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Financial Times: BP faces two US probes over trading

By Rebecca Bream

Published: August 30 2006 03:00 | Last updated: August 30 2006 03:00

BP has revealed that it now faces two investigations into its trading activities in the US, adding to its troubles following the forced shutdown of its Prudhoe Bay field in Alaska.

The oil major yesterday confirmed media reports that it was being probed over its trading of crude oil and gasoline.

The crude oil inquiry is led by the US Commodity Futures Trading Commission (CFTC), which regulates futures markets, while the US Department of Justice is looking into some of BP’s gasoline trades.

BP said: “There are two investigations and we are fully co-operating [with the authorities].”

It is understood that the CFTC has sent subpoenas to BP and other energy traders in its investigation of crude oil over-the-counter trades from in 2003 and 2004.

The Department of Justice’s separate gasoline investigation has been going on for more than a year, said people close to BP, and is focused on one day’s trading on the New York Mercantile Exchange in 2002.

This is not the first time BP’s trading activities have been the subject of investigation by the US authorities.

In June, BP was accused by the CFTC of attempting to manipulate the market for propane, a gas used bymany households in the US.

BP has denied the propane-related allegations.

In 2003, BP agreed to pay $2.5m (£1.3m) to settle the allegations of improper crude oil trading on Nymex, although it did not admit to or deny any wrong-doing.

The oil major is already being investigated by several other bodies in the US.

These include grand juries probing a fatal explosion at BP’s Texas City refineryin March 2005 and a serious oil spill at Prudhoe Bay,one of the biggest oil fields in the US, in March this year.

Prudhoe Bay is also only operating at half its normal output after BP admitted earlier this month that its pipelines there were badly corroded and risked leaking more oil.

BP’s shares fell 12½p to 593p yesterday.

The group’s stock market performance has been damaged by its recent problems in the US, and has fallen almost 7 per cent this month. As a result, BP’s market capitalisation has fallen below that of rival Royal Dutch Shell for the first time in three years.

On Monday, a Texas court ruled that Lord Browne, BP chief executive, and John Manzoni, head of refining and marketing, should testify in court cases arising from the Texas City refinery explosion, which killed 15 people.

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