Regulator threatens BP with $29m in fines
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Tuesday 06 August 2013
An American energy regulator threatened BP with fines of nearly $29m (£19m) yesterday, asking the oil giant to respond to allegations of manipulating the natural gas market.
The Federal Energy Regulatory Commission (Ferc) issued an order “to show cause and notice of proposed penalty” directed at BP. The order stems from allegations that the oil giant manipulated the natural gas market at the Houston Ship Channel, a major American commercial waterway, from mid-September to the end of November in 2008. BP has 30 days to respond to the order.
The allegations followed an investigation by officials from the regulator’s Office of Enforcement (OE). “The OE Staff Report alleges that traders on the ‘Texas team’ of BP’s Southeast Gas Trading desk traded physical natural gas at Houston Ship Channel (HSC) to increase the value of BP’s financial position at HSC,” the order said.
In response to the order, BP said the allegations, which date back to 2011, were “without merit”. “We stand by what we previously disclosed publicly in February 2011 – that BP natural gas traders did not engage in any market manipulation in late 2008,” the company’s head of US communications, Geoff Morrell, said. “BP is disappointed that the Ferc has brought this action and we will vigorously defend against these allegations.”
Mr Morrell said that the body had based 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”.
Last month, Ferc settled a major power market manipulation case with a unit of JP Morgan. The company agreed to pay over $400m to settle allegations stemming from bidding activities in California and the Midwest from September 2010 to last year.
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