SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                      ------------------------------------


                                    FORM 8-K



                                 CURRENT REPORT


                       Pursuant to Section 13 or 15(d) of
                     the Securities and Exchange Act of 1934

 Date of Report: (Date of earliest event reported): June 7, 2002 (May 16, 2002)


                           Blue Dolphin Energy Company
             (Exact name of registrant as specified in its charter)




       Delaware                         0-15905                   73-1268729
(State of Incorporation)       (Commission File Number)       (IRS Employer
                                                             Identification No.)



                             801 Travis, Suite 2100
                              Houston, Texas 77002
              (Address of Registrant's principal executive offices)

                                 (713) 227-7660
              (Registrant's telephone number, including area code)




                                (Not Applicable)
          (Former name or former address, if changed since last report)







ITEM 5.  OTHER EVENTS

         On May 8, 2000, American Resources Offshore,  Inc., a subsidiary of the
registrant ("American Resources"),  and its former chief financial officer, were
named in a lawsuit in the United States District Court for the Southern District
of Texas,  Houston  Division,  styled H&N Gas,  Limited  Partnership,  et al. v.
Richard  Hale, et al. (Case No.  H-00-1371).  The lawsuit  alleged,  among other
things,  that H&N Gas ("H&N") was defrauded by American  Resources in connection
with gas  purchase  options  and gas  price  swap  contracts  entered  into from
February 1998 through  September 1999. H&N alleged  unlawful  collusion  between
American  Resources'  prior  management and then president of H&N,  Richard Hale
("Hale"),  to the detriment of H&N. H&N generally alleged that Hale directed H&N
to purchase  illusory  options from American  Resources that bore no relation to
any physical gas business and that American Resources did not have the financial
resources and/or sufficient quantity of gas to perform. H&N further alleged that
American Resources and Hale colluded with respect to swap transactions that were
designed to benefit  American  Resources at the expense of H&N. H&N also alleged
civil conspiracy against all of the defendants.

         The registrant,  American  Resources and members of prior management of
American Resources, including its former chief financial officer, entered into a
settlement  agreement  with the  Plaintiffs to this  litigation.  The registrant
recorded an expense of approximately  $265,000 in settlement of this litigation.
This  settlement  agreement and the payments to be made  thereunder  are made in
compromise  of  disputed  claims and are not an  admission  of wrong doing or of
liability of any kind.








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                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

Date:    June 7, 2002


                                                     BLUE DOLPHIN ENERGY COMPANY


                                                     /s/ G. Brian Lloyd
                                                     ---------------------------
                                                     G. Brian Lloyd
                                                     Vice President, Treasurer




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