BP settles propane trade allegations
Oil giant BP will pay $303 million to settle regulators’ claims that it tried to corner the U.S. propane market, according to a person familiar with the matter.
The accord may be announced Thursday at a news conference with the Justice Department and the Commodity Futures Trading Commission, said the person, who declined to be named because the agreement hadn’t been made public.
Three traders for London-based BP tried in February 2004 to force up the price of the heating fuel by controlling most of the propane in a pipeline that transports it from a hub in Texas to the Midwest and Northeast, according to transcripts filed by the commission June 28 with the U.S. District Court in Illinois.
BP at the time denied the agency’s allegations of market manipulation and said several employees had been fired. BP spokesman Ronnie Chappell declined to comment Tuesday. commission spokeswoman Ianthe Zabel also declined to comment. Justice Department spokesman Andrew Ames didn’t return a phone call seeking comment.
The Wall Street Journal reported the settlement on its website Tuesday.
BP’s trades pushed propane up to 90 cents a gallon before it fell 34 cents March 1, 2004, according to court documents. When the price plunged, the BP traders were left with a $10-million loss. They had planned to reap a $20-million profit, the records show.
A $303-million settlement would be a record penalty for the commission in an enforcement case involving the energy markets, according to the regulator’s own data. It has levied a total of $308 million of fines in the last five years in cases alleging improper energy trading.
BP’s U.S.-traded shares rose $1.56, or 2.1%, to $75.44.
On Tuesday, BP reported that profit declined less in the third quarter than analysts had estimated and said that its two largest U.S. refineries were increasing production.
Profit excluding one-time items and changes in inventories dropped 6.4%, beating analysts’ estimates for a second consecutive quarter. Net income slid 29% to $4.41 billion, or 23 cents a share, from $6.23 billion, or 31 cents, in the year-earlier period, the company said.
BP plans to return refineries in Texas City, Texas, and Whiting, Ind., to full capacity in the first half of 2008. Pumping has begun at new fields in Angola and in the Gulf of Mexico as Chief Executive Tony Hayward seeks to revive production growth.
