 180 others.

"Rules already on the books would likely have prevented the tragedy in Texas City," said CSB Chairman Carolyn Merritt.

"But if a company is not following those rules, it is ultimately the responsibility of the federal government to enforce good safety practices before more lives are lost."

The report dealt another blow to BP, beset by a string of mishaps at its U.S. operations that has sullied its reputation and caused tens of millions of dollars in liability.

The U.S. Department of Justice is investigating whether BP is criminally responsible in the blast.

The CSB report said cost-cutting, worker fatigue, and a failure by all levels of BP management to address safety issues contributed to the accident.

"Process safety programs to protect the lives of workers and the public deserve the same level of attention, investment, and scrutiny as companies now dedicate to maintaining their financial controls," Merritt said.

The CSB approved the report at a public meeting late on Tuesday in Texas City, within sight of the BP refinery still hobbled by the March 23, 2005, blast.

"I want to point out, as others have, that it just happened to happen in Texas City, Texas," said Gary Beevers, international vice president for the United Steelworkers. "This is a problem all across the oil industry."

In a statement, BP said it disagreed strongly with parts of the CSB report, but would consider its recommendations. "BP is committed to preventing such a tragedy from occurring again," the firm said.

BP America President Bob Malone said the process to fix problems at Texas City will take five to seven years. Malone spoke Tuesday at a conference in California.

OSHA LACKS EXPERTISE

The U.S. Occupational Safety and Health Administration, charged with protecting workers on the job, failed to spot warning signs at the refinery and has "insufficient" capability to enforce safety regulations at large petrochemical plants, the CSB said.

It recommended OSHA hire or develop inspectors specialized in petrochemical facilities, and conduct deep inspections of plants with the greatest risk of a major catastrophic accident.

The report added that beginning in 1999 when BP acquired the refinery in a merger with Amoco, BP had repeated warnings ranging from similar mishaps to internal studies of a possible catastrophic disaster at the Texas City refinery.

Six times between 1994-2004, a vapor cloud formed similar to the one that ignited with devastating results in 2005, yet the CSB found "the incidents were not effectively reported or investigated by BP."

BP also undertook 25 percent budget cuts in 1999 and 2005 "even though much of the refinery's infrastructure and process equipment were in disrepair," the board said.

After the 2005 explosion, OSHA found 301 safety violations in the explosion and fined BP $21 million, the largest in the agency's history. BP has previously challenged the agency's finding that budget cuts led to poor maintenance and safety problems.

CSB lead investigator Don Holmstrom said BP's own documents support the finding that cost-cutting and production pressure led to the refinery's "progressive deterioration of safety."

On the day of the explosion, six pieces of equipment on the unit being restarted did not operate, he said. Three of the items were known to be malfunctioning.

Holmstrom said the CSB has already asked the American Petroleum Institute to improve its revised standard on siting of temporary trailers near hazardous process units. (Additional reporting by Bernie Woodall in Los Angeles)

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