Inquiry into BP 'market manipulation'
BP faced a further serious attack on its integrity this week with the disclosure that United States federal investigators were looking into allegations that it had manipulated oil and unleaded gasoline markets.
The latest setback came 24 hours after Lord Browne, the chief executive, was told by a US state judge that he would have to personally testify in death and injuries cases resulting from the Texas City refinery fire last year.
In the latest allegations to hit BP over its oil-trading practices, the US Commodity Futures Trading Commission (CFTC) sent subpoenas to the company as part of an inquiry into possible manipulation of the global over-the-counter crude-oil market in 2003 and 2004.
A BP spokesperson in London said: “We are aware of the investigations and we are cooperating, but we are not going to comment on the specifics.’’ Britain’s biggest company is already facing a civil complaint lodged by federal commodity regulators for allegedly manipulating the US market for propane gas.
The CFTC undertook a similar inquiry into oil trading in 2003, which resulted in no charges against BP, but the same year the company paid $2,5-million to the New York mercantile exchange to settle allegations of improper crude-oil trading.
BP has also been summoned before the US Congress next week over pipeline spills from its Prudhoe Bay field in Alaska. The field was forced to partly shut down last month amid accusations that maintenance had been neglected. After 15 people were killed at the Texas City refinery, in the secondÂ fire in two years, BP was also hit last year when its Thunder Horse production platform in the US Gulf capsized, reinforcing accusations that the company had lost its way in the US.
Fadel Gheit, oil analyst with New York brokerage Oppenheimer & Co and a long-time supporter of Lord Browne and BP, said the scale of the problems facing the company had brought it to a “crisis”. He said BP’s share price was already suffering compared with its rivals. BP has seen its shares gain only 6% this year. Shell has gained 15% and ExxonMobil 25%.
The accidents at Texas City and Thunder Horse have already highlighted the company’s safety record in the US. If BP is found to be guilty of systematically neglecting pipelines in Alaska or manipulating the oil and gas markets, politicians and the public could increasingly turn against the company.
BP has already dismissed a group of propane traders for trading irregularities, opening itself up to civil claims from regulators.—Â