By Christian Berthelsen
A U.S. regulatory judge ruled that BP PLC manipulated the Texas
natural gas market in 2008 and then conducted an inadequate
internal investigation, and said fines against the British energy
company could increase because the scheme took place after earlier
market manipulation.
BP was accused of flooding a delivery point for natural gas in
the Houston Ship Channel, sustaining losses and pushing down prices
to benefit a related trading position in financial derivative
markets. Enforcement lawyers from the U.S. Federal Energy
Regulatory Commission sought fines of nearly $50 million for the
activity, even though the government's own evidence showed the
company made less than $250,000 in profits.
BP didn't immediately respond to a request for comment
Thursday.
The amount of the fine being imposed on BP wasn't decided by
Administrative Law Judge Carmen A. Cintron, according to the ruling
released Thursday. The full FERC commission will decide on a
penalty amount after reviewing the judge's conclusions.
The judge noted in her ruling that BP could face increased
penalties because the conduct occurred less than five years after
the company settled charges by the U.S. Justice Department and the
U.S. Commodity Futures Trading Commission related to manipulation
of the propane market, and violated the terms of a CFTC injunction
barring it from further market manipulation.
The case was kicked off after one BP trader called another on a
recorded line and asked how to describe their market strategy in a
way that didn't "make it sound like we're manipulating" the gas
market. The judge called the market strategy a "classic case of
physical for financial benefits," and called BP's internal
investigation of the matter "ineffective and biased."
Write to Christian Berthelsen at
christian.berthelsen@wsj.com
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