BP facing US fine for rigging gas market

BP moved a step closer to having to pay a £19m fine after a US judge ruled its traders had manipulated the natural gas market in 2008.

The energy giant has been battling allegations of wrongdoing made by regulators after a BP trainee tried to impress executives at a conference by boasting how his team had profited from driving down prices.

The American, Clayton Luskie, then called his manager to tell him what he had said but used a recorded line and kept talking despite repeated attempts by his manager to interrupt him. Eventually he was persuaded to continue the conversation on mobile phones, which were unmonitored.

Following his comments, the Federal Energy Regulatory Commission began an investigation in 2011 into possible price fixing. BP has strongly disputed the allegations.

But on Thursday night a US judge upheld the regulator’s previous charge that BP’s trading activities in Texas violated the Natural Gas Act.

The commission said it would now decide whether there will be further civil penalties for BP and whether it will recoup a chunk of the profit generated by the alleged price fixing.

The alleged scam involved the traders betting on the price of gas falling and then bringing this about by flooding the market with gas which drove down prices. In the call to his manager, Luskie was recorded as asking how he should explain their dealings ‘that don’t make it sound like we’re manipulating the index’.

BP (down 3.9p to 379.25p) said it will appeal the decision. It has 30 days to file ‘exceptions’ and then there are a further 20 days for interested parties to oppose those ‘exceptions’.

The oil major said: ‘We strongly disagree with today’s decision by the FERC Administrative Law judge. The evidence overwhelmingly demonstrated that BP’s natural gas traders did not engage in any market manipulation, and FERC has no jurisdiction over the trading at issue in any event.’

The fine is the latest for BP which has faced a series of penalties related to the 2010 Deepwater Horizon oil spill. Last month it agreed an £11.95bn deal with the US government over the accident. Other British companies have also been hit hard by regulatory fines on the other side of the Atlantic.

In 2014 Standard Chartered agreed to pay the New York State Department of Financial Services £191m over lapses in its anti-money-laundering procedures. In 2012 HSBC paid a record £1.23bn after a Mexican drug lord referred to the bank as the ‘place to launder money’.