Record fine for BP over propane market scandal

The US Commodity and Futures Trading Commission (CFTC) has imposed a record $303 million penalty on BP for manipulating the North American propane gas market.

BP Products North America paid fines totalling $225 million, $53 million in restitution and $25 million into a consumer fraud fund, after the CFTC found that it had cornered the US propane market in February 2004. The company had attempted to corner the market in April 2003, but without success.

CFTC acting chairman Walter Lukken said: “BP engaged in a massive manipulation – the magnitude of this settlement reflects that the Commission will not tolerate trading abuses in our open and competitive markets.” As part of the settlement deal, the US Department of Justice has agreed to defer criminal prosecution.

In a separate case, the CFTC also imposed a $400,000 fine on Paul Kelly, who, as a gasoline trader for BP in 2002, attempted to manipulate the prices of gasoline futures in October 2002 by buying a large number of November futures, in order to affect the November-December price spread.

The company will also plead guilty to criminal charges relating to the 2005 Texas City refinery explosion, which killed 15, and the 2006 Prudhoe Bay pipeline spill, and pay fines totalling $68 million.