BP faces $28m in fines for alleged gas market manipulation

Oil giant BP has been threatened with a fine worth $28 million (£18.2m) by the US energy regulator for allegedly manipulating the natural gas market in 2008. The Federal Energy […]

By Priyanka Shrestha

Oil giant BP has been threatened with a fine worth $28 million (£18.2m) by the US energy regulator for allegedly manipulating the natural gas market in 2008.

The Federal Energy Regulatory Commission (FERC) alleges BP tried to increase the value of its gas contracts by manipulating the price through false trades in the Houston Ship Channel – part of the Port of Houston – from around mid-September through November 2008.

The news comes just a week after the FERC reached a settlement of $410 million (£270.8m) with JPMorgan against allegations it rigged the power market. Earlier this year BP and Shell’s EU offices were also raided by the European Commission over alleged price fixing in the last 10 years.

The potential FERC fine for BP could also include an additional penalty of $800,000 (£520,715) in profits and interest made in the alleged trading. The proposed fine is much smaller than others that the FERC has pursued in the last few months.

BP however claims the allegations by the FERC are “without merit” and that it intends to fight against them.

Geoff Morrell, BP Vice President and Head of US Communications said: “The FERC bases its allegations on a recorded two-minute phone conversation between a BP trainee and BP natural gas trader that the regulator has taken completely out of context. The recording does not support any allegation of wrongdoing.

“In fact, the trainee involved in the conversation states that his characterisation was incorrect and the trader never agrees with nor condones the trainee’s statements. The trader also reacts strongly to the trainee’s comments and interrupts him because the trainee’s comments – as the trainee admits on the call – are incorrect and inappropriate,” he added.

BP has 30 days to pay the fine or contest the order.

Last month the FERC also ordered Barclays Bank and four of its traders to pay $453 million (£298m) for allegedly manipulating electricity prices in the US.