A U.S. regulatory judge upheld a gas market manipulation charge on Thursday bought by the U.S. Federal Energy Regulatory Commission against BP.
In an non-binding ruling, Judge Carmen A. Cintron upheld a charge filed by FERC in 2013 that alleges some BP natural gas trading activities that took place in 2008 violated the Natural Gas Act, Reuters said.
In an August 2013 order, FERC said an investigation found that BP’s “Texas team” at the company’s Southeast Gas Trading (SEGT) desk traded physical natural gas at the Houston Ship Channel (HSC) to “increase the value of BP’S financial position at HSC.”
FERC claims that the Texas team traders “uneconomically” utilized BP’s transportation capacity between Katy and HSC, made “repeated early uneconomic sales” at HSC and “took steps to increase BP’s market concentration at HSC as part of a manipulative scheme.”
Those actions allegedly allowed the Texas team to suppress the HSC Gas Daily index with the goal of boosting the value of BP’s financial position at HSC from September 2008 through November 2008, FERC said.
In the 2013 order, FERC proposed a $28 million civil penalty and asked the company to disgorge $800,000 plus interest.
Judge Cintron’s ruling did not address the proposed fine or other penalties.
The decision will now go to a five member commission at FERC for consideration, Bloomberg noted.
The commission will then issue a final ruling.
BP has disputed the allegations and said it will appeal the ruling to FERC’s full commission.
“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,” BP spokesman Geoff Morrell told Reuters.