BP fined \\$20mn over natural gas trading: CorrectionOREANDA-NEWS. July 14, 2016. The Federal Energy Regulatory Commission (FERC) has approved a \\$20.2mn penalty against BP for allegedly manipulating natural gas prices following Hurricane Ike's landfall in Texas in September 2008.

FERC made public its accusations that BP manipulated gas prices in 2013, but spent nearly two years in administrative proceedings before approving the penalty late yesterday. FERC in its order said the alleged gas price manipulation undermined the stability of deregulated natural gas markets.

"We find the violations here to have been very serious," FERC said. "BP manipulated the market to profit from a natural disaster, and it did not stop after a trade or two but rather kept the scheme going for nearly three months."

BP said it strongly disagrees with the order. The company said it would seek rehearing of the order and would file an appeal in federal court if necessary.

"This decision should be reversed both because there is no credible evidence that BP's natural gas traders engaged in any market manipulation and because the FERC does not have jurisdiction over the trading at issue," BP said.

FERC's investigation centers on gas trades BP allegedly made in the two months after Hurricane Ike, when a disruption in industrial activity caused gas prices in Texas to drop. FERC has alleged that BP traders wanted those gas prices to stay low to increase the value of a financial spread position it held, leading the traders to sell large volumes of physical gas at a loss at the Houston Ship Channel.

BP has argued in administrative proceedings that FERC lacks jurisdiction over the gas trades in question because they occurred entirely at locations within Texas, rather than within the interstate gas markets. FERC has rejected that argument because it said the trades affected prices in interstate gas markets that fall under its jurisdiction.

The penalty approved yesterday is lower than the \\$28mn fine that FERC staff first recommended in 2013. But FERC said the penalty was at the top of what is recommended in its guidelines. BP could also have to pay back \\$207,000 in alleged "unjust profits" under the agency's order, unless it successfully fights the allegations in court.

BP will have 30 days to file a request for rehearing of the penalty. If FERC upholds its decision, BP will have the ability to challenge the penalty in federal appeals court.