BP under fire in US over natural gas market manipulation claims

BP was today ordered to respond to allegations of natural gas market manipulation and threatened with fines of US $28.8m (€21.75m) by US federal energy regulators, in the latest round of its legal troubles in America.

The oil giant denied the claims and said it was disappointed the Federal Energy Regulatory Commission (FERC) had brought the action, which is based on allegations it first disclosed in 2011 and related to events in 2008.

It is the latest challenge facing BP in the US, where its multibillion-dollar bill following the 2010 Deepwater Horizon blow-out is still rising and it is asking a court to throw out a one billion dollar tranche of allegedly spurious compensation claims.

Today’s FERC statement is the latest stage in legal proceedings related to the behaviour of activity at its Texas-based Southeast Gas Trading desk.

It is alleged that BP traders bought and sold natural gas at the Houston Ship Channel in a manipulative way designed to increase the value of the company’s financial position.

The FERC has now given the company 30 days to file a reply to its “show cause” order – asking the firm to explain why it should not have to pay a US $28m penalty plus $800,000 in profits.

BP said the allegations were “without merit” and that it stood by its previous statement “that BP natural gas traders did not engage in any market manipulation in late 2008”.

“BP is disappointed that the FERC has brought this action and we will vigorously defend against these allegations,” the company said.

The threatened fine is small compared to the company’s completely separate estimated $42.4bn (€323bn) over the Deepwater Horizon disaster off the Louisiana coast which claimed 11 lives and caused huge damage to fishing, tourism and wildlife.

But the company’s response to today’s development echoes BP’s robust recent stance over compensation claims for the Gulf of Mexico catastrophe, which are still rising and threaten to empty a vast trust fund it had set up to settle them.

BP chief Bob Dudley last week said it would dig in for a long-haul legal battle over more than a billion dollars of claims being handled by an administrator it said were absurd as they were from businesses that did not suffer losses.

Last month it unveiled second quarter profits down 25% to US $2.7bn (€2.04bn) compared to last year, blamed on lower oil prices and a higher tax bill.